P. Kishanchand and Co. vs Lalishah Khanna and Sons

Rajiv Sahai Endlaw, J.—Exemption allowed, subject to just exceptions.

Vide order dated 29th July, 2009 warrants of attachment were issued in execution of the monies decree against M/s Lali Shah Khanna & Sons, a partnership firm. These objections have been filed by one Shri Rajesh Khanna on the ground that the warrants have been issued with respect to his premises and goods. In the entire objection petition it is nowhere stated that the objector is not the partner of the judgment debtor firm. Mr. S.C. Singhal, Advocate appearing for the objector on query admits that the objector is a partner of the judgment debtor firm. He however contends that the goods ordered to be attached are the personal property of the objector and the decree cannot be executed there against under Order 21 Rule 50 of the CPC which is as under:

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 or Order 30 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 Indian Partnership Act, 1932 (9 of 1932)].

(2) Where the decree-holder claims to be entitled to cause the decree to be executed against any person other than such a person as is referred to in Sub-rule (1), 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.

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

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

(5) Nothing in this rule shall apply to a decree passed against a Hindu Undivided Family by virtue of the provisions of Rule 10 of Order 30.

The partners of a firm have a unlimited liability to the creditors of the firm. That is what distinguishes a partnership firm from a limited company or now from the limited liabilities partnership (LLP) permitted under the recent legislation. It is for this reason only that Sub-rule 1(c) provides for execution of a decree against a firm also against a person individually adjudicated as a partner or sued as a partner along with the judgment debtor firm. Thus, once it is admitted that the objector is a partner of the judgment debtor firm, the decree against the judgment debtor firm is executable even against the personal properties of the objector.

As far as the reference to Rule 50 (Supra) is concerned, the same also does not negate the aforesaid general proposition. The only purport thereof is that if from the decree it is not clear as to whether the person against whom it is sought to be executed is a partner or not, then the decree against such person cannot be executed till the such adjudication is made by the court. However, the said provision cannot come to the rescue of the objector who on query from the court admits to be a partner of the judgment debtor firm, though the said fact was sought to be obliquely concealed in the objection petition.

The counsel for objector has contended that since the objector does not fall in any of the categories mentioned in Clauses (a) to (c) of Sub-rule 1, for the decree to be executable against him, his liability must be determined under Sub-rule (2) and procedure for which adjudication is the same as a suit and till then, the decree cannot be executed against him. He has thus urged for issuance of notice of objection to the decree holder.

In my view, the only determination required under Sub-rule (2) is whether the objector is a partner or not. The same does not permit adjudication of any other liability, if a partner; in as much as if the person referred to in Sub-rule (2) is determined to be a partner, he would be liable for debt of the firm. To hold otherwise would be to allow the decree to be reopened and which is not permissible in law. If any support is needed for the proposition, Gambhir Mal Pandiya Vs. J.K. Jute Mills Co., Ltd., Kanpur and Another, can be referred to.

In the present case, that determination under Sub-rule (2) is also not required since it is admitted that the objector is a partner.

In the circumstance, no merits are found in the objections and the same are dismissed along with the other application.