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Kolor Syama Raju Vs. Sri Venkateshwara Mahal and ors. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtAndhra Pradesh High Court
Decided On
Case NumberCMSA No. 18 of 2006
Judge
Reported in2006(6)ALD278
ActsIndian Partnership Act, 1932 - Sections 32 and 72; Code of Civil Procedure (CPC) , 1908 - Order 21, Rule 58
AppellantKolor Syama Raju
RespondentSri Venkateshwara Mahal and ors.
Appellant AdvocatePattipati Venkateswarlu, Adv.
Respondent AdvocateNuthalapati Krishna Murthy, Adv.
DispositionAppeal dismissed
Excerpt:
.....sale deed earlier registered. registration of document cannot be understood to be an absolute sale divesting vender of its title else it would render sections 31 and 34 of specific relief act, otiose. - krishna murthy, learned counsel for the appellant, submits that the judgment-debtor borrowed the amount for the benefit of the firm, and that the respondent failed to establish that the alleged retirement of the judgment-debtor from the firm, was in accordance with the provisions of sections 32 and 72 of the indian partnership act, 1932, for short 'the act'.learned counsel submits that the so-called retirement of the judgment-debtor from the firm, is a collusive act, to defeat the award passed by the lok adalat in the suit. 9. the best person to dispute the legality of retirement, or..........there was no basis for him, to proceed against the properties held by the firm, after the judgment-debtor retired from the firm. in fact, the appellant does not have the locus standi, to challenge the legality or otherwise of the retirement of the judgment-debtor in the firm. in syndicate bank's case (supra), there was no dispute that the firm borrowed amount from the bank. some of the partners retired after the said transaction. the contention that the retired partners cannot be held liable to pay the debt to the bank was repelled. the facts in the case on hand are totally different, and there is nothing on record to disclose that the amount borrowed by the judgment-debtor, for the benefit of the firm.13. there are other circumstances, which persuaded the courts below, to reject the.....
Judgment:

L. Narasimha Reddy, J.

1. This CMSA is filed against the judgment, dated 28-7-2004, rendered by the learned Additional District Judge, Madanapalle, in CMA No. 14 of 2003. The CMA, in turn, was filed against the order in E.A.No. 36 of 2001, dated 19-2-2003, passed by the Court of Senior Civil Judge, Punganur, in E.P.No. 5 of 2001 in O.S. No. 21 of 2000.

2. The appellant filed the suit against one Pindukuri L. Manohar, for recovery of certain amount, on the basis of a promissory note dated 29-9-1997, in the Court of Senior Civil Judge, Punganur. The subject-matter of the suit was settled, through an award, passed by the Lok Adalat on 17-3-2001. The appellant filed E.P.No. 5 of 2001, and obtained attachment of the alleged share of the judgment-debtor on 16-5-2001. The respondents herein, a third party to the decree, filed E.A. No. 36 of 2001, under Rule 58 of Order XXI C.P.C., to raise the attachment.

3. The respondents pleaded that the judgment-debtor and themselves were partners of two firms, by name Sri Venkateswara Mahal (cinema theatre) and Sri Sai Baba Rice Mill, constituted in the year 1963. It is stated that on account of the differences that arose among the partners, the judgment-debtor and his wife retired from Venkateswara Mahal, with effect from 25-10-1999, and the respondents, in turn, retried from Sri Sai Baba Rice Mill. It was alleged that the amount, borrowed by the judgment-debtor was not for the benefit of the theatre (hereinafter referred to as the firm), and that even by the time the suit came to be filed, he ceased to be a partner of the firm. Several facts were pleaded in detail, touching on the inter se arrangements and disputes among the judgment-debtor and the respondents herein.

4. The appellant opposed the claim, petition of the respondent. The judgment-debtor, who figured as respondent No. 2 in the E.A., remained ex parte. The executing Court allowed the E.A. No. 36 of 2001, and the appeal filed against it was dismissed.

5. Sri N. Krishna Murthy, learned Counsel for the appellant, submits that the judgment-debtor borrowed the amount for the benefit of the firm, and that the respondent failed to establish that the alleged retirement of the judgment-debtor from the firm, was in accordance with the provisions of Sections 32 and 72 of the Indian Partnership Act, 1932, for short 'the Act'. Learned Counsel submits that the so-called retirement of the judgment-debtor from the firm, is a collusive act, to defeat the award passed by the Lok Adalat in the suit. He places reliance upon the judgment of the Supreme Court in Syndicate Bank v. R.S.R. Engineering Works and Ors. 2003 (4) ALD 62 (SC).

6. The award passed in O.S.No. 21 of 2000, through Lok Adalat, between the appellant herein and the judgment-debtor, became final. It was based upon a promissory note dated 29-9-1997. The appellant obtained an order of attachment against the theatre, in the execution proceedings. In their claims petition filed under Rule 58 of Order XXI C.P.C., the respondents pleaded that the award was obtained by the appellant, in collusion with the judgment-debtor. They pleaded several facts that touched the constitution and reconstitution of the firms, to which themselves and the judgment-debtor were partners. PWs. 1 and 2 were examined and Exs.A-1 to A-51 were filed by them. On behalf of appellant, RWs.1 to 4 were examined. The award, dated 17-1-2001, was filed as Ex.B-1. The assessments and returns of the two firms were filed as Exs.X-1 to X-8. The executing Court had considered the respective contentions advanced on behalf of the parties before it, and rendered a detailed judgment, holding that the attachment effected on 16-5-2001, cannot be sustained in law. The same was affirmed by the lower appellate Court.

7. The main contention advanced by Sri N. Krishna Murthy, learned Counsel, for the appellant is that the retirement of the judgment-debtor from the firm, was not in accordance with the provisions of the Act.

8. Sections 32 and 72 of the Act prescribe a detailed procedure, in the matter of retirement of partners from the firm, and the consequences flowing from out of it. While Section 72 exclusively deals with the manner of communication and publication of the proceedings, through which the partners retire, Section 32 deals with the consequences of the retirement.

9. The best person to dispute the legality of retirement, or the outcome of such a step, would have been the judgment-debtor. For the reasons known to him, he remained ex parte. He pretended his law abiding nature, by participating in the suit and becoming a party to almost a consent award before the Lok Adalat, but left the enforcement of the award to be sorted out, between the appellant and the respondent herein.

10. Section 32 of the Act is basically enacted, with an object of protecting the interest of third parties, and in particular, the creditors of a firm. Its purport is to the effect that if a partner had incurred any liability, in his capacity as partner towards a third party or a creditor, his retirement from the firm does not terminate the obligation. Such an obligation can be terminated, only with the consent of and approval by, the third parties, or creditors. To invoke the principle underlying Section 32, it must be established that the firm had incurred liability towards a creditor, before the partner in question retired. If this fact is proved, and it is also established that the retirement took place without the consent and express or facit approval by the creditor, the retiring partner cannot absolve himself, of his liability.

11. In the instant case, there is nothing on record to disclose that the judgment-debtor borrowed the amount from the appellant, for the benefit of the firm. If the appellant was of the view that he lent the amount for the benefit of the firm, through the judgment-debtor, he ought to have impleaded the firm as a party to the suit. The judgment-debtor alone was impleaded as the defendant.

12. Whatever may have been the justification for the appellant in not impleading the firm in the suit, it was open to him to place the necessary material before the executing Court, to substantiate his contention that the debt was incurred by the judgment-debtor, for the benefit of the firm. Except the consent award passed in the Lok Adalat, the appellant did not place any material before the executing Court. Therefore, the appellant failed to plead and prove that the judgment-debtor incurred the debt for the benefit of the firm. There was no basis for him, to proceed against the properties held by the firm, after the judgment-debtor retired from the firm. In fact, the appellant does not have the locus standi, to challenge the legality or otherwise of the retirement of the judgment-debtor in the firm. In Syndicate Bank's case (supra), there was no dispute that the firm borrowed amount from the bank. Some of the partners retired after the said transaction. The contention that the retired partners cannot be held liable to pay the debt to the bank was repelled. The facts in the case on hand are totally different, and there is nothing on record to disclose that the amount borrowed by the judgment-debtor, for the benefit of the firm.

13. There are other circumstances, which persuaded the Courts below, to reject the contention of the appellant. The suit itself was filed, long after the judgment-debtor retired from the firm. The pleadings in E.A. No. 36 of 2001, disclose that after retiring from the theatre, the judgment-debtor had gained a higher share holding in the other firm i.e., Sai Baba Rice Mill. Apart from that, the judgment-debtor had several assets in the form of residential houses, other business establishments, etc. The persistence of the appellant in proceeding against the firm, from which the judgment-debtor retired, had only added strength to the contention of the respondent herein that there was collusion between the appellant herein and the judgment-debtor, in filing the suit and obtaining a consent award. This Court is not inclined to interfere with the concurrent findings recorded by the Courts below.

14. The C.M.S.A. is accordingly dismissed. There shall be no order as to costs.


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