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Judgment
1.These two revision petitions arise out of the execution proceedings in OS No. 166 of 1979 on the file of the Court of the Additional Subordinate Judge, Chittoor. It is, therefore, proper to dispose of them by this common order.
The fads in brief are as follows : The parties are referred to herein by their status in the execution petition. The decree-holder is a firm by name M/s. Krishna Finance Corporation, a registered partnership concern. They filed a suit being OS No.166 of 1979 against one Reddaiah Choudary and another. A decree was passed on 31-3-1980 for an amount of Rs.32,115/-. Execution petition was filed on behalf of the firm being OEP No.23 of 1992. When the EP was pending, one of the partners, Smt Chinna Munemma filed an application being EA No.412 of 1996 praying to implead her as decree-holder in the place of one Venkatadri Naidu who represented the plaintiff firm at the stage of trial. The judgment debtor, Reddaiah Choudary also filed an application under Order 21, Rules 1 and 2 of the Code of Civil Procedure, 1908 (''CPC'' for brevity) being EA No. 413 of 1996 for recording satisfaction of the decree. In his application, he alleged that under Ex.A.l stamped receipt dated 30-6-1996 for Rs.35,000/- issued by Smt Chinna Munemma, the new managing partner of the firm, the decree has been satisfied. The trial Court by order dated 12-9-1996 dismissed EA No.412 of 1996 filed by Smt. Chinna Munemma for impleading as managing partner of the decree-holder firm as well as EA No.413 of 1996 filed by the judgment debtor for recording satisfaction of the decree.
Aggrieved by the order dated 12-9-1996, the judgment debtor filed CRPNo.3863 of 1996 and Smt Chinna Munemma, the new managing partner filed CRP No.432 of 1997. This Court by a common order dated 16-6-1997 allowed the revision petitions and remanded the matter to the Court below for conducting enquiry in accordance with the order in the CRPs. It is necessary to excerpt the observations of this Court which are relevant:
"On a perusal of the order passed by the Court below, I am of the view that the lower Court erred in dismissing the EA without conducting proper enquiry. When the judgment debtor approached the Court with the plea that he paid the entire decretal amount to the new Managing Partner of the company and the alleged new Managing Partner had also approached with a petition to implead her as a decree-holder, the Court below ought to have allowed her to come on record in the proceedings and decide the issues after appropriate enquiry.
I am of the view that the petitioner in EA No.413 of 1996 (412 of 1996) is a proper and necessary party and the lower Court is directed to implead the alleged present Managing Partner to establish that the said resolution said to have been passed on 23-6-1996 is a genuine one."
There cannot be an iota of doubt that this Court directed the Court below to implead the alleged new managing partner as decree-holder and decide the issue after appropriate enquiry.
After the remand, the judgment debtor examined himself as PW1, PW2, Subbaiah was also examined besides marking Exs.A1 to A5. Exs.A2 to A5 are the affidavits issued by the partners of the firm or the legal heirs of the deceased partners of the firm. Ex.A1 is the stamped receipt dated 30-6-1996 issued by Smt Chinna Munemma for an amount of Rs.35,000/- which is the basis for the application under Order 21, Rules 1 and 2 CPC filed by the judgment debtor.
One Venkatadri Naidu who was representing the plaintiff firm as managing partner and who is disputing the claim of the judgment debtors, examined himself as RW. 1 and Smt Chinna Munemma examined RWs.2 and 3. On behalf of the decree-holder, Exs.B1 to B3 were marked. Ex.B1 is the partnership deed and Ex.B3 is the resolution dated 23-6-1996 allegedly electing Smt. Chinna Munemma as managing partner and Ex.B2 is the special power of attorney executed by Smt. Chinna Munemma in favour of one Madhava Choudary, who was examined as PW2. The Court below after considering the oral and documentary evidence, by order dated 10-11-1997 dismissed EA Nos.412 and 413 of 1996. Aggrieved by the order in EA No.412 of 1996, Smt Chinna Munemma filed CRP No.661 of 1998 and aggrieved by the order in EA No.413 of 1996, the judgment debtor, Reddiah, Choudaiy filed CRP No.5244 of 1997. While ordering notice before admission, this Court stayed all further proceedings in OEP No.23 of 1992.
The learned Counsel for the petitioners in both the CRPs, Sri P.S. Narayana and Sri P.V. Vidyasagar submitt that the Court below grossly erred in dismissing EA No.412 of 1996 filed by Smt Chinna Muneema for impleading her as managing partner of the plaintiff firm. They submit that when this Court by its order dated 16-6-1997 in CRP Nos. 3863 of 1996 and 432 of 1997 gave a direction to implead Smt Chinna Munemma as decree-holder, the trial Court grossly erred In dismissing the application for impleading Smt. Chinna Munemnia. Sri P.S. Narayana who appeared for the judgment debtor, Venkatadri Naidu submits that insofar as the judgment debtor is concerned, he is a third party with reference to the inter se disputes and relations among the partners of the firm and that under Ex.B3 resolution, the partner of the firm elected Smt Chinna Munumma as managing partner and the judgment debtor paid an amount of Rs.35,000/- under a stamped receipt Ex.A1 and the judgment debtor is at liberty to ignore the disputes and pay the amount to any of the partners under a valid receipt and seek recording of the satisfaction of the decree. In the alternative, he submits that even if Ex.B3 resolution is ignored as not true and valid, still the earlier managing partner cannot question the claim of the judgment debtor. It is for the erstwhile managing partner to prove special circumstances before the executing Court for rejecting the claim of the judgment debtor in his application under Order 21, Rules 1 and 2 CPC for recording satisfaction of the decree. The learned Counsel places reliance on the judgment of the Supreme Court in Purushottam Umedbhai and Co. Vs. Manilal and Sons, and Her Highness Maharani Mandalsa Devi and Others Vs. M. Ramnarain (P) Ltd. and Others, . The learned Counsel also places reliance on a Full Bench judgment of the Madras High Court in Hanumanthappa v. Seethayya and Co AIR 1949 Mad. 790 (FB). Placing reliance on the Full Bench judgment of the High Court of M. Subbarayudu and Others Vs. The State, , the learned Counsel submits that the Full Bench judgments of the Madras High Court is binding on the High Court. The principle that the judgments of the Madras High Court prior to 1954 are binding on Andhra High Court as well as Andhra Pradesh High Court is well-settled principle of doctrine of precedent which cannot be disputed. Indeed, the learned Counsel, Sri G. Manohar does not dispute the legal position.
The learned Counsel for the respondents, Sri G. Manohar submits that after considering the evidence the lower Court recorded a finding that Venkatadri Naidu (former managing partner) was not removed validly and that Ex.B3 resolution appointing Smt. Chinna Munemma as managing partner was not signed by all the partners. Therefore, he submits that there is no error in the order passed by the executing Court.
Having regard to the rival contentions, the point that arises for consideration is whether the judgment debtor having paid the amount to one of the partners in full satisfaction of the decree can maintain an application under Order 21, Rules 1 and 2 CPC?
Rule 2 of Order 21 CPC authorises a Court to recognise payment or adjustment of money payable under decree. The same can be at the instance of decree-holder as well as judgment debtor. Under sub-rule(1) of Rule 2, the decree-holder shall certify the payment of money or adjustment to the Court whose duty it is to execute the decree. On such certification by the decree-holder, the Court shall record satisfaction of the decree. Under sub-rule (2) of Rule 2, the judgment debtor may also inform the Court of such payment or adjustment, and on giving adequate notice to the decree-holder for verifying as to whether payment or adjustment has been made or not, the Court shall record satisfaction of the decree. If certification is by the decree-holder, no further enquiry is required. In case the satisfaction of the decree is required to be recorded under sub-rule (2) of Rule 2 of Order 21, the Code requires to prove that payment or adjustment is made by producing documentary evidence or the payment or adjustment is admitted by or on behalf of the decree-holder after receiving the notice issued by the Court under sub-rule (2) of Rule 2. The word ''decree-holder'' is defined u/s 2(3) CPC as to mean any person in whose favour a decree has been passed. If it were a natural person, no difficult would arise. However, in case the decree-holder is a group of persons constituting a firm, who is the person to certify the satisfaction of the decree in favour of the decree-holder? Who is the person, on Court''s notice, to appear before the Court and object the application filed by the judgment debtor under Order 21, Rule, 2 CPC?
It is well settled that a partnership firm can be sued or can sue in the name of the firm. Under Order 30, Rule, 1 CPC any, partner of the firm can sue in the name of the firm. When a suit is filed by a firm duly represented by one of the partners, in law, the suit is by all the partners. See Pursuhottam Umedbhai''s case and Mandalsa Devi''s case (supra). Likewise, when a suit is filed against a firm, in law, the suit is against all the partners of the firm. Unless otherwise required by any other law, it is not necessary to array all the partners as defendants in the suit. The same & fortiori applies even to execution proceedings. There cannot be any doubt to this. A judgment debtor will never be permitted to raise an objection that the execution is not taken out by all the partners. Even a firm, which is a decree-holder, can maintain execution petition. Likewise, a judgment debtor who made payment outside the Court towards full adjustment and payment of the decretal amount to any partner can file an application under sub-rule (2) of Rule 2 of Order 21. Whether such application should be accepted or not is a different question.
Under sub-rule (2A) of Rule 2 of Order 21, the Court in required to conduct enquiry into-
(i) whether payment has been made as required underOrder21, Rule 1?
(ii) whether the payment is proved by documentary evidence ? and
(iii) whether the payment is admitted by the decree-holder?
If the decree-holder after receiving the notice issued under sub-rule (2) of Rule 2 comes to the Court and agrees that payment is received, enquiry should stop there. In this, case, allegedly Smt Chinna Munemma was elected as managing partner on 23-6-1996. She received the sum of Rs.35,000/- on 30-6-1996 and passed stamped receipt - Ex.A1. After that she filed an application for showing her as managing partner of the firm/decree-holder. Simultaneously, the judgment debtor filed an application under Order 21, Rules 1 and 2 CPC to record satisfaction of the decree based on Ex.Al stamped receipt. Prima facie, these circumstances should not require any further enquire because the decree-holder represented by Smt Chinna Munemma accepted and certified the payment before the Court. Insofar as Ex.Al stamped receipt executed by Smt Chinna Munemma as partner or manging partner of the firm, in favour of the judgment debtor is concerned, legally, the requirements under Order 21, Rule 2(2) and (2A) CPC are satisfied. In the event of inter se dispute among the partners of the plaintiff firm, is it possible for the executing Court to refuse to record the payment or adjustment of the money payable under a decree?
In Hanumanthappa''s case (supra), the Full Bench of Madras High Court adverted to a similar question. The facts in the said case disclose that the factual matrix on hand in this case is almost similar to the one before the Full Bench of Madras High Court. So as to resolve difference of opinion in various judgments, the question referred to the Full Bench was as under:
"When a decree is passed in favour of a firm, can payment outside Court to one partner decree-holder bind the other partner-decree-holder?"
The Full Bench by a majority of 2:1 held that when a decree is passed in favour of a firm and payment is made outside the Court to one partner (decree-holder), the same binds others partners. If any objection is to be made by any other person there should exist special circumstances as to why such payment should not be binding on him. It is apposite to refer to paragraph 15 of the judgment which is as under :
"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-holder?"
must be in the affirmative, provided that the other partners decree-holder would be at liberty to establish special circumstances why such a payment should not bind them".
As already noticed, a decree in favour of a plaintiff firm in taw is a decree in favour of all the partners. Therefore, if payment is accepted by one of the partners by issuing a valid receipt and the judgment debtor applies to the Court to record satisfaction, the firm cannot go back and deny the payment. If any partner, for various reasons, disputes the payment by showing special circumstances, such partner can always contend that payment made by the judgment debtor to one of the partners does not bind him. First, there should exist special circumstances for the Court to reject the application of the judgment debtor under Order 21, Rule 2(2) CPC. Secondly, it is doubtful whether the payment made by the judgment debtor to one of the partners does not bind the firm itself. No doubt, as held by the Full Bench of the Madras High Court in Hanumanthappa''s case (supra), a partner disputing the payment can always contend showing special circumstances that the payment does not bind him, in which case, while working out equities in inter se disputes among the partners, particular payment will not be taken into account and to that extent only a partner will be given liberty to raise objection pursuant to the decree in favour of a firm. Be that as it may, as per sub-rule (2) of Rule 2 of Order 21 CPC, it is for the decree-holder to show as to why a payment or adjustment should not be recorded by the Court. That is to say, burden of proof is on the other partner who disputes the payment and contends that the payment made by the judgment debtor outside the Court does not bind him.
In the impugned order, the lower Court seems to have proceeded on the ground that burden of proof lies on the judgment debtor. By producing Ex.A.1 stamped receipt dated 30-6-1996, the judgment debtor has produced documentary evidence which would satisfy the requirements of Order 21, Rule 2(2A)(b) CPC. When Venkatadri Naidu disputes this on various grounds, the burden lies on him to prove the special circumstances disentitling the judgment debtor the benefit of the satisfaction of the decree.
Sri G. Manohar, learned Counsel for the respondents, submits that when evidence is led and the parties have proceeded on the evidence recorded, the burden of proof pales into insignificance and therefore the same is not crucial to the case of the former managing partner. I am afraid I cannot agree with him. The impugned order discloses that the case of the judgment debtor was rejected on the ground that he did not prove his bona fides of paying to Smt Chinna Munemma. This is grossly illegal and contrary to the view expressed by the binding Full Bench judgment of Madras High Court.
To sum up, the payment made by a judgment debtor outside the Court to a partner of a firm (decree-holder) binds all the partners and would be sufficient documentary proof for the purpose of Order 21, Rule 2 (2A) CPC. However, if any of the partners disputes, he/she shall be at liberty to plead and prove special circumstances and contend that the payment by the judgment debtor to any partner does not bind him/her . In such a case, as already held by the Madras High Court, the burden is on the other partner who disputes the payment by the judgment debtor outside the Court. As the Court below ignored this aspect of the matter, the impugned order is wholly unsustainable. Further, as already observed by me, in the earlier round of revision petitions, this Court gave a specific direction that Smt Chinna Munemma, the applicant in EA No.412 of 1996 shall be impleaded. Inspite of this, the Court below dismissed the EA.CRP No.661 of 1998 arising out of EA No.412 of 1996 is, therefore, allowed. The applicant in EA No.412 of 1996 shall be impleaded as managing partner of the decree-holder firm.
In the result, both the revision petitions are allowed and the matter is remanded again to the Court below. The parties shall be at liberty to file additional pleadings and also adduce additional evidence. As the decree was passed in 1980 and still the matter is pending, I deem it proper to direct the Court below to dispose of EA No.413 of 1996 within a period of four months from the date of receipt of copy of this order without being influenced by any of the observations relating to facts made herein. There shall be no order as to costs.