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V.N. Muthusamy Iyer, Managing Partner of V.N. Sundaram Ayyar and Brothers Vs. V.S. Narasimha Iyer and ors. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai
Decided On
Reported in(1934)66MLJ656
AppellantV.N. Muthusamy Iyer, Managing Partner of V.N. Sundaram Ayyar and Brothers
RespondentV.S. Narasimha Iyer and ors.
Cases ReferredGanesha Row v. Tuljaram Row In
Excerpt:
- - in the later decision, it is clearly stated that a decree in the name of a firm is a decree passed generally in favour of all the partners and that any one or more of the partners can take out execution for the benefit of all the partners under order 21, rule 15, civil procedure code. the distinction between the right under the general law and a right open to one of the joint decree-holders according to the provisions of the civil procedure code has been well pointed out in a decision of a division bench of this high court reported in mahomed silar sahib v. these observations receive additional strength from the principle laid down clearly by the privy council in ganesha row v......procedure code.3. now the question is, whether the aforesaid narasimha ayyar who is one of the joint decree-holders can give a valid discharge in respect of the whole decree by any payment received by him alone. it may be conceded that he fills two capacities, viz., that of a partner in a firm and that of a joint decree-holder. in the latter capacity, what are his rights? a payment towards a decree in order to he valid must be made to the decree-holder, if made out of court; vide order 21, rule 1, clause (b), civil procedure code. the term 'decree-holder' therein used in singular includes also the plural 'decree-holders'. if there are two or more decree-holders the payment must necessarily be made to all of them according to this rule. having regard to the terms of rule 15, one of.....
Judgment:

Sundaram Chetty, J.

1. This is an appeal against the order of the District Judge of Salem directing satisfaction of the decree to be recorded to the extent of Rs. 2,100. The decree was obtained in the name of a firm styled as V.N. Sundaram Ayyar & Brothers represented by the managing partner V.N. Muthuswami Ayyar. The suit itself was filed in the name of the firm represented by the aforesaid managing partner. Subsequent to the decree another brother of the family received a sum of Re. 2,100 in full satisfaction of the decree and put in a memorandum requesting the Court to record satisfaction. The firm consists of the brothers of a joint Hindu family, and as such, the person who received the payment and who applied to the Court to enter up satisfaction is not only one of the members of the joint family, but also one of the partners of the firm. This petition was opposed by Muthuswami Ayyar, who filed this suit as the managing partner of the firm. The question is whether by reason of the payment of the decree amount to V. S. Narasimha Ayyar, one of the partners of the firm, a valid discharge of the decree debt has been given so as to bind the other partners of the firm. The learned District Judge seems to have taken the decision reported in Ghulam Muhammad v. Sohna Mal A.I.R. 1927 Lah. 385 as authority for the position that Narasimha Ayyar can give a valid discharge when the decree is in favour of the firm. The correctness of that view is now challenged in this appeal.

2. In the first place, we have to see what is the effect of the decree given in favour of the firm. There is abundant authority for holding, that the description of the decree-holder as the firm tantamounts to a decree being given in the names of these who are partners of the firm. That description is only a cotnpendious way of mentioning all those who are really the partners of that firm. Vide Administrator-General v. Sultanalli Sushtary (1926) 29 Bom. L.R. 396, Rani Prosad Chimonlal v. Anundji & Co. I.L.R. (1921) Cal. 524 and Brojo Lal Saha Banikya v. Budh Nath Pyarilal & Co. I.L.R. (1927) Cal. 551 . The mere fact that the decree stands in the name of the firm does 'not preclude us from holding that it is virtually a decree in favour of all the partners jointly. A later decision of the Lahore High Court, Abdul Humid v. Dhanpat Mal A.I.R. 1931 Lah. 507, is in conflict with the view expressed in the decision in Ghulam Muhammad v. Sohna Mal A.I.R. 1927 Lah. 385, (which was followed by the Lower Court in this case) but no reference was made to 'the earlier decision itself. Both those decisions, are decisions of single Judges. In the later decision, it is clearly stated that a decree in the name of a firm is a decree passed generally in favour of all the partners and that any one or more of the partners can take out execution for the benefit of all the partners under Order 21, Rule 15, Civil Procedure Code. It follows that though the decree stands in the name of the firm, it must be treated as a decree in favour of all the partners jointly even for the purposes of Order 21, Rule 15, Civil Procedure Code.

3. Now the question is, whether the aforesaid Narasimha Ayyar who is one of the joint decree-holders can give a valid discharge in respect of the whole decree by any payment received by him alone. It may be conceded that he fills two capacities, viz., that of a partner in a firm and that of a joint decree-holder. In the latter capacity, what are his rights? A payment towards a decree in order to he valid must be made to the decree-holder, if made out of Court; vide Order 21, Rule 1, Clause (b), Civil Procedure Code. The term 'Decree-holder' therein used in singular includes also the plural 'decree-holders'. If there are two or more decree-holders the payment must necessarily be made to all of them according to this rule. Having regard to the terms of Rule 15, one of the joint decree-holders cannot as a matter of right execute the whole decree without reference to the other decree-holders. It is in the discretion of the Court to allow one of such decree-holders to execute the whole decree and when so doing the Court should make such orders as are necessary for protecting the interests of the persons who have not joined in the application. If one of two or more joint decree-holders takes it upon himself to certify satisfaction of the whole decree, then the Court can make no provision for safeguarding the interests of the other decree-holder or decree-holders as required by Order 21, Rule 15, Civil Procedure Code. If satisfaction of the whole decree should be entered on the report of one of the joint decree-holders alone, it would amount to a violation of the provisions of Rule 15 of Order 21. This is the view expressed in a decision of the Allahabad High Court reported in Moti Ram v. Hannu Prasad I.L.R. (1904) All. 334.

4. An attempt has been made by the learned Advocate for the respondent to show that under Order 30, Rule 1, Clause (2), it would be Open to any one of the partners though they are joint decree-holders to certify satisfaction of the whole decree so as to bind the others. Rule 1 obviously deals with the form in which a suit by or against a firm can be laid. Any two or more persons claiming as partners may sue in the name of the firm. When the suit is so filed, all that Sub-clause (2) says is that as to any pleading or other document required by or under this Code to be signed, verified or certified by the plaintiff, it would be sufficient if such pleading or other document is signed, verified or certified, by any one of the partners. This rule has no reference to a decree passed in the suit or to any proceedings in execution of the decree. We are not convinced that there is anything in Rule 1 of Order 30, Civil Procedure Code, which would take away the effect of the provisions contained in Rules 1 and 15 of Order 21, Civil Procedure Code. We have no doubt that one of the joint decree-holders though they are partners cannot give a valid discharge by receiving the decree amount out of Court without the concurrence of the other decree-holders. A payment to one of them may under the general law relating to partnership be valid and binding on the firm, but that circumstance is not enough to validate the payment made to one of them as against the other joint decree-holders, according to the principle of the decision of the Privy Council reported in Ganesha Row v. Tuljaram Row though the particular provision of the Civil Procedure Code which their Lordships had to consider was Rule 6 of Order 32, Civil Procedure Code. It is observed at p. 303 as follows:

The Courts in India seem to think that because Rajaram was a party to the suit of 1886 and was also guardian ad litem for his minor son, who was a member of the joint family Whom Rajaram was representing, it was open to him to enter into the compromise in his personal capacity, and as it was a bona fide settlement of a disputed claim, it became binding on the minor by virtue of his having acted as the managing member of the family But they consider it to be clear that when he himself is the next friend or guardian of the minor, his powers are controlled by the provisions of the law and he cannot do any act in his capacity of father or managing member which he is debarred from doing as next friend or guardian without leave of the Court. To hold otherwise would be to defeat the object of the enactment.

5. After such a clear pronouncement by the Privy Council, the fact that Narasimha Ayyar happened to be one of the partners in the present case does not help to make the payment to him of the decree amount a valid discharge binding on the other decree-holders. The distinction between the right under the general law and a right open to one of the joint decree-holders according to the provisions of the Civil Procedure Code has been well pointed out in a decision of a Division Bench of this High Court reported in Mahomed Silar Sahib v. Nabi Khan Sahib : (1916)31MLJ93 . Sadasiva Aiyar, J. observes as follows:

The right of two out of three partners to receive on behalf of the partnership a partnership debt which has not merged into a decree so as to bind the third partner has no bearing on the decision of the question whether when the three partners have become joint decree-holders (and are not merely joint private creditors) two of them as such decree-holders can receive the joint decree debt so as to release the judgment-debtor from liability in execution for even a portion of the decree-debt....The status as such agent must either appear expressly in the decree or should be expressly created after the passing of the decree and cannot merely be inferred from the position of the payee as managing member of the joint Hindu family of the decree-holders or as one of several partners-decree-holders.

6. We are in entire agreement with these observations. The view taken by the Allahabad High Court in Lachman Das v. Chaturbhuj Das I.L.R. (1905) All. 252 is also the same. These observations receive additional strength from the principle laid down clearly by the Privy Council in Ganesha Row v. Tuljaram Row . The principle of that decision was also followed by a later decision of this High Court reported in Letchmana Chetty v. Subbiah Chetty I.L.R. (1924) Mad. 920 : : (1924)47MLJ389 . The decision in Mahomed Silar Sahib v. Nabi Khan Sahib : (1916)31MLJ93 was also followed in a later decision in Pitchakkuttiya Pillai v. Doraiswami Mooppanar : AIR1925Mad230 . That is the decision of a single Judge. At page 502, that learned Judge says, that the law on the subject is clear, that payment to one of several joint decree-holders will not be satisfaction of the decree even in part, unless (1) the payee is an agent of the others entitled in law to receive the whole amount on their behalf, or (2) the distinct shares of each joint decree-holder were determined and known. For this proposition, the decision in Mahomed Silar Sahib v. Nabi Khan Sahib : (1916)31MLJ93 is quoted as authority. Though the above observations appear to be somewhat ambiguous and may lead to an inference that it is enough if the payee is an agent of the others according to the general law, still it must be taken in view of the fact that the decision in Mahomed Silar Sahib v. Nabi Khan Sahib : (1916)31MLJ93 is relied on as the, authority, that the agency under the general law is not enough, but it must be a special agency created subsequent to the decree for the purpose of receiving the decree amount on behalf of all or any agency expressly declared in the decree itself. That seems to be the correct view point, if regard be had to the principle laid down in the Privy Council decision. It is unnecessary for us to refer to certain decisions quoted in the course of the arguments as those decisions were given before the pronouncement of the Privy Council in Ganesha Row v. Tuljaram Row In the present case, the validity or otherwise of the payment made to Narasimha Ayyar is to be judged in the light of the provisions of the Civil Procedure Code, and not under the general law relating to partnership.

7. That being so, we have to hold that the payment to one only of the six joint decree-holders is not a valid discharge of the decree debt. For these reasons, we set aside the order of the Lower Court and dismiss I.A. No. 126 of 1927 in O.S. No. 31 of 1925. The appellant's costs throughout will be paid by the respondents.


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