Andhra Pradesh High Court
Judges : PUNNAIAH
SALAMKAYALA PULLESWARA RAO - Appellant
Versus
MUNAGALA BASAVIAH KUTUMBA RAO - Respondent
Decided On : 04-01-77
PARTNERSHIP - DISSOLUTION - SUIT FOR SETTLEMENT OF ACCOUNTS - DECREE FOR SHARE IN ASSETS OF FIRM - SALE OF EXCLUSIVE PROPERTIES OF PARTNERS - RATABLE DISTRIBUTION OF SALE PROCEEDS - JURISDICTION OF CUSTODY COURT - ATTACHMENT OF SALE PROCEEDS - EFFECT - SECTION 73 C. P. C. - ORDER 21 RULE 52 C. P. C. - INTERPRETATION.
Fact of the Case:
The petitioner filed a suit for dissolution of partnership and settlement of accounts. An ex parte preliminary decree was passed but later set aside. A preliminary decree was passed on merits and a final decree was passed. During the pendency of the suit, the mill owned by the partners was sold in execution of a decree and the sale proceeds were deposited in court. The petitioner obtained an order of attachment against the sale proceeds. Some other creditors who obtained decrees against the partners filed a joint memo for rateable distribution under Section 73 C. P. C. The petitioner filed an application to restrain the payment of the sale proceeds to the respondents without notice to him. The application was dismissed. The petitioner filed two revision petitions challenging the orders dismissing his application and allowing the respondents' petitions for rateable distribution.
Finding of the Court:
The court held that the custody court had no jurisdiction to decide the question of rateable distribution under Section 73 C. P. C. and it was the attaching court that had the power and jurisdiction to send for the amounts from the custody court to itself and then decide as to who were entitled to rateable distribution. The court also held that the petitioner was not entitled to rateable distribution as he did not obtain a decree entitling him to a share in the sale proceeds realized on the sale of the mill and the site occupied by the mill which were the exclusive properties of the partners and which had nothing to do with the assets of the firm in respect of which the petitioner obtained the decree.
Issues: 1. Whether the custody court had jurisdiction to decide the question of rateable distribution under Section 73 C. P. C.? 2. Whether the petitioner was entitled to rateable distribution?
Ratio Decidendi: 1. The court held that the custody court had no jurisdiction to decide the question of rateable distribution under Section 73 C. P. C. and it was the attaching court that had the power and jurisdiction to send for the amounts from the custody court to itself and then decide as to who were entitled to rateable distribution. The court relied on the provisions of Section 73 C. P. C. and Order 21 Rule 52 C. P. C. and the case law on this aspect. 2. The court held that the petitioner was not entitled to rateable distribution as he did not obtain a decree entitling him to a share in the sale proceeds realized on the sale of the mill and the site occupied by the mill which were the exclusive properties of the partners and which had nothing to do with the assets of the firm in respect of which the petitioner obtained the decree. The court relied on the provisions of Section 49 of the Partnership Act and the case law on this aspect.
Final Decision: The court dismissed the revision petitions with costs.
( 1 ) THE petitioner in both the revision petitions, filed O. S. No. 140/ 1951 in the Sub-Court, Vijayawada for dissolution of partnership or settlement of accounts of the suit firm of which the plaintiff and Munagaia kutumba Rao Munagaia Basavayya were partners. Munagaia Basavayya died and his legal representatives Annapurnarnina and M. Samrajya Lakshmi were brought on record. An ex parte preliminary decree was passed on 13-10-1958. But it was set aside on 26-10-1960. Subsequently after contest a preliminary decree was passed on 8-12-1961 and final decree was passed on 31-3-1965. But before the above mentioned decrees were passed and before the death of Basavayya, Kutumba Rao and Basavayya were adjudicated as insolvents in I. P. No. 1/1961 on the file of the sub-Court Vijayawada and an official Receiver was appointed. The official Receiver was added as D 5 in the suit and became ex parte But the high Court set aside the order of insolvency on 16/3/1959. Number of suits were filed and decrees were passed during the period from 1951 to 1958. One such decree was the decree in Os. No. 196/1954 on the file of the Additional Sub-Court, Vijayawada. In execution of that decree the Mill owned by Kutumba Rao and Basavayya was sold for a sum of rs. 88,000/and odd on 6-7-1957 and the sale was confirmed ana hence the sale proceeds were deposited to the credit of OS No. 196/1954. After the adjudication was set aside by the High Court, the plaintiff in os. No. 140/1951 filed 1. A, No. 949/59 in O. S. No. 140/51 for attachment of the amount of Rs. 88,000/and the Principal Sub Judge made an order of attachment on 8-3-1959 which was effected on 28-7-1959. Some other creditors who obtained decrees against Kutumba Rao and basavayya filed joint memo before the 1st Additional Sub-Judge in O. S. No. 196/54 on 8 4-1959 for rateable distribution under Section 73 C. P. C. and also filed a memo of appropriations. Coming to know that such petitions were filed, the plaintiff in O,s. No. 140/51 who obtained the order of attachment against the sale proceeds lying in the court of the first Additional Sub Judge as per tho orders in I. A. No. 949/59 filed an application E. A. No. 657/59 impleading all the decree-holders and the judgment-debtors with tho prayer that the sale proceeds lying in the court may not be paid to the respondents mentioned therein without ordering notice and hearing him When the E. A. was called on 10-11-1959 neither the petitioner nor his counsel was present. Since the petitioner s counsel was not present the case was posted to next day. Even on that day the petitioner s counsel was not present. The court, therefore, passed an order as follows : "the petition is closed with permission to the petitioner to raise his objection in the other petitions. "
( 2 ) IN view of this order, the petition was dismissed. Subsequently the 1st Additional Subordinate Judge allowed the petition for rateable distribution and issued cheques in favour of the decree-holders without notice to the petitioner. The petitioner, therefore,, field two revision petitions c. R. P. Nos, 934 and 935/1960 against the orders dismissing EA. No. 65/759 and also against the order granting cheques to the decree-holders. Sher- fuddin Ahmed. J. following the decisions in Hiralal Vs. Akshoy Kumar and Gyarsilal Vs. Shankar Rao] which laid down that a custody court under Order 21 Rule 52 has no authority to make any rateable distribution unless it is the attaching Court as well, held that it is difficult to sustain the orders made by the Additional Subordinate Judge, Vijayawada ignoring the attachment. So holding, the learned Judge allowed on 7-9-1965 the C. R. Ps. and set aside the orders, of the lower Court made on 11-11-1959 and directed the lower court to dispose of E. A. No, 657/59 on meritsi The petition EA. No. 677/59 was, therefore, restored to the file of the learned Subordinate Judge. After it was restored to the file of the lower Court, the petitioner filed
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