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Preethi Creations Represented by Partner P. Ramadas Vs. T.A.P. Enterprises Represented by Partner C.N. Basha - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai High Court
Decided On
Reported in(1987)1MLJ353
AppellantPreethi Creations Represented by Partner P. Ramadas
RespondentT.A.P. Enterprises Represented by Partner C.N. Basha
Cases ReferredShanthilal v. Pranlal A.I.R.
Excerpt:
- - the respondent has also undertaken to pay the abovesaid balance consideration within one week from 14th march, 1984. the respondent failed to pay the said balance. in the said case despite notice in the interlocutory application the respondent failed to enter appearance. (1) where, at any stage of a suit, the court is satisfied, by affidavit or otherwise, that the defendant, with intent to obstruct or delay the execution of any decree that may be passed against him- (a) is about to dispose of the whole or any part of his property, or: (c) against any person who has been individually served as a partner with a summons and has failed to appear;.....of decrees passed against a firm is governed by order 21, rule 50, c.p.c. according to the said rule a decree against the firm can be executed against the property of a partner, if he had appeared in the suit in his own name representing the partnership under rule 6 or rule 7 of order 30, or in cases where he admitted to be a partner of the firm or he had been adjudged as a partner of the firm. hence the above said rules in the code of civil procedure contain a specific provision enabling a decree holder against a firm to attach and bring to sale the individual property of the partners in execution of a decree.11. the provision regarding the attachment before judgment under order 38, rule 5 is an extraordinary one by which the plaintiff can secure the property of the defendant if the.....
Judgment:
ORDER

Sengottuvelan, J.

1. This is an application by the plaintiff for attachment before judgment of the properties of one of the partners of the defendant firm under Order 38, Rule 5, Civil Procedure Code, read with Order 14, Rule 8 of the Original Side Rules.

2. The facts of the case are briefly as follows : The applicant-plaintiff, viz., a partnership-firm, filed the above suit for recovering a sum of Rs. 1,00,000 due from the respondent/defendant which is also a partnership firm. The claim arises out of an agreement under which the respondent agreed to pay Rs. 13,50,000 as lease consideration to the applicant for taking on lease the exploitation rights of a Tamil Talkie picture all over the world. At the time of the release of the picture the respondent was not able to pay the entire consideration and had to leave an arrears of Rs. 1,35,000. The applicant refused to deliver any print for release till the payment of entire consideration. The respondent assured that he will withhold the release of the picture in the districts of Madurai and Ramanathapuram as security for the balance of consideration and also undertook not to take delivery of the prints, kept ready for release in the districts of Madurai and Ramanathapuram from Gemini Colour Laboratory without paying the balance consideration. The respondent has also undertaken to pay the abovesaid balance consideration within one week from 14th March, 1984. The respondent failed to pay the said balance. A sum of Rs. 35,000 was paid out of adjustment and the balance of Rs. 1,00,000 is due and hence the above suit is filed for the recovery of the same.

3. The respondent has purchased the exploitation rights of another Tamil Talkie picture from a third party and the applicant herein filed Application No. 2159 of 1984 to attach such rights, where initially an injunction was Ordered on 22nd November, 1984. Despite such Orders the respondent cleverly manipulated and fabricated a false agreement and released the picture totally defeating the rights of the applicant.

4.The respondent has virtually violated his undertaking not to release the picture in Madurai and Ramanathapuram districts by releasing the same in Sivam Theatre, Madurai, surreptitiously through third parties utilising prints delivered for exploitation in other areas and thus committed an offence of infringement of copyright, for which the applicant has filed a separate suit C.S. No. 756 of 1984 on the file of this Court. In the said case despite notice in the interlocutory application the respondent failed to enter appearance. In the present case though the respondent had initially entered appearance through counsel, subsequently the said counsel when sought to be served with notice in the application, refused to receive it stating that he had no instructions from the party on this matter. Thus, the respondent has been exhibiting fraudulent intention and a total indifference to the lawful claim of the applicant.

5. The respondent is heavily involved in debts and he has to pay huge amounts to Ganapathy Vel Murugan Combines and Gemini Colour Laboratory, apart from other sundry creditors.

6. The respondent's partner is possessed of only one property, viz., House, ground and premises bearing No. 15, Malony Road, T. Nagar, Madras-17, which is also encumbered. The property will be worth about Rs. 15,00,000. The respondent with intent to defeat and delay the claim of the crditors, is attempting to alienate the said property and to secrete the proceeds therefrom beyond the reach of the creditors. If the respondent is allowed to do so the applicant will be left with no means of realising the fruits of the decree. In the interest of justice and to safeguard the rights of the applicant, the abovesaid property will have to be attached before judgment.

7. Mr. V.R. Biksheswaran, Learned Counsel for the respondent, took notice of the application and contended that this application is not maintainable for the following reasons:

(1) An Order of attachment before judgment can be passed only in respect of the properties of the respondent,, which is the partnership firm;

(2) the property sought to be attached is an individual property of a partner of the firm and the same cannot be attached before judgment in pursuance of a debt due from the partnership firm.

8. Orders 38, Rule 5 enables the Court to call upon the defendant to furnish security and in default Order attachment of the property of the defendant before judgment. The said provision is reproduced below:

(1) Where, at any stage of a suit, the Court is satisfied, by affidavit or otherwise, that the defendant, with intent to obstruct or delay the execution of any decree that may be passed against him-

(a) is about to dispose of the whole or any part of his property, or:

(b) is about to remove the whole or part of his property from the local limits of the jurisdiction of the Court,

the Court may direct the defendant, within a time to be fixed by it, either to furnish security, in such sum as may be specified in the Order, to produce and place at the disposal of the Court, when required, the said property or the value of the same, or such portion thereof as may be sufficient to satisfy the decree, or to appear and show cause why he should not furnish security.

(2) The plaintiff shall, unless the Court otherwise directs, specify the property required to be attached and the estimated value thereof.

(3) The Court may also in the Order direct the conditional attachment of the whole or any portion of the property so specified.

The wording of the above Rule indicates, that an Order to be passed under this Rule can only be with reference to the property of the defendant. This can be inferred from the Sub-clauses (a) and (b) of Sub-rule (1), of Rule 5, where the phrase 'his property' occurs. Relying on this Rule Mr. V.R. Biksheswaran, Learned Counsel, contends that an Order under Order 38, Rule 5, C.P.C., can be passed only with reference to the property of the defendant and in this case the defendant is a partnership firm and as such an Order of attachment before judgment can only be passed in I respect of the properties of the firm which is the defendant in this case. In other words, the contention is that an Order of attachment before judgment cannot be made in respect of the individual properties of the partner of a firm since the partner has not been added as a party to the suit in his individual capacity.

9. Mr. K. Ravi, Learned Counsel for the applicant, contends that a partner is always liable for the debts of the partnership firm and in view of this liability the individual property of the partner of a firm can also be attached before judgment. The proposition that every partner is liable to answer the liabilities of the partnership firm is an obvious proposition. But the question whether the property of a partner can be attached before judgment in a suit where the partnership alone is the defendant is to be considered in this application. On behalf of the applicant reliance is placed upon Order 21, Rule 50, C.P.C., which provides for execution of a decree against the firm. The said Rule is as follows:

(1) Where a decree has been paaoad against a firm, execution may be granted-

(a) against any property of the partnership;

(b) against any person who has appeared in his own name under Rule 7 or Rule 7 of Order 30 or who has admitted on the pleadings that he is, or who has been adjudged to he a partner;

(c) against any person who has been individually served as a partner with a summons and has failed to appear;

Provided that nothing in this sub-rule shall be deemed to limit or otherwise affect the provisions of Section 30 of the Indian Partnership Act, 1932 (9 of 1932).

(2) 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), Clause (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.

(3) Where the liability of any person has been tried and determined under Sub-rule (2), the Order made thereon shall have the same force and be subject to the same conditions as to appeal or otherwise as if it were a decree.

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

According to Rule 50(1)(a), of Order 21 a decree against the partnership can be executed straightway against the partnership property. According to Rule 50(1)(b), in cases where the defendant had appeared in his own name under Rule 6 or Rule 7 of Order 30 or a person who has admitted on the pleadings that he is or he had been found to be a partner of the partnership firm, his property can be proceeded against for a decree against the partnership firm. In this case the sole defendant is the partnership firm T.A.P. Enterprises, represented by its Partner C.N. Basha. The said C.N. Basha is not denying that he is the partner of the firm. Hence by virtue of Order 20, Rule 50, C.P.C., if a decree is obtained against the firm the property of C.N. Basha can be proceeded against. But the question is whether the same principle can be applied to an attachment before judgment.

10. Just as there are provisions in the Code of Civil Procedure for proceeding against the property of the partners for realising the decree against the partnership firm, there is no provision under Order 38, Rule 5, C.P.C., for passing an Order of conditional attachment of the property of the partner for the debt due from the partnership firm. It is contended that in view of the fact that in cases where attachment before judgment is made no fresh attachment need be made in respect of the same property after the passing of the decree and the same attachment may become attachment for purpose of execution of the decree, the principle applicable to the attachment in the course of the execution of the decree applies in all force to attachment before judgment and hence in view of Order 21, Rule 50, C.P.C., the individual property of a partner can be attached before judgment in a suit against the partnership. In support of this contention the case reported in Bharat Survodays Mills v. Mohatta Bros. : AIR1969Guj178 , is cited. In that decision it has been observed as follows:

A suit by or in the name of a firm is thus really a suit by or in the name of all its partners. See Rodriquez v. Speyer Brothers 1919 A.C. 59 and Puroushotham & Co. v. Manilal and Sons : [1961]1SCR982 .

So also a suit against the firm is really a suit against all the partners of the firm. Their Lordships quoted a passage of Lindley, L.J., in Western National Bank of City of New York v. Perez, Trisanna and Co. 1891 Q.B. 304, as under:

When a firm's name is used, it is only a convenient method of denoting those persons who compose the firm at the time, when that name is used, and a plaintiff who sues partners in the name of their firm in truth sues them individually, just as such as if he had set out all their names.

The decree passed in the suit, though in form against the firm, is in effect decree against all the partners.... From this subsequent decision by their Lordships of the Supreme Court it appears to be a settled position that such suits by or against a firm under Order 30 are in reality suits by partners or against the partners at the time when the cause of action accrued. There is no question of a deemed fiction, but in reality the suit is by all the partners or against all the partners, even though firm name is used as a convenient method of denoting those persons who compose the firm at the time when the cause of action accrued. In such cases even though the plaint in the cause title mentions name of the firm as the plaintiff, the suit is really by all the partners individually, just as much as if they had all of them set out their names in the plaint.

The above observation of the Gujarat High Court is only a reiteration of the principle laid down in Order 30, C.P.C., which relates to the institution of suits by or against the partnership firms. But the execution of decrees passed against a firm is governed by Order 21, Rule 50, C.P.C. According to the said Rule a decree against the firm can be executed against the property of a partner, if he had appeared in the suit in his own name representing the partnership under Rule 6 or Rule 7 of Order 30, or in cases where he admitted to be a partner of the firm or he had been adjudged as a partner of the firm. Hence the above said Rules in the Code of Civil Procedure contain a specific provision enabling a decree holder against a firm to attach and bring to sale the individual property of the partners in execution of a decree.

11. The provision regarding the attachment before judgment under Order 38, Rule 5 is an extraordinary one by which the plaintiff can secure the property of the defendant if the conditions laid down in that section are present. The said provision cannot be applied to the individual property of a partner in a suit against the partnership firm. The proposition had been considered by the Judicial Commissioner of Kutch in the case reported in Shanthilal v. Pranlal A.I.R. 1952 Kut 47, where the following observation is found:

Under Order 38, Rule 5 a plaintiff can ask for attachment before judgment of the property of his defendant and not of the property of a partnership of which the defendant is a partner as the partnership property cannot be called 'his property' within the meaning of that expression used in Clause (a) and (b) of Sub-rule (1) of Rule 5, Order 38.

12. In view of the fact that the provision under Order 38, Rule 5, C.P.C., is an extraordinary provision the same will have to be strictly followed or else it will result in injury to parties to the litigation. It is not possible to construe the words 'his property' occurring in Sub-clauses (a) and (b) of Sub-rule (1) of Rule 5, Order 38, as the property of an individual partner in a suit in which the partnership firm alone figures as the defendant. Under the circumstances the contention of the respondent that in a suit against the partnership firm an Order of attachment before judgment under Order 38, Rule 5 cannot be passed in respect of the individual property of a partner merits acceptance. The case would be different if the partner is also added as a party defendant to the suit in view of the fact that he is liable for the partnership debt. In this case the partner has not been individually made as a party defendant. Under the circumstances the only conclusion that can be arrived at is that the applicant is not entitled to an Order of conditional attachment under Order 32, Rule 5, C.P.C., in respect of the individual property of a partner.

13. In the result the application for attachment before judgment is dismissed. However, there will be no Order as to costs.


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