Skip to content


Mrs. P. Subbiah Alias Dhanalakshmi Subbiah Vs. Venkatathiru Muthuraja and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai High Court
Decided On
Reported in(1975)1MLJ311
AppellantMrs. P. Subbiah Alias Dhanalakshmi Subbiah
RespondentVenkatathiru Muthuraja and ors.
Cases ReferredKrishnanda Rao v. M.V. Ramanjeneyulu
Excerpt:
- .....it would be a misnomer to call the judgment-debtor and the other persons who constituted the firm as partners of the firm. the firm itself is not in existence, the same having been dissolved and there is no question of the judgment-debtor and others remaining as partners. they are only erstwhile partners of a dissolved firm. the abovesaid rule contemplates an order charging the interest of a partner and the other partners having opportunity to redeem such interest charged. as already seen, the other partners are entitled to notice of an application to charge the interest of a particular partner. that can be so only when there is a partnership and not after it is dissolved.4. the learned counsel for the judgment-debtor contends that even though the partnership had been dissolved,.....
Judgment:
ORDER

N.S. Ramaswami, J.

1. The question in this Civil Miscellaneous Second Appeal is whether when the judgment-debtor is a person who was a partner of a firm which has since been dissolved, the decree-holder can proceed against the interests of that person (judgment-debtor) in the dissolved firm only under Order 21, Rule 49, Code of Civil Procedure. The appellant before me in this Civil Miscellaneous Second Appeal is the judgment-debtor in a decree obtained by the first respondent herein. The decree-holder attached the right, title and interest of the judgment-debtor in the dissolved firm by name, General Engineering Foundry Industrial Estate, Tiruchirapalli. The said property (right, title and interest of the judgment-debtor in the defunct firm) was sold in Court-auction after which the judgment-debtor filed an application under Order 21, Rule 90, Code of Civil Procedure, for settling aside the said sale. The executing Court while dealing with the above-said application, to set aside the sale, dismissed the execution petition itself holding that it was not maintainable.

2. The view of the executing Court is that the decree-holder ought to have adopted the special procedure provided under Order 21, Rule 49, Code of Civil Procedure in proceeding against the right, title and interest of the judgment-debtor in General Engineering Foundry, and that the said procedure having not been followed, the execution petition resulting in the sale was not maintainable. The said execution petition came to be dismissed. On appeal by the decree-holder, the learned Additional District Judge, Tiruchirapalli reversed the finding of the executing Court and held that the special procedure prescribed under Order 21, Rule 49, Code of Civil Procedure, is not applicable to this case inasmuch as the partnership, General Engineering Foundry, had been dissolved even before the decree-holder took out execution. The view of the Appellate Judge is that the special procedure under Order 21, Rule 49 is applicable only when the partnership is in existence and not after it stood dissolved. He based his view on a decision of this Court, in Rangayya v. Nagapottu Rao : AIR1946Mad176 . It is the correctness of this view that is questioned by the judgment-debtor in this Civil Miscellaneous Second Appeal.

Order 21, Rule 49, Code of Civil Procedure, is as follows:

(1) 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

(2) The Court may, on the application of the holder of a decree against a partner, make an order charging the interest of such partner in the partnership property and profits with payment of the amount due under the decree, and may, by the same or a subsequent order, appoint a Receiver of the share of such partner in the profits (whether already declared or accruing) and of any other money which may be coming to him in respect of the partnerhip, and direct accounts and inquiries and make an order for the sale of such interest or other orders as might have been directed or made if a charge had been made in favour of the decree-holder by such partner or as the circumstances of the . case may require.

(3) The other partner or partners shall be at liberty at any time to redeem the interest charged or , in the case of a sale being directed, to purchase the same.

(4) Every application for an order under Sub-rule (2) shall be served on the judgment-debtor and on his partners or such of them as are within India.

(5) Every application made by any partner of the judgment-debtor under Sub-rule (3) shall be served on the decree-holder and on the judgment-debtor, and on such of the other partners as do not join in the application and as are within India.

(6) Service under Sub-rule (4) or Sub-rule (5) shall be deemed to be service on all the partners, and all orders made on such applications shall be similarly served.

3. In the present case, the above procedure prescribed under Rule 49 has not been followed. As already seen, the right, title and interest of the judgment-debtor in the dissolved firm had been attached and sold. That is under the ordinary procedure for attachment and sale available to a decree-holder and not under the special procedure under Rule 49. It cannot be disputed that the application made by the decree-holder was not one under Sub-rule (2) of Rule 49 for an order charging the interest of the judgment-debtor and further it is clear that no notice of such an application had been served on the other partners of the firm as contemplated by sub rule (4). No opportunity to the other partners to redeem the interests of the judgment-debtor had been given. But it is quite obvious from the very language of Rule 49 that the special procedure prescribed therein is applicable only to a partnership which is in existence. Admittedly in the present case, the firm, General Engineering Foundry had been dissolved very much prior to the order of attachment of the right, title and interest of the judgment-debtor. After the dissolution of the partnership it would be a misnomer to call the judgment-debtor and the other persons who constituted the firm as partners of the firm. The firm itself is not in existence, the same having been dissolved and there is no question of the judgment-debtor and others remaining as partners. They are only erstwhile partners of a dissolved firm. The abovesaid rule contemplates an order charging the interest of a partner and the other partners having opportunity to redeem such interest charged. As already seen, the other partners are entitled to notice of an application to charge the interest of a particular partner. That can be so only when there is a partnership and not after it is dissolved.

4. The learned Counsel for the judgment-debtor contends that even though the partnership had been dissolved, still the accounts had not been settled and till a final decree in the suit for dissolution and taking of accounts is passed, no person who was a partner of the firm can claim title to any particular property which originally belonged to the firm and that therefore till accounts are settled between the erstwhile partners, the decree-holder has to adopt the special procedure prescribed under Rule 49. This contention is not tenable. It is true that till the accounts are settled between the erstwhile partners, there is no question of any one of them claiming exclusive title to any property which originally belonged to the firm. Even so the question is whether the special procedure laid down under Rule 49 has any application to a dissolved partnership. As indicated earlier, the language of the rule is quite plain and that makes it clear that the rule applies only to a partnership which is in existence and not to one which has already been dissolved.

5. In the present case, it has to be noted that the decree-holder has attached not any individual item of property either movable or immovable. He has only attached the right, title and interest of the judgment-debtor in the dissolved firm. Even if any particular item of property is attached for the individual debt of an erstwhile partner, I think, it cannot be contended that Rule 49 is a bar. In such a situation, the remedy of the other erstwhile partners of the dissolved firm would be only to file a claim under Order 21, Rule 58, Code of Civil Procedure. But in the present case the decree-holder has not proceeded against any particular item of property. He has only attached the right, title and interest of the judgment-debtor in the dissolved firm. I am clearly of the view that there can be no valid objection to such an attachment and the contention on behalf of the judgment-debtor that the special procedure laid down under Rule 49 of Order 21 should have been followed is wholly without merit.

6. In Rangayya v. Nagapoothu Rao A.I.R. 1946 Mad. 176 the facts were that the partnership stood dissolved on the death of one of the two partners. There was a money decree against the legal representatives of the deceased partner as against his assets in their hand. The debt was that of the deceased person in his individual capacity and not as partner of the firm. In execution of that decree, the decree-holder had invoked Order 21, Rule 49 and ultimately the executing Court directed the surviving partner (who was then carrying on. the business of the dissolved firm as a proprietary concern) to deposit in Court the amount claimed in the execution petition in satisfaction of the charge created under the abovesaid rule. When the matter came to this Court by way of a revision petition filed by the surviving partner, his contention was that the partnership having been dissolved on the death of one of the partners (the debtor), Order 21, Rule 49 has no application and that the proceedings taken by the executing Court under that rule are wholly invalid. Yahya Ali, J., had taken the same view which I am now taking and held that Order 21, Rule 49 has no application to a dissolved partnership.

7. However, it should not be understood that I am in agreement with all the observations of the learned Judge regarding the interpretation of Rule 49. The learned judge has stated that the special procedure laid down in Rule 49 is applicable only in respect of a debt against the partnership firm itself or against a partner as such. The learned Judge observes:

But Rule 49 of Order 21 is in the nature of a special rule covering a special class of cases, viz., decrees passed against firms or against partners in the firm as such. With regard to such decrees it is open to the Court to execute the decree in the special manner prescribed by the rule.

With great respect to the learned Judge, the correct position is quite the reverse. The special procedure laid down under that rule is not in respect of a debt against the firm or against a partner as such, but in respect of a debt against the partner in his individual capacity. Sub-rule (1) as already seen, 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 quite obvious that in respect of decrees passed against the firm or against the partners in the firm as such, the special procedure has no application. If the decree is against the firm, the decree-holder can attach any item of property whether movable or immovable belonging to the firm, and no partner of the firm can have any valid objection against such an attachment, for, each and every partner of the firm would be equally liable for a decree against the firm itself. Even if the decree is against a partner, provided it is against him in his capacity as a partner, any item, of property of the firm can be proceeded against and the other partners of the firm can have no valid objection. If the debt incurred by a partner is in his capacity as a partner, the other partners to the firm are equally liable for the said debt. That is why they cannot have any valid objection in the decree-holder proceeding against any property of the firm under a decree against the partner as such. Only if the decree is against a partner in his individual capacity, the decree-holder is not entitled to attach the property of the firm except in the manner provided under Sub-rules (2); to (6) of the Rule 49. The position is summarised correctly by Mulla in his Thirteenth Edition of the Code of Civil Procedure, Volume II at page 1073 as follows:

Sub-rule (1) provides that it is only when a decree is obtained against a firm or a partner as such that it can be executed against partnership property. Where the decree is against the partner in his individual capacity it is the interests of such partner that can be attached and that must be done in the manner prescribed in Sub-rule 2 and the subsequent sub-rules.

But I am in entire agreement with the learned Judge in his view that Rule 49, has no application to a dissolved partnership I have given my reasons in support of such a view earlier.

8. The learned Counsel for the judgment-debtor referred to Ajudhia Pershad Ram v. Sham Sunder A.I.R. 1947 Lah. 13 Krishnanda Rao v. M.V. Ramanjeneyulu (1964) 1 A.W.R. 300 in support of his argument, but none of these decisions has any application to the present question. In the Lahore case all that has been held is that the interests of a person in a partnership firm is movable property notwithstanding that at the time when it is charged or sold, the partnership assets included immovable property. That has nothing to do with the present question. In the Andhra Case, the observation relied on by the learned Counsel is at page 306. It is stated there that it is not legally possible for the creditor of an individual partner to seize upon a particular item of immovable property belonging to the partnership and claim it to belong to his debtor. It does not go in any way counter to the view that I am taking regarding the question whether Order 21, Rule 49, Code of Civil Procedure is applicable to a dissolved firm, It should be noted that in the case before the Andhra Pradesh High Court, the firm was in existence and it was not a dissolved firm. As I have indicated, even in a case of dissolved firm, till accounts are settled, the erstwhile partner may not be entitled to any particular item of property but in such a case, if the decree-holder attaches any property of the dissolved firm for a decree against an erstwhile partner in his individual capacity, the remedy of the other erstwhile partners would be only to make a claim.

9. The Civil Miscellaneous Second Appeal fails and the same is dismissed with costs. No leave.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //