HIGH COURT OF GUJARAT
V. B. RAJU, J.
Bhikhabhai Kalidas
Versus
Vali Isa Patel and Co. a firm
Civii Revn. Appln. No. 1209 of 1960
Decided On : 06-11-1962
Towns Insolvency Act - Civil Procedure Code,1908 - Order 14, Rule 1 and Rule 2 - Suit was not maintainable - Debt provable in insolvency - Whether suit is not maintainable and he held in affirmative on that issue thereupon dismissed suit - It also mentions that at first hearing of suit Court shell after reading plaint and written statements if any and after such examination of parties as may appear necessary ascertain upon what material propositions of fact or of law parties are at variance, and shall thereupon proceed to frame and record issues on which right decision of case appears to depend – Held, Now according to plaintiff goods were purchased on two dates in question by partnership but defendant No. 2 is liable because he was partner of firm - Obligation arising out of membership of partnership was incurred before date of such adjudication although goods were purchased after date of adjudication - As according to plaint defendant No. 2 was a partner of firm even before date of his adjudication as insolvent obligation referred to was incurred by defendant No. 2 before date of his adjudication as an insolvent and therefore Sub-Section (3) of Section 46 of Residency-Towns Insolvency Act comes into play obligation having been incurred before date of siren adjudication - Such debts are provable in insolvency - To such a case provisions of Section 17 of Presidency-Towns Insolvency Act apply and no suit can be filed without consent of the Court - lower Court was therefore right in holding that suit was not maintainable as against defendant - Revision partly allowed
2. The framing of preliminary issues is referred to in Order 14, Rule 1 and Rule 2, Civil Procedure Code. Rule 1 of Order 14, C.P. Code classifies issues into two kinds; (1) issues of fact, and (2) issues of law. It also mentions that at the first hearing of the suit the Court shell, after reading the plaint and the written statements, if any, and after such examination of the parties as may appear necessary, ascertain upon what material propositions of fact or of law the parties are at variance, and shall thereupon proceed to frame and record the issues on which the right decision of the case appears to depend. In other words, if the parties are at variance on a material proposition of law then an issue of law arises. If the parties are at variance with regard to a material proposition of fact, then an issue of fact arises. Then Rule 2 of Order 14, C. P. Code provides as follows :
"Where issues both of law and of fact arise in the same suit, and the Court is of opinion that the casa or any part thereof may be disposed of on the issues of law only, it shall try those issues first, and for that purpose may, if it thinks fit, postpone the settlement of the issues of fact until after the issues of law have been determined."
It is only where the case or any part thereof may be disposed of on the issues of law that a preliminary Issue can be framed and determined first.
3. So far as defendant No. 2 goes, the fact that he was adjudged insolvent on 18-5-1956 was admitted. The plaintiffs allegations are to be found in the plaint before leading any evidence. In these circumstances, the question, of law arose whether in view of the provisions of Section 17 of the Presidency-Towns Insolvency Act the suit as framed was maintainable as against defendant No. 2. In this case, the only section to be considered was Section 17 of the Presidency-Towns Insolvency Act, and the Court was right in framing the preliminary issue regarding the maintainability of the suit as against defendant No. 2.
4. But as against defendant No. 1 the contention involved a proposition of law as well as a preposition of fact. The contention of the defendant was that the partnership was dissolved automatically on the insolvency of one of the partners. But Section 42 of the Indian Partnership Act provides that subject to contract between the partners a firm is dissolved by adjudication of a partner as an insolvent. The expression subject to contract clearly means subject to a contract to the contrary between the parties. This is clear because the same expression has been used in Sections 13, 14, 15, 16 and 17 of the Indian Partnership Act. It is true that the words to the contrary are used in Section 19(2) of the Partnership Act, but they are used with reference to the usage, or custom of trade. Whether in the present case the partnership was dissolved upon the insolvency of one of the partners is a question of fact and not one of law. It depended on the existence or non-existence of a contract to the contrary. It was not, therefore, a pure question of law and a preliminary issue should not have been framed with regard to the maintainability of the suit as regards defendant No. 1. The parties did not
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