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Ram Narain-kishun Dayal Vs. Ram Prasad and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAllahabad
Decided On
Reported inAIR1931All65
AppellantRam Narain-kishun Dayal
RespondentRam Prasad and ors.
Excerpt:
- - also the decree-holder was only seeking to enforce a personal liability as is clearly stated by his counsel at p. accordingly the learned counsel for the appellant is not correct in his allegation that the firm of sitaram nathmal was owned solely by nathmal, because it is clearly shown that either balmakund or his wife also owned a share in the firm. we consider therefore that the two cases of the plaintiff will fail on this ground......decree of which execution was sought was a decree against a firm of sitaram nathmal, and in that firm chhotey lal was not a partner. there are three applications for execution on the record in none of which notice was to be served on chhotey lal. the application in question is printed at pp. 75 and 76 of the paper book, and the only mention of chhotey lal is that contained at p. 75 to the effect that the security bond was executed by his brother in his name, but in column 9 'against whom the decree is to be executed' is stated:firm sitaram nathmal of kahukikothi. the summons will be served on balmakund, son of sanehi ram, a partner of the firm judgment-debtor.11. this matter is of some importance because in para. 11 of the plaint it is incorrectly stated that the application for.....
Judgment:

Bennet, J.

1. These are two connected appeals brought by the plaintiff firm of Ram Narain-Kishun Dayal of Cawnpore against decrees of the learned First Subordinate Judge of Cawnpore dismissing their two suits. The circumstances which gave rise to this litigation are as follows: There was a firm in Cawnpore by the name of Sitaram Nathmal and the plaintiff firm had dealings with it by supplying cloth, and the plaintiff firm brought a suit No. 280 of 1919 against the firm of Sitaram Nathmal. At that time there were two partners in that firm, Nathmal and Balmakund, and on 23rd June 1919 a written statement was filed on behalf of the firm by Nathmal, stating that he was a partner in that firm.

2. Subsequently, at a date not shown, the parties in that suit agreed to refer the matter to arbitration. After the agreement Nathmal died in January 1920, and it is stated in the judgment that prior to that date no proceedings had been taken in arbitration. Subsequent to that date proceedings in arbitration took place, and an award was filed on 11th December 1920, and on that award a decree was framed against the firm Sitaram Nath-mal. The award granted a sum to the plaintiffs of Rs. 68,136-1-0. By this decree of 23rd December 1920, the decrectal amount was to be paid in two instalments: one instalment at once and the other instalment within two months from the date of the decree. There was a revision proceeding in the High Court at the instance of the defendant firm. Execution applications were taken out in regard to each instalment, and execution was stayed on execution of two security bonds the one dated 12th January 1921 and the other dated 10th March 1921. These bonds were executed by two of the sons of Nathmal, Ram Prasad, on behalf of himself and his minor brother Chhotey Lal, and Lachhi Ram. These bonds hypothecated in the case of the bond dated 12th January 1921, a house 25/11, and in the case of the bond dated 10th March 1921, a house 48/107 and a grove. The application in revision was dismissed. The decree-holders then applied for execution of their decree in respect of both instalments on 23rd July 1921 : see p. 75 of the paper book. That application stated that summons should be served on Balmakund, but an objection was filed on behalf of Ram Prasad and Lachmi Narain the two major sons of Nath mal. Their objection was disallowed by the learned Subordinate Judge on 3rd January 1922, but in that proceeding he held:

the share of their minor brother Chhotey Lal is not liable to be sold and attached in satisfaction of the decree in question.

3. The present plaintiffs took this execution order in appeal to this Court, but as they did not make Chhotey Lal a party, their appeal was dismissed. Accordingly the decree-holders put up for sale the 2/3 of the property of Nathmal owned by his two adult sons Ram Prasad and Lachhi Ram and the 2/3 share in house 55/11 was sold for Rs. 15.700. This had been hypothecated for Rs. 37,402-13-6, and accordingly, in Suit No. 217/25 the plaintiffs sue for the balance of Rs. 21,702-13-6, and they asked that a decree for that amount should be passed, and if the defendants do not pay, the hypothecated property not already sold, that is one-third share of Chhotey Lal the minor son of Nathmal, should be sold. Now this one-third share of Chhotey Lal was attached by Messrs. Ganesh Das-Ram Gopal of Calcutta in execution of a simple money decree against Nathmal Parshadilal and at an auction-sale this one-third share of Chhotey Lal was purchased by Munna Lal who is defendant 5 in Suit No. 217 of 1925, and he is the contesting respondent in this case. The circumstances in the Appeal No. 325 of 1926, are similar, and the real contesting respondents are the purchasers of the one-third share of Chhotey Lal which was sold in execution, that is defendant 5 Jitmal who purchased the grove and defendants 6 and 7 who purchased the share of the house.

4. The learned Subordinate Judge has dismissed the suits of the plaintiffs on various grounds. Firstly, he has held that the security bonds were not valid because they were in favour of the Court and he held that such a bond was invalid and also that it could not be assigned by the Court. Secondly he has hell that the proceedings in execution on the objection of the two elder brothers in which it was held that the share of the minor brother could not be attached and sold in execution of this decree are a bar by the principle of res judicata against the plaintiffs raising the question in this suit. He further held that the properties in question were not the assets of the business.

5. The first question which we will discuss in these appeals is whether these security bonds are valid bonds, and whether they have been validly assigned by the Court. The learned Subordinate Judge relied on a ruling ,of their Lordships of the Privy Council reported in Raj Raghubar Singh v. Jai Indra Bahadur Singh A.I.R. 1919 P.C. 55. In that case there was a security bond which had been drawn up in the year 1902 previous to the Civil Procedure Code of 1908. As their Lordships remarked at that period there was no definite form in which security bonds on an application to stay execution should be framed. The bond in question did not purport to be in favour of any person, but merely stated that the applicants furnished security and declared that the hypothecated property should serve as security and be liable to the extent of a lakh of rupees. It was argued that the mortgage might be valid because the bond might be taken to be in favour of the Court. Their Lordships said:

The Court is not a juridical person. It cannot be sued. It cannot take property, and as it cannot take property it cannot assign it. It remains therefore, that there is an unquestioned liability, and that the only mode of enforcing it must be by the Court making an order in the suit upon an application to which the sureties are parties that the property charged be sold unless before a day named the sureties find the money.

6. In this case before their Lordships it is shown on p. 160 that the question was whether it was necessary that a separate suit should be brought to enforce the liability against the sureties. The finding of their Lordships was that it was not necessary that such a separate suit should be brought, and accordingly they directed that the words:

the property hypothecated by the instrument of security of 16th September 1902 is liable

should be added to the decree of the trial Court. This shows that although their Lordships criticized the language of the security bond, they did not consider that it was a bond which was null and void. Further at p. 168 (of 42 All.) their Lordships remarked that the form in appendix 'G' No. 3, present Civil P.C. of 1908 should obviate the difficulty arising in future, although it was not quite clear whether the form should be in favour of a party or an officer of the Court. Now in the present security bond printed at p. 63 a comparison with form No. 2, Appendix 'G,' Civil P.C., will show that the Code directs the title to be put as a heading of the bond. But such title is blank in the present bond. It should have apparently been addressed to the presiding officer, the Subordinate Judge of Cawnpore. In the body of the bond there a reference to the Court of the Subordinate Judge of Cawnpore and it states:

We, the executants therefore stand as sureties of our own accord and do hereby hold ourselves and our heirs and representatives liable to the said Court....When called upon to do so...We hereby hypothecate house number so and so.

7. We consider that the mere omission of the title from this document and the name of the presiding officer does not make it an invalid document, and that we should presume that the formality prescribed by the form exists. As noted by their Lordships of the Privy Council the obligee would be an officer of the Court and not the Court itself. There is statutory provision for such security bonds in favour of the presiding officers of the Courts in India. Thus, in Section 31 (a), Guardians and Wards Act, it is provided that a guardian should give a security bond to the Judge of the Court, and the form for this security bond is contained in the General Rules (Civil) of 1926 for civil Courts subordinate to the High Court of Judicature at Allahabad, Vol. I, where in Rule 23 at p. 252 it is laid down that the form shall be that in Rule 1 on p. 231. The expression used here is:

I, E.F., do hereby engage and bind myself to the said Judge and his successors in office to stand security etc.

8. Another case in which a security bond is taken in favour of the presiding officer of a Court is under Section 233, Succession Act, where the form of the bond is given on p. 233 of the same General Rules. That form states:

We A.B. of . . ., C.D... ., are bound into G. H. Esq...the Judge of the District Court of...and to his successors in office in the sum of rupees.

9. These examples show that in India the common form of a security bond is a bond in favour of the presiding officers of the Court either expressed by name with the qualification that he is the presiding officer of that Court or expressed as Judge of that district. Accordingly we consider that the security bonds in question are valid documents and they were duly transferred by a registered deed of transfer by the Additional Subordinate Judge to the plaintiff firm. Accordingly we consider that under those security bonds duly transferred the plaintiffs are legally entitled to bring the present suits.

10. The next matter which is made a ground of appeal, is that the former proceedings in the execution department terminating in the order of the Subordinate Judge on 3rd January 1922, to the effect that the share of Chhotey Lal was not liable to be attached and sold in satisfaction of the decree in question, is not a bar to the present suits under the rule of res judicata. The decree of which execution was sought was a decree against a firm of Sitaram Nathmal, and in that firm Chhotey Lal was not a partner. There are three applications for execution on the record in none of which notice was to be served on Chhotey Lal. The application in question is printed at pp. 75 and 76 of the paper book, and the only mention of Chhotey Lal is that contained at p. 75 to the effect that the security bond was executed by his brother in his name, but in column 9 'against whom the decree is to be executed' is stated:

firm Sitaram Nathmal of Kahukikothi. The summons will be served on Balmakund, son of Sanehi Ram, a partner of the firm judgment-debtor.

11. This matter is of some importance because in para. 11 of the plaint it is incorrectly stated that the application for execution was against defendant 2 Chhotey Lal along with other persons and the learned Subordinate Judge has been mistaken on this point. When the execution proceedings were going on an objection was filed by Ram Prasad and Lachhi Ram, and Chhotey Lal was not a party to that objection. This is shown by the heading at p. 81 of the order of the Subordinate Judge on the objection. An appeal was taken against the order of the Subordinate Judge of 3rd January 1922, and the decree-holders did not make Chhotey Lal a party to that appeal presumably because he had not been a party in the execution Court, but the order in appeal of this Court printed at p. 99 shows that the appeal was dismissed on the ground:

The decree-holders have not chosen to make Chhotey Lal a party to this appeal, and they can therefore obtain no relief against him as he is not represented in the proceedings.

12. Later an application for a review of this order in appeal was made, and Mukerji, J., considered that no review was necessary, and he states at p. 101:

In the present application for review of judgment it is said that Chhotey Lal was not a party in the Court below, and if the applicants want to proceed against Chhotey Lal, the judgment of this Court would be a bar to the trial of the question of Chhotey Lal's liability in the presence of Chhotey Lal.

I do not presume to advise the applicants, but it seems to me their apprehension is baseless. All that we have said was that we were not going to decide anything against Chhotey Lal in his absence. We have given no judgment on the merits of the, case. In the circumstances I do not see why, if the applicants have any remedy against Chhotey Lal, that remedy should be barred, because we refused to hear the appeal.

13. Under these circumstances we consider that these proceedings in execution are not a bar to the present proceedings because Chhotey Lal was not a party to the execution proceedings. Also the decree-holder was only seeking to enforce a personal liability as is clearly stated by his counsel at p. 79, whereas in the present proceedings the plaintiff is seeking to enforce the liability of the hypothecation bond of the property. An order in execution deciding a matter in issue will be res judicata in subsequent execution proceedings as was held in Dwarka Das v. Muhammad Ashfaq Ullah : AIR1925All117 , where it was laid down that after a notice to the judgment-debtor the judgment-debtor could not raise the question again in subsequent execution proceedings. But the present suit is not an execution proceeding. It is also to be noted that Order 34, Rule 14, lays down that where a mortgagee has obtained a decree for the payment of money in satisfaction of a claim arising under the mortgage, he shall not be entitled to bring the mortgaged property to sale otherwise than by instituting a suit for sale in enforcement of the mortgage. Under the principle of this rule there is reason for holding that the present proceeding to enforce the hypothecation liability on this property is correctly a suit and not an execution proceeding. Accordingly therefore the decision in the execution proceedings would not be res judicata for the present suits, because the present suits are for enforcement of a liability which it would not be possible to enforce in the execution Court.

14. We may also point out that the order of the Subordinate Judge was apparently passed under Order 21, Rule 23 (2) The procedure in hearing objection to applications for execution must be similar to the procedure in hearing objections to attachment. O.21, Rule 63, provides that a party against whom such an order is made may institute a suit to establish his right. We consider that this principle would govern the execution order in question and there would be no bar of res judicata to the present suits.

15. The main question on which the decrees of the learned Subordinate Judge dismissing these two suits was upheld by the learned Counsel for the respondents was that because Nathmal had died during the hearing of the original suit No. 280 of 1919, by the plaintiffs and because the plaintiffs in that case had taken advantage of Order 30, Rule 4, and had not joined the legal representatives of Nath Mal as parties to the suit, therefore, it was not open to the decree-holders to proceed in execution against the personal property of Nath Mal. It is admitted that Order 21, Rule 50 does not make any clear provision on this point. For the appellant-plaintiff it was claimed that even though the legal representatives of the deceased partner had not been brought on the record, still the decree could be executed against his personal estate. It is to be noted that the present case is differentiated from those in various rulings which were quoted, because in the present case when a written statement was filed in the suit against the firm that written statement was filed by Nathmal, who filed it as a partner in the firm : see attestation at p. 43 of the Printed Book (' I, Nath Mal, one of the proprietors of the firm ' Sita-ram Nathmal ' defendants do declare.') Accordingly Nathmal would come within the words ' any person....who has admitted on the pleadings that he is a partner ' which are contained in Order 21, Rule 50 (1) (b) as one of the persons against whom a decree passed against a firm may be executed. For the respondents it was contended that the words ' any person ' must be taken to mean a person who was alive at the time of execution. In the present case Nathmal had died before the award and decree and execution proceedings. It must be admitted that the provisions in Order 21, Rule 50, are defective on this point. The exempting clause of Rule 50 is (4):

save as against any property of the partnership a decree against a firm shall not release, render liable to or otherwise affect any partner therein unless he has been served with a summons to appear and answer.

16. It could not be contended that Nathmal would be exempted under this sub-clause, because he did appear and answer. The learned Counsel for the respondents relied on the case of Ellis v. Wadeson [1899] 1 Q.B. 714. In that case the facts were that an action was brought against a firm named Wadeson and Malleson in which the partners at the time that the action was brought were Mallason and Nesbitt. After the issue of the writ, appearance thereto and statement of claim, Malleson died. The surviving partner, Nesbitt, put in a defence on his own behalf, and the plaintiffs applied to a master at chambers for leave to sign judgment in default unless the defendant Nesbitt amended his defence to a defence on behalf of the firm and the defendant Nesbitt appealed. In the Court of appeal it was held that the order was correct and that the defendant should amend his defence by making a defence on behalf of the firm, In the course of the judgment various points were considered, and at p. 718 it is laid down:

If the legal personal representatives of a deceased partner are not added expressly as defendants, and the action is brought against the firm in the firm's name, then judgment can only be obtained as against the surviving partners and be enforced against them and against the partnership assets.

17. It is on this passage that the learned Counsel for the respondents relies. It is true that there is in the English law no provision such as is contained in Order 30, Rule 4, but it does not follow that that provision is intended to make the personal estate of a deceased partner liable if his legal representatives are not made parties to the suit. It is not, we consider, only open to the legal representatives to contend that a deceased person was not a partner, but it would be open to them also to make a general defence in the suit. In the present case when Nath-mal mal died the proceedings continued against the firm and the firm was properly represented by the surviving partner Balmakund, but the personal estate of Nathmal was not represented by anyone and accordingly we consider that to make that personal estate liable it should have been[ represented after the death of Nathmal. There have' been conflicting rulings in the Courts in India on the question of liabilities of the estate of a deceased partner. One of these cases is Mathura Das Gangi v. Ebrahim Fazalbhoy A.I.R. 1927 Bom. 581 which followed the rule in L. Wadeson's case, but the case in 51 Bom. was a case where the firm had been dissolved to the knowledge of the plaintiff before the institution of the suit by reason of the death of a partner, and he did not bring his suit against the legal representatives of the deceased partner. It was held that it was necessary to add the legal representatives of the deceased partner in order to obtain judgment against the private estate of the deceased partner, as opposed to a mere judgment against the partnership assets. This ruling in 1927 differed from rulings reported in Jivraj Lallubhai v. Bhagwan Das Govardhan Das A.I.R. 1923 Bom. 66 and Moti Lal Jasruj v. Chand Mal Hindu Mal A.I.R. 1924 Bom. 155. The Full Bench case of Yusuf v. Badsha A.I.R. 1929 Mad. 733 follows the case in Mathura Das v. Ebrahim Fazalbhoy A.I.R. 1927 Bom. 581.

18. We consider that, as the legal representatives of the deceased Nathmal were not brought on the record before the arbitration award and the decree passed on it, that decree cannot be executed against the private estate of Nathmal, and that that decree is only capable of execution against the assets of the partnership. It was stated in the plaints of the present suits that the property in question was property purchased by Nathmal out of the assets of the firm. But that statement is shown by the evidence to be incorrect. Balmakund, the surviving partner, gave evidence on p. 18 of the paper book in which he stated that the price of the house No. 55/11 was paid from the cloth shop, but in cross-examination he stated that the price of the house was debited to Nathmal's account in the partnership, and that he, Balmakund, had no concern with the house. He also stated that the grove was purchased by Nathmal, and that no other property was purchased with money from the cloth shop, and by inference therefore the house in the other suit would not be even purchased with money taken from the cloth shop accounts. The plaintiff produced the vendor Manni Lal who stated that he sold the house No. 55/11 to Sitaram Nathmal in October 1916, but in cross-examination the vendor admitted that he did not remember in whose name the sale deed of the house was written. By some strange omission the plaintiff has neglected to produce certified copies of these sale deeds although these could easily have been obtained in the office of the Sub-Registrar. As regards the partnership Balmakund states that his wife's father Jitmal had invested money in the partnership along with Nathmal and that his wife was the heir of her father and that he (Balmakund) received a salary of Us. 62-9-0 per mensem and that he was also a partner in the cloth business in profits. By this we understand that Balmakund received a share of profits on behalf of the capital owned by his wife in this firm. Accordingly the learned Counsel for the appellant is not correct in his allegation that the firm of Sitaram Nathmal was owned solely by Nathmal, because it is clearly shown that either Balmakund or his wife also owned a share in the firm. Accordingly the two houses and the grove are property which belonged to Nathmal in his private capacity and not to Nathmal as a partner in this firm. It is also in evidence that Nathmal had received all his property by will from his father and therefore it was his self-acquired property, and on his death it would descend on his sons by inheritance and not as joint family property.

19. The question now is what right had Ram Prasad and Lachhi Ram, the two brothers of Chhotey Lal, minor, to hypothecate the share of Chhotey Lal which was one-third in this property by the security bonds in question. We have held that the decree which had been passed on the arbitration award was a decree which was capable of being executed only against the assets of the partnership. Accordingly it could not be said that it was for the benefit of the minor Chotey Lal that his property which he had obtained by inheritance from his father and which had no liability whatever under that decree should be hypothecated as a security bond to delay execution of that decree. The transactions therefore of the security bonds were not in the interests of the minor Chhotey Lal, and accordingly they were not transactions by which his interest in this property is bound. No personal liability could attach to Chhotey Lal under the security bonds because he was a minor. Accordingly there is neither personal liability nor liability of his estate under these security bonds. We consider therefore that the two cases of the plaintiff will fail on this ground. Accordingly we consider that the decrees of the learned Subordinate Judge dismissing the suits of the plaintiff were correct decrees and we dismiss these appeals with costs.


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