Dasari Ramachandra Rao, vs Koripalli Venkata Rao,
2021 Latest Caselaw 37 AP

      IN THE HIGH COURT OF ANDHRA PRADESH: AMARAVATI

           CIVIL REVISION PETITION No.1322 OF 2014


% Dated 07.01.2021

#
Dasari Ramachandra Rao
S/o Bulliganiraju
R/o D.No.14-5-18, Samalkota
East Godavari District and two others        ..... Petitioners

Vs.

$
Koripalli Venkata Rao
R/o Kunduru, K. Gangavaram Mandal
Ramachandrapuram
East Godavari District and two others        ..Respondents



JUDGMENT PRONOUNCED ON: 07.01.2021




      THE HON'BLE SRI JUSTICE M. SATYANARAYANA MURTHY


  1. Whether Reporters of Local newspapers
     may be allowed to see the Judgments?

  2. Whether the copies of judgment may be
     marked to Law Reporters/Journals

  3. Whether Their Ladyship/Lordship wish to see
     the fair copy of the Judgment?
                                                                      MSM,J
                                                              CRP_1322_2014
                                   2



       * THE HON'BLE SRI JUSTICE M. SATYANARAYANA MURTHY


          + CIVIL REVISION PETITION No.3039 OF 2013

% Dated 07.01.2021

#
Dasari Ramachandra Rao
S/o Bulliganiraju
R/o D.No.14-5-18, Samalkota
East Godavari District and two others              ..... Petitioners

Vs.

$
Koripalli Venkata Rao
R/o Kunduru, K. Gangavaram Mandal
Ramachandrapuram
East Godavari District and two others              ..Respondents

! Counsel for the petitioner   :       Sri Lasetty Ravinder

^ Counsel for the respondent    : S. Sridhar

<GIST:

> HEAD NOTE:

? Cases referred


   1. AIR 1964 SC 581
   2. AIR 1956 Bomb 513
   3. AIR 1927 CAL 758
   4. AIR 1926 BOM 585
   5. AIR 1921 BOM 482
   6. (1925) 2 KB 127
   7. 1966 (3) SCR 400
   8. (1979) 120 ITR 49
   9. (1964) 5 I.T.R. 755
   10. (1966) 9 SCC 3
   11. 1963 AIR 243
   12. (1925) 2 KB 127
   13. (2000) 5 SCC 694
   14. AIR 1965 SC 1718
                                                                    MSM,J
                                                            CRP_1322_2014
                                    3




   THE HON'BLE SRI JUSTICE M.SATYANARAYANA MURTHY

             CIVIL REVISION PETITION NO.1322 OF 2014

ORDER:

This civil revision petition is filed under Article 227 of the

Constitution of India, challenging the order in E.A.No.585 of 2011 in

E.P.No.43 of 2010 in O.S.No.77 of 2004 dated 20.09.2012 passed by

the I Additional Senior Civil Judge, Kakinada, whereby, a petition

filed under Order XXI Rule 50(2) C.P.C to grant leave to the

petitioner to file execution petition against the partners of the first

judgment debtor was allowed.

The parties before the Court will hereinafter be referred, as

arrayed before the executing Court, for the sake of convenience.

The petitioner/decree holder obtained a decree against the first

judgment debtor i.e. partnership firm - Siddi Vinayaka Raw boiled

rice mill for recovery of amount. In order to recover the decree

amount, it is necessary for the petitioner to proceed against the

partners of the first judgment debtor, who are shown as Respondent

Nos. 2 to 5. In such circumstances, it is necessary to obtain leave by

the petitioner to file execution petition against the partners of the

first respondent/judgment debtor and sought leave to proceed

against the partners of the firm.

The Respondent Nos. 1 and 2 filed counter affidavit, denying

material allegations, inter alia, contending that Item No.1 of the E.P.

schedule property is the absolute property of judgment debtors and

Item No.2 is the absolute property of the fifth judgment debtor.

MSM,J CRP_1322_2014

Respondent Nos. 3 to 5 are not parties to the suit O.S.No.77 of 2004.

The decree passed in O.S.No.77 of 2004 never intended to execute

the said decree against the property of Judgment Debtor Nos. 3 to 5,

which absolutely belongs to them. It is further contended that, the

property was never used for business purpose relating to the first

Judgment Debtor firm. It is contended that, the decree holder has

got no right whatsoever to execute the decree against the properties

belonging to Judgment Debtor Nos. 3 to 5, except proceeding against

the assets belonging to Judgment Debtor Nos. 1 and 2, the decree

holder has no right to proceed against the assets of the respondents

Nos. 3 to 5 and prayed for dismissal of E.A.No.585 of 2011.

During the course of enquiry, the petitioner/decree holder

examined himself as P.W-1 and marked Exs.A-1 and A-2, while the

fifth respondent/Judgment Debtor himself examined as R.W-1, but

no documents were marked.

The Executing Court upon hearing argument of both the

counsel, granted leave to the petitioner to proceed against the

petitioners herein/respondent Nos. 3 to 5, who are the partners of

the firm. Aggrieved by the order, the petitioners herein being the

partners of the firm, preferred this revision petition under Article 227

of the Constitution of India instead of Section 115 C.P.C, reiterating

the grounds urged in the counter affidavit filed by the Judgment

Debtor Nos.1 and 2 in E.A No.585 of 2011. However, the petitioners

herein/Respondent Nos. 3 to 5 did not file counter affidavit in E.A

No.585 of 2011.

MSM,J CRP_1322_2014

The first and foremost ground urged by the petitioners

herein/Respondent Nos. 3 to 5 before Executing Court is that, the

first respondent herein/decree holder is not entitled to proceed

against the petitioners herein/Respondent Nos. 3 to 5 i.e. partners of

the firm proposed to proceed, who are not parties to the suit

O.S.No.77 of 2004 invoking Order XXI Rule 50(2) C.P.C. It is further

contended that the Court below failed to appreciate the contention in

proper perspective, though an appeal A.S.No.320 of 2008 is pending

against the judgment and decree in O.S.No.77 of 2004 passed by the

I Additional Senior Civil Judge, Kakinada, but, granted leave

mechanically and requested to set-aside the same.

During hearing, Sri Lasetty Ravinder, learned counsel for the

petitioners/Respondent Nos. 3 to 5, mainly contended that, when the

suit is filed against the firm and it's Managing Partner, the decree

holder is disentitled to proceed against the partners of the firm as

the Execution Court cannot go beyond the decree. It is further

contended that the law laid down by the Apex Court has no direct or

indirect application and therefore, the order of the Court below is

erroneous and liable to be set-aside.

Whereas, learned counsel for the respondents supported the

order passed by the Executing Court in all respects, while

contending that the revision petition ought to have been filed under

Section 115 of C.P.C, but not under Article 227 of the Constitution of

India and requested to dismiss the civil revision petition.

MSM,J CRP_1322_2014

Considering rival contentions, perusing the material available

on record, the point that arises for consideration is:

"Whether the first respondent herein/Decree Holder is entitled to claim any permission from the I Additional Senior Civil Judge, Kakinada, to proceed against the petitioners herein/Respondent Nos. 3 to 5, who were the partners of the firm - first Judgment Debtor, though no decree was obtained against them. If not, whether the order passed by the I Additional Senior Civil Judge, Kakinada in E.A.No.585 of 2011 dated 20.09.2012 be sustained?"

P O I N T:

Indisputably, the first respondent herein/Decree Holder

obtained a decree against Siddi Vinayaka Raw Boiled Rice Mill,

represented by partner one Edala Suryanarayana, Managing Partner

of the firm for recovery of the amount. The petitioners

herein/Respondent Nos. 3 to 5 before the Court below, who were the

alleged partners of the firm, did not file counter affidavit in E.A

No.585 of 2011. Only, Respondent Nos. 2 and 3 herein/Respondent

Nos. 1 and 2 Judgment Debtors filed their counter affidavit against

which the decree holder intended to proceed. It is not denied about

the admission of the petitioners herein as partners in the first

Judgment Debtor firm. To prove that they were partners of the firm,

the first respondent herein/decree holder himself was examined as

P.W.1 and filed his affidavit under Order XVIII Rule 4(1) C.P.C in lieu

of examination-in-chief. He specifically testified that the petitioners

herein were the partners of the firm. Ex.P-1 is the partnership deed

dated 01.01.2000 and Ex.P-2 is the amended partnership deed dated

01.04.2000 i.e. reconstituted partnership firm. These documents

would show that the petitioners herein were the partners of the firm.

MSM,J CRP_1322_2014

In the cross-examination, except eliciting the ownership of the

property, no suggestion was put to P.W-1 that the petitioners before

this Court were partners of the firm. Therefore, the first respondent

herein/decree holder could substantiate his contention that the

petitioners before this Court were partners of Judgment Debtor firm,

but they were not arrayed as parties to the suit, since they are also

equally liable being the partners of the firm.

A special procedure is prescribed under Order XXX

C.P.C for service of summons on the partnership firm and its

partners and filing of appearance on protest etc. The

procedure prescribed under Order XXX C.P.C is an exception

to the general rule.

In Gajendra Narain Singh v. Johrimal Prahlad Rai1, the

Supreme Court held that, appearance under protest by the persons

sued render the service of summons as regards the defendant firm

ineffective. The plaintiff may obtain a fresh summons against the

firm and serve it in the manner prescribed by Order XXX, Rule 3,

C.P.C. against another person who is alleged to be a partner by the

plaintiff. A decree against the defendant firm so obtained may with

leave under Order 20, Rule 50(2) be executed against the firm and

also against the person who had been initially served as a partner

and who had appeared under protest denying that he was a partner.

The plaintiff, however, is not obliged to obtain a fresh summons; he

may request the Court to adjudicate upon the plea of denial raised

by the person served and appearing under protest. The Court will

then proceed to determine the issue raised by that plea, if the Court

AIR 1964 SC 581 MSM,J CRP_1322_2014

finds evidence that the person served was not a partner at the

material time, the suit cannot proceed unless summon is served

afresh under Rule 3. If the Court holds that he was a partner, service

on him will be regarded as a good service on the firm and the suit

will proceed against the firm. The whole of Order XXX in the Code of

Civil Procedure has been newly incorporated in the Code. In the old

Code on account of the provisions contained in Section 45 of the

Contract Act, in suits by or against firms, all the members

composing the firm were necessary parties. Order XXX was

introduced in the present Code so as to provide exception to the

provisions contained in Section 45 of the Contract Act and thus if

the promisees are partners it enables one to sue alone, but only if he

sued in the name of the partnership. A firm as such had no existence

in law. It is not a legal entity like a corporation. It is a mere

abbreviated name for the partner of which it consists. The effect of

the using the name of the firm is simply to bring all the partners

before the Court. A decree against a firm in the name of the firm has

the effect as a decree against all partners. Appendix A to the Code

dealing with the description of parties in particular cases shows that

in suits by or against a firm, the description of the plaintiff or the

defendant should be "AB", a firm carrying on business in

partnership. The plaint should therefore name only the firm as the

plaintiff or the defendant. The words "two or more persons" in Rule 1

of Order XXX are merely descriptive of a partnership as introductory

to the enacting part of the Rule that they are entitled to sue in the

firm name. Therefore, it is not necessary that two partners of the

firm should be named in the cause title. One partner can institute a MSM,J CRP_1322_2014

suit in the name of the firm. Order XXX Rule 1 of the Code inter alia

provides that two or more persons being liable as partners may be

sued in the name of the firm (if any) of which such persons were

partners, at the time of the arising the cause of action. The pleadings

or other documents can be signed, verified or certified by any of the

persons liable as partner. Rule 3 of Order XL of the Code deals with

service of summons on the firm. Where persons are sued as partners

in the name of their firm, the summons should be served either upon

any one or more of the partners or at the principal place at which the

partnership business is carried on within India upon any person

having, at the time of service, the control or management of

partnership business there, as the Court may direct and such

service shall be deemed to be good service upon the firm so sued. If

the service of summons is affected upon any one or more of the

partners, it is good service upon the firm as well as upon that

partner personally, but it is no service upon any other member of the

firm so as to make such a member a person who has been

individually served as a partner. There is a proviso to Rule 3 saying

that in the case of a partnership which has been dissolved to the

knowledge of the plaintiff before the institution of the suit, the

summons shall be served upon other person within India whom it is

sought to make liable. This proviso applies when the dissolution of

the firm was in the knowledge of the plaintiff, Order 6 of Rule 30

deals with appearance of partners. Though all proceedings in a suit

against a firm in the firm name must be conducted in the firm name,

the partners should, so far as appearance is concerned, appear

individually in their own names. The only persons entitled to appeal MSM,J CRP_1322_2014

in a suit against a firm are (i) a persons who alleged that they were

partners of the firm sued or were partners at the time the cause of

action arose; and (ii) persons who are served as partners but deny

that they are partners of the firm sued or were partners of the firm at

the time the cause of action accrued.

In Rana Harkishandas Lallubhai v. Rana Gulabdas

Kalyandas2, the Bombay High Court observed as follows:

"Before dealing with this question, it would be relevant to refer to the material provisions of Order 21, This Order deals with suits by or against firms and persons carrying on business in names other than their own. Rule 1 Sub-rule (1) of this Order allows suits to be filed by or against firms in the names of the firms, and Sub-rule (2) of Rule 1 authorises any one of the partners of the firm to sign, verify or certify pleadings or other documents in such suits.

Rule 2 requires the disclosure of partners' names to be made on demand and Sub-rules (2) and (3) of this rule provide for the passing of orders consequent upon the disclosure of the names or its absence. Rule 3 provides for the manner in which notice can be served in actions against firms. If a firm is sued, the summons shall be served either upon any one or more of its partners, or at the principal place at which the partnership business is earned on within India upon any person having, at the time of service, the control or management of the partnership business there, as the Court may direct.

This rule provides that service, when thus made, shall be deemed good service upon the firm so sued, whether alt the partners are within or without India. The proviso to this rule may be noticed. It deals with the cases of partnership which have been dissolved to the Knowledge of the plaintiffs before the institution of suits and it requires that in such cases the summons shall be served upon every person within India whom it is sought to make liable.

Rule 6 of Order XXX provides that, where persons are sued as partners in the name of their firm, they shall appear individually in their own names, but even so all subsequent proceedings will continue in the name of the firm. According to Rule 7, where a summons is served in the manner provided by Rule 3 upon a person having the control or management of the partnership business, no appearance by him shall be necessary unless he is a partner of the firm sued.

In other words, where a decree has been passed against a firm, it can be executed against the property of the partnership without the decree-holder taking any further step by way of obtaining leave from the Court. Similarly, it can be executed against persons mentioned in Clauses (b) and (c) of Sub-rule (1) of Rule 50. So long as the decree-holder is content to execute the decree either against the property of the partnership or against the persons mentioned in these two clauses, he is not required to ask for any leave and the execution application is entertained by the executing Court and

AIR 1956 Bomb 513 MSM,J CRP_1322_2014

further steps in execution are ordered to be taken in the ordinary course."

(Emphasis supplied)

In International Continental Caoutchone Compagnie

v. Mehta & Co3., it was contended before the Apex Court that when

the appellants had been served as partners of the firm M/s. Oswal

Metal Industries, Nagaur under Order XXX, Rule 3, C.P.C., they had

appeared under protest stating that they had retired and as such the

service on them as service on the partnership firm was a nullity. In

the above decision appearance has been put by an attorney on behalf

of the defendant Bhagat Ram Vadra. That appearance was made

under protest as the defendant denied that he was a partner of the

firm. On 12th April a written statement was filed on behalf of Bhagat

Ram Vadra in which he only said that he had no knowledge of the

allegations in the plaint and he denied that he was a partner.

Referring to Order XXX, Rule 6, C.P.C., his Lordship Buckland, J,,

stated that the provisions contained in Rule 6 of Order XXX, C.P.C.

meant that though such persons may file different written

statements, they may not do so on their own behalf but must file

them on behalf of the firm. Should they file different written

statement on behalf of the firm, the plaintiff will be obliged to show

that not one of the defences prevents a decree being made against

the firm. The learned Judge then referred to Order XXX, Rule 3(a) of

the old Code which was not identical with the corresponding

provisions contained in Order XXX, Rule 8 of the Code of Civil

Procedure of present Code, Examining the provisions of Order XXX,

Rule 3(a) of the old Code, the learned Judge said that the effect of

AIR 1927 Cal 758 MSM,J CRP_1322_2014

that Rule was that where a person who had been served as a partner

under Rule 3 appeared under protest, the service on him as such on

the firm was a nullity and the plaintiff should therefore begin again

and effect service upon the firm in accordance with Rule 3 unless the

firm had already been otherwise served through some other person

as a partner who had not appeared under protest. The learned Judge

then examined the question as to what should happen of the

defendant who had entered appearance under protest denying that

he was a partner of the firm. He referred to the decision of the

Bombay High Court in Ramanujachary v. Pohoomal Bros4. In the

Bombay case, the learned Chief Justice had said that in such event

after the plaintiff had obtained the judgment, he may apply under

Order 21, Rule 50 for leave to issue execution against the person

who had appeared under protest when if the liability is still disputed,

the Court may order the liability of such person to be tried and

determined in any manner in which any issue in a suit may be tried

or determined. The other alternative was also referred in that case by

stating that the plaintiff may wish to challenge at once the denial of

the persons served as a partner that he was a partner. If so, he

should take out a summons to strike out the appearance entered on

the ground that the party appearing was a partner in the firm or was

a partners at the time the cause of action accrued, or in the

alternative to strike out of such appearance the denial of

partnership. An order may then be made directing an issue to be

tried to determine the question of partnership. In another case of

Vithaldas v. Hansraj5, the same Chief Justice suggested a third

AIR 1926 Bom 585

AIR 1921 Bom 48(2) MSM,J CRP_1322_2014

alternative, namely, that the person who had entered appearance

under protest had a right to ask the Court to have the question

decided whether or not he is a partner in the defendant firm and get

the matter decided. On the facts of the case before the Calcutta High

Court, it was laid down that no such question had yet arisen in that

case because no summons had been taken out by the party who

desired to have the question determined. It was, therefore, observed

that it was not necessary until the point came before the Court in a

concrete form to express any definite opinion as to whether or not

the law and practice admit of either of these courses being followed.

None of the above procedure were mentioned in the provisions

contained in Order XXX of the old Code, Shri Buckland, J. said that

Order 21, Rule 50 of the Code provided a definite procedure whereby

the issue can be determined before any execution could go against

the person who had entered appearance under protest. The learned

Judge referred to the observations of Atkin L.J. In Weir & Co. v. Me

Vicar & Co6, and observed that Atkin L.J. seemed to have taken the

view that the question could only be determined after judgment. The

matter was left open by the learned Judge for a proper occasion in

case such a question arose before him. For the purpose of disposal of

the matter before him, the learned Judge said that a person who had

been served as a partner under Order XXX, Rule 3 of the old Code

and entered appearance under protest was not entitled to file a

written statement on his own behalf denying that he was a partner.

That was precisely the law laid down in the above Calcutta case on

the basis of the provisions contained in Order XXX of the old Code.

The written statement filed by Bhagat Ram Vadra was ordered to be

(1925) 2 KB 127 MSM,J CRP_1322_2014

taken off the file which amounted to this that there was no written

statement in the suit and which consequently was undefended.

Thus, in view of the law declared by the Apex Court and

Bombay High Court in the judgments referred supra, when a decree

was obtained by filing suit in the name of the firm, its partners are

liable for the debt due by the firm. In the present case, though, a

notice was served on the partnership firm, none of its partners

appeared and raised any protest as mandated under Order XXX Rule

(6) C.P.C. When no such objection was raised, the decree is binding

on its partners.

The general principle is that, when a decree was obtained

against the judgment debtor in the Trial Court, the Executing Court

cannot go beyond the decree for realization of the fruits of the decree.

But, there is an exception to it. Order XXI Rule 50 C.P.C carved out

an exception to such rule that, the Executing Court cannot go

beyond the decree. Order XXI Rule 50 C.P.C deals with execution of

decrees against the firm and it is extracted hereunder for better

appreciation of the case:

"50. Execution of decree against firm. - (1) Where a decree has been passed 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 6 or rule 7 of Order XXX or who has admitted on the pleadings that he is, or who has been adjudged to be, 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 Indial 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), clauses (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 MSM,J CRP_1322_2014

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 lease, render liable or otherwise affect any partner therein unless he has been served with a summons to appear and answer.

(5) Nothing in this rule shall apply to a decree passed against a Hindu Undivided Family by virtue of the provision of Rule 10 of Order XXX."

Clause (2) is relevant for the purpose of deciding the present

controversy, which permits the decree-holder to proceed and cause

the decree to be executed against any person other than such a

person as is referred to in sub-rule (1), clauses (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.

In view of this exception carved out to the general rule, a

person who obtained a decree is not only entitled to proceed against

the judgment debtors firm, but also against the partners of the firm,

when first judgment debtor is the partnership firm. This special rule

enables the Court to grant leave in a routine manner, if the liability

of that partner is not in dispute. If, for any reason, such liability is

disputed, the Court has to try such an issue as if it is a suit and

recorded a finding in E.A.No.585 of 2011 in E.P.No.43 of 2010 in

O.S.No.77 of 2004.

MSM,J CRP_1322_2014

When an application under Order XXI Rule 50(2) C.P.C is filed,

seeking leave of the Court, the original judgment

debtors/Respondent Nos. 2 and 3 herein filed counter affidavit in

E.A.No.585 of 2011 contending that the property is not liable to be

proceeded for realization of the decretal amount. But, the partners

against whom the first respondent herein/decree holder intended to

proceed did not dispute their liability. However, the Court below by

way of abundant caution recorded a specific finding that the

petitioners before this Court are also liable, being the partners of the

firm/first judgment debtor and the same is now assailed on the

ground that, leave cannot be granted against a person who is not a

judgment debtor. But, this contention can be rejected on the sole

ground that, if the Court finds that these petitioners are liable being

the partners of the firm and granted leave, permitting the decree

holder to proceed against the property of the partners, the contention

of the petitioners before this Court holds no substance and it is liable

to be rejected.

The other contention as per the evidence on record is that, the

petitioners herein/Respondent Nos. 3 to 5 before the Trial Court

have retired as partners from the firm subsequent to March, 2004.

However, the decree holder obtained a decree for the value of the

paddy supplied by the decree holder to the firm on 06.07.2002,

07.07.2002, 20.02.2003 and 23.02.2003. Consequently, the

retirement of the petitioners before this Court subsequent to March,

2004 has no relevance for the reason that, these debts were incurred

prior to retirement of petitioners herein from the firm as partners

and they are liable to discharge the debt. Consequently, the MSM,J CRP_1322_2014

petitioners herein/Respondent Nos. 3 to 5, being the partners of the

firm cannot avoid their liability to avoid their liability to pay debt due

to the decree holder.

Coming to the liability of the partners, Section 25 of the Indian

Partnership Act, 1932, deals with liability of the firm, which reads as

follows:

"Liability of a partner for acts of the firm, every partners is liable, jointly with all the other partners and also severally, for all acts of the firm done while he is a partner."

Similar question came up before Apex Court in Addanki

Narayanappa v. Bhaskara Krishnappa7 and Malabar Fisheries

Company v. Commissioner of Income Tax, Kerala8, the Court

discussed the nature and character of the Partnership under the

Indian Law and held that, "a partnership firm under the Indian

Partnership Act, 1932, is not a distinct legal entity apart from the

partners constituting it and equally in law the firm as such has

separate rights of its own in the partnership assets and when one

talks of the firm's property or firm's assets all that is meant is

property or assets in which all partners have a joint or common

interest". In particular, the Court held that Indian law in this respect

is akin to English Law - and different from the Scottish law -and

quoted several passage from Lindley on Partnership [12th Edition] to

indicate the relationship between the firm and the partners. The

following passage from one of the extracts is relevant. It reads:

1966 (3) S.C.R 400

(1979) 120 I.T.R 49 MSM,J CRP_1322_2014

"The firm is not recognised by English lawyers as distinct from the members composing it. In taking partnership accounts and in administering partnership assets, courts have to some extent adopted the mercantile view, and actions may now, speaking generally, be brought by or against partners in the name of their firm; but, speaking generally, the firm as such has no legal recognition. The law, ignoring the firm, looks to the partners composing it; any change amongst them destroys the identity of the firm; what is called the property of the firm is their property, and what are called the debts and liabilities of what are called the debts and liabilities of the firm are their debts and their liabilities. In point of law, a partner may be the debtor or the creditor of his co- partners, by the cannot be either debtor or creditor o f the firm of which he is himself a members, nor can be employed by his firm, for a man cannot be his own employer."

If this principle is read along with Section 25 of the Indian

Partnership Act, the partners are liable for payment of the debt due,

though decree was obtained against the firm, invoking Order XXI

Rule 50 (2) C.P.C.

The Allahabad Court in Sahu Rajeshwar Nath v. Income-Tax

Officer C-Ward9 R.S.Pathak, J., speaking for the Bench, observed as

follows:

"It is true that under the Income-tax law a firm is treated as an entity distinct from its partners, but that is so only for the purposes of assessment. The procedure relating to assessment concludes when an assessment order has been made and the tax liability consequent upon that assessment has been determined. When a notice of demand is issued requiring the payment of the tax liability, the stage of assessment has been left behind, and with it the distinction between the firm and its partners.....The liability of the partners of the firm is joint and several, and it is open to a creditor of the firm to proceed to recover a debt the firm from any one or more of the partners. In Simon's Income Tax (2nd edition), volume I page 337, paragraph 510, the law is thus stated:

The tax assessed in the firm name is a partnership debt for which all who were partners a t the time when the debt was incurred, or have held themselves out to the Revenue to be such, are jointly liable, This means that any or all of the those persons may be used for the whole of the tax due (when the asssessment become final) without reference to their

9 (1964) 5 I.T.R.755 MSM,J CRP_1322_2014

respective shares under the partnership agreement': See also Stevens v. Britten [1954] 3 All. E.R.385]"

In Income Tax Officer (III), Circle-I, Salem v. Arunagiri

Chettiar10 the Apex Court reiterated the same principle.

Later, in Gambhir Mal Pandiya v. J.K. Jote Mills Company

Limited, Kanpur11, an identical question came up for consideration

before the Apex Court, and the Apex Court after considering the

various provisions of Indian Partnership, Civil Procedure Code and

relying on the judgments of Ellis v. Wadeson12 concluded that, a

large number of cases decided in India and England have laid down

the kind of issue which may be tried under Order XXI Rule 50 (2) of

the Code and the cognate provisions of the English rules. Since the

English cases are first in point of time, we shall begin with them. It

must be remembered in this connection that the English rules

prescribe forms for recording appearance by persons summoned in

actions against firms. Finally, the Apex Court held that, the widest

meaning cannot be attributed to the word "liability". The proper

meaning thus is that primarily the question to try would be whether

the person against whom the decree is sought to be executed was a

partner of the firm, when the cause of action accrued, but he may

question the decree on the ground of collusion, fraud or the like but

so as Dot to have the suit tried over again or to raise issues between

himself and his other partners. It is to be remembered that the leave

that is sought is in respect of execution against the personal

property of such partner and the leave that is granted or refused

affect only such property and not the property of the firm. Ordinarily,

10 (1996) 9 SCC 33 11 1963 AIR 243 12 (1925) 2 K.B 127 MSM,J CRP_1322_2014

when the person summoned admits that be is a partner, leave would

be granted, unless he alleges collusion, fraud or the like.

If, the principles laid in the above judgments are applied to the

present facts of the case, the proposed respondents against whom

the Decree Holder intended to proceed did not file their counter and

did not raise any objection before the Court below, before passing an

order and they did not enter into the witness box atleast to deny

their liability. Therefore, there is absolutely nothing to conclude that

they denied their liability and they are not the partners of the firm.

Hence, the Court is not required to conduct any roving enquiry into

the liability of these petitioners at this stage of granting leave.

The judgment of the Supreme Court in Dena Bank vs.

Bhikhabhai Prabhudas Parekh & Co. & Ors13, is useful for

reference at this stage, to decide the issue in dispute. The two

questions arose for consideration before the Court in the case.

Firstly, whether the recovery of sales tax dues amounting to Crown

debt shall have precedence over the right of the Bank to proceed

against the property of the borrowers mortgaged in favour of the

Bank. Secondly, whether property belonging to the partners can be

proceeded against for recovery of dues on account of Sales tax

assessed against the partnership firm under the provisions of the

Karnataka Sales Tax Act, 1957. The Apex Court was concerned only

with regard to the second question. In Paragraph 18, R.C. Lahoti, J

observed as follows:

"The High Court has relied on Section 25 of the Partnership Act, 1932 for the purpose of holding the partners as individuals liable to meet the tax liability

(2000) 5 SCC 694 MSM,J CRP_1322_2014

of the firm. Section 25 provides that every partner is liable, jointly with all the other partners and also severally for all acts of the firm done while he is a partner. A firm is not a legal entity. It is only a collective or compendious name for all the partners. In other words, a firm does not have any existence away from its partners. A decree in favour of or against a firm in the name of the firm has the same effect as a decree in favour of or against the partners. While the firm is incurring a liability it can be assumed that all the partners were incurring that liability and so the partners remain liable jointly and severally for all the acts of the firm."

(Emphasis supplied)

The Apex Court again referred the principles in Income Tax

Officer (III), Circle-I, Salem v. Arunagiri Chettiar (referred supra),

Sahu Rajeshwar Nath vs Income-Tax Officer C-Ward (referred

supra) and Her Highness Maharani Mandalsa Devi and others v.

M. Ramnaram Private Limited and others14, while considering the

scope of Order XXI Rule 50 C.P.C and observed as follows:

"A suit by or in the name of a firm is really a suit by or in the name of all its partners. The decree passed in the suit, though in form against the firm, is in effect a decree against all the partners. Beyond doubt, in a normal case where all the partners of a firm are capable of being sued and of being adjudged judgment-debtors, a suit may be filed and a decree may be obtained against a firm under Order XXX of the Code of Civil Procedure, and such a decree may be executed against the property of the partnership and against all the partners by following the procedure of Order 21 Rule 50 of the Code of Civil Procedure."

We shall now advert to the submissions made by the learned Additional Advocate General appearing for the respondent-State. The starting point for the litigation is the decree dated 6.6.1970 passed against the State of Rajasthan in respect of the construction work of irrigation department. An appeal was preferred by the State of Rajasthan on 12.2.1980, an application under Section 144 C.P.C. was moved on behalf of the State on 2.4.1981 and Smt. Dhanwanti Devi executed a Will on 7.12.1983 and died in the month of May, 1985. In May, 1987, the District Judge, Sri Ganganagar allowed the

AIR 1965 SC 1718 MSM,J CRP_1322_2014

application filed by the State of Rajasthan under Section 144 C.P.C. The attachment of the property was made of the house in question on 21.11.1992. Several other proceedings were taken thereafter by both the parties opposing attachment and the execution etc. Ultimately, the District Judge dismissed the application filed under Order 21 Rules 49 and 50 C.P.C. and the Review Application was also dismissed on 5.9.1998. Thereupon the appellant filed S.B. Civil Execution First Appeal No.2 of 1998 and the said appeal was dismissed on 12.11.2003. Now the parties are in this Court."

(Emphasis supplied)

A similar question came up for consideration before the Apex

Court in Ashutosh v. State of Rajasthan (referred supra), where the

Apex Court while dealing with Order XXI Rule 50 C.P.C observed

that the execution under this Rule can only be granted where a

decree has been passed against a firm. A decree against the firm

must perforce be in the firm's name. under this Rule, execution may

be granted against the partnership property. It may also be granted

against the partners, in which case the decree-holder may proceed

against the separate property of the partners.

Therefore, not only the property of the firm, but also personal

property of the partners is also liable to be proceeded, since this Rule

is an exception to the general rule and the liability of the partners is

governed by the Partnership Act. In the instant case, the petitioners

herein were the partners as on the date of incurring debt(s) as on

06.07.2002, 07.07.2002, 20.02.2003 and 20.03.2003 and they

allegedly retired subsequent to 01.03.2004. Therefore, for the debt

contracted by the firm, during the partnership business prior to

retirement of these petitioners, not only the firm, but also the

partners are liable to the firm debt.

MSM,J CRP_1322_2014

Section 25 of the Indian Partnership Act, 1932, deals with

liability of a partner for acts of the firm, every partners is liable,

jointly with all the other partners and also severally, for all acts of

the firm done while he is a partner. Thus, it is clear from Section 25

of the Indian Partnership Act that, when the debt was contracted

prior to retirement of these petitioners as partners from the firm

subsequent to March, 2004, still, they are liable to pay the debt due

to the decree holder, as the liability was incurred prior to their

retirement. The Trial Court adverted to the decision of the Apex

Court in Ashutosh v. State of Rajasthan (referred supra) and also

provisions of Indian Partnership Act, concluded that the personal

property is also liable for the debt of the firm when the debt was

contracted prior to retirement of the petitioners as partners from the

firm, consequently, I find no error in the under challenge warranting

interference of this Court.

This civil revision petition is filed under Article 227 of the

Constitution of India. But, the same is not maintainable and only

revision under Section 115 of C.P.C is maintainable against such an

order in execution. In any view of the matter, mere quoting of wrong

provisions of law is not a ground to dismiss the petition, if the

petitioner is otherwise entitled. Therefore, this petition is treated as a

revision under Section 115 of C.P.C. This Court can exercise such

power only in three circumstances, where the subordinate courts

appears to have exercised a jurisdiction not vested in it by law, or to

have failed to exercise a jurisdiction so vested, or to have acted in the

exercise of its jurisdiction illegally or with material irregularity, the MSM,J CRP_1322_2014

High Court may make such order in the case as it thinks fit. Thus,

the jurisdiction of this Court is limited under Section 115 of C.P.C

and such jurisdiction shall be exercised only in three circumstances

enumerated in Section 115 C.P.C.

The order under challenge is not a final order, but it is only

interlocutory in nature. In view of the proviso to Section 115 (2)

C.P.C, only a final order is revisable under Section 115 of C.P.C.

Even according to the explanation thereto, the expression "any case

which has been decided" includes any order made, or any order

deciding an issue in the course of a suit or other proceeding.

But, in the present case, leave is granted deciding an issue

recording evidence of the parties to the execution petition and held

that the decree holder is entitled to proceed against the property of

the petitioners/partners of the firm. Such finding amounts to

deciding an issue and thereby, revision is maintainable under

Section 115 of C.P.C.

On close verification of the order under challenge, I find that

the contention of these petitioners do not attract any of the three

pre-conditions to entertain a revision under Section 115 C.P.C. Even

assuming that the revision under Article 227 of the Constitution of

India is maintainable, the jurisdiction of this Court is limited.

The powers of this Court under Article 227 are limited, this

Court cannot exercise such power and the duty of this Court is to

see that the Courts shall not exceed its power that is conferred on it

or exercise power based on extraneous material to pass any order

and to keep the subordinate courts within its bounds of jurisdiction.

MSM,J CRP_1322_2014

This Court while exercising power under Article 227 can

exercise its discretion to interfere in the following circumstances:

a) When the inferior court assumes jurisdiction erroneously in excess of power.

b) When refused to exercise jurisdiction.

c) When found an error of law apparent on the face of record.

d) Violated principles of natural justice.

e) Arbitrary or capricious exercise of authority or discretion.

f) Arriving at a finding which is perverse or based on no material.

g) A patent or flagrant error in procedure.

h) Order resulting in manifest injustice.

i) Error both on facts and law or even otherwise.

Article 227 deals with power of superintendence by the High

Court over all Subordinate Court and Tribunals. The power of

superintendence conferred upon the High Court by Article 227 is not

confined to administrative superintendence only, but includes the

power of judicial review also even where no appeal or revision lies to

the High Court under the ordinary law, rather power under this

Article is wider than that of Article 226 in the sense that it is not

subject to those technicalities of procedure or traditional fetters

which are to be found in certiorari jurisdiction and such power can

also be exercised suo motu. The circumstances where the Court can

exercise jurisdiction under Article 227 of the Constitution of India

are only elliptic.

In view of my foregoing discussion, even if the petition is

treated as revision either under Article 227 of the Constitution of

India or under Section 115 of C.P.C, I find no ground warranting

interference of this Court, since the order under challenge is free

from any legal infirmity, warranting interference of this Court, while MSM,J CRP_1322_2014

exercising jurisdiction either under Section 115 C.P.C or under

Article 227 of the Constitution of India. Hence, the civil revision

petition is liable to be dismissed. Accordingly, the point is answered.

In the result, civil revision petition is dismissed.

Consequently, miscellaneous applications pending if any, shall

stand dismissed.

_________________________________________ JUSTICE M. SATYANARAYANA MURTHY Date:07.01.2021 Note: LR copy to be marked b/o SP