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Judgment
R. Sudhakar, J.—This application is filed under Order XIV Rule 8 of the Original Side Rules read with Order XVIII Rule 1 and Order XIV
Rule 12 of the Original Side Rules to set aside the order dated 15.7.2013, as modified on 1.8.2013, in A. No. 2555 of 2013 in E.P. No. 226 of
2012 in C.S. No. 578 of 2011 passed by the learned Master. The facts in a nutshell are as follows: The first defendant/applicant herein is a
judgment-debtor. On 15.11.2011, a decree was passed on admission in favour of the plaintiff/respondent herein (decree-holder). In execution of
the said decree as against the first defendant/applicant firm and its partners, the plaintiff/respondent herein (decree-holder), filed E.P. No. 226 of
2012 seeking an order of attachment of the bank account and a prohibitory order was passed by the learned Master on 15.11.2012 attaching the
bank account of the first defendant/applicant firm (judgment-debtor).
1.1. On 19.4.2013, plaintiff/respondent herein (decree-holder) filed A. No. 2555 of 2013 in E.P. No. 226 of 2012 under Order XXI Rule 41 of
the CPC and the same was served on the counsel for the applicant herein (judgment-debtor) seeking disclosure of assets of the applicant firm and
its partners. The application was listed on 24.6.2013 and the applicant herein (judgment-debtor) sought time to file counter and the matter was
adjourned to 8.7.2013. On 8.7.2013, the applicant herein (judgment-debtor) sought further time to file counter and the matter was adjourned to
15.7.2013, as a last chance. On 15.7.2013, the learned Master, while declining to grant the applicant herein (judgment debtor) further time,
passed the following order:
Posted today for filing an affidavit (J/D) or not filed sufficient opportunity given to the 1st respondent/Judgment Debtor to file counter. This petition
is filed to make an affidavit stating the particular of the assets of Judgment Debtor (Respondent). Since the sufficient opportunity is given to
Judgment Debtor (Respondent) and counter is not filed. It is necessary to pass appropriate order at this stage. Hence the Judgment Debtor
(Respondent) is directed to make an affidavit stating the particular of the assets of the Judgment Debtor (Respondent) within 15 days from today.
With above observation petition is closed.
1.2. However, when the copy of the order was received, the respondent herein (decree-holder) noticed that the order passed by the learned
Master is not in terms of the prayer made in A. No. 2555 of 2013 and, therefore, the matter was listed on 29.7.2013 at the request of the
respondent herein (decree-holder) pointing out the omission in the order dated 15.7.2013. The matter was listed before the learned Master on
30.7.2013 under the caption ""for clarification"" showing the names of the counsel on either side and the matter was adjourned to 1.8.2013. The
learned Master, after hearing the respondent herein (decree-holder) and the objections of the applicant herein (judgment-debtor), directed the
applicant firm and its partners to make an affidavit stating the particulars of the assets of the judgment-debtor and its partners. The said order reads
as under:
After passing orders in A. 2555/2013 on 15.7.2013, representation was made on behalf of the petitioners, stating that the prayer is to direct the
judgment debtor and its partners to make an affidavit stating the particulars of assets, whereas on 15.7.2013 order, judgment debtor alone is
directed to furnish affidavit stating the particulars of assets, hence to amend the order to that effect. Counsel for the respondent argued that the
decree is against Firm and not against partners, so partners may not be directed to furnish the affidavit of particulars of assets.
If the pointed out matter is clerical or arithmetical mistake the court on its own motion may amend the decree or judgment and errors arising there
in from any accidental slip or omission can also be corrected. The matter pointed out is only omission. There is no mention about partners in the
order. Order passed regarding the firm only. Since this court has omitted to mention about partners of judgment debtors, it can be corrected as per
Section 152 CPC.
The counsel for the respondent would content that the decree is against firm and not against partners, so partners may not be directed to furnish the
affidavit of assets. The counsel for the petitioner relied on Dena Bank Vs. Bhikhabhai Prabhudas Parekh and Co. and Others, and argued that a
decree against firm has the same effect against partners. It is held by Hon''ble Apex Court that 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.
In the case on hand the decree is against judgment debtor firm. As per the guide lines of Hon''ble Apex Court it is a decree against the partners
also. So the above judgment is squarely applicable to the case on hand. While passing order on 15.7.2013 it was omitted to mention about
judgment debtor partners and now it is rectified u/s 152 CPC.
It is hereby ordered that the judgment debtor (R1) and its partners are directed to make an affidavit stating the particulars of the assets of judgment
debtor (R1) and also the partners.
The order dated 15.7.2013 may be amended to effect the above order.
The said order dated 1.8.2013 passed in A. No. 2555 of 2013 by the learned Master is now under challenge.
Heard Ms. R.T. Shyamala, learned counsel for the applicant (judgment-debtor) and Mr. V.P. Raman, learned counsel for the respondent
(decree-holder).
Ms. R.T. Shyamala, learned counsel for the applicant (judgment-debtor) contended that the partners are not parties to the suit and no notice has
been issued to them in terms of Order XXX Rule 2 of the CPC and, therefore, the application in A. No. 2555 of 2013 filed under Order XXI
Rule 41 of the CPC is not maintainable against them.
At the outset, it has to be pointed out that the reference made by the learned counsel for the applicant (judgment-debtor) to Order XXX Rule 2
of the CPC is per se incorrect, as that relates to disclosure of partners'' names where a suit is instituted by partners in the name of their firm. The
said provision will not apply to the facts of the present case.
Ms. R.T. Shyamala, learned counsel for the applicant contended that the applicant firm is the judgment-debtor and not the partners. This
contention is however fallacious in the light of the very provision, namely Order XXX Rule 1 of the Code of Civil Procedure, which clearly
provides that suit can be laid against the partners in the name of the firm.
Moreover, Section 25 of the Partnership Act, 1932 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. The Supreme Court in Dena Bank Vs. Bhikhabhai Prabhudas Parekh and Co. and Others, , while
interpreting Section 25 of the Partnership Act, 1932, has held as under:
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 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. This principle cannot be stretched and extended to such situations in which the
firm is deemed to be a person and hence a legal entity for a certain purpose. The Karnataka Sales Tax Act, with which we are concerned, also
gives the firm a legal status by treating it as a dealer and hence a person for the limited purpose of assessing under the Sales Tax Act. It was,
therefore, held by a three-Judge Bench in Commissioner of Sales Tax, Madhya Pradesh, Indore and Others Vs. Radhakrishan and Others,
[A] firm in a partnership and a Hindu undivided family are recognised as legal entities and as such proceedings can only be taken against the firm or
undivided family as the case may be. Neither the partners of the firm nor the members of the Hindu undivided family will be liable for the tax
assessed against the firm or the undivided Hindu family.
(emphasis supplied)
That apart, a Full Bench of this Court in Ediga Hanumanthappa and Another Vs. Eeranti Seethayya and Company consisting of Eeranti
Seethayya and Another, , has held that a decree in favour of a firm is in favour of all the partners as such. The relevant portions of the said decision
read as under:
Where a decree has been passed against a firm, execution may be granted, under O. 21, R. 50, not only against the property of the partnership,
but against any person who has admitted on the pleadings or who has been adjudged to be a partner and a decree-holder is also entitled to cause
the decree to be executed against any person not mentioned in the decree as a partner, alleging that he is a partner, and where the liability is
disputed, the issue can even be tried in a manner in which any issue in a suit can be tried and determined.
...
If it is sufficient that the agency is expressly declared in the decree itself, I am prepared to hold that the fact that the decree is expressed to be in
favour of a firm amounts to a declaration that each partner is an agent of the other partners. One can realise that, when the decree is merely in
favour of two or more decree-holders without anything more appearing on its face, it is necessary to insist upon proof of special agency conferring
the right to receive the decree amount on one of them. But when on the face of the decree it appears that the decree is in favour of the firm, that is,
in favour of all partner as such, I think it is reasonable to imply that the decree itself declares the rights which the partners would have under the
general law.
After a consideration of the several decisions cited before us and the points which have been urged before us on either side, I have arrived at the
conclusion that the answer to the question referred to the Full Bench, namely, ''When a decree is passed in favour of a firm, can payment outside
Court to one partner-decree holder bind the other partner-decree holders?'' must be in the affirmative, provided that the other partners decree-
holders would be at liberty to establish special circumstances, why such a payment should not bind them.
....
Is it to be said that the moment that a decree is passed for a debt due to the partnership the relationship of the partners quoad the decree debt
ceases and they become mere joint creditors entitled to the decree amount in such specific shares as they would be entitled to in the assets of the
firm on a dissolution?
The definition of the term ""decree-holder"", as provided u/s 2(3) of the Code of Civil Procedure, which has been explained in the Full Bench
decision of this Court in Hanumanthappa v. Seethayya and Company, referred supra, will also apply to the term ""judgment-debtor"" in terms of
Section 2(10) of the Code of Civil Procedure, where the judgment-debtor is a firm.
Furthermore, the Supreme Court in Her Highness Maharani Mandalsa Devi and Others Vs. M. Ramnarain (P) Ltd. and Others, has held as
under:
The decree passed in the suit, though in form against the firm, is in effect a decree against all the partners. In Lovell and Christmas v. Beauchamp,
1894 AC 607 at p. 612, Lord Herschell, L.C. said:
Although the judgment may be pronounced against the firm in the firm''s name, it is in reality a judgment against all the persons who are in fact
members of the firm; and it is because such a judgment exists that the right of execution follow.
(emphasis supplied)
In this case, admittedly one of the partners represented the firm. Since the bank account of the applicant herein (judgment-debtor) did not
disclose sufficient amount to discharge the liability under the decree, the respondent herein (decree-holder) filed A. No. 2555 of 2013 under Order
XXI Rule 41 of the CPC to gather further particulars relating to the assets of the partners of the applicant firm (judgment-debtor), so as to proceed
further in the matter under Order XXI Rule 50 of the Code of Civil Procedure, and that was allowed by the learned Master. In view of the
provisions of law referred to above and the law enunciated in the decisions referred supra, I do not find any fault with the order passed by the
learned Master in allowing the application filed under Order XXI Rule 41 of the CPC and directing the applicant herein (judgment-debtor) and its
partners to make an affidavit stating the particulars of the assets of applicant firm (judgment-debtor) and also the partners in entirety.
For the foregoing reasons, this application is dismissed.