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1996 DIGILAW 176 (MAD)

A. R. K. Ramanathan Chettiar v. Lakshminarayanan

1996-02-12

S.S.SUBRAMANI

body1996
Judgment :- 1. A decree was obtained by name Messrs. Vasavi and Company, a registered partnership firm. 2. It is not disputed that one of the partners of the firm was adjudicated insolvent. After the decree was obtained, petitioner herein filed execution petition for recovering the amount due from the judgment-debtor. It is not disputed that the petitioner who filed the execution petition is the Managing Partner, though he has not described himself as partner of the firm. When the execution petition was filed, objection was taken that the firm was not in existence and had become defunct. He also put forward a contention that the petitioner herein is not entitled to execute the decree. 3. By the impugned order, court below dismissed the execution petition, against which this Revision is filed 4. The question is how far the present petitioner is competent to execute the decree. 5. Section 34 of the Indian Partnership Act says that when a partner in a firm is adjudicated insolvent, he ceases to be a partner on the date on which the order of adjudication is made, whether or not the firm is thereby dissolved. Sub-sec. (2) says thus: “Where under a contract between the partners the firm is not dissolved by the adjudication of a partner as an insolvent, the estate of a partner so adjudicated is not liable for any act of the insolvent, done after the date on which the order of adjudication is made.” A reading of the said Section shows that unless there is a contract to the contrary, on the adjudication of a partner as insolvent, the partnership is dissolved. In this case, the deed of partnership is not filed and the contract to the contrary is not proved. Therefore, the normal presumption that the partnership is dissolved has to be taken. Section 47 of the Indian Partnership Act says thus: “47. Continuing authority of partners for purposes of winding up. In this case, the deed of partnership is not filed and the contract to the contrary is not proved. Therefore, the normal presumption that the partnership is dissolved has to be taken. Section 47 of the Indian Partnership Act says thus: “47. Continuing authority of partners for purposes of winding up. -After the dissolution of a firm the authority of each partner to bind the firm, and the other mutual rights and obligations of the partners, continue notwithstanding the dissolution, so far as may be necessary to wind up the affairs of the firm and to complete transactions begun but unfinished at the time of the dissolution, but not otherwise; Provided that the firm is in no case bound by the acts of a partner who has been adjudicated insolvent; but this Proviso does not affect the liability of any person who has after the adjudication presented himself or knowingly permitted himself to be represented as partner of the insolvent.” So, even after dissolution, authority of each partner will continue till the firm is wound up. Nobody has got a case that the firm has been wound up in accordance with the Act. 6. It is admitted that the execution petition was filed not by the firm, but by the petitioner, who is a partner, though he has not described himself as such. But, under Section 18 of the said Act, he is an agent of the firm and he is also an agent of the other partners. 7. Order 30 of the Code of Civil Procedure enables a firm to institute a suit. Legally, a firm is not a legal person. It is only a collective or compendious name for all the partners. If a suit is filed on behalf of the firm, the law presumes that the suit instituted by all the partners. Likewise, if a decree is obtained against a firm, law presumes that the decree is against all the partners. They need not be impleaded or named individually. 8. In A.I.R. 1961 SC 325 ( Purushottam & Co. v. Manilal & Sons ), in paragraph 8 it has been held thus: ”Where a suit is filed in the name of a firm it is still a suit by all the partners of the firm unless it is proved that all the partners had not authorized the suit. 8. In A.I.R. 1961 SC 325 ( Purushottam & Co. v. Manilal & Sons ), in paragraph 8 it has been held thus: ”Where a suit is filed in the name of a firm it is still a suit by all the partners of the firm unless it is proved that all the partners had not authorized the suit. A firm may not be legal entity in the sense of a corporation or a company incorporated under the Indian Companies Act but it is still an existing concern where business is done by a number of persons in partnership. When a suit is filed in the name of a firm it is in reality a suit by all the partners of the firm. Order 30 had not been introduced into the code and when a suit had been filed in the name of a firm it would not be a case of a suit filed by a non existent person. It would still be a suit by the partners of a firm, the defect being that they were described as a firm. ..” 9. Following the said decision, in A.I.R. 1978 Delhi 255 (Messrs. Shankar Housing Corporation v. Smt. Mohan Devi and others), it was held thus:— “A “firm” is not a legal entity but is only a collective or compendious name for all the partners. So if a suit to enforce a right arising from a contract is to be instituted “by a firm” against a third party, the firm would be the plaintiff. If the suit is to be instituted “on behalf” of a firm, the partner or partners, who wants or want to institute the suit on behalf of (i.e., for the benefit of) the firm would be the plaintiff. But, in both the cases the suit would in effect be by or on behalf of al l the partners of the firm. 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 all the partners. The provisions in S. 69(2) of the Partnership Act and those in R. 1 or O. 30 deal with different aspects and operate separately. 10. If it is a suit, law presumes that there is a suit by all the partners. The provisions in S. 69(2) of the Partnership Act and those in R. 1 or O. 30 deal with different aspects and operate separately. 10. If it is a suit, law presumes that there is a suit by all the partners. Then, any partner is entitled to file execution petition, for, there is a decree in his favour also. 11. This Court, in A.I.R. 1934 Madras 330 = 39 L.W. 383 ( V.N. Muthuswamy Iyer v. V.S. Narasimha Ayyar ) has held that if any decree is obtained in favour of a firm, it will amount to a joint decree in favour of all the partners. Therefore, under the provisions of Order 21, Rule 15, C.P.C., any partner can execute the decree. 12. Sarkar on ‘Law of Civil Procedure, 8th Edition(1992), commenting On order 21, Rule 15, C.P.C., has said that a decree in the name of a firm is a joint decree passed in favour of all the partners. 13. If it is a joint decree, the petitioner will be competent to execute the decree and any realisation will be only in his capacity as a partner. 14. Even if a firm is dissolved, till the winding up is ordered, the authority of the partner will continue to realise the assets of the firm. Section 47 of the Indian Partnership Act is very clear in this regard. If that be so, dismissal of the execution petition by the Court below was not proper. Merely because he has not described himself as a partner, it should not have dismissed the execution petition. The Court below could have made necessary safeguards while executing the decree by declaring that the amounts realised are for the purpose of the firm. Learned counsel for the respondent submitted that if the partner has been declared as insolvent and his assets vest with the official Assignee, without impleading the official Assignee or other partners as parties, execution petition is not maintainable. 15. A reading of Order 2, 1 Rule 15, C.P.C. goes against the said argument, and even if they are necessary parties, court below should have allowed them to be impleaded as respondents. Thought is not obligatory on the part of the lower Court, it could have made safeguards for the money to be realised, invoking the powers under Order 21, Rule 15, C.P.C., instead of dismissing the execution petition. 16. Thought is not obligatory on the part of the lower Court, it could have made safeguards for the money to be realised, invoking the powers under Order 21, Rule 15, C.P.C., instead of dismissing the execution petition. 16. In the result, the Revision Petition is allowed. The order of the court below is set aside. I hold that the Execution Petition filed by the petitioner is maintainable. The Executing Court is directed to restore the execution petition to its file and dispose of the same in accordance with law. There will be no order as to costs.