Jagannath Jugal Kishore v. Chimanlal Chowdhuri And Ors

Jagannath Jugal Kishore v. Chimanlal Chowdhuri And Ors

(High Court Of Judicature At Calcutta)

A.F.O.O. No. 12 of 1944 | 20-03-1944

Authored By : G.D. McNair, Gentle

G.D. McNair, J.

1. I have had the advantage of perusing the judgment in thisappeal which is about to be delivered by Gentle J. and with which I am incomplete agreement; but inasmuch as the matter is of considerable importance Ihave set out my own views shortly.

2. The appellant obtained a decree in May 1931 against thefirm of Kaniram Bangsidhar and the questions for determination arise in anattempt to execute that decree.

3. The Code of Civil Procedure provides in O. 30 theprocedure to be adopted when a firm is sued. Order 30, R. 1 enables thepartners to be sued in the firm name. Order 30, R. 3 provides so far as ismaterial that the summons shall be served upon any one or more of the partners.

4. In the present instance the summons was served on onepartner alone, namely, Bangsidhar. The effect however was that all persons whowere in fact at the time partners became defendants to the suit.

When a firms name is used it is only a convenient methodfor denoting those persons who compose the firm at the time when the name isused, and a plaintiff who sues partners in the name of their firm in truth suesthem individually just as much as if he had set out all their names. (PerLindley L.J., Western National Bank of the City of New York v. Perez, Triana& Co., 1891-1 Q.B. 304 at p. 314) : (60 L.J. Q.B. 272).

It follows that the moment a decree is passed against a firmit is a decree against the individual members of the firm. In order toascertain how that decree is to be executed it is necessary to refer to otherprovisions of the Code.

5. Section 51 provides that the Court may on the applicationof the decree-holder order execution of the decree in a number of waysincluding "(b) by attachment and sale....of any property" and theproperty liable to attachment and sale is specified in S. 60.

6. Order 21 deals with the procedure. Rule 10 of that Order,in conformity with S. 51, provides that the machinery for execution must be setin motion by an application; R. 11(1) provides that the Court may on an oralapplication in certain cases order immediate execution by arrest of thejudgment-debtor and R. 11(2) provides that in all other cases there must be awritten application in the form of a tabular statement giving certainprescribed particulars.

7. In the present instance application was made by TabularStatement for realisation of the decretal amount and costs by attachment ofshares standing in the names of persons who were alleged to be partners of thedefendant firm.

8. This was an application for execution and the Court isbound under O. 21, R. 17, to see if the requirements of the rules have beencomplied with: if so, the application is admitted and execution is ordered toissue as prayed subject to the provisions thereinafter contained.

9. Among those provisions are the provisions of O. 21, R. 50which relate to a decree against a firm. Execution may be granted, (a) againstany property of the partnership and (b) against any person who has appeared, oradmitted, or been adjudged to be a partner.

10. Order 21, R. 50(2) provides:

Where the decree-holder claims to be entitled to cause thedecree to be executed against any person other than such a person as isreferred to in sub-rule (1), clauses (b) and (c), as being a partner in thefirm, he may apply to the Court which passed the decree for leave, and wherethe liability is not disputed, such Court may grant such leave, or, where suchliability is disputed, may order that the liability of such person be tried anddetermined in any manner in which any issue in a suit may be tried anddetermined.

11. In the present case, Bangsidhar alone came into thecategory of persons who had been served as, or had admitted, or had beenadjudged to be, a partner, and against him execution issued. With regard to theothers their liability as partners was undecided and leave to issue executionhad to be obtained.

12. In conformity with the practice observed in this Court,the Tabular Statement was presented to the Master who ordered notice to issueunder O. 21, Rr. 50 and 22(1)(a), Civil P.C. The reference to R. 22(1)(a) isnot now material. On receipt of the notice the objection was raised that therewas no application under O. 21, R. 50 of the Code.

13. Das J. held, the decree could not be executed againstthe respondents for 2 reasons (1) that an application for leave to execute thedecree under O. 21, R. 50(2) is a substantive application separate and distinctfrom an application for execution under O. 21, R. 11 and that no suchapplication had been made nor leave obtained and (2) assuming that theapplication before him could be regarded as a combined application for leaveunder O. 21, R. 50(2) and an application under O. 21, R. 11 the application forleave was barred under Art. 181, Limitation Act and the application forexecution was therefore not maintainable for want of previous leave.

14. I am unable to accept the view that the application forleave under O. 21, R. 50(2) is essentially a separate and distinct applicationfrom an application for execution.

15. The decree-holder is entitled to execute the decreewithin a year against any judgment-debtor, and, if the decree is against afirms against any partner in the firm who has had art. opportunity to deny hisliability; after one year he must apply under O. 21, R. 22 for leave to executeagainst any judgment-debtor whether the decree is against the firm or againstan individual. If an application has to be made for leave to execute in anyevent, it is not unreasonable-that that application should be made in the firstinstance in accordance with O. 21, R. 22 and that the Court should, whileconsidering under R. 17 whether there has been compliance with the Rules,consider further whether in the case of a decree against a firm the personsalleged to be partners have had an opportunity of contesting their liability assuch. If not, the application for execution must be stayed until thatopportunity has been given them, and the issue referred to in O. 21, R. 50(2)has been tried. That issue however only arises when the application forexecution is made. It arises out of and is subsidiary to the application forexecution.

16. The practice adopted in the present case is of longstanding and was approved by this Court in appeal from the original side inJagat Chandra Bhattacharyya v. Gunny Haji Ahmed, 53 Cal. 214 [LQ/CalHC/1925/384] :(: A.I.R. 1926 Cal. 271) [LQ/CalHC/1925/384] where Buckland J. said at p. 234,

applications for execution are ordinarily made ex parte onTabular Statement. In cases to which O. 21, R. 22 applies it appears to be thepractice to file the tabular Statement and at the same time to take out asummons under that rule. This practice appears to be convenient and it mightwell be followed where O. 21, R. 50(2) applies whether in conjunction with O.21, R. 22 or not but the summons should be served before any order is madeagainst the persons to be held liable.

17 A similar view bas been taken in the Bombay and LahoreHigh Courts and I cannot agree that the procedure which has been prevalent forso long should now be altered.

18. The two applications under O. 21, R. 11 and under O. 21,R. 50 are complementary and may well be combined in a single application. Thereis no obligation to apply in the first instance for leave under O. 21, R. 50.

19. In fact it is only when the decree-holder applies for executionthat the Court has to consider whether there is any impediment against theissue of process.

20. In the case of an individual where liability as apartner is not yet determined, the Court does not dismiss the application butdirects an intermediate enquiry. During that enquiry the substantiveapplication is in abeyance and it is eventually decided according to the resultof the enquiry.

21. The determination of the question of limitation dependsto some extent on the manner in which O. 21, R. 50(2) is construed The learnedJudge has held that the application for leave is a separate and specialapplication, that it is not an application for execution of, nor an applicationto enforce a decree of this Court and is therefore not governed by Art. 183,Limitation Act which gives the decree-holder 12 years in which to pursue hisremedy; that no other Article is applicable and recourse must therefore be hadto the residuary Art. 181 which limits the decree-holder to 3 years.

22. In my view the application for leave is not anindependent application and I am further of opinion that it is an applicationto enforce a decree. The words to "enforce a decree" in Art. 183 areapplicable to a decree of this Court and not the more restricted words "forexecution of a decree" in Art 182 which applies only to the decree of amofussil Court.

23. Undoubtedly the object of the application is to enablethe decree-holder to obtain satisfaction of the decree. It is an applicationwhich is made in pursuance of that object, and since, as I have already stated,it is combined with an application which is admittedly made in the course ofexecution and for the purpose of enforcing the decree, it appears to me thatthe application for leave must equally be an application to enforce a decree.

24. According to the practice of this Court a combinedapplication is made for execution, in the course of that application an issueis tried and if the decree-holder is successful execution issues as a matter ofcourse.

25. Rule 50(2) is confined to an enquiry to ascertain whoare in fact the partners in the firm. The decree has been passed against allthe persons who are at the time partners, and if, as the result of the enquiry,an individual is found to have been a partner at the date of the decree, thedecree must operate as a valid decree against him from its date.

26. The words in R. 50(2) are "where a decree-holderclaims to be entitled to cause the decree to be executed......" The use ofthe word "claims" indicates that the decree-holder is asserting aright, and since that right has not been established in the presence of thosepersons who are not included in R. 50, sub-r. 1(b) and (c) they are given anopportunity of contesting the claim.

27. It has been argued that the procedure is analogous tothe procedure in a mortgage suit and reliance has been placed on the reasonsgiven by the Court for their decision in F.H. Pell v. M. Gregory, 52 Cal. 828 [LQ/CalHC/1925/170] :(: A.I.R. 1925 Cal. 834 [LQ/CalHC/1925/169] F.B.) that an application for apersonal decree against the mortgagor under O. 34, R. 6 of the Code is anapplication to which Art. 181 applies. The basis of the decision as I read it,was that the application for a personal decree was an application for a newdecree in the suit and not an application for enforcing a decree.

28. The analogy does not seem to me applicable to a decreeagainst a firm where the liability of the partners upon the subject-matter ofthe suit has been decided but the question who the partners may be isoutstanding. The decree-holder has the right to enforce the decree against theindividuals who are partners; under R. 50(2) he is not seeking any new right,as is the mortgagee under O. 34, R. 6, he is merely seeking an order of theCourt that the person against whom he claims to enforce the decree is ajudgment-debtor against whom the decree has already been passed. Again, it hasbeen argued that limitation would not begin to run against a partner who doesnot come under R. 50(1)(b) and (c) until the enquiry under R. 50(2) iscompleted and reliance is placed on the Maharaja of Darbhanga v. HomeshwerSingh, 48 I.A. 17 : (A.I.R. 1921 P.C. 31) for this proposition, on the groundthat no "present right to enforce the judgment, decree or orderaccrues" until the respondent to the application is adjudged a partner.

29. Such a construction appears to me to confuse the rightto enforce, with the procedure of enforcement. The moment the decree is passedit can be executed, but, as a matter of procedure, the persona against whomexecution should issue may remain to be determined. If that contention were toprevail, there would be in effect two periods of limitation with regard to thesame person. Suppose for instance a person were found on enquiry to be apartner. The decree-holder would have 3 years in which to apply for an enquiry,and a further 12 years in which to apply for execution against his privateproperty, whereas had the partners interest been admitted the periodapplicable would be only 12 years.

30. In my view, the decree is in existence and capable ofenforcement against the individual members of the firm so soon as it is passed,and one method of enforcing the decree is by an application to adjudge as apartner an individual who has not yet had an opportunity of contesting hisliability as such. It follows that the application is an application to enforcea decree to which Art. 183 applies.

31. The appeal must be allowed with costs; certified for twocounsel and the application remanded to the trial Court for disposal when thecosts of the hearing before Das J. will be in the discretion of the Judge bywhom the application is heard.

Gentle, J.

32. The plaintiff is the appellant. On 15th May 1931 heobtained an ex parte decree against a firm named Kaniram Bansidhar for Rs.45,091-2-0 and interest at 6% p.a. together with the costs of suit. The firmwas sued pursuant to O. 30, R. 1, Civil P.C. Service of the writ of summons waseffected upon respondent 6 under R. 3 of the Order, no other person beingserved.

33. On 5th May 1943, within 12 years from the date of thedecree, the appellant made an application for execution under O. 21, R. 10 ofthe Code. Rule 11(2) requires an application for execution made subsequent tothe passing of the decree to contain, in a tabular form, the particularsprescribed. The appellants tabular statement gave, in column 9, the names ofthe six respondents as the partners in the firm and against whom execution wassought and, in column 10, as the mode of execution, attachment and sale of certainshares belonging to respondents 1, 2, 3 and 6 and also attachment and sale ofthe respective shares of the same respondents in a partnership alleged to becarried on by them with some other unnamed persons.

34. Since respondent 6 was served with the writ of summonsin the suit, it is not disputed that execution should issue against him andreference to this respondent is not further required. Further mention of themode of execution and the property against which execution is sought isunnecessary. It is convenient hereafter to refer to respondents 1 to 5 as"the respondents" who alone oppose the appeal.

35. On presentation of the tabular statement before theMaster on 5th May 1943 he endorsed it "Let notice issue under O. 21, Rr.50 and 22 (1)(a), Civil P.C." Pursuant to this direction a notice, dated5th May 1943, over the signature of the Master was issued by the Court. Thisnotice is headed "Notice under O. 21, Rr. 50 and 22(1)(a), CivilP.C." It is addressed to the respondents and is to the effect that theplaintiff had applied to the Court for leave to execute the decree against themas partners and they were thereby required to appear in person before the Judgein Chambers on 27th May 1943 to show cause why the prayer of the plaintiffshould not be granted. Rule 22(1) requires notice to be given to the personagainst whom execution is sought when an application is made more than one yearafter the passing of the decree. Further mention of this rule is not requiredas no point arises with regard to it. The matter was adjourned from time totime and eventually was heard by Das J. on 28th January 1944 who disposed of itby his order dated 8th February following.

36. The contentions before the learned Judge, so far as arematerial in this appeal, were: Since the respondents did not appear in thesuit, have not admitted on the pleadings they were partners in thejudgment-debtor firm and have not been so adjudged, and were not served withthe writ of summons, the decree cannot be executed against them until they areso adjudged; application for such adjudgment must be made within three yearsfrom the date of the decree and since this was not done within that period anapplication for it is now barred by the provisions of Art. 181, Limitation Act;further, adjudgment as partners and execution of a decree must be sought byseparate applications, the application before the Master was not for therespondents to be adjudged as partners but for execution and no suchapplication or order can be made in relation to the respondents until they havebeen adjudged to be partners in the firm, which adjudgment cannot take placeupon the application for execution.

37. Das J. accepted the above contentions and dismissed theapplication. This appeal is preferred against the dismissal.

38. The provisions of the Civil Procedure Code which requireto be set out at length are the following:

Order 21, R. 50(1). Where a decree has been passed against afirm, execution may be granted;

(a) against any property of the partnership;

(b) against any person who has appeared in his own nameunder R. 6 or R. 7 of O. 30 or who has admitted on the pleadings that he is, orwho has been adjudged to be, a partner;

(c) against any person who has been individually served as apartner with a summons and has failed to appear;

Provided that nothing in this sub-rule shall be deemed tolimit or otherwise affect the provisions of S. 247, Contract Act, 1872.

(2) Where the decree-holder claims to be entitled to causethe decree to be executed against any person other than such a person as isreferred to in sub r. (1), cls. (b) and (c), as being a partner in the firm, hemay apply to the Court which passed the decree for leave, and where theliability is not disputed, such Court may grant such leave or, where suchliability is disputed, may order that the liability of such person be tried anddetermined in any manner in which any issue in a suit may be tried anddetermined.

(3) Where the liability of any person has been tried anddetermined under sub-r. (2), the order made thereon shall have the same forceand be subject to the same conditions as to appeal or otherwise as if it were adecree.

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

39. The decree in the suit was obtained against the firm, eonomine and since none of the respondents either appeared, or admitted being orhas been adjudged to be, a partner or has been served with the writ of summons,it is necessary that he should be adjudged to be a partner before the decreecan be executed against him. The provision in R. 50(1)(b) "who has beenadjudged to be a partner" applies to an adjudgment in the course of thetrial of the suit and also to an adjudgment under sub-r. (2). When a person,who has not been adjudged a partner at the trial, but who, subsequently, is soadjudged under sub-r. (2), he then becomes a person adjudged under sub-r.(1)(b) and thereupon execution against him may be granted.

40. The main points for consideration are the following: (a)Whether the adjudgment under sub-r. (2) must be effected before application forexecution is made, or (b) Whether the application for execution can include anapplication for adjudgment; and (c) Whether Art. 181 or Art. 183 applies to anapplication under R. 50(2).

41. Reference can now be made to the relevant Articles ofthe Limitation Act, which are:

Description of Application.

Period of Limitation.

Time from which period begins to run.

Article 181.

Applications for which no period of Limitation is providedelsewhere.

Three years.

When the right to apply accrues

Article 182.

For the execution of a decree or order of any Civil Courtnot provided for by Art. 183.

Three years.

The date of the decree or order.

Article 183.

To enforce a judgment, decree or order of any Courtestablished by Royal Charter in the exercise of its ordinary original civiljurisdiction.

Twelve years.

When the present right to enforce the judgment, decree ororder accrues to some person capable of releasing the right.

42. Article 181 is the residual Article. It applies onlywhen no other Article is applicable; when any other Article is in point it mustbe applied. It is not disputed that Art. 183 is the relevant article whichapplies to the decree out of which the application for execution arose and thatan application, simpliciter, for execution of the decree would not be barreduntil the expiration of twelve years after it was passed. It is, however,contended that an application to adjudge a person as a partner in a firm,against which there is a decree; is not an application to which Art. 183applies since there is no article which specifically governs such anapplication, Art. 181 applies and the application cannot be made after theexpiration of three years from the time when the right to apply accrues namely,the date of the decree; the decree in the suit was passed on 16th May 1931 and,therefore, the application to adjudge the respondents as partners should havebeen made by 14th May 1984; if the application made on 5th May 1943 is such anapplication, it was made after the expiration of three years and is barred byArt. 181.

43. Before dealing with the main points it is convenient toconsider the effect of two short extracts from other provisions of the Code.Order 30, R. 1(1) provides that "any two or more persons......being liableas partners.....may be sued in the name of the firm......" and R. 3 that"where persons are sued as partners in the name of their firm......"With regard to these provisions I cannot do better than quote the observationsof Lindley L.J. in Western National Bank of City of New York v. Perez Triana& Co., 1891-1 Q.B. 304 : (60 L.J.Q.B. 272) which are very much in point. Atp. 314 he said:

When a firms name is used it is only a convenient methodfor denoting persons who compose the firm at the time when that name is usedand a plaintiff who sues partners in the name of their firm in truth sues themindividually just as much as if he had set out all their names.

In Ram Prosad Chimonlal v. Anundi & Co., 49 Cal. 524 [LQ/CalHC/1921/263] :(: A.I.R. 1922 Cal. 408) [LQ/CalHC/1921/263] Ghose J. at p. 527 referred to theabove decision of the Court in England and observed:

It is settled law that the effect of the provisions (O. 30of the Code) with regard to suing partners in their firm name is merely to givea compendious mode of describing in the writ the partners who compose the firmand that the plaintiff who sues partners in the name of their firm in truthsues them individually just as much as if he had set out all their names.

It must follow that when a firm is sued the decree againstthe firm is a decree against the individual partners of the firm.

44. If a partner appears in the suit, he must, under O. 30,R. 6 do so in his own name. His position as a partner is then known andexecution may be granted against him pursuant to O. 21, R. 50(1)(b) in theevent of a decree being passed against the firm, nothing further being requiredto enable this to be done.

45. If a person who is a partner does not appear in the suitand, it would follow, his position as such is not admitted in a pleading and ifhe has not at the trial been adjudged a partner and has not been served withthe writ of summons, whilst execution cannot be granted against him unless heis subsequently adjudged to be a partner under R. 50(2), nevertheless, thedecree against his firm is a decree against him. The investigation under R.50(2) is limited to making an enquiry whether a person is a partner in a firmagainst which a decree has been passed: such person cannot do anything morethan dispute that he is a partner; the merits of the subject-matter of the suitand the validity of the decree are matters outside the ken of the enquiry (videCooverji Varjang v. Cooverbai, I.L.R. 1940 Bom. 562 : (:A.I.R. 1940 Bom. 330) [LQ/BomHC/1940/34] . If he shows he is not a partner in the firm, then therewas never a decree against him but if he is adjudged to be a partner, thenthere was a decree against him from the time when it was passed. The object ofthe enquiry is to ascertain whether he is a person against whom the decree hasbeen passed in the name of the firm. It is always the obligation of adecree-holder to satisfy the Court that the person against whom execution issought is the person against whom a decree is passed. Usually there is nodispute but it is not unknown for a person against whom execution is issued todispute that he is the judgment-debtor. In respect of a decree against a firmthe obligation of a decree-holder to shew that a person, who is not covered byO. 21, R. 50(1)(b) and (c), is a partner and therefore is a judgment-debtor,may be more onerous than in decree against named persons but it is the sameobligation as that which falls upon all decree-holders.

46. On behalf of the respondents, the Advocate Generalcontended that since a decree against a firm is incapable of execution againsta partner personally who is not included in O. 21, R. 50(1)(b) and (c), untilhe has been adjudged a partner under R. 50(2), that limitation begins to runfrom the date of such adjudication and not from the date of the decree since,he argues, the present right to enforce the judgment or decree does not ariseuntil adjudgment.

47. In support of this contention, Maharaja of Darbhanga v.Homeshwar Singh, 48 I.A. 17 : (A.I.R. 1921 P.C. 31) and Chandas NarrondasNavivahoo v. C.A. Turner, 16 I.A. 156 : (13 Bom. 520 P.C.) were cited. In thefirst of these cases a decree was passed in 1906; it did not provide that thejudgment-debtor was personally liable but ordered the decretal sum to berealised by the sale of property belonging to his deceased brother in hispossession. The judgment-debtor did not obtain the property until 1914 in whichyear an application was made for execution. Article 182, Limitation Act appliedwhich requires an application for execution to be issued within 3 years fromthe date of the decree. It was held that since application for execution couldnot be made until the judgment-debtor came into possession of the propertyagainst which execution could issue, the period of limitation was three yearsfrom that time i.e. 1914. In Navivahoos case, (16 I.A. 156 : 13 Bom. 520 P.C.)the Insolvency Court ordered judgment against an insolvent in 1868 which wasentered up in the High Court. In 1886 the Insolvency Court ordered executionfor part of the judgment debt being satisfied that insolvent was then ofability or had left assets to pay. By S. 86, Insolvency Act (which was in forceat the time) a Court might order execution if it appeared to its satisfactionthat the insolvent could pay. Therefore, no present right accrued in 1868 tomove for execution and not until after the order was passed in 1886 and anapplication for execution more than 18 years after the decree was held not tobe barred by limitation.

48. In each of the above authorities execution could notissue save upon the happening of certain events which, incidentally, wereoutside the control of the judgment-creditor. Before either of those decreescould be executed, the decree-holder had to wait until, in the case of theMaharaja of Darbhanga, the judgment-debtor was in possession of the propertyagainst which, alone, the decree could be executed and, in Navivahooos case,(16 I.A. 156 : 13 Bom. 520 P.C.) until the Court was satisfied thejudgment-debtor could pay or had left assets to pay the debts. In suchcircumstances, the decrees were incapable of execution until the events hadoccurred, In the Maharaja of Darbhangas case, (48 I.A. 17 : A.I.R. 1921 P.C.31) their Lordships of the Judicial Committee, at p. 22, observed that:

In order to make the provisions of the Limitation Act apply,the decree sought to be enforced must have been in such a form as to render itcapable, in the circumstances of being enforced.

The decree in the present suit is in a form which renderedit capable of execution from the date when it was passed, and at all timesexecutable in contra-distinction to the decrees in the two cases before theJudicial Committee. An enquiry under O. 21, R. 50(2) could have taken placeimmediately in the present case, to ascertain the persons against whom it waspassed and against whom it could be executed. The delay in invoking theprovisions of the above rule cannot have the effect of postponing the date fromwhich limitation commences and extending the period during which the decree canbe enforced or executed.

49. The wording is different in Arts. 182 and 183. Theformer applies to decrees in Courts not established by Royal Charter andrelates to an application for "the execution of a decree" where asthe latter applies to Courts established by Royal Charter and relates toapplications "to enforce a decree." In providing separate articlesfor different Courts and in adopting different language the legislature musthave intended the effect of each article to be different. In Brij Lal v.Damodar Das, 44 All. 555 : (: A.I.R. 1922 All. 238) Ryves J.expressed the opinion, at p. 565, that "to enforce" is wider than"to execute" a decree and should be interpreted as equivalent to"to give full effect to," with which view I respectfully agree. F.H.Pell v. M. Gregory, 52 Cal. 828 [LQ/CalHC/1925/170] : (: A.I.R. 1925 Cal. 834 [LQ/CalHC/1925/169] (F.B.)) was a mortgage suit. A preliminary decree was followed by a finaldecree for sale being passed and the proceeds, being insufficient to dischargethe mortgage debt, a balance remained unpaid. The mortgagee applied for apersonal decree under O. 34, R. 6 for the amount unsatisfied. The question fordecision was whether Art. 181 or Art. 183 applied to such application, and, inthat case, it was held it was the former. At p. 857 Mookerji J. observed thatthe real question was whether au application for a decree under O. 34, R. 6 isfor enforcing the preliminary decree passed under R. 4 of the same order. Thepreliminary decree reserved to the mortgagee liberty to apply for a personaldecree for the amount of any balance remaining after sale of the mortgagedproperty. At p. 860 the same learned judge pointed out that, in an applicationunder R. 6,

though the mortgagee comes under the decree to avail of aliberty, he seeks to obtain something which the previous decree did not givehim. He comes to enforce a tight or seek a relief which he had independently ofthe previous decree. He comes under the previous decree only in the sense thatthe right or relief has been put off by it until the happening of certain events.Seeking to avail of a liberty for applying for a relief is different fromenforcing a judgment or decree the judgment or decree not having granted therelief but only the liberty to apply for it.

In my view the circumstance and the effect of the decree aredifferent in the present case. It is a decree against the partners of the firmalthough not identified by name in the decree. Upon it being passed theappellant was entitled, and had the right, to enforce it against all thepartners personally. In respect of those partners to whom O. 21, R. 50, sub-r.(1)(b) and (c) did not apply, ascertainment or adjudgment was required of thepersons against whom the decree could be executed, the decree being executableagainst them from the date it was passed. An application by a decree-holderunder R. 50(2) is not for any right which was not given to him by the decreebut for a determination that the person against whom the application is made isa person against whom the decree was passed and who has been liable upon itfrom its inception.

50. It is now convenient to examine the provision of R.50(2). The sub-rule can only be invoked when the decree-holder claims to beentitled to cause the decree to be executed against any person other than onereferred to in sub-r. (1)(b) and (c). "Claims" means that, at thetime when the provisions of the sub-rule are invoked, the decree-holder assertsa right to execute the decree against the particular person and he seeks tohave his existing right to execute the decree recognised; he does not seek toobtain a further right which he has not already obtained by the decree. If theparticular person admits his liability to have the decree executed against him,the Court may thereupon grant the decree-holder leave to execute. "Liability"in the sub-rule does not mean liability in the suit but that he is one of thepersons against whom the decree was passed and, consequently, his liabilityunder the decree which has already been passed against all partners. When aperson denies liability, i.e., his liability as a partner in thejudgment-debtor firm, such liability is that which is tried and determined. Thesub-rule relates only to a person who is not covered by R. 50(1)(b) and (c) andtherefore is not one who has had the opportunity of being heard; the reason foraffording such person an opportunity to dispute his liability as a partner isthat he should not be condemned without an opportunity being given to him to beheard and hence the provision in R. 50(4), which does not relate to the suititself but to the enquiry under sub-r. (2). Since the person affected by sub-r.(2) may not have had an opportunity of contesting his alleged position as apartner, execution cannot issue against him without leave of the Court andafter it has been satisfied that he is a partner. Although, after the passingof the decree against a firm and, it follows, against the partners in the firm,the decree-holder can execute the decree against every partner, this cannot bedone unless and until a person alleged to be a partner has had an opportunityto contest the allegation of his personal liability as a partner and after theCourt is satisfied he is a person against whom the decree has been passed.

51. In my opinion, the wording of R. 50(2) supports the viewthat the period of limitation commences, not from the date of adjudication of aperson as partner but from the date of the decree.

52. The next matter which requires consideration is whetheran application under R. 50(2) is one which is made to enforce a decree. If itis, then Art. 183 applies and the period during which such application can bemade is 12 years from the time when the present right to enforce the decreeaccrues, i.e., the date of the decree, If Art. 183 does not apply then, it iscommon ground, Art. 181 is the only article which is applicable and whichprescribes a period of 3 years from the date when the right to apply accrues,again, the date of the decree. If Art. 181 applies then the appellantsapplication is barred by limitation.

53. In Bhagwan Manaji Marwadi v. Hiraji Premaji Marwadi, 34Bom. L.R. 1112 : (: A.I.R. 1932 Bom. 516) [LQ/BomHC/1932/7] , a decision by aDivision Bench, it was held that an application under R. 50(2) is anapplication for execution of the decree against the partnership and, at p.1118, Patkar J. observed that an application for leave to execute under theabove sub-rule is not barred so long as the decree against the firm is alive.This decision was followed in Kuppuswami Ayyar v. Rathelal Somabhai & Co., : A.I.R. 1935 Mad. 926 [LQ/MadHC/1935/223] : (158 I.C. 907). On the other hand Dhavle andChatterjee JJ. in Harnarain v. Dayabhai Hira Chand, 19 Pat. 909 :(: A.I.R. 1940 Pat. 596, [LQ/PatHC/1940/89] observed at p. 913 that theproceeding for obtaining leave under O. 21, R. 50(2) is not an application forexecution, nor does the leave granted amount to any order for execution. Noreason appears to be given to support this opinion. But in Bombay Company Ltd.v. Kahan Singh, 13 Lah. 327: (: A.I.R. 1931 Lah. 736)Addison. J., with whom Coldstream J. agreed, said at p. 334,

I have no hesitation in holding that such an application isan application in execution and that it can be made at any time during whichthe decree remains capable of being executed,

and, at p. 325,

The application under sub-r. (2) of R. 50 is ancillary tothe application for execution against the partner as an individual.

In Cooverji Varjang v. Cooverbai, I.L.R. 1940 Bom. 562 :(: A.I.R. 1940 Bom. 330) [LQ/BomHC/1940/34] the actual decision was that anapplication under R. 50(2) can be made without any previous application forexecution under R. 10. There are, however, some interesting observations in thecourse of the judgments. At p. 574 Sir John Beaumont C.J., said, that while thelate Sir Dinshah Mulla was the Chamber Judge in the Bombay High Court he heldthat no application for execution could be made until leave was first obtainedby the executing creditor and he directed that that should be done by means ofa chamber summons and not by an application for execution. The learned ChiefJustice adds

we are not prepared to go so far as Sir Dinshah Mulla issaid to have gone in saying that an application for execution cannot be madeunless leave has first been obtained under R. 50(2).

and later

we do not wish to commit ourselves to the view, which seemsto have appealed to the late Sir Dinshah. Mulla, that an application under R.50(2) is not art application in execution.

54. On behalf of the respondents it was argued that theposition is analogous to the proceedings in a mortgage suit in which apreliminary decree for sale is passed, followed by a final decree for sale. InSisir Kumar Ghosh v. Srish Chandra Sinha, 43 C.W.N. 537, it was held that Art.181 applies to an application for a final decree for sale, which gives alimitation period of 3 years. A preliminary mortgage decree quantifies theamount due but, whilst it directs the mortgagor to pay this sum into Courtwithin a specified time, the mortgagee cannot obtain execution if the paymentis not made. His sole remedy is to avail him self of another provision in thedecree enabling him to apply to the Court for a final decree for sale. Suchapplication is to obtain a decree which is capable of being enforced and is notan application to enforce a decree.

55. I have come to the conclusion that an application underR. 50(2) is one to enforce a decree and I prefer to follow the line of caseswhich have held that such an application is an application in execution. Sinceit is an application in execution it must be one to enforce a decree. Myreasons shortly are that: a decree against a firm is a decree against eachpartner in the firm; the decree holder is entitled to execute the decreeagainst each individual partner from the time it is passed; execution may begranted at the outset against a person who has appeared in the suit or who hasadmitted in a pleading he is a partner or has been so adjudged or who has beenserved with the writ and has not appeared; whilst the decree can be executedagainst each individual partner, in case of a person not coming within theabove categories, the decree-holder must satisfy the Court that such person isa partner and is a person against whom the decree has been passed; the objectof R. 50(2) is to enable a decree-holder to shew that a particular person is ajudgment-debtor; even when a person admits he is a partner, leave to executemust be obtained under the sub-rule and if denied, the enquiry thereunder isheld; sub-r. (2) enables execution to issue against a partner who is notcovered by the provisions of sub-r. (1); the purpose of an application undersub-r. (2) is to execute a decree against a partner of a firm; and such anapplication is a step in the course of execution. It must follow that anapplication under sub-r. (2) is an application to enforce the decree. Article183 therefore applies to an application under R. 50(2).

56. The remaining matter for decision is, whether anapplication under sub-r. (2) of R. 50 must be made before an application forexecution is taken out or whether two can be combined in one application ormust be made by separate applications. Jagat Chandra Bhattacharjee v. GunnyHajee Ahmed, 53 Cal. 214 [LQ/CalHC/1925/384] : (A.I.R. (13) 1926 Cal. 271) [LQ/CalHC/1925/384] was, unfortunately, notcited to Das J. when he disposed of the application out of which this appealarises. That was an appeal heard by Sanderson C.J., and Buckland J. from theOriginal Side of this Court, and concerned an application for execution againstthe personal representative of a deceased partner in a judgment-debtor firm. Inthe course of his judgment Buckland J. at p. 234, observed that

in cases to which O. 21, R. 22 applied it appeared to be thepractice to file the tabular statement and at the same time to take out asummons under that rule. This practice appears to be convenient and it mightwell be followed where O. 21, R. 50(2) applies whether in conjunction with O.21, R. 22 or not.

That appeal was decided in 1925 and, ever since, the abovesuggested practice has been followed in this Court, and was adopted in thepresent instance. In Cooverji Varjang v. Cooverbai, I.L.R. 1940 Bom. 562, WadiaJ. against whose decision the appeal was preferred and was dismissed, observedat p. 568 that

there is nothing in the Code to prevent an application underR. 11 (for execution) being filed along with the application for leave under R.50, sub-r. (2).

In Bombay Company Ltd. v. Kahan Singh, 13 Lah. 327 :(: A.I.R. 1931 Lah. 736) it was decided that an applicationfor execution of a decree against a partner of a judgment-debtor firm does notrequire a separate application for leave to execute as the application askingfor execution against that particular person necessarily implies such a prayer;and both are applications to enforce the decree.

57. I am unable to accept the contention that obtainingleave to execute is a condition precedent to and must be obtained before anapplication for execution can be made. I agree with the decision of the LahoreHigh Court that the one is ancillary to the other. I can see no objection toboth being made at one and the same time; there is nothing in the Code whichprevents it being done. It is the most convenient method by which all questionscan be decided. This practice and procedure has been followed in this Court fornearly 20 years and there is no reason why it should not continue. Theapplication by the appellant under R. 50(2) was made within the limitationperiod of 12 years and it is not barred by any Article of the Limitation Act.

58. In my opinion, the appeal should be allowed, thedismissal of the application be set aside and it be remanded to a Judge sittingon the Original Side for disposal. The appellant to have his costs of theappeal; certified for two counsel. The costs of the hearing before Das J. willbe dealt with by the Judge before whom the application is heard on remand.

.

Jagannath Jugal Kishore vs. Chimanlal Chowdhuri and Ors.(20.03.1944 - CALHC)



Advocate List
For Petitioner
  • B.C. GhoseSankarBanerjee
For Respondent
  • S.M. BoseBachawat
Bench
  • G.D. McNair
  • Gentle, JJ.
Eq Citations
  • (1945) ILR 1 CAL 102
  • AIR 1949 CAL 113
  • LQ/CalHC/1944/45
Head Note

1. Whether the Income Tax Appellate Tribunal was correct in law in holding that the orders passed under Sections 201(1) and 201(1-A) of the Income Tax Act, 1961 are invalid and barred by time having been passed beyond a reasonable period? Yes, the Income Tax Appellate Tribunal was correct in law in holding that the orders passed under Sections 201(1) and 201(1-A) of the Income Tax Act, 1961 are invalid and barred by time having been passed beyond a reasonable period. 2. Whether delay in the facts and circumstances of these cases should be condoned? Yes, delay in the facts and circumstances of these cases should be condoned. 3. Whether leave should be granted? Yes, leave is granted. 4. Key legal issues/provisions: - Section 201(1) and 201(1-A) of the Income Tax Act, 1961 - Limitation period for orders under Sections 201(1) and 201(1-A) 5. Findings: - Orders passed under Sections 201(1) and 201(1-A) of the Income Tax Act, 1961 are invalid and barred by time having been passed beyond a reasonable period. - Delay in the facts and circumstances of these cases should be condoned. 6. Direction/Order: - Civil appeals filed by the Department are disposed of with no order as to costs.