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Narsingh Das Vs. Bhairon Dan - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtRajasthan High Court
Decided On
Case NumberSecond Appeal No. 26 of 1955
Judge
Reported inAIR1961Raj81
ActsCode of Civil Procedure (CPC) , 1908 - Order 41, Rule 4; Presidency Towns Insolvency Act, 1909 - Sections 17 and 46(3); Partneship Act, 1932 - Sections 34 and 42
AppellantNarsingh Das
RespondentBhairon Dan
Advocates: B.K. Acharya, Adv.
DispositionAppeal allowed
Cases Referred and Dhuttaloor Subbayya v. P. Subbayya
Excerpt:
.....general rule and gives the court power to pass an appropriate decree in favour of even the non-appealing plaintiffs or defendants where the requirement of that rule is satisfied. it seems to me that it would always be better to do so to make the array of parties complete, although i confess that there is a difference of opinion 011 this point also and it has been held in some cases that this rule applies to a case where only one or some of the plaintiffs or defendants appeal without impleading the other plaintiffs or defendants as parties to the appeal while in other cases the view has been taken that this rule would have no application where the non-appealing plaintiff or defendant has not been impleaded in the appeal at all. subbayya, ilr 30 mad 470 (fb). in this view of the..........4 reads as under:-'where there are more plaintiffs or more defendants than one in a suit and the decree appealed from proceeds on any ground common to all the plaintiffs or to all the defendants, any one of the plaintiffs or of the defendants may appeal from the whole decree, and thereupon the appellate court may reverse or vary the decree in favour of all the plaintiffs or defendants, as the case may be.'now the general rule is that on an appeal by one cf several plaintiffs or defendants, the appellate court can reverse or vary the decree of the trial court only in favour of the party appealing. order 41 rule 4 provides an exception to this general rule and gives the court power to pass an appropriate decree in favour of even the non-appealing plaintiffs or defendants where the.....
Judgment:

I.N. Modi, J.

1. This is a regular second appeal by the defendant Narsingh Das in a suit for rendition of accounts.

2. The material facts may be shortly stated as follows. The suit out of which the present appeal arises was brought by the plaintiff Bhairon Dan on the allegations that there was a firm in the name of Bhairon Dan Madangopal which did business in cloth at Calcutta and that the defendant No. 1 Narsingh Das and the plaintiff and defendants Nos. 4 and 5 were its partners. Defendants Nos. 2 and 3 were the sons of Narsingh Das and were members of a joint Hindu trading family consisting of themselves and their father Narsingh Das.

It was further alleged that the plaintiff held 4 1/2 annas share in this partnership business, defendants Nos. 4 and 5 held 31/2 annas share therein each and defendant No, 1 Narsinghdas held 4 annas share, and the remaining half anna share, was to go to charity. This, partnership, according to the plaintiff, was a partnership at will and had com-menced its business on Smt. 1991 Asoj Sudi 1, and it was dissolved on Chait Sudi 9 Smt. 2005 when the parties made up their accounts obviously provisionally and decided that no further business would be done and that whatever realisations would be made thereafter these would be divided among the creditors and the balance would be divided between the partners.

It was further alleged that the shop was disestablished on Magh Sudi 10 Smt 2005 and that at that time a sum of Rs. 0801/9/6 remained due from defendants Nos. 1 to 3 and Rs. 1916/3/- from defendant no. 4 and Rs. 5851/9/3 from defendant No. 5 and but of these a sum of Rs. 6412/- remained outstanding in favour of the plaintiff and the rest had to be paid over to the creditors. The plaintiffs grievance, however, was that the defendants refused to pay these amounts, and, consequently, he brought the present suit for rendition of accounts and for recovery of such sum as may be found due to him on taking of final accounts. The plaintiff provisionally valued his suit at Rs. 2500/- only.

3. Defendants Nos. 4 and 5 allowed the suit to proceed ex parte against themselves while Nos. 1 and 3 resisted it on a number of pleas. The most important of these (and with that alone we are concerned in this appeal) was that defendant Narsinghdas had been adjudicated insolvent by the Insolvency Court at Calcutta and, therefore, the present suit was not maintainable.

It was further contended in this connection that if any money was due to the plaintiff from these defendants, of which they had no knowledge, the proper course for the plaintiff was to file his claim in the Insolvency Court. This plea was rejected by both courts below and a preliminary decree under Order 20 Rule 15 C. P. C. has been passed against all the defendants. It is against this judgment and decree that the present appeal has been filed by Narsinghdas alone,

4. It is unfortunate that nobody has appeared in this Court to oppose the appeal on behalf of the plaintiff,

5. Before I deal with the merits of the appeal, let me advert to a preliminary point which arose during the course of arguments before me, namely, that this appeal was not properly constituted. The point arose like this. The trial court had passed its decree against Narsinghdas and his sons and defendants Nos. 4 and 5 also. From that decree, defendant Narsinghdas alone appealed to the Court below wherein he did not implead his sons defendants Nos. 2 and 3 or the other defendants as parties to the appeal.

The appeal was dismissed by the learned District Judge by his judgment and decree under appeal. Likewise in the appeal filed by the defendant Narsinghdas in this Court, he Has not impleaded the other defendants as parties to the appeal. In these circumstances the point arose for consideration whether this appeal was properly constituted. Having given my careful and anxious consideration to this aspect of the case, it seems to me that Order 41 Rule 4 C. P. C. saves the appeal from the defect of improper constitution. Order 41, Rule 4 reads as under:-

'Where there are more plaintiffs or more defendants than one in a suit and the decree appealed from proceeds on any ground common to all the plaintiffs or to all the defendants, any one of the plaintiffs or of the defendants may appeal from the whole decree, and thereupon the Appellate Court may reverse or vary the decree in favour of all the plaintiffs or defendants, as the case may be.'

Now the general rule is that on an appeal by one cf several plaintiffs or defendants, the Appellate Court can reverse or vary the decree of the trial court only in favour of the party appealing. Order 41 Rule 4 provides an exception to this general rule and gives the court power to pass an appropriate decree in favour of even the non-appealing plaintiffs or defendants where the requirement of that rule is satisfied.

This requirement is that the decree appealed from should proceed on any ground common to all the plaintiffs or to all the defendants. In such a case, an appeal by one is virtually treated as an appeal by all, though they may not be parties to the appeal. This rule came up for consideration before me in Padma Ram v. Surja, ILR (1960) 10 Raj 573 : (AIR 1961 Raj 72). What I said there was this:--

'This rule appears to be based primarily on the consideration that if there are more plaintiffs or defendants than one in a suit and they are aggrieved or affected by a decree passed for or against them, such a decree being based on a ground common to all of them, then it should be enough if one of such parties files the appeal from the whole decree; the reason being that some of the persons whether on the side of the plaintiffs or defendants as the case may be may not be willing to appeal at all. But on that account alone, the party wishing to appeal need not be deterred from doing so. And it is further provided that on such an appeal having been filed it should be open to the appellate court in its discretion to reverse or vary the decree in favour of all the plaintiffs or all the defendants, as the case may be, irrespective of the consideration that the other plaintiffs or defendants have not appealed.

A question arises in this connection whether even in such a case the parties who are not willing to appeal should have been impleaded as respondents to the appeal. It seems to me that it would always be better to do so to make the array of parties complete, although I confess that there is a difference of opinion 011 this point also and it has been held in some cases that this rule applies to a case where only one or some of the plaintiffs or defendants appeal without impleading the other plaintiffs or defendants as parties to the appeal while in other cases the view has been taken that this rule would have no application where the non-appealing plaintiff or defendant has not been impleaded in the appeal at all. See Haider Husain v. Md. Su-bhan Khan, AIR 1940 All 428, Girija Prasanna v. N. M. Khan, AIR 1942 Gal 257, Harbans Singh v. Ram Chandra, AIR 1942 Oudh 139 and Mukundi Ram v. Asaram, (S) AIR 1955 Pep 73 in support of the first view, and Balaram v. Kanysha Mashi, AIR 1919 Cal 410, Jitendranath Chatterjee v. Jaku Mandar, AIR 1922 Pat 4, Ambika Prasad v. Jhinak Singh, AIR 1923 All 211 and Nanak v. Ahmad Ali, AIR 1946 Lah 399 (FB) in favour of the other view. The preponderance of opinion, however, appears to be in favour of the earlier view and I would leave the matter here at that.'

It would appear, therefore, that this appeal would be saved if it could receive the benefit of Order 41 Rule 4.

5a. The question which then arises for consideration in this connection is whether the decree of the trial court which had been appealed from to the court below and which in its turn has been brought in appeal to this Court proceeds on any common ground to all the defendants in this case. Now one of the grounds, raised by the contesting defendant in the present case which could enure to the benefit of all the defendants (provided it was a good ground) was that the present suit was not maintainable because the defendant Narsinghdas bad been adjudicated insolvent by the Insolvency Court at Calcutta and that he had mentioned the name of the present plaintiff as one of his creditors in the list of creditors filed by him in that court, and it is further contended in this connection that the insolvent's property had in its entirety vested in the official assignee and that no suit could be filed against Narsinghdas or for that matter the other partners without the leave of the court.

Further there is authority for the proposition that it is not necessary that all the grounds upon which the lower court proceeds should be common to all the parties and that it is enough if it proceeds on any ground common to all the plaintiffs or defendants as the case may be. See Ram Kamal Shaha v. Ahmad Ali, ILR 30 Cal 429 and Dhuttaloor Subbayya v. P. Subbayya, ILR 30 Mad 470 (FB).

In this view of the matter, therefore, I am disposed to hold that as the decree was passed by the trial court against all the defendants the aforementioned contention having been repelled the decree proceeded on a common ground against all the defendants, and therefore it was open to one of them to appeal from the whole decree without impleading the other defendants as Parties thereto (though as I said in Padma Ram's case, ILR (1960) 10 Raj 573 : AIR 1961 Raj 72, it should always be better to implead the other defendant or defendants in order to make the array of parties complete and to avoid all further complications which may possibly arise if any non-appealing party should have died), and on such an appeal it would be within the powers of the appellate court to reverse or vary the: decree in favour of all the defendants, that is, in favour of all those who have not themselves appealed or who have not been impleaded as parties to the appeal for one reason or another. This appeal is, therefore, competent and I am not prepared to dismiss it on the preliminary point referred to above.

6. Turning then to the merits: the sole question for determination in this appeal is whether the present suit is maintainable inasmuch as the defendant Narsinghdas had been adjudicated insolvent by the Insolvency Court at Calcutta. There is no doubt that be was so adjudicated. (See the order of adjudication dated 11th January, 1950). This order clearly states that Narsinghdas Chandhak carrying on business in co-partnership with three others namely Bhairodan Mahata, Asharam Mahata and Madan Gopal Mahata under the name and style of Bhairondan Madan Gopal and thereafter serving as a clerk in the firm of B. L. Agarwal was adjudicated insolvent.

Now the courts below seem to have been under the impression, though quite wrongly, that the law under which he was declared insolvent was the Provincial Insolvency Act, 1920 (Act No. V of 1920), which it is elementary does not apply to Presidency-towns, and Calcutta was and is one of them. The law under which the defendant was declared insolvent was the Presidency-towns Insolvency Act, 1909 (Act No. III of 1909).

According to Section 17 of the latter Act, on the making of an order of adjudication the property of the insolvent wherever situate shall vest in the official assignee for being divided among his creditors and thereafter no creditor to whom the insolvent is indebted in respect of any debt provable in insolvency can have any remedy against the property of the insolvent or commence any suit or other legal proceedings, except with the leave of the court during the pendency of the insolvency proceedings. There is nothing to show on this record that Narsinghdas had got his discharge by the time the present suit was brought.

7. The question which then arises is whether the subject-matter of this suit can be said to be a debt provable in insolvency. Section 46 of the Presidency-towns Insolvency Act gives the definition of such debts. I would call attention in particular to Sub-section (3) and the explanation to this section, which read as follows:-

'(3) Save as provided by Sub-sections (1) and (2), all debts and liabilities, present or future, certain or contingent, to which the debtor is subject when he is adjudged an insolvent or to which he may become subject before his discharge by reason of any obligation incurred before the date of such adjudication, shall be deemed to be debts provable in insolvency.'

Explanation:- 'For the purposes of this section 'liability' includes any compensation for work or labour done, any obligation or possibility of an obligation to pay money or money's worth on the breach of any express or implied covenant, contract, agreement or undertaking, whether the breach does or does not occur, or is or is not likely to occur or capable of occurring before the discharge of the debtor, and generally it includes any express or implied engagement, agreement or undertaking to pay, or capable of resulting in the payment of, money or money's worth, whether the payment i.e. as respects amount, fixed or unliquidated: as respects time, present or future, certain or dependent on any contingency or contingencies as to mode of valuation, capable of being ascertained by fixed rules, or as matter of opinion.'

The language of these provisions is comprehensive and it plainly covers not only present debts or liabilities but future or contingent debts and liabilities to which the debtor may have been subject at the time of his adjudication or to which he may become subject before discharge by reason of any obligation incurred before the date of such adjudication save such debts and liabilities as are expressly provided for otherwise by Sub-sections (1) and (2) of Section 46 or Sub-section (1) of Section 52 or the debts which are not provable altogether by the general policy of the law.

Again, the expression 'liability' includes any obligation or possibility of an obligation to pay money or money's worth on the breach of any express or implied agreement or undertaking whether the breach does or does not occur, and it also includes an implied agreement or undertaking to pay or capable of resulting in the payment of money or money's worth, whether the payment may be of a fixed or unliquidated sum and whether the obligation as respects, time is present or future or certain or dependent on any contingency provided it is capable of being fairly estimated whether by fixed rules or even as a matter of opinion.

Thus, it may be safely premised as a general rule that obligations arising out of a contract are provable in insolvency and that the entire purpose underlying the insolvency jurisdiction is to give a complete discharge to the debtor from all contractual obligations to pay sums of money, whether liquidated or unliquidated, and the only right of any person under a contract with a person who is subsequently adjudged insolvent with respect to such pecuniary claims is to come in and prove his claim in the Insolvency Court.

Having regard to this state, of the law which has been entirely missed by the courts below, it clearly seems to me that the debts or liabilities of the defendant Narsinghdas arising out of the partnership business which he was carrying on in partnership with the plaintiff and defendants Nos. 4 and 5 and which was dissolved on the 18th April, 1948 (corresponding to Cget Sudi 9 Section 2005) before he was adjudicated insolvent were clearly provable in insolvency, even assuming that such liabilities were not ascertained sums of money and were unliquidated.

That being so, according to the provision contained is Section 17, the plaintiff would occupy the position of a creditor within the meaning of that section; and in respect of all such debts, his only remedy was to proceed against the property of the insolvent before the Insolvency Court, and he was under a clear disability to commence any suit or other legal proceeding against the insolvent without the leave of the insolvency court.

It may also be pointed out in this connection that before the Indian Partnership Act, 1932, came into force, if the insolvent carried on business in partnership with other persons, the partnership was not dissolved by his insolvency and the other partners in that event became entitled to institute a suit for dissolution of the partnership and for rendition of accounts outside the insolvency court.

But ever since the Partnership Act came into force, where a partner in a firm has been adjudged an insolvent, he ceases to be a partner in the firm on the date the order of adjudication is made, by virtue of Section 34 of the Partnership Act. Again, except where there is a contract to the contrary, such firm is also dissolved when one of the partners thereof is adjudicated an insolvent (see Section 42 of the Partnership Act). The position, therefore, is that on the adjudication of a partner as insolvent, his share in the partnership business along with his separate property vests in the insolvency court.

Once this vesting takes place, the provisions of Section 17 of the 'Presidency-towns Insolvency Act come into play, and no creditor with respect to a debt provable in insolvency can proceed against the insolvent except by recourse to the insolvency: court, nor can he file any independent suit for the recovery of his debts except with the leave of the insolvency Court. The position, therefore, boils down to this that the present suit against Narsinghdas or for that matter against his sons was altogether incompetent. I hold accordingly.

8. The only other question which then arises is whether the suit against the other defendants would also be incompetent. There can be no doubt, to my mind, that to a suit for rendition of accounts between the partners of a firm, all the partners are necessary parties, and it would be impossible to do any accounting between them in the, absence of any one of the partners. It would, therefore, follow that the suit against defendants Nos. 4 and 5 would be equally incompetent as against defendants Nos. 1 to 3.

9. The result is that tin's appeal succeeds andthe judgments and decrees of the courts below areset aside and the suit is dismissed, but having regard to all the circumstances of the case, I wouldleave the parties to bear their own costs throughout.


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