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Hardatt Sharma Vs. Jaikishen Shamlal and Sons and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtJammu and Kashmir High Court
Decided On
Case NumberCivil Misc. Appeal No. 90 of 1981 and Civil Misc. Petn. No. 152 of 1982
Judge
Reported inAIR1983J& K29
ActsCode of Civil Procedure (CPC) , 1908 - Section 11 - Order 1, Rule 10(2) - Order 21, Rule 50(2); ;Evidence Act, 1872 - Section 18
AppellantHardatt Sharma
RespondentJaikishen Shamlal and Sons and ors.
Appellant Advocate S.P. Gupta and; Amar Chand, Advs.; P.L. Dua and;
Respondent Advocate V.S. Malhotra and; H.L. Bhagotra, Advs.
Cases ReferredMulraj v. Murti Raghunath Maharaj
Excerpt:
- i.k. kotwal, j.1. this judgment will govern the disposal of civil misc. appeal no. 90 of 1981 and civil misc. petition no. 152 of 1982, moved on behalf of the state of jammu and kashmir for being impleaded as a party-respondent to the aforesaid appeal.2. the appeal has a chequered history. the appellant, hardatt sharma, in a suit brought by him on 22-10-1979, obtained a consent decree on 27-10-1979, i.e. only five days thereafter, from the court of sub-judge (c.j.m.), jammu, against respondents 1 to 3, namely, messrs. jaikishen shamlal and sons, a partnership firm and its two partners jai kishen and sham lal. the decree was to the effect that all the timber in compartments nos. 16 and 18a in batote range of ramban forest division, whether standing, felled or sawn, including saw bands.....
Judgment:

I.K. Kotwal, J.

1. This judgment will govern the disposal of Civil Misc. Appeal No. 90 of 1981 and Civil Misc. Petition No. 152 of 1982, moved on behalf of the State of Jammu and Kashmir for being impleaded as a party-respondent to the aforesaid appeal.

2. The appeal has a chequered history. The appellant, Hardatt Sharma, in a suit brought by him on 22-10-1979, obtained a consent decree on 27-10-1979, i.e. only five days thereafter, from the court of Sub-Judge (C.J.M.), Jammu, against respondents 1 to 3, namely, Messrs. Jaikishen Shamlal and Sons, a partnership firm and its two partners Jai Kishen and Sham Lal. The decree was to the effect that all the timber in compartments Nos. 16 and 18A in Batote range of Ramban Forest Division, whether standing, felled or sawn, including saw bands installed therein, were his exclusive property and that respondents 1 to 3 could not transfer, or agree to transfer the aforesaid property to any person, nor could they remove the same from there and nor could they operate the aforesaid forest compartments. Execution of this decree was taken out by him against the aforesaid three respondents in the court of Sub-Judge (C.J.M.) Jammu the court that had passed the decree by making an application to it on 12-12-1979 that their property, including the sawn timber lying in their depot at Canal Road, Jammu, be attached and sold, as they had failed to obey the decree. On this, notices were issued to them. In the meantime, three persons, namely, P. L. Dua, Ravinder Dua, and Smt. Usha Gupta on 17-12-1979, made an application to the Executing Court, seeking time to file objections to the aforesaid execution application, as the decree sought to be executed had, according to them, been obtained by fraud. This prayer was granted by the court. They filed their objections on 26-12-1979, attacking the decree mainly on the ground that it was a product of fraud and collusion between the appellant and respondents Jaikishen and Sham Lal, alleging further that they too were the partners in the firm M/s. Jaikishen Shamlal and Sons along with these respondents, by virtue of a deed of partnership executed between them on 22-7-1978 and had invested lacs of rupees in exploiting the forest pursuant to the said partnership.

3. On 31-12-1979, the decree-holder made yet another application purporting to be one Under Section 151, Civil P. Code for attachment of 1900 scants lying in the depot of the judgment-debtors which, according to him, he had extracted from the aforesaid forest comprising compartments Nos. 16 and 18A and which the judgment-debtors had brought to their depot against the clear mandate of the decree under execution. The executing court, even though the District Judge at Jammu had by his order dated 31-12-1979 stayed all further proceedings in the execution application on an appeal preferred against the aforesaid decree by P. L. Dua and two others yet passed an order on 1-1-1979, attaching 1900 scants from the depot subject, however, to objections by the judgment-debtors. This order was, however, vacated by it on 5-2-1979 at the instance of P. L. Dua and others; the acquiescence in it of Jai Kishen and Sham Lal not notwithstanding.

4. The appeal preferred by P. L. Dua and others, which had been filed by them in the name of the firm M/s. Jai Kishen Sham Lal and Sons, was ultimately heard and disposed of by the First Additional District Judge, Jammu, to whom it had later on been transferred. He dismissed it on 21-5-1981, holding that they not being parties to the suit in which the impugned decree had been passed, had no right to challenge it in, appeal; the only remedy open to them being to challenge it in a regular suit. This decision was accepted by P. L. Dua and others, who eventually challenged the aforesaid decree in regular suit, being Civil Suit No. 92 of 1981, brought by them on 3-10-1981 in the Court of Sub-Judge (C.J.M.) Jammu.

5. With the dismissal of this appeal, proceedings in the execution application were reopened by the decree-holder. On 14-11-1982, he made an application that the judgment-debtors with a view to defeating the decree under execution, had brought 5000 scants from the forest to their depot, which they intended to remove and sell outside the jurisdiction of the court in flagrant disregard of the terms of the decree, and prayed that as provided by Order 21, Rule 32, C.P.C., they may be arrested and the acants lying in their depot be attached. On this, the court on 14-11-1981 itself, issued a notice to the judgment-debtors to show cause as to why they be not arrested for not obeying the command of the decree, and in the meantime attached all the timber lying in their depot. The next date was fixed for 30-11-1981. This order was, however, recalled by the court on 27-11-1981 on an application made to it on behalf of P. L. Dua and others, alleging that the timber lying in the depot belonged to them, which they had already sold to a third party for cash consideration. This order, which was passed ex parte, read as under:

'In partial modification of the court order dated 14-11-1981, timber mentioned above will stand released pending disposal of stay application on 30-11-1981'.'

Aggrieved by this order, Hardatt Sharma challenged it in an appeal before the District Judge at Jammu, who stayed its implementation by his order dated 30-11-1981.

6. In the meantime, P. L. Dua and others in their suit for setting aside the aforesaid decree too had moved an application for staying its execution, and the trial court had on 21-11-198l issued a notice to defendant Hardatt Sharma for 30-11-1981 to show cause as to why execution of the impugned decree be not stayed. The defendant it may be noticed, had through his counsel appeared in the court on 28-10-1981 and was directed to file his written statement on 30-11-1981. On this date too, he neither filed his written statement nor did he file any objections to the aforesaid application for staying the execution of the impugned decree. Consequently, the court on the said date passed the following order on the stay application:

'Defendant has appeared through his advocate but neither written statement nor objections have been filed, pending filing of objections and disposal of the application, the execution of the impugned decree is stayed. Put up for objections on 2-12-81.'

This order dated 30-11-1981 was also challenged by Hardatt Sharma in an appeal before the District Judge, who on 1-12-1981 stayed its implementation as well In the application for execution, however, the court on 38-11-1981 passed the following order:

(Order being in Urdu language not printed.--Ed.)

7. On 2-12-1981 again, no objection to the application of P. L, Dua and others for staying the execution of the impugned decree were filed by Hardati Sharma and the court in presence of the counsel for the parties proceeded to pass the following order in his execution application:

'Counsel for the parties present. The execution of the decree has been stayed by my order dated 39-11-1981. As a necessary consequence of the stay order my order dated 14-11-1981 stands vacated as it was passed ex parte when no suit was pending. Hence my order dated 14-11-1981 ordering attachment before returning a finding that judgment-debtor has wilfully disobeyed the decree is withdrawn till disposal of the application in which stay has been granted pending in suit for cancellation of the decree. Mr. Kapoor learned counsel for the decree-holder wanted time to file objections but as the stay order was passed in his presence on 38-11-81, so there is nothing which can be argued against the fact that any order passed earlier to order of stay of execution has to be vacated more so when it is clearly against the mandate of Order 21, Rule 32, C.P.C. as pointed out by Mr. V S. Mal-hotra and rightly so because by the order judgment-debtor has been condemned unheard without returning any finding about disobedience of decree by him by the court. Hence the order dated 14-11-1881 is withdrawn.' This order too was challenged in appeal by Hardatt Sharma before the District Judge on the same day, who stayed its implementation as well, by his order dated 2-12-1980.

8. The learned Judge heard all the three appeals against the aforesaid three orders dated 27-11-1981, 30-11-1981, and 2-12-1981 and disposed of the same by a common judgment, dismissing all the three appeals by his order dated 23-12-1981. It is this order which is the subject-matter of Civil Miscellaneous Appeal No. 90. The appellant, it may be stated, did not challenge it by way of appeal, but by way of a revision petition, which was, however, admitted as an appeal and implementation of the aforesaid three orders dated 27-11-1981, 30-11-1981, and 2-12-1981 stayed by this court vide its order dated 24-11-1881.

9. Right at the stage of the admission of the appeal, Mr. V. S. Malhotra put in his appearance on behalf of the firm, respondent No. 1 in the appeal. He was outright disowned by respondent Jai Kishen, who was incidentally present in the court, according to whom, the firm and the two other respondents, namely, Jai Kishen and Sham Lal were represented not by Mr. V. S. Malhotra, but by Mr. A. V. Gupta. The controversy having thus arisen, Mr. V S. Malhotra was directed to prove that he represented all the partners in the firm, or to make an application for the impleadment of those partners in it, who were not already on the record. Consequently, an application was moved on behalf of P. L. Gupta, Ravinder Dua and Smt. Usha Gupta on 30-12-1981 that they be also impleaded as respondents to the appeal, as they too were partners in the firm along with respondents Jai Kishen and Sham Lal, by virtue of a deed of partnership, executed between them on 22-7-1978. This application was stoutly resisted by all the three respondents in the appeal, who were already on the record, on the grounds; firstly, that rule nisi for contempt of court having been already issued against T. N. Mahajan, the attorney of the applicants they could not be heard in support of their application, till they purged themselves of the contempt; secondly, that the applicants not being parties to the main suit in which the consent decree was passed, they had no right to be impleaded as parties to the appeal arising out of it; thirdly, that a partnership deed in terms of Section 17 (i) (d) of the Jammu and Kashmir Registration Act, being compulsorily registrable, and the partnership-deed dated 22-7-1978 being admittedly not registered, the applicants could not claim to be partners in the firm, and nor could they consequently claim to be impleaded as party respondents to the appeal; and fourthly, that the aforesaid partnership deed, even if not compulsorily regigtrable under Section 17 (i) (d), was still registrable under Clauses (a) and (b) of the Indian Registration Act, as it created interest in standing trees, which squarely fell within the definition of immovable property. The respondents it may be stated, did not, dispute the execution of the aforesaid partnership deed dated 22-7-1978, and perhaps rightly so, because there had been a previous litigation in this court between them on the one hand and P. L. Dua, Ravinder Dua and Smt. Usha Gupta on the other hand, wherein both the parties had based their claims upon it,

10. All these contentions were negatived by the Court and P. L. Dua, Rajinder Dua and Smt Usha Gupta were impleaded as party respondents to the appeal by its order dated 29-1-1982. On the first ground it was held on the general principle of law that a party could not be deprived of its valuable right of hearing, merely because rule nisi for contempt of court had been issued against it. In the alternative, it was held that rule nisi having been issued against their attorney, the applicants P. L. Dua and others could not be deprived of their right of hearing. As regards the second ground it was in the first instance held that the firm name being merely a compendious way of describing all the partners in it, a suit against a firm would automatically be a suit against all its partners. Secondly, it was held that one of the orders impugned in the appeal having been passed in the suit filed by P. L. Dua and others themselves, they had every right to defend it by being impleaded as respondents to the appeal. The third ground was repelled on the short point that the partnership-deed having been admittedly executed at Pathankot, the J, & K. Registration Act, could have no application to it, and there being no provision corresponding to Clause (d) of Section 17 in the Indian Registration Act, the partnership deed required no registration. Lastly, it was held that the avowed object of the partnership being to convert the trees standing on the forest into timber as early as possible, at. the most within the period granted under the lease, and there being thus no likelihood of the trees standing on the forest continuing to draw sustenance from its soil for long, the partnership, if at all it created any interest, -it created it in the timber standing on the forest, which undoubtedly was not immovable property that fell within the definition of the expression provided by Section 2(6) of the Indian Registration Act, to attract the provisions of even Clauses (a) and (b) of Sub-section (1) of Section 17 of the said Act, a distinction was drawn between standing timber and standing trees, and for this reliance was placed upon the following observations contained in Smt. Shantabai v. State of Bombay, AIR 1958 SC 532 :

'Now what is the difference between standing timber and tree? It is clear that there must be a distinction because the Transfer of Property Act draws one in the definitions of 'immovable property' and 'attached to the earth'; and it seems to me that the distinction must lie in the difference between a tree and timber. It is to be noted that the exclusion is only of 'standing timber'' and not of 'timber trees'. Timber is well enough known to be --

'wood suitable for building houses, bridges, ships etc., whether on the trees or cut and seasoned'. (Webster's Collegiate Dictionary).

Therefore, 'standing timber' must be a tree that is in a state fit for these purposes and, further a tree that is meant to be converted into timber so shortly that it can already be looked upon as timber for all practical purposes even though it is still standing. If not, it is still a tree because, unlike timber, it will continue to draw sustenance from the soil.'

Hardutt Sharma, feeling aggrieved of this order, sought special leave to go in appeal against it to the Supreme Court through Special Leave Petition (Civil) No. 1649 of 1982 titled Hardatt Sharma v. Jaikishen Shamlal & Sons and others. Before their Lordships, it appears, that execution of the partnership deed dated 22-7-1978 was disputed by him. This Special Leave Petition was however, dismissed by their Lordships with these observations :

'The impugned order against which this special leave petition has been filed is an interlocutory order implead-ing respondents Nos. 4 to 6 as parties to the litigation. We do not want to interfere with that order. Special leave petition is accordingly dismissed. Tt is, however, made clear that the question whether these persons were properly joined or not which depended upon several aspects including the aspect whether the partnership was registered under the Jammu and Kashmir Law will be permitted to be raised at the final hearing of the suit and expression of any opinion by any court in suit or appeal at the interlocutory stage will not prejudice the final decision of the matter. It is further directed that so far as the removal of timber which is either lying in the compartment or that may be brought in the compartment or depots is concerned the parties not to remove that timber without obtaining prior order from the concerned court.'

While arguments in the appeal were being heard, the State moved an application for being impleaded as a party to it. This is CMP No. 152/82. Objections to it from all the parties were invited and the parties, including the State, heard on it. Whereas the appellant and respondents 1 to 3 had no objection to the impleadment of the State, respondents P. L. Dua, Ravinder Dua and Smt. Usha Gupta put a stiff resistance to it; the main plank of their argument being that the State had moved this application at this late stage with a view to coming to the rescue of the appellant, with whom it was in collusion.

11. Appearing for the appellant and respondents 1 to 3, Messrs S. P. Gupta, and Amarchand assailed the judgment of the learned District Judge on the grounds; firstly, that P. L. Dua, Ravinder Dua and Smt. Usha Gupta not being partners in the firm Messrs Jaikishen shamlal and Sons, they had no right to challenge the consent decree dated 27-10-1978; secondly, that even if they were to be held to be partners in the firm, still the decree being against the firm and the firm having been duly represented in the suit by its two partners, Jaikishen and Shamlal, the decree was equally binding upon its other partners as well, who could not challenge it on any ground whatsover; thirdly, that even if a right to challenge the decree were to be assumed in favour of P. L. Dua and others, who admittedly were not parties to the suit, still they had no right to challenge it, as the appellant decree-holder did not seek to execute the decree against them in their individual capacity: fourthly, that the appeal against the aforesaid decree filed by P. L. Dua and others having been dismissed by the learned First Additional District Judge, by his judgment dated 21-5-1981, and the said judgment not having been challenged by them in a higher court, the same operated as res judicata and was thus binding on them; and fifthly, that the two orders dated 30-11-1981 and 2-12-1981 having been passed by the trial court after the District Judge on appeal against each order had stayed all further proceedings in the matter, the orders were clearly without jurisdiction.

12. On behalf of P. L. Dua and others, however, it was argued by Messrs H. L. Bhagotra and V. S. Malhotra, that the consent decree was not binding upon them; firstly, because it was passed at their back; and secondly, because they were entitled to challenge it on any ground whatsoever, even if such grounds were to be personal to them, or even inconsistent with the one taken by the other partners. It was further contended that Jai Kishen and Sham Lal having ad-mitted the execution of the partnership dated 22-7-1978 in arbitration proceedings pending in this court between them and P. L. Dua and others, the said admission was binding on the appellant Who claimed right to the forest through them and could not be heard to say that P. L. Dua Ravinder Dua and Smt. Usha Gupta were not partners in the firm. They also disputed the proposition that the judgment of the learned Addl. District Judge dated 21-5-1981 operated as res judicata and maintained that P. L. Dua and others having had no opportunity to obey the decree, it was not, in any event, binding on them on the plaint terms of Order 21 Rule 32.

13. Before dealing with the merits of the appeal, it is necessary to first of all dispose of CMP No. 152/82. The State has invoked the provisions of Order 1 Rule TO C.P.C., in particular, Sub-section (2) thereof for being impleaded as a party-respondent to the appeal. Sub-section (2) reads as under :--

'(2) The court may at any stage of the proceedings, either upon or without the application of either party, and on such terms as may appear to the court to be Just, order that the name of any party improperly joined, whether as plaintiff or defendant be struck out, and that the name of any person who ought to have been joined whether as plaintiff or defendant, or whose presence before the Court may be necessary in order to enable the court effectually and completely to adjudicate upon and settle all the questions involved in the suit, be added.'

14. Apart from the one that the State is in collusion with the appellant, the other objection raised to its impleadment on behalf of P. L. Dua and others is that the State not being a party to the suit, it could not be made a party to the appeal arising out of it. This objection is sought to be met on behalf of the State by the counter argument that P. L. Dua and others having been impleaded as respondents to this very appeal, despite the fact that they too were not parties to the suit in which the consent decree was passed, the State could, on the parity of the reasoning, claim to be made a party to it. In my opinion, none of the contentions raised is sound and the State cannot be made a party to the appeal. An appeal being the continuation of the suit, a person may be added as a party to it, even at the stage of the appeal, provided his addition is necessary 'in order to enable the court effectually and completely adjudicate upon and settle all the questions involved in the suit'. There is ample authority for the proposition that the questions involved in the suit mean and include only those questions that are involved in the suit between the parties to it, who are already on the record, and cannot include those questions that may subsequently arise between them and the person who seeks to be impleaded as a party to the suit. (See Razia Begum v. Anwar Begum, AIR 1958 Andh Pra 195, Moti Ram Roshan Lal Coal Co. v. District Committee, Dhanbad, AIR 1962 Pat 357, and Vaithilinga v. Sadasiva, AIR 1926 Mad 836). The only dispute involved between the parties to the appeal being as to whether or not the consent decree dated 27-10-1979 had been obtained through fraud ar collusion, whether or not it was binding on the firm when all its partners were not impleaded as parties to the suit, and whether or not the transfer in favour of the appellant was in violation of the terms of the partnership deed alleged to have been executed on 22-7-1978 by virtue whereof P. L. Dua and others were inducted as partners in the firm, the State cannot be added as a party to the appeal to raise the new questions as to whether or not the lease period has expired, or whether or not Jai Kishen and Sham Lal had any right to transfer to the appellant their rights under the lease, muchless, when none of the parties has questioned the State's paramount title in the forest. The State not being a party to the suits, cannot obviously be bound by the decrees passed therein and is fully competent to take all steps under law that it may deem necessary to protect ite interests.

15. Turning now to the other contention raised on behalf of the Slate, the case of P. L. Dua and others, there can be no manner of doubt, is clearly distinguishable from that of the State. They having claimed to be partners in the firm Messrs Jai Kishen Sham Lal & Sons, which was admittedly a party to the suit, in which a consent decree was passed, were held to be already on the record on the ground that the firm name being a compendious way of describing all the partners in it, a suit against a firm would in fact he a suit against all its partners. The law that a suit against a firm is a suit against all its partners is well settled. In Her Highness Maharani Mandalsa Devi v. M. Ramnarain Private Limited, AIR 1965 SC 1718 it was held (at p. 1721) :

'The suit against the firm is really a suit against all the partners who were its partners at the time of the accrual of the cause of action, including the dead partner. Order 30, Rule 4 of the Code of Civil Procedure enables the creditor to institute the suit against the firm in the firm name without joining the legal representative of the deceased partner. The suit is, therefore, competent, but no suit can be instituted nor can a decree be obtained against a dead person. The decree passed in such a suit will, therefore, binds the partnership and all the surviving partners, but will not affect the separate property of the deceased partner.'

The State, admittedly not being a party to either of the suits from which the appeal has arisen, its case is dearly distinguishable from that of P. L. Dua and others. In any case, therefore, the State has no right to be added as a party to the appeal. C.M.P, No. 152/82 is accordingly dismissed.

16. Turning now to the appeal itself, the first question that falls for determination is : whether or not P. L. Dua. Ravinder Dua and Smt. Usha Gupta can in the eye of law, be said to be partners in the firm Messrs jaikishen Shamlal & Sons. As already noticed, neither the appellant, nor respondents Jai Kishen and Sham Lal had disputed the allegation that P. L. Dua and two others were partners in the firm, by virtue of the deed of partnership alleged to have been executed by them on 22-7-1978 at Pathankot, a place outside the territorial limits of the State of Jammu and Kashmir to which its laws were not applicable. In view of this admission, it was held that the partnership deed being valid in law, they were partners in the firm for all intents and purposes. While dismissing the special leave petition, their Lordships, however, observed that the appellant at the time of the final hearing of the appeal, shall be at liberty to raise afresh the question whether or not the deed of partnership that admittedly has not been registered under the Jammu and Kashmir Registration Act, was a valid deed creating any right in favour of P. L. Dua and others. It may be stated that no argument was raised on behalf of the appellant to question the validity of the partnership deed during the course of the final hearing of the appeal on the ground that it required registration Under Section 17 of the Jammu and Kashmir Registration Act and nor was it disputed that P. L. Dua, Ravinder Dua and Smt. Usha Gupta had been properly added as party respondents to the appeal. What was, however, disputed was the binding effect of the admission relating to the execution of the aforesaid partnership deed dated 22-7-1978, made by Jaikishen and Sham Lal in the arbitration proceedings pending between them and P. L. Dua and others in this court on the appellant, to which he was admittedly not a party. There appears to be some force in Mr. Gupta's contention that this admission cannot bind the appellant, even granting that he claims his right to the forest through Jai Kishen and Sham Lal. True, Under Section 18 of the Evidence Act, statements made by persons from whom the parties to the suit have derived their interest in the subject matter of the suit, are binding on such parties as their admissions, nevertheless, before the same may bind them, it has further to be shown that the statements were made by those persons during the continuance of their interest in the subject matter, and obviously so, because it would be highly unjust and improper to divest a person of his right in the property, lawfully acquired by him from another, on the basis of the latter's admission, after his own interest in the property has ceased to exist. The consent decree, passed upon an agreement to sell, executed on behalf of respondents Jai Kishen and Sham Lal in favour of the appellant having been passed much earlier to the institution of the aforesaid arbitration proceedings, the admission made therein by them will not bind the appellant. Even so, the aforesaid admission would still be relevant for judging the prima facie case of P. L. Dua and others in so far as the relief of temporary injunction sought by them, and granted by the courts below, that the appellant shall not execute the consent decree is concerned. It is, therefore, still necessary to go into the other contentions raised on behalf of the parties.

17. While not disputing the proposition that the firm Messrs Jai Kishen Sham Lal and Sons was duly represented in the suit and a decree on the concession of its two partners, namely, Jai Kishen and Sham Lal, who alone were the other two defendants in the suit, properly obtained against it, the two warring parties viz. the appellant and respondents Jai Kishen and Sham Lal on the one hand, and respondents P. L. Dua, Ravinder Dua and Smt. Usha Gupta on the other hand, took two extreme positions, divergent to each other. It was argued on behalf of the appellant and respondents Jai Kishen and Sham Lal that the consent decree was binding on the firm and could not be challenged by P. L. Dua and others on any ground whatsoever, even assuming that they too were partners in the firm, but were still not made parties to the suit, adding, that it would be a fortiori so, when the decree was not sought to be executed against them as partners in the firm. On the other hand, it was urged on behalf of P. L. Dua and others that the decree would not bind even the firm, so long as all its partners were not made parties to the suit, adding, that they being partners in the firm, had a right to challenge the decree even on pleas inconsistent with those taken by Jai Kishen and Sham Lal in the suit in which the decree was passed. They are entitled to challenge the aforesaid decree, according to them, not only on the ground that it was an outcome of fraud or collusion between the parties to the suit, but also on the ground simpliciter that they were not made parties to the suit. Incidentally, both sides have placed reliance upon two Supreme Court decisions viz. : Gambhir Mal Pandiya v. J. K. Jute Mills Co. Ltd., AIR 1963 SC 243, and Her Highness Maharani Man-dalsa Devi v. M. Ramnarain Private Limited, AIR 1965 SC 1718 to support their rival contentions.

18. In my opinion, neither of the parties is wholly correct. In Gambhirmal Pandiya's case (supra) a decree against a firm was sought to be executed against one of its partners, who had not been made a party to the suit in which the decree had been passed. He had challenged it on the twin ground that be not being a party to the suit, the decree was not binding on him and could not be executed against him, and that his other partner having no right to enter into an agreement with the decree-holder that contained the arbitration clause, pursuant to which the impugned decree came to be passed, the same was inexecutable. Both these contentions were negatived by their Lordships. It was no doubt observed therein :

'.....The law is thus not concerned with a right between the partners inter se, and an action between the partners is not to be tried within the action between the firm and the plaintiff. Of course, the partners who admit that they are partners need not raise a common defence. They may raise inconsistent defences, but all such defences must be directed to defend the firm and the plaintiff must surmount all such defences.....'

But, it was ultimately held that once a decree was properly obtained against a firm, it could be executed not only against the firm and its partners, who were parties to the suit, but also against those partners who were not parties to It, provided the procedure laid down in Sub-rule (2) of Rule 50 of Order 21, C. P. C. was followed. Such a decree could no doubt be challenged by a partner who was not a party to the suit but only on the ground that it was obtained by fraud or collusion, or a ground akin to it, but on no other ground. To quote their Lordships ipsissima verba :

'.....When the decree is passed it is against the firm. Such a decree is capable of being executed against the property of the partnership and also against two classes of persons individually. They are (1) persons who appeared in answer to summons served on them as partners and either admitted that they were partners or were found to be so, and (2) persons who were summoned as partners but stayed away. The decree can also be executed against persons who were not summoned in the suit as partners, but Rule 50 (2) of Order 21 gives them an opportunity of showing cause and, the plaintiff must prove their liability. This enquiry does not entitle the person summoned to reopen the decree. He can only prove that he was not a partner, and in a proper case, that the decree is the result of collusion, fraud or the like. But, he cannot claim to have other matters tried, so to speak, between himself and his other partners. Once he admits that he is a partner and has no special defence of collusion, fraud etc. the court must give leave forthwith.'

This decision was followed in Maharani Maridalsa Devi's case (AIR 1965 Sc 1718); (supra), wherein besides the grounds of fraud, collusion Or the like, two more grounds; that the, partner had special protection under law against the suit and that the decree obtained against the firm was a nullity, were held to be valid grounds for challenging the decree and for resisting the leave sought for its execution, in terms of Order 21, Rule 50 (2).

19. Mr. Gupta then contended that P. L. Dua and others could have no right to challenge the decree even on the ground of fraud or collusion, so long as it was not sought to be executed against them by seeking the necessary leave in terms of Sub-rule (2) of Rule 50. I am not impressed with this argument either. Right of a partner to challenge on these grounds, a decree against the firm, passed in a suit to which he is not a party, does not depend upon the decree holder's application seeking leave to execute the decree against him in terms of Sub-rule (2), but it exists independently of it, and may be exercised by him even by filing a regular suit. Such a right he may exercise not only to resist the execution of the decree against him, but also to resist its execution against the firm as well, for to envisage a right in him to challenge the decree only when it is sought to be executed against him, will have the effect of negativing this right, by placing his interest in the partnership at the mercy of his other partners, who, to his detriment, are in collusion with the decree-holder.

20. Messrs P. L. Dua and others having pleaded fraud and collusion, they are entitled to challenge the consent decree and resist its execution even against the firm provided, of course, they are able to prove vis a vis the appellant that they are partners in the firm. The next argument of Mr. Gupta that particulars of fraud or collusion have not been given in the plaint, is only an argument in despair. The particulars have been succinctly set out by P. L. Dua and others in paras 4 to 7 of their plaint.

21. Then comes the question of res judicata. P. L. Dua and others had no doubt gone in appeal against the decree under execution, which ultimately came to be dismissed by the First Additional District Judge on 21-5-1981. But, this judgment cannot operate as res judicata for the obvious reason that their appeal was not dismissed on merits. It was on the other hand dismissed on the short; ground that they not being parties to the suit in which the decree was passed, had no right to challenge it in appeal. Such a judgment can hardly operate as res judicata, for on the plain language of Section 11, C.P.C. before a judgment may operate as res judicata, the matter must have been heard and finally decided, and in order that a matter may be said to have been heard and finally decided, the decision in the former suit has to be one on merits.

22. This brings me to the last argument raised on behalf of the appellant that out of the three orders challenged in this appeal, two, i.e. one dated 30-11-1981 and the other dated 2-12-1981 are without jurisdiction, as both the orders came to be passed after the District Judge in appeal had stayed all further proceedings in the suit as well as in the execution application. These stay orders, it was contended had the effect of taking away the jurisdiction of the trial court to pass any order in these cases thereafter, irrespective of the fact whether or not these were communicated to the trial court before the aforesaid two orders came to be passed by it. In the alternative it was asserted that the stay orders had in fact been brought to the notice of the trial court, before the aforesaid two orders came to be passed.

23. There was a conflict in judicial opinion as to whether or not the stay issued by the appellate Court in terms of Order 41, Rule 5, C.P.C. became effective, the moment it came to be passed, or it would take effect only after it was communicated to the court against whose order the appeal had been taken, Some High Courts had taken the view that the lower court would retain its jurisdiction to pass any order in the case before the stay granted by the appellate Court was communicated to it, and some High Courts had taken the view that its Jurisdiction would be taken away the moment the stay was issued. This conflict was finally set at rest by their Lordships in Mulraj v. Murti Raghunath Maharaj, AIR 1967 SC 1386, wherein it was held that the lower court would retain its jurisdiction to pass any order in the case pending before it, till the stay issued by the appellate Court was communicated to it. The locus classicus in the judgment reads as under (para 10) :--

'As we have already indicated, an order of stay is as much a prohibitory order as an injunction order and unless the court to which it is addressed has knowledge of it, it cannot deprive that court of the jurisdiction to proceed with the execution before it. But there is one difference between an order of injunction and an order of stay arising out of the fact that an injunction order is usually passed against a party while a stay order is addressed to the court. As the stay order is addressed to the court, as soon as the court has knowledge of it, it must stay its hand; if it does not do so, it acts illegally. Therefore in the case of a stay order as opposed to an order of injunction, as soon as the court has knowledge of it, it must, stay its hand and further proceedings are illegal, but so long as the court has no knowledge of the stay order it does not lose the jurisdiction to deal with the execution which it has under the Code of Civil Procedure.'

24. There is nothing on the record to show that the stay orders issued by the learned District Judge were communicated to the learned Sub-Judge (CJM) before he had passed the two orders dated 30-11-1981 and 2-12-1981, Mr. Gupta, even though he argued with all vehemence at his command, that each time the District Judge had conveyed the stay order to him through the peon of his court. I still could not feel convinced about it and for more than one reason. To begin with, in none of the two appeals taken to the District Judge, this ground was taken in clear and specific terms that the impugned order was passed by the lower court after the stay issued by the appellate Court had been communicated to it. Secondly, neither in this court, nor in the lower appellate Court, any affidavit of the peon who had allegedly handed over the stay order to the Sub-Judge (CJM) was produced by the appellant. Furthermore, from the judgment of the learned District Judge also, it does not transpire that any such argument was ever advanced before him. I have no reason to attribute any motive to the Sub-Judge (CJM) and nor have any such circumstances been brought to my notice that may warrant such an inference. On the other hand. Mr. Gupta has been fair enough to concede that motives could not be attributed to the Sub-Judge (CJM). In these circumstances, therefore, it is not possible to accept the ipse dixit of the appellant. No fault can thus be found with orders dated 30-11-1981 and 2-12-1981.

25. The cumulative effect of all the three orders dated 27-11-1961, 30-11-1981 and 2-12-1981 is that the timber lying in the depot of the respondents stands released from attachment, and the notice issued to them as to why they should not be arrested withdrawn, though the question whether or not the decree is at all executable, and if so to what extent and in what manner, is yet to be decided on taking objections from the appellant. The appellant is, therefore, still at liberty to take all such pleas as would compel the court to order its execution after determining the mode and extent of its execution. It would be thus more appropriate that what the appellant has urged before this court, he urges before the executing Court itself, which is still to apply its mind in order to finally dispose of the plea. There is, therefore, no reason to interfere with the order dated 30-11-1981.

26. In so far as the order dated 27-11-1981 is concerned, it has undoubtedly been passed with undue haste. The court ought to have issued notice to the decree-holder before modifying its earlier order dated 14-11-1981. Be that as it may, the order having merged with the later order dt. 2-12-1981, there is no point in either upholding or setting aside the same.

27. This brings me to the third order dt. 2-12-1981. Notice for the arrest of respondent Jai Kishen and Sham Lal and attachment of the timber lying in their depot at Canal Road, Jammu, issued vide order dt. 14-11-1981, were withdrawn on the ground that the judgment-debtors had had no opportunity to obey the decree under execution. Here, the executing Court has clearly erred, in that, notice had been issued to respondents Jai Kishen and Sham Lal alone to show cause as to why they should not be arrested. No such notice was, however, issued to P. L. Dua, Ravinder Dua and Usha Gupta. Jai Kishen and Sham Lal being parties to the suit in which the decree was passed, they could not be said to have had no opportunity to obey the decree. Normally, the notice issued against them should not have been withdrawn, and on their failure to show any cause they ought to have been arrested in terms of Order 21, Rule 32, unless the court otherwise came to the conclusion that the decree was not executable Even against them. No such finding appears to hare been recorded by the executing Court.

28. The only property that can be attached under Order 21, Rule 32 is the property belonging to the judgment-debtor. Neither at the time of ordering its attachment on 14-11-1981, nor at the time the order dated 2-12-1981 was passed, the court recorded a finding that the timber belonged to the firm. On this issue, the stand taken by the appellant decree-holder also appears to be a little nebulous. When he filed the execution application, he alleged therein that the timber lying in the depot of the judgment-debtors belonged to them. But, in his later application dated 31-12-1579 as noticed heretofore, he averred that 1900 scants out of it belonged to him, which too he prayed should be attached in execution of the decree. He could not have asked for attachment of his own property in terms of Order 21', Rule 32. Since the timber is still lying in the depot and P. L. Dua and others have not been so far permitted by the executing Court to remove it, there is no need to over set the order dt. 2-12-1981 on this score as well. Suffice it to say, that before re-attaching it or releasing it, the executing Court will keep in mind the following:--

(i) to whom does the property belong;

(ii) whether the decree under execution is executable, if so, to what extent;

(iii) what are the facts and circumstances that probabilise the case (c)f respondents P. L. Dua, Ravinder Dua and Smt. Usha Gupta that they too are partners in the firm Messrs. Jai Kishen Sham Lal and Sons by virtue of the partnership deed dated 22-7-1978, and the consent decree obtained by the appellant is a product of fraud or collu-tion; and

(iv) how best can the court protect the rights of the appellant accruing in his favour from the decree, in case it decides to release the timber in favour of P. L. Dua and others.

29. This the court will decide after hearing both the sides. This would be a fortiori necessary in view of their Lordships direction in their Judgment in the Special Leave Petition reproduced heretofore. If necessary, the court may even frame a preliminary issue as to whether P. L. Dua, Ravinder Dua and Smt. Usha Gupta became partners in the firm along with Jai Kishen and Sham Lal by virtue of the deed of partnership, that came to be executed on 22-7-1978, as that would help the court determine the binding effect on the appellant of the various orders passed by this court in arbitration proceedings between the aforesaid persons, to which admittedly the appellant was not a party.

30. The appeal is accordingly disposed of, and the stay granted by this court on 24-12-1981 is vacated. The parties are directed to appear before Sub-Judge (CJM) Jammu on 18-10-1982.


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