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Andhra Pradesh High Court
Judges : GOPALA KRISHNAN NAIR
Kanegolla Krishnananda Rao - Appellant
Versus
Manepalli Venkata Ramanjaneyulu - Respondent
Decided On : 11-30-63
CLAIM UNDER ORDER 21, RULE 58, CIVIL PROCEDURE CODE - ATTACHMENT OF PROPERTY - INTEREST IN PROPERTY - SALE DEED - TRANSFER OF PROPERTY ACT, SECTION 54 - PARTNERSHIP - AUCTION SALE - ESTOPPEL - EXECUTION PROCEEDINGS - PARTNERSHIP ACT, SECTIONS 14 AND 15 - SHARE OF PARTNER - ATTACHMENT OF PARTNERSHIP PROPERTY - ORDER 21, RULE 49, CIVIL PROCEDURE CODE.
Fact of the Case:
Plaintiffs, claiming to be partners of the fifth defendant, objected to the attachment of the suit property by the decree-holders in execution of a money decree obtained against the fifth defendant. The executing Court dismissed the claim. The plaintiffs instituted a suit under Order 21, Rule 63, Civil Procedure Code, claiming that they became the owners of the property and that the decree-holders were not entitled to attach it. The trial Court held that the alleged relinquishment by the fifth defendant of his interest in the partnership was not true and bona fide and that the plaintiffs and the fifth defendant continued to constitute a partnership firm. It further held that the successful bid for the suit property made by the fifth defendant at the auction held by the Municipality was for his own benefit and not for the benefit of the partnership and that the part-payment towards price made by the fifth defendant was with his own money and not with partnership money. It however considered that the subsequent payment of the balance of the purchase money by the plaintiffs to the municipality came out of the partnership funds. It therefore, directed the 7th defendant-auction-purchaser to pay one half of this amount to the plaintiffs. Subject to this, it dismissed the suit. The plaintiffs and the 7th defendant preferred separate appeals to the District Court at Eluru. The District Judge allowed both the appeals and declared that the plaintiffs were entitled to one half of the suit property. The other moiety, according to the learned District Judge, fell to the share of the fifth defendant. The plaintiffs, who are aggrieved by this decision, have approached this Court in Second Appeal.
Finding of the Court:
The Court held that the plaintiffs were entitled to maintain a claim under Order 21, Rule 58, Civil Procedure Code, against the subsequent attachment of the property in execution of a money decree, as they had a valid and pre-existing contract in their favour for the sale of the property brought under attachment. The Court further held that the plaintiffs had a charge on the property for the part-payment of the purchase money made by them to the vendor-municipality. The Court also held that the attachment of the suit property as belonging to the judgment-debtor was invalid, as the property belonged to the Eluru Municipality and the decree-holders could have proceeded only against the debt and not against the security. The Court further held that the decree-holders could not invoke the principle of estoppel feeding the grant embodied in Section 43 of the Transfer of Property Act, as the judgment-debtor did not purport to grant any interest in land to the decree-holder or the auction-purchaser. The Court also held that the non-compliance with the provisions of Order 21, Rule 49, Civil Procedure Code, made execution against the suit property invalid. The Court further held that a partner has no interest in partnership realty as distinguished from the money arising from its sale and that the share of a partner is nothing more than his proportionate share of the partnership assets after they have been turned into money and applied in liquidation of the debts of the partnership.
Issues: 1. Whether the plaintiffs had a right to maintain a claim under Order 21, Rule 58, Civil Procedure Code, against the subsequent attachment of the property in execution of a money decree? 2. Whether the plaintiffs had a charge on the property for the part-payment of the purchase money made by them to the vendor-municipality? 3. Whether the attachment of the suit property as belonging to the judgment-debtor was valid? 4. Whether the decree-holders could invoke the principle of estoppel feeding the grant embodied in Section 43 of the Transfer of Property Act? 5. Whether the non-compliance with the provisions of Order 21, Rule 49, Civil Procedure Code, made execution against the suit property invalid? 6. Whether a partner has an interest in partnership realty as distinguished from the money arising from its sale?
Ratio Decidendi: 1. A person in whose favour there is a prior agreement to sell has an interest whatsoever to prefer a claim or object to the attachment under Order 21, Rule 58, when the property he has contracted to purchase is subsequently attached in execution of a money decree against a third person. 2. A vendee who has paid a part of the sale price has a charge for that amount on the property intended to be sold, provided the contract does not fail on account of any misconduct or default on his part. 3. The attachment of the suit property as belonging to the judgment-debtor was invalid, as the property belonged to the Eluru Municipality and the decree-holders could have proceeded only against the debt and not against the security. 4. The decree-holders could not invoke the principle of estoppel feeding the grant embodied in Section 43 of the Transfer of Property Act, as the judgment-debtor did not purport to grant any interest in land to the decree-holder or the auction-purchaser. 5. The non-compliance with the provisions of Order 21, Rule 49, Civil Procedure Code, made execution against the suit property invalid. 6. A partner has no interest in partnership realty as distinguished from the money arising from its sale and the share of a partner is nothing more than his proportionate share of the partnership assets after they have been turned into money and applied in liquidation of the debts of the partnership.
Final Decision: The Second Appeal was allowed to the extent indicated above with costs throughout against the decree-holders and contesting respondents. The Cross-Objections which raise substantially the same points also failed and were dismissed, but without costs. No leave.
( 2 ) IT is well to mention here that the plaintiffs preferred the claim for and on behalf of the partnership and objected to the attachment of the suit property by defendants 1 to 4 on the basis that it was the exclusive property of the 5th defendant. The plaintiffs did not claim that on the date of the attachment the ownership of the suit property vested in them or in their firm.
( 3 ) WHEN the suit was pending, the plaintiffs obtained a sale deed dated 18th October, 1956, from the Municipality to whom they duly paid the balance purchase money. Thereupon they sought to amend the plaint asking for a declaration that they became the owner of the property and that the decree-holders were not entitled to attach it in execution of a money decree obtained against the fifth defendant in his individual capacity. It appears that subsequently, during the pendency of the suit, the property was brought to Court sale and was purchased by the 7th defendant who is the son-in-law of the decree-holder-third defendant. But this sale does not appear to have yet been confirmed by the Court.
( 4 ) THE trial Court held that the alleged relinquishment by the fifth defendant of his interest in the partnership on 10th October, 1949 was not true and bona fide and that the plaintiffs and the fifth defendant continued to constitute a partnership firm. On its appreciation of the evidence, the trial Court further held that the successful bid for the suit property made by the fifth defendant at the auction held by the Municipality was for his own benefit and not for the benefit of the partnership and that the part-payment towards price made by the fifth defendant was with his own money and not with partnership money. It however considered that the subsequent payment of the balance of the purchase money by the plaintiffs to the municipality came
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