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Radha Soami Satsangh Sabha Vs. Pawan Electric Refrigerating Co. and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAllahabad High Court
Decided On
Case NumberEx. First Appeal No. 33 of 1959
Judge
Reported inAIR1967All9
ActsCode of Civil Procedure (CPC) , 1908 - Sections 20 - Order 21, Rule 50(2) - Order 30, Rule 3; Partnership Act, 1932 - Sections 40
AppellantRadha Soami Satsangh Sabha
RespondentPawan Electric Refrigerating Co. and anr.
Appellant AdvocateSwami Dayal and ;J. Swarup, Advs.
Respondent AdvocateSudarson Dayal Agarwala and ;Shanti Bhushan, Advs.
DispositionAppeal allowed
Excerpt:
(i) civil - execution of decree against partner of firm - order 21 rule 50 and order 30 rule 3 of code of civil procedure, 1908 - decree against firm to be executed against one of partners - partner denies liability and files objections on grounds that he was not served with summons - case to be governed by order 21 rule 50 and not by order 30 rule 3. (ii) dissolution of partnership firm - section 40 of partnership act, 1932 - mere transfer of entire business of partnership firm does not result in dissolution. - cantonments act[c.a. no. 41/2006]. section 346 & cantonment fund (servants rules, 1937, rules 13, 14 & 15: [h.l. gokhale, ag. cj, p.v. hardas, naresh h. patil, r.m. borde & r.m. savant, jj] jurisdiction of school tribunal constituted under maharashtra employees of private schools..........to him were attached his case was that he was not impleaded in the suit giving rise to the decree as partner of the firm, no summons was served on him, the decree, therefore, could not be executed against him. it was further alleged by him that the firm had dissolved on the date, when the cause of action had accrued and the fact of the dissolution of the firm was known to the plaintiff decree-holder although this was so, the plaintiff did not implead sobha ram objector in the suit, nor get summons served on him. with regard to his objection under order 21, rules 50 and 58, his allegation was that no leave could be granted to the decree-holder to execute the decree against him inasmuch as no separate application for leave had been filed. it was also alleged by him that as the.....
Judgment:

Rajeshwari Prasad, J.

1. This is an execution first appeal filed by decree-holder.

2. The facts of the case are that Sri Radha Soami Satsangh Sabha, Dayal Bagh, Agra, obtained a simple money-decree against the firm known as 'Pawan Electric Refrigerating Company.' There was another defendant in the suit which had resulted into the decree, and that was disclosed to be a limited company known as 'Pawan Refrigerations Ltd.' Both the defendants were sued through Sri B.N. Jain. Decree was, however, obtained against the first defendant alone. The decree was of the nature of a decree for damages on account of breach of contract.

3. When the decree-holder put the decree in execution, one Sobha Ram filed objection purporting to be under Order 21, Rules 50 and 58 and Order 30. Rule 3 of the Code of Civil Procedure. The necessity for Sobha Ram, to file the aforesaid objection arose on account of the fact, that execution of the decree was sought against him and certain immovable properties belonging to him were attached His case was that he was not impleaded in the suit giving rise to the decree as partner of the firm, no summons was served on him, the decree, therefore, could not be executed against him. It was further alleged by him that the firm had dissolved on the date, when the cause of action had accrued and the fact of the dissolution of the firm was known to the plaintiff decree-holder Although this was so, the plaintiff did not implead Sobha Ram objector in the suit, nor get summons served on him. With regard to his objection under Order 21, Rules 50 and 58, his allegation was that no leave could be granted to the decree-holder to execute the decree against him inasmuch as no separate application for leave had been filed. It was also alleged by him that as the decree was not executable against him under Order 30, Rule 3 of the Code of Civil Procedure, no leave could be granted under Order 21, Rule 50 of the Code of Civil Procedure.

4. The execution Court by its order under appeal dated 7th October 1958 came to the conclusion that the objector was entitled to succeed. As a result of it, the execution Court released the immovable properties of Sobha Ram attached under the decree.

5. As stated above, the decree-holder has filed the present execution first appeal in this Court At the very outset, it may be mentioned that the order of the lower appellate Court is somewhat confusing and is based on incorrect appreciation of the two provisions of law relevant to the present controversy.

6. It is not in controversy between the parties that in the suit which was filed by the present appellant, the objector was not impleaded as a defendant. Nor was any summons served on him personally or through any other partner of the firm. As a matter of fact, we are of the opinion that Order 30, Rule 3, C. P. C., is not applicable to the controversy in hand. Order 30. Rule 3 of the Code of Civil Procedure reads as follows :

'Where persons are sued as partners in the name of their firm, the summons shall be served either :--

(a) upon any one or more of the partners, or

(b) at the principal place at which the partnership business is carried on within (India) upon any person having, at the time of service, the control or management of the partnership business there.

as the Court may direct; and such service shall be deemed good service upon the firm so sued, whether all or any of the partners are within or without (India): Provided that, in the case of a partnership which has been dissolved to the knowledge of the plaintiff before the institution of the suit, the summons shall be served upon every person within (India) whom it is sought to make liable. '

7. The aforesaid rule is a provision relating to the service of summons and it indicates the manner in which summons may be served in a suit where persons are sued as partners in the name of their firm. In the case in hand, the objector said to be a partner of the firm had not been sued as partner in the name of thefirm. Consequently, the question of the mode of service upon him could not arise. It is thus clear that the whole of Rule 3 including the proviso is not applicable to the facts of the present case at all. However, the Court below came to the conclusion that the plaintiff decree-holder was aware of a fact that the firm had been dissolved before the institution of the suit. The entire discussion with regard to the proviso as contained in this rule is wholly irrelevant. The provision which needed the attention of the Court below was Order 21. Rule 50 alone. Order 21, Rule 50 C. P. C., provides for execution of the decree against firm in cases where a decree has been passed not against any person as partner of the firm but against firm itself It provides that although the decree is only against a firm, and not against human agency namely the partners, such a decree under certain circumstances could be executed against such human agency namely the partners in the manner provided for Sub-clause (2) of Order 21, Rule 50 is the relevant clause which reads as follows

'Where the decree-holder claims to be entitled to cause the decree to be executed against any person other than such a person as is referred to in Sub-rule (1), Clauses (b) and (c), as being a partner in the firm, he may apply to the Court which passed the decree for leave, and where the liability is not disputed, such Court may grant such leave, or, where such liability is disputed, may order that the liability of such person be tried and determined in any manner in which any issue in a suit may be tried and determined.'

In the present case, the decree is only against a firm and not against the partners, at least, not against the objector as a partner of the firm, though decree against the firm was sought to be executed against the objector on the ground that he was a partner of the firm. When a prayer for leave under Order 21. Rule 50 Clause (2) is made, there are two courses open to the Court. In a case where the liability is not disputed of such person against whom the decree is executed, the Court may grant such leave. In the second place where such liability is disputed, the Court may order that the liability of such person be tried and determined in any manner in which an issue in suit may be tried and determined. In the present case, the liability was disputed. Therefore, the procedure to be adopted by the Court below was the one which requires the determination of the question of the liability of the objector in a manner in which an issue in a suit is tried and determined. The Court below, however, did not proceed on that enquiry

8. It observed that the objection must prevail, as the procedure required by Order 30, Rule 3 of the Code of Civil Procedure had not been followed by the decree-holder We have already pointed out that it was not necessary for the decree-holder to follow the procedure of Order 30. Rule 3 C P C inasmuch as the objector was not sued in the suit as a partner in firm name. The view, therefore, takenby the lower appellate Court is obviously erroneous.

9. In the above view of the matter, the question whether there was a dissolution of the firm prior to the institution of the suit or not, and the question whether the plaintiff-decree-holder did have knowledge of that dissolution really did not arise, even though there may have been a dissolution and the plaintiff may have had knowledge of that dissolution. It was necessary for the Court to determine the liability of the person against whom decree was sought in the maner provided by Order 21, Rule 50 Sub-clause (2) of the Code of Civil Procedure.

10. Apart from that, we are of the opinion that the fact that there had been a dissolution of the firm has not been established in this case With a view to establish dissolution, reliance was placed on the agreement dated 6th December 1948. Through this agreement, B.N. Jain, Jai Ram Jain and Sobha Ram, the objector agreed to transfer the running business of M/s. Pawan Electric Refrigerating Company Ltd. and its assets and liabilities to a newly constituted company under the name and style of 'Pawan Refrigeration Ltd.' There was term in this agreement which purported to disclose that Sobha Ram objector had transferred his share in the firm by gift to Mahabir Prasad Jain, his brother

The lower appellate Court took the view that by means of the aforesaid agreement, the liabilities and assets of Pawan Refrigeration were transferred to the limited company and there was a total effacement of the existing firm Pawan Electric Refrigerating Company and that therefore, it ceased to exist as such. We are of the opinion that the transfer of the running business by itself would not bring out a dissolution of the firm, and the agreement relied upon by the Court below does not establish the dissolution of the firm as required by law. If there was no dissolution of the firm, the question of the plaintiff having knowledge of such dissolution did not arise in this view of the matter also, we are of the opinion that proviso to Order 30, Rule 3 of the Code of Civil Procedure did not apply.

11. It was admitted by the objector that he was a partner in the firm Pawan Electric Refrigerating Company till 1948 i.e., to say at the time when the contract in question giving rise to the plaintiff's claim was entered into. It further appears that there was an application on behalf of the objector for the setting aside of the ex parte decree under Order 9, Rule 13 C p. C., and during the course of it. It was conceded by him that he was a partner of the firm The learned counsel for the respondent has urged that the cause of action for the suit giving rise to the decree under execution arose not by the making of the contract, but, from the date of its breach and on this basis it was urged, that although the objector had been a partner on the date when the contract was made, he was not a partner on the date when breach of the contract was made.

We are unable to agree to this contention end we must hold that the objector was a partner of the firm on the date when cause of action for the suit giving rise to the decree really arose. The cause of action for a suit of this nature consists of the fact of making the contract and the subsequent failure of a party in performance of his contractual obligation. We are, therefore, of the opinion that the objector was a partner on the date when cause of action for the suit had arisen but this finding does not put an end to the objection of Sobha Ram. It is further to be decided whether Sobha Ram was really liable to pay up the decree. As the lower Court failed to appreciate the provision of Order 21, Rule 50 Sub-clause (2) and it did not adopt the procedure provided by that provision, it is necessary that the case be sent back to the Court below for disposal according to law.

12. We, therefore, allow the appeal, set aside the decision of the Court below, remand the case to the lower Court to try and determine the liability of the objector as an issue in the suit and then to dispose of the case according to law. Costs of this appeal will abide the ultimate result of the case.


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