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Punjab National Bank Vs. Balikram Kissenchand and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata
Decided On
Reported inAIR1940Cal225
AppellantPunjab National Bank
RespondentBalikram Kissenchand and ors.
Cases ReferredOfficial Assignee of Madras v. Official Assignee of Rangoon
Excerpt:
- .....for leave to execute the decree against beharilal jhamb on the footing that he is a partner of the firm. beharilal opposes the application on various grounds. when the matter came up for hearing two preliminary objections were taken on his behalf as to the maintainability of the application. first it was contended that the application is barred by the principle of res judicata by reason of a previous decision of this court in its insolvency jurisdiction and that it is also barred by reason of that decision being a judgment in rem. the second objection is raised in the following manner. the suit out of which the application arises was instituted in accord-dance with the provisions laid down in order 30, civil p.c., against balikram kissenchand in its firm name. belying on the decision of.....
Judgment:
ORDER

Sen, J.

1. This is an application by the Punjab National Bank which has obtained a decree against a firm Balikram Kissen chand for leave to execute the decree against Beharilal Jhamb on the footing that he is a partner of the firm. Beharilal opposes the application on various grounds. When the matter came up for hearing two preliminary objections were taken on his behalf as to the maintainability of the application. First it was contended that the application is barred by the principle of res judicata by reason of a previous decision of this Court in its insolvency jurisdiction and that it is also barred by reason of that decision being a judgment in rem. The second objection is raised in the following manner. The suit out of which the application arises was instituted in accord-dance with the provisions laid down in Order 30, Civil P.C., against Balikram Kissenchand in its firm name. Belying on the decision of this Court in Lalchand Anonmal v. M.C. Boid & Co. : AIR1934Cal810 and In re Gobindlal Mohata (1935) 39 CWN 275 it is pointed out that the procedure laid down in Order 30, Civil P.C., applies only to a contractual partnership and has no application to a Hindu joint family business. Then it is contended that as Balikram Kissenchand is not a contractual partnership but a Hindu joint family business, Beharilal, even if he be a member of this joint family firm, cannot be proceeded against in execution as if he were a partner of a contractual firm.

2. I shall deal with the second objection first. In order to succeed, the respondent must establish that Balikram Kissenchand is not a contractual partnership. If this fact has to be decided, after going into evidence then the objection cannot be disposed of as a preliminary one. On behalf of Behari Lal, it is pointed out that in a document dated 2nd May 1933 which is annexure B to the affidavit in opposition it is stated that Balikram Kissenchand is a Hindu joint family business and it is contended that the Punjab National Bank is bound by this statement inasmuch as it was a party to the document. In my opinion this is not a correct view. The document relied upon is an agreement to which several persons including the Punjab National Bank were parties. By this agreement certain claims and matters between the parties were settled. In that document Rai Bahadur Sukhram Jhamb was a party and he is described as the

karta or managing member of the joint Hindu tracing family carrying on business at amongst other places 118 Cross Street in the town of Calcutta in the name and style of Balikram Kissenchand.

3. Now this description may be binding on Rai Bahadur Sukhram Jhamb but I do not see how it can be binding on the Punjab National Bank except for the purposes of that particular agreement. This document may be a piece of evidence in favour of Beharilal, but it is not conclusive against the Punjab National Bank so as to prevent the Bank from asserting that the firm was a co-partnership firm. In this connexion I might as well mention that in this document certain persons are stated to be adult members of the firm and among those names the name of Beharilal does not appear. My remarks about the effect of the description of the firm would apply equally to the statement regarding the members of the firm. In my opinion this document does not preclude the Punjab National Bank from asserting that this is a contractual partnership or from asserting that Beharilal is a member of the firm. This preliminary objection fails.

4. I take up the next objection. The firm of Balikram Kissenchand was adjudicated insolvent. Beharilal contended that he was not a partner of the firm and the adjudication so far as he was concerned was annulled on the ground that he was not a partner of the insolvent firm. It is argued that this decision bars the present application as the point for decision therein is res judicata and also because the decision is a judgment in rem. I shall now consider the first branch of this argument. It is admitted by the learned Counsel for Beharilal that Section 11, Civil P.C., does not apply in terms to the facts of this case inasmuch as insolvency proceedings do not constitute a suit but he says that this Section is not exhaustive and that the application is barred on the principle of res judicata. He referred me to the well known case in Hook v. Administrator-General of Bengal (1921) 8 A.I.R. P.C. 11. There can be no doubt that Section 11, Civil P.C., is not exhaustive regarding the principle of res judicata and that the plea of res judicata may successfully be raised in circumstances which do not fall within the purview of the Section. Such a plea can be supported on the general principle of law that there must be an end to litigation. But an element essential to the success of such la plea is that the matter must have been in controversy between the same parties or between parties under which the present parties claim. Now the Punjab National Bank was not a petitioning creditor in the insolvency proceedings. There is nothing to show that the bank took any steps to have the firm adjudicated or to get any declaration that Beharilal was a partner of the insolvent firm. The bank was merely one of the creditors. In these circumstances I cannot see how on any principle it can be held that the present application of the bank is barred on the ground that the matter in issue is res judicata by reason of the decision of the Insolvency Court and that Biharilal was not a partner of the insolvency firm, a decision which was neither sought for nor opposed by the bank or by anyone under whom the bank claims. It is contended on behalf of Beharilal that the Official Assignee represented all the creditors and that if the decision is binding on the Official Assignee, as it undoubtedly is, it must also be binding on each and every creditor. In my opinion the argument is unsound. The Official Assignee does not represent the creditors for all purposes in insolvency proceedings. In many respects his interest and that of a creditor may be in conflict. In the present case it may be that it was not to the interest of the bank that Beharilal should be adjudicated. It is not every creditor who desires to have his debtor adjudicated. The decision of the Insolvency Court not being inter partes it does not render the point for decision in this application res judicata.

5. Next I examine the contention that the finding of the Insolvency Court to the effect that Beharilal was not a partner of the insolvent firm is a judgment in rem or a judgment which is valid inter omnes. In order that the decision may operate as a judgment in rem, it must be one of the kind described in Section 41, Evidence Act, which is the only Section dealing with this matter. A mere perusal of the Section in my opinion exposes the weakness of this contention. The Section is as follows:

A final judgment, order or decree of a competent Court in the exercise of probate, matrimonial, admiralty or insolvency jurisdiction, which confers upon or takes away from any person any legal character, or which declares any person to be entitled to any such character, or to be entitled to any specific thing, not as against any specified person but absolutely, is relevant when the existence of any such legal character, or the title of any such person to any such thing is relevant.

Such judgment, order or decree is conclusive proof - that any legal character which it confers accrued at the time when such judgment, order or decree came into operation; that any legal character to which it declares any such person to be entitled, accrued to that person at the time when such judgment, order or decree declares it to have accrued to that person; that any legal character which it takes away from any such person ceased at the time from which such judgment, order or decree declares that it had ceased or should cease and that anything to which it declares any person to be so entitled was the property of that person at the time from which such judgment, order or decree declares that it had been or should be his property.

6. Now the Insolvency Court did not confer upon or take away from Behari Lal any legal character. The first portion of Section 41 can have no application. The point for decision is whether the Court declared Behari Lal to be entitled to a legal character. To say of a person that he is not a partner is a negative declaration; it does not in my opinion amount to a declaration that he is entitled to a legal character or to anything at all. Next even if it be held that a negative declaration is a declaration within the meaning of Section 41, there is another difficulty in the way of the respondent. The words used are 'declares any person to be entitled to a legal character.' A declaration of a legal right is a different thing from a declaration of a legal character. The word 'character' means status, it is something more than a mere right. The declaration of a person's right operates as against a particular person or group of persons against whom the right is claimed, whereas a man's status is something which 'defines his position not in relation to any particular person or group of persons but in relation to the rest of the world; his status distinguishes him from the rest of the world. To say that a person is not a partner of a firm is not to declare his status or legal character, it is merely to declare his position with respect to the particular firm. In this connexion I would refer to the case in Official Assignee of Madras v. Official Assignee of Rangoon (1924) 11 A.I.R. Mad. 662 where Schwabe C.J. and Ramesam J. held that an order of an Insolvency Court refusing to adjudicate a person insolvent, on the ground that he was not a member of a firm which had been declared insolvent is not a final order which conferred upon or took away from him any legal character within the meaning of Section 41 of the Evidence Act and hence is not a judgment in rem. I would also refer to the case in In re Venkataramanayya (1931) 18 A.I.R. Mad. 441 where the term 'legal character' has been interpreted as being something more than a legal right. It was held that the declaration by the Insolvency Court that a person was a creditor of the insolvent did not amount to a declaration of any legal character and was therefore not a judgment in rem. For the reasons given above the preliminary objections must fail. The application will be heard on the merits upon evidence a month from this date.


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