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Bishambhar Dayal Vs. Lala Mool Chand Agrawal and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAllahabad High Court
Decided On
Case NumberCivil Revn. No. 875 of 1975
Judge
Reported inAIR1981All321
ActsCode of Civil Procedure (CPC) , 1908 - Order 38, Rules 5 and 8
AppellantBishambhar Dayal
RespondentLala Mool Chand Agrawal and ors.
Appellant AdvocateS.M. Dayal, Adv.
Respondent AdvocateSudhir Narain Agrawal, Adv.
DispositionRevision allowed
Excerpt:
.....this decision applies to the present case because here the suit was filed by plaintiff opposite party..........of decree against firms. sub-rule (1) of rule 49 says that save as otherwise provided by this rule, property belonging to a partnership shall not be attached or sold in execution of a decree other than a decree passed against the firm or against the partners in the firm as such. it is not necessary for me to refer to sub-rules (2) to (6) of this rule. in sub-rule (1) of rule 50 where a decree has been passed against a firm, the mode of its execution has been provided. execution can proceed against any property of the partnership or againstany person who has appeared in has own name under rule 6 or rule 7 of order xxx or who has admitted on the pleadings that he is or has been adjudged to be a partner, or against any person who has been individually served as a partner with a summons.....
Judgment:
ORDER

R.R. Rastogi, J.

1. Brief facts giving rise to this revision are that the plaintiff-opposite party No. 1, Late Lala Mool Chand Agrawal (he died during the pendency of this revision and his heirs and legal representatives have been brought on record), had filed a suit against M/s. S. K. Agrawal & Company, a partnership firm and its partners, Surendra Kumar Agrawal, Sunil Kumar Agrawal, Smt. Kela Devi and Bishambhar Dayal. The suit was filed for recovery of Rs. 88,551.50 along with interest. On an application given by the plaintiff under Order 38, Rule 5, C. P. C. an order was issued to the Superintending Engineer, Asthai National High way Khand, U. P. P. W. D. Mac Robertsganj, Kanpur, for withholding payment of Rs. 96,000/- to M/s. Bishambhar Dayal, another partnership firm and which is the applicant before this Court. The applicant filed an objection under Order 38 Rule 8, C. P. C. in which it was stated that it was a separate firm constituted of M/s, Bishambhar Dayal and his three sons, Surendra Kumar Agrawal, Sunil Kumar Agrawal and Sudhir Kumar Agrawal and two outsiders, Surendra Kumar Agrawal s/o Govind Prasad and Kanhaiya Lal. It was claimed that this firm had come into existence in pursuance of a deed of partnership executed on 18th August, 1972. It was this objector firm which had taken the contract with the Asthai National Highway Khand aforesaid and had deposited the security amount and apart from that considerable amount of the final bill was pending payment to it. It was alleged that the defendant firm had no concern whatsoever with this contract or with this payment and since the objector firm was not a party to the suit filed by Sri Mool Chand, the order withholding payment to the objector firm was wholly invalid in law.

2. This objection was contested by the plaintiff and it appears that in support of their respective contentions the objectorand the plaintiff filed their affidavits. After considering the same the Court below has dismissed the objection and in doing so it has been influenced very much by the consideration that the defendants had been keeping on changing their business names with the intention to defeat and delay their creditors. It has further been influenced by the fact that in the objector firm Surendra Kumar and Sunil Kumar have shares of 20 Paise each and their father has a share of 10 Paise. In other words these three partners own 50 per cent share in the objector firm. The partners of the defendant firm are Surendra Kumar and Sunil Kumar, sons and Smt. Kela Devi wife, of Bishambhar Dayal. In all a sum of Rs. 3,20,000/- is payable to the objector firm from Asthai National Highway Khand aforesaid, wherein the share of Bishambhar Dayal and his two sons would be about Rupees 1,60,000/- and since only a sum of Rupees 96,000/- has been attached, it cannot be said that the rights of the other partners of the objector firm have in any way been affected. In the result, as noted above, the objection has been dismissed and the present revision has been directed against this order.

3. It has been submitted before me on behalf of the objector that the view taken by the Court below is erroneous in law and the order suffers from jurisdictional error inasmuch as during the subsistence of the partnership the right of a partner is only to obtain such profits as fall to his share from time to time and no partner can deal with any portion of the property as his own. Reliance in this behalf has been placed on a decision of the Supreme Court in Narayanappa v. Bhaskara Krishnappa, AIR 1966 SC 1300. A three-fold submission was made before me on behalf of the plaintiff-opposite party No. 1 that Rules 49 and 50 of Order XXI provide for attachment of partnership property and execution of decree against firms. Sub-rule (1) of Rule 49 says that save as otherwise provided by this Rule, property belonging to a partnership shall not be attached or sold in execution of a decree other than a decree passed against the firm or against the partners in the firm as such. It is not necessary for me to refer to Sub-rules (2) to (6) of this Rule. In Sub-rule (1) of Rule 50 where a decree has been passed against a firm, the mode of its execution has been provided. Execution can proceed against any property of the partnership or againstany person who has appeared in has own name under Rule 6 or Rule 7 of Order XXX or who has admitted on the pleadings that he is or has been adjudged to be a partner, or against any person who has been individually served as a partner with a summons and has failed to appear. In my opinion none of these provisions is applicable to the present case because here what was sought to be adjudged was the amount payable by the Temporary National Highways Division to the objector firm and it is a finding of fact re-corded by the Court below that the objector firm constitutes a separate legal entity. Merely because in the objector firm and the defendant firm there are some common partners, the two do not become one single entity and, as noted above, there is a clear finding that the objector firm is a separate legal entity.

4. Another limb of the argument of the counsel for the opposite party No. 1 was that in substance the order passed by the trial Court was an order of injunction restraining the Superintending Engineer, Temporary National Highways Division from making a certain payment to the objector firm. It may be noted that the defendant had also filed an objection under Order 38 Rule 8, C. P. C. That objection was dismissed by a separate order by the trial Court and against that order the defendant's filed a first appeal being F. A. F. O. No. 314 of 1975. That appeal has been dismissed on 10-2-1981 for default of the appellants with costs. On these facts the submission made by the learned counsel was that in the above situation it would be difficult to reconcile the situation in case the present revision is allowed. I do not find that any such irreconcilable situation comes into existence. As noted above, on plaintiff's application the Superintending Engineer, Asthai National Highway Khand was directed to withhold payment which was payable to the objector firm. The objector firm is an entity different from the defendant firm. Therefore, if the objection filed by the defendant firm under Order 38, Rule 3, C. P. C. against this attachment has been dismissed, that does not mean that the objector firm cannot successfully contest this attachment.

5. The last limb of the argument was based on the decision of the Kerala High Court in Thomas v. George, AIR 1973 Ker 94. That was a case under Order 30 Rule 1 C. P. C. and the principle laid down was that that Rule is only permissive and itdoes not prevent a partner from suing or being sued in his individual name. I fail to understand as to how this decision applies to the present case because here the suit was filed by plaintiff opposite party No. 1 against the firm and its partners and there is no controversy at present in regard to the frame of the suit.

6. It would further be seen that the short question for consideration is as towhether the shares of two of the common partners could be attached in proceedings under Order 38, Rule 5, C. P. C. and the answer would depend on the nature of the property of the firm. Section 14 of the Partnership Act says:--

'Subject to contract between the partners, the property of the firm includes all property and rights and interests in property originally brought into the stock of the firm or acquired by purchase or otherwise, by or for the firm, or for the purposes and in the course of the business of the firm, and includes also the goodwill of the business.'

This section also says that unless the contrary intention appears, property and rights and interest in property acquired with money belonging to the firm are deemed to have been acquired for the firm. It may, thus, be noted that whatever may be the character of the property which is brought in by the partners when the partnership is formed or which may be acquired in the course of the business of the partnership it becomes the property of the firm and what a partner is entitled to is his share of profits, if any, accruing to the partnership from the realisation of those property and upon dissolution of the partnership to a share in the money representing the value of the property. As laid down in Narayanappa v. Bhaskara Krishnappa (AIR 1966 SC 1300) (supra) during the subsistence of the partnership no partner can deal with any portion of the property as his own. Nor can he assign his interest in a specific item of the partnership property to any one. His right is to obtain such profits, if any, as fall to his share from time to time and upon the dissolution of the firm to a share in the assets of the firm which remain after satisfying the liabilities set out in Clause (a) and Sub-clauses (i), (ii) and (iii) of Clause (b) of Section 48. In view of this legal aspect, therefore, the view taken by the court below that Bishambhar Dayal and his two sons being owners of 50 per cent share in the objector firm were entitled to receive more than Rs. 1,60,000/- from the aforesaid Asthai National Highway Khand and that being so that attachment of Rs. 96,000/-could not be said to be unreasonable or illegal, is manifestly erroneous in law and cannot be sustained.

7. The revision, hence, succeeds and is allowed with costs and the order passed by the Court below on 12-3-1975 is set aside.


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