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1991 DIGILAW 78 (MAD)

Messers Raja Theatre, Coimbatore v. Selvam Financiers and another

1991-02-01

RATNAM, SOMASUNDARAM

body1991
Judgment :- Somasundaram, J.: The second respondent-garnishee in I.A.No.1167 of 1980 in O.S.No.1453 of 1980 on the file of the Sub-Court, Coimbatore, is the appellant in this civil miscellaneous appeal. The petitioner in the said I.A.No.1167 of 1980 is the first respondent in this miscellaneous appeal. The first respondent in the said application is the second respondent this civil miscellaneous appeal. For the sake of convenience, the parties are referred to judgment as per their array in the Interlocutory Application. 2. The petitioner filed the application I.ANo.1167 of 1980 in O.S.No.1453 of 1980 on of the Sub Court, Coimbatore under O.38, Rules 5 and 11(a) read with O.21, Rule O.40, Rule 1 and Sec.151, C.P.C., to call upon the first respondent to furnish sufficient security failing which to order of attachment before judgment of the share, interest, credit and deposits due to him in the partnership firm M/s.Raja Theatre at Coimbatore case of the petitioner in I.A.No.1167 of 1980 is as follows. O.S.No.1453 of 1980 has filed by the petitioner-firm against the defendants for the recovery of a sum of Rs.1,31,600 together with interest at 18% per annum. The first respondent in I.A.No.1167 of 1980 his wife are the defendants in the said suit. The defendants are heavily involved in having borrowed moneys from various financiers throughout Tamilnadu. The defendants have disposed of the negatives and exhibition rights of the various films and secreted sale proceeds. The defendants have disposed of their valuable immovable properties immovable property viz, the house bearing door No.83/110, Barathi Park Road, Coimbatore, standing in the name of the second defendant in the suit has been mortgaged and the of redemption is practically worth nothing. The first respondent owned 30% share partnership firm M/s.Raja Theatres. The other partners of the said firm are one Baskaran, elder brother of the first respondent Viswanatha Chettiar and his sons Ravindranath Sekar. The first respondent has been making attempts to dispose of his interest in the partnership firm. Unless the first respondent ’ s interest as partner in the properties profits of the firm M/s.Raja Theatres are attached, the first respondent is likely to enter some arrangement with the other partners of the said firm for transferring the same to or to some third parties. Unless the first respondent ’ s interest as partner in the properties profits of the firm M/s.Raja Theatres are attached, the first respondent is likely to enter some arrangement with the other partners of the said firm for transferring the same to or to some third parties. On 31.10.1980 the lower Court passed an interim order in I. 1167 of 1980 directing interim attachment of the interest and share of the first respondent the partnership firm M/s.Raja Theatres and the attachment was effected by pro 15.11.1980. The first respondent remained ex parte in I.A.No.1167 of 1980. 3. The second respondent filed a counter contending as follows: The first respondent had interest in the partnership firm, M/s.Raja Theatres. Even long prior to the filing of the suit the first respondent ceased to have any interest in the partnership firm. Even otherwise application for attachment is not maintainable in view of the fact that the partners of firm have not been made parties in the garnishee proceedings. As per the agreement dated 1.3.1979 Viswanatha Chettiar and his two sons on the one hand and the first respondent on the assets and liabilities of the first respondent in the partnership firm are to be taken by Viswanatha Chettiar and his two sons in lieu of their discharging the debts due by first respondent as a partner of the firm. The petitioner is not entitled to the relief application, because, the first respondent has no interest whatsoever in the firm M/s.Raja Theatres on the date of the filing of the application as well as on the date of the order attachment. 4. The lower Court, on a consideration of the entire evidence on record, held that the respondent did not retire from the firm M/s.Raja Theatres as per the agreement 1.3.1979 marked as Ex.B-1 in this case as alleged by the second respondent, and therefore the first respondent continues to have right, title and interest in the said partnership firm an extent of 30% on the date of the filing of the application I.ANo.1167 of 1980 and right, title and interest of the first respondent in the partnership firm is liable to be attached, and consequently allowed the application and directed the attachment effected by pro on 15.11.1980 to be made absolute. As against the order of the lower court in I.ANo.1167 1980 the second respondent-garnishee has filed this present civil miscellaneous appeal. 5. As against the order of the lower court in I.ANo.1167 1980 the second respondent-garnishee has filed this present civil miscellaneous appeal. 5. The two points which arise for consideration in this civil miscellaneous appeal are: “(1) Whether the first respondent had any right, title and interest in the firm M/s.Raja Theatres as on the date of attachment in Application I.ANo.1167 of 1980 i. 15.11.1980. (2) Whether such right, title and interest of the. first respondent in the firm M/s.Raja Theatres is liable for attachment before judgment in the suit under 0.38, Rule 5, C.P.C. 6. Point No.1: The interim attachment was ordered in I.A.No.1167 of 1980 on 31.10.1980 and the attachment was effected by pro-order on 15.11.1980. Mr.M.R.Narayanaswami, learned counsel for the second respondent would submit that on both the dates referred above the first respondent had no right, title and interest in the firm M/s.Raja Theatre retired from the said firm as early as on 31.12.1978. The agreement marked as Ex.B ledger entry marked as Ex.B-5 and the certified copy of Form ‘A’ maintained by the Registrar of Firms under Sec.59 of the Indian Partnership Act marked as Ex.B-8 in this case will show that the first respondent was not having any interest in the partnership firm date of attachment and, therefore, the, order of the lower Court directing attachment right, title and interest of the first respondent in the firm Raja Theatres is illegal. Now, examine how far the documents Exs.B-1, B-5 and B-8 relied on by the learned counsel the second respondent go to prove the case of the second respondent that the respondent had no manner of right, title or interest in the partnership firm Raja Theatres after 31.12.1978. Ex.B-1 is an unregistered agreement entered into between Viswanatha Chettiar, the brother of the first respondent and his two sons Ravindranath and Sekar one hand and the first respondent on the other. A perusal of Ex.B-1 shows that it is deed of dissolution of partnership firm M/s.Raja Theatres nor is it a deed by which the respondent has actually transferred all his right, title and interest in the firm in favour other parties to the agreement, Ex.B-1. Ex.B-1 also does not show that the first respondent retired from the firm with effect from 31.12.1978. Ex.B-1 also does not show that the first respondent retired from the firm with effect from 31.12.1978. The recitals in Ex.B-1 with regard another firms Raju Chettiar and Brother clearly show that some of the partners of the Raju Chettiar and Brother viz., Ravindranath and Sekar and their mother Viswanathan actually retired from the said firm with effect from 31.12.1978 and the of the firm Raju Chettiar and Brother have become the absolute properties of the respondent. On the other hand, the recitals in Ex.B-1 with regard to the partnership Raja Theatres go to show that the other three partners Viswanathan and his two sons agreed to take over the 30% share of the first respondent and the liabilities of the respondent in the firm and for that purpose they have agreed to take a proper document from the first respondent on a later date. Such a subsequent transferring his 30% share the partnership firm in favour of the other partners was not at all executed by the 1st respondent at a later date. Further, there is no recital in Ex.B effect that the first respondent retired from the partnership firm M/s.Raja Theatres effect from31.12.1978.A perusal of Ex.B-l shows that it is only an agreement to some acts in future in respect of the transfer of the rights and liabilities of respondent in the partnership firm Raja Theatres. By any stretch of imagination cannot be construed as a document under which the first respondent actually transferred his right, title and interest in the partnership firm in favour of the other partners. As held by the lower court the agreement Ex.B-1 is only executory in nature and transfer the right, title and interest of the first respondent in the firm M/s.Raja Theatres Viswanatha Chettiar and his two sons. In these circumstances it has to be held that does not support the case of the second respondent that the first respondent retired the firm M/s.Raja Theatres with effect from 31.12.1978 and that by executing Ex.B first respondent has actually transferred all his right, title and interest in the firm in the other partners with effect from 31.12.1978 as contended by learned counsel second respondent. 7. 7. The learned counsel for the second respondent then placed reliance on Ex.B-5 in of his contention that the first respondent ceased to have any right, title and interest firm M/s. Raja Theatres and he retired from the said firm as early as 31.12.1978 the ledger entry dated 31.12.1978 at page 392 of the ledger book of Raja Theatres. shows that in the account of the first respondent a balance was struck as on 31.12.1978 the amount available to his credit was distributed in favour of Viswanatha Chettiar two sons. No reliance can be placed on Ex.B-5 because it is a self-serving document none of the partners viz., Viswanatha Chettiar, his two sons and the first respondent signed the ledger entry at page 392 of the ledger book of Raja Theatres. Further, the entry dated 31.12.1978 at page 392, Ex.B-5 is not supported by any receipt obtained any one of the partners. 8. The third document relied on by the learned counsel for the second respondent in of his contention is Ex.B-8. Ex.B-8 is the certified copy of Form A maintained Registrar of Firms under Sec.59 of the Indian Partnership Act relating to the firm Theatres. Ex.X-1 is the original of Ex.B-8. Ex.X-2 is an application dated 1.3.1979 by one Kumar to the Registrar of Firms and signed by the outgoing partner respondent. The endorsement made by the Registrar of Firms in Ex.X-2 shows that received by him only on 4.12.1981 though Ex.X-2 was stated to have been prepared signed by the first respondent on 1.3.1979. There was no explanation on the side second respondent as to why the form marked as Ex.X-2 alleged to have been executed the first respondent on 1.3.1979 should be filed before the Registrar of Firms 4.12.1981. The recitals in Exs.B-1 and X-2 are contradictory to each other with regard actual date on which the first respondent retired from the firm M/s.Raja Theatres. In it is stated that the first respondent would be retiring from the firm by executing document within thirty days from 1.3.1979 i.e., on 1.4.1979. On the other hand, says that the first respondent ceased to be a partner from 31.121978. In it is stated that the first respondent would be retiring from the firm by executing document within thirty days from 1.3.1979 i.e., on 1.4.1979. On the other hand, says that the first respondent ceased to be a partner from 31.121978. In view contradictory versions in Exs.B-1 and X-2 with regard to the date on which respondent retired from the firm and in view of the fact that there is no explanation presenting Ex.X-2 stated to have been signed by the first respondent on 1.3.1979 before Registrar of Firms only on 4.12.1981 no reliance can be placed on Ex.B-8 in support case of the first respondent. 9. There is yet another circumstance which goes to show that the first respondent retired from the firm M/s.Raja Theatres. Ex.X-1 shows that the partnership Theatres is a partnership at will. In the case of a partnership at will, a partner can from the partnership by giving notice in writing to the other partners as contemplated Sec.32(1)(c) of the Partnership Act Sec.32(1) of the Partnership Act provides that a may retire with the consent of all other partners and in accordance with the agreement between the partners or where the partnership is at will by giving writing to the other partners of his intention to retire. In the present case there express agreement by the partners with regard to the retirement of the first respondent and there was no consent of all other partners for his retirement. As a notice in writing expressing his intention to the Partnership Act. Admittedly such a notice contemplated in Sec.32(1)(c) of the Partnership Act was not given by the first respondent the other partners of the firm. In such circumstances, the case of the second respondent the first respondent had retired from the firm M/s.Raja Theatres with effect from 31.12.1978 cannot be true and valid in law. In those circumstances the lower court rightly came conclusion that the first respondent did not retire from the firm M/s. Raja Theatres as agreement Ex.B-1 dated 1.3.1979 with effect from 31.12.1978 and that the first respondent is having his right, title and interest in the said partnership firm to an extent of 30%. 10. Point No. 2: Mr. In those circumstances the lower court rightly came conclusion that the first respondent did not retire from the firm M/s. Raja Theatres as agreement Ex.B-1 dated 1.3.1979 with effect from 31.12.1978 and that the first respondent is having his right, title and interest in the said partnership firm to an extent of 30%. 10. Point No. 2: Mr. M.R. Narayanaswami, learned counsel for the second respondent contend, that the petitioner has filed the suit O.S.No.1453 of 1980 against the respondent and his wife for recovery of money on the basis of a promissory note individual capacity; the suit was filed neither against the partnership firm nor against respondent in his capacity as a partner of the firm. In such a suit the right, title and of the first respondent in the firm M/s. Raja Theatres is not liable for attachment under Rule 5, C.P.C. The learned counsel for the second respondent further contended that event the attachment made in this case is invalid, because, the procedure laid down Rule 5, C.P.C., was not followed by the lower Court before ordering attachment. unable to accept the above contention of the learned counsel for the second respondent. right, title and interest of a partner in a partnership firm is a saleable property and right, title and interest of a partner in the partnership firm can be attached and Dharmaraju v. Motilal, 57 M.L.J. 264: A.I.R 1929 Mad. 641:1161.C. 343: I.L.R. 52 Mad. (F.B.), a Full Bench of this Court, while dealing with the question whether a partner in a partnership firm can be attached and sold, answered the question in the affirmative held as follows: "It cannot be and is not disputed that a partner’s interest in a partnership is property, within the meaning of Sec.60, Civil P.C., and may be attached and execution of a decree obtained against the partner by his creditor: see Parvatheesan Bapamma,I.L.R (1890)13 Mad. 447 and Jagat Chunder Roy v. Iswar Chundar Roy, (1893)20 Cat. 693. In both these cases reliance is placed upon the following observations their Lordships of the Privy Council in Deen-dayal v. Jugdeep, I.L.R. (1877)3 Cal. 447 and Jagat Chunder Roy v. Iswar Chundar Roy, (1893)20 Cat. 693. In both these cases reliance is placed upon the following observations their Lordships of the Privy Council in Deen-dayal v. Jugdeep, I.L.R. (1877)3 Cal. which the question arose as to the rights of an execution creditors and of a purchaser execution sale, in regard to the interests of an undivided coparcener in the Hindu Their Lordships, in holding that such interest was liable to be attached and sold, observed follows: "It is sufficient to instance the seizure and sale of a share in a trading partnership, at of a separate creditor of one of the partners. The partner could not have himself share so as to introduce a stranger into the firm without the consent of his copartners; the purchaser at the execution sale acquires the interest sold with the right to partnership accounts taken, in order to ascertain and realise its value." When it is said that the right, title and interest of a partner in a partnership firm attached and sold, it can be done so only by proceeding against the firm i.e., proceeding against the right, title and interest of such partners in the partnership firm. view of the decision referred above it has to be held that the right, title and interest first respondent in the partnership firm is liable to be purchased against by the petitioner, who is the creditor of the first respondent. 11. It is a settled position of law that the interest of a partner in the partnership property movable property. In Narayanappa v. Bhaskara Krishnappa, (1966)2 M.L.J. (S.C) 60: 2 An.W.R. (S.C.) 60: (1966)2 S.C.J. 490: A.I.R. 1966 S.C. 1300, the Supreme Court held as follows: "The interest of the partners of a family in the partnership assets was movable property, the document evidencing the relinquishment of that interest was not compulsorily registrable under Sec. 17(1) Registration Act". Once when it is held that the interest of a partner in a partnership firm is movable property then, O.21, Rule 46(1), C.P.C. is attracted. Once when it is held that the interest of a partner in a partnership firm is movable property then, O.21, Rule 46(1), C.P.C. is attracted. Rule 46(1), C.P.C., prescribes the mode of attachment of debt, share and other property in possession of judgment-debtor and the relevant portion of the Rule provides that in case of the other movable property not in the possession of a judgment-debtor, attachment shall be made by a written order prohibiting the person in possession of same from giving it over to the judgment-debtor. 0.21, Rule 46(2) further provides copy of such order shall be affixed on some conspicuous part of the Court-house and another copy shall be sent in the case of the debt to the debtor, in the case of the share, to proper officer of the corporation, and in the case of the other movable property (except aforesaid) to the person in possession of the same. O.38, Rule 11-A(1) provides that provisions of C.P.C. applicable to an attachment made in execution of a decree shall apply an attachment before judgment which continues after the judgment by virtue of provisions of Rule. 11. In view of O.38, Rule 11-A(1), the Court, While ordering attachment of movables before judgment under 0.38, Rule 5, C.P.C., has to follow the procedure prescribed in 0.21, Rule 46(1) and (2), C.P.C. In view of the above position of law it has to be held that right, title and interest of the first respondent in the partnership firm M/s.Raja Theatres liable for attachment before judgment under O.38, Rule 5, C.P.C. In the affidavit filed support of the petition I.A.No. 1167 of 1980 the petitioner has made out a case attachment of the share in the property and credit and deposits due to the first respondent in the partnership firm M/s.Raja Theatres and in the application for attachment the petitioner requested the lower court to call upon the first respondent to furnish sufficient and sound security failing which to order attachment before judgment. The lower court by the order dated 31.10.1980 ordered interim attachment only, of the interest and share of the respondent in the partnership firm and the lower court was right in doing so in view of provision contained in 0.38, Rule 5(3), C.P.C. The first respondent remained exparte order of attachment was effected by pro-order over the said rights of the first respondent the partnership firm on 15.11.1980. In these circumstances, there is no merit in contention of the learned counsel for the second respondent that the procedure prescribed O.38, Rule 5, C.P.C., was not followed by the lower court before ordering attachment before judgment. 12. In these circumstances, the lower court rightly held that the first respondent did retire from the firm M/s.Raja Theatres with effect from 31.12.1978; that the first respondent has right, title and interest in the partnership firm M/s.Raja Theatres to the extent of and such right, title and interest of the first respondent in the firm is liable to be attached and consequently made the order of interim attachment absolute. Hence the order of lower court is not liable to be interfered with in this appeal. There are no merits in the miscellaneous appeal and the same is liable to be dismissed. Accordingly the miscellaneous appeal is dismissed. No costs. B.S. ---- Appeal dismissed.