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IN THE HIGH COURT OF JAMMU AND KASHMIR AT JAMMU
I.K. Kotwal, J.
Hardutt Sharma - Appellant
Versus
Jaikishan Sham Lal & Sons & Ors. - Respondent
CMA No. 90/1981
Decided On : 09 October, 1982
CIVIL PROCEDURE CODE - Order 21 Rule 32 - Execution of decree - Attachment of property - Property belonging to judgment-debtor - Partnership firm - Consent decree against firm - Execution against partners - Right of partners to challenge decree - Grounds - Fraud or collusion - Res judicata - Stay of proceedings - Effect on jurisdiction of trial court.
Fact of the Case:
Appellant obtained a consent decree against respondents 1 to 3, a partnership firm and its two partners, for exclusive property rights over certain timber. Execution of the decree was taken out against the three respondents. Three persons, P.L. Dua, Ravinder Dua, and Smt. Usha Gupta, claiming to be partners in the firm, filed objections to the execution application, alleging that the decree was obtained by fraud and collusion. The executing court issued notices to them and stayed further proceedings in the execution application on an appeal filed by P.L. Dua and others against the decree. However, the court later vacated the stay order and attached the timber lying in the depot of the judgment-debtors. P.L. Dua and others challenged this order in an appeal before the District Judge, who dismissed it, holding that they had no right to challenge the decree as they were not parties to the suit. They then filed a regular suit challenging the decree.
Finding of the Court:
1. The consent decree against the firm was binding on all its partners, including P.L. Dua and others, who were held to be partners in the firm on the basis of an admission made by the other partners in arbitration proceedings. 2. P.L. Dua and others had the right to challenge the decree on the ground of fraud or collusion, even though they were not parties to the suit in which the decree was passed. 3. The judgment of the District Judge dismissing the appeal filed by P.L. Dua and others did not operate as res judicata, as it was dismissed on the ground that they had no right to challenge the decree, not on merits. 4. The stay orders issued by the District Judge in the appeal against the decree did not take away the jurisdiction of the trial court to pass orders in the execution application until they were communicated to the trial court. 5. The executing court erred in withdrawing the notice issued to respondents Jai Kishen and Sham Lal to show cause why they should not be arrested for disobeying the decree, as they were parties to the suit and had an opportunity to obey the decree. 6. The executing court also erred in attaching the timber lying in the depot of the judgment-debtors without determining whether it belonged to the firm or to P.L. Dua and others.
Issues: 1. Whether P.L. Dua and others, who claimed to be partners in the firm, had the right to challenge the consent decree obtained against the firm. 2. Whether the judgment of the District Judge dismissing the appeal filed by P.L. Dua and others operated as res judicata. 3. Whether the stay orders issued by the District Judge in the appeal against the decree took away the jurisdiction of the trial court to pass orders in the execution application. 4. Whether the executing court erred in withdrawing the notice issued to respondents Jai Kishen and Sham Lal to show cause why they should not be arrested for disobeying the decree. 5. Whether the executing court erred in attaching the timber lying in the depot of the judgment-debtors without determining whether it belonged to the firm or to P.L. Dua and others.
Ratio Decidendi: 1. A consent decree against a firm is binding on all its partners, including those who were not parties to the suit, as a suit against a firm is a suit against all its partners. 2. Partners who were not parties to a suit in which a decree was passed against the firm have the right to challenge the decree on the ground of fraud or collusion, even though they were not parties to the suit. 3. A judgment dismissing an appeal on the ground that the appellants had no right to challenge the decree does not operate as res judicata, as it is not a decision on merits. 4. A stay order issued by an appellate court does not take away the jurisdiction of the trial court to pass orders in the case until it is communicated to the trial court. 5. The executing court cannot withdraw a notice issued to a judgment-debtor to show cause why he should not be arrested for disobeying a decree, as the judgment-debtor is entitled to an opportunity to obey the decree. 6. The executing court cannot attach property without determining whether it belongs to the judgment-debtor.
Final Decision: The appeal was disposed of, and the stay granted by the court was vacated. The parties were directed to appear before the trial court to determine the binding effect of the consent decree on the appellant, the right of P.L. Dua and others to challenge the decree, and the extent to which the decree was executable.
2. The appeal has a chequred history. The appellant, Hardatt Sharma, in a suit brought by him on 22-10-1979, obtained a consent decree on 27-10-1979, i.e. only five days thereafter, from the court of Sub Judge(C. J. M.), Jammu, against respondents,1 to 3, namely, Messrs Jaikishen and Shamlal and Sons, a partnership firm and its two partners Jai Kishen and Sham Lal. The decree was to the effect that all the timber in compartments Nos. 16 and 18A in Batote range of Ramban Forest Division, whether standing, felled or sawn, including saw bands, installed therein, were his exclusive property and that respondents 1 to 3 could not transfer, or agree to transfer the aforesaid property to any person, nor could they remove the same from there and nor could they operate the aforesaid forest compartments. Execution of this decree was taken out by him against the aforesaid three respondents in the court of Sub Judge (C. J. M.)Jammu the court that had passed the decree-by making an application to it on 12-12-1979 that their property, including the sawn timber lying in their depot at Canal Road, Jammu, be attached and sold, as they had failed to obey the decree. On this, notices were issued to them. In the meantime, three persons, namely, P.L. Dua, Ravinder Dua, and Smt. Usha Gupta on 17-12-1979, made an application to the Executing court, seeking time to file objections, to the aforesaid execution application, as the decree sought to be executed had, according to them, been obtained by fraud, This prayer was granted by the court. They filed their objections on 26-12-1979, attacking the decree mainly on the ground that it was a product of fraud and collusion between the appellant and respondents Jaikishen and Sham Lal, alleging further that they too were the partners in the firm M/s Jaikishen Shamlal and Sons alongwith these; respondents, by virtue of a deed of partnership executed between them on forest pursuant to the said partnership.
3. On 31-12-1979 the decree holder made yet another application purporting to be one u/s 151 Civil P.r. Code for attachment of 1900 scants lying in the depot of the judgment-debtors which, according to him, he had extracted from the aforesaid forest comprising compartments Nos: 16 and 18 A and which the judgment debtors had brought to their depot against the clear mandate of the decree under execution. The executing court even though the District Judge at Jammu bad by his order dated 31-12-1979 stayed all further proceedings in the execution application on an appeal preferred, against the aforesaid decree by P.L. Dua and two others, yet passed an order on 1-1-1979, attaching 1900 scants from the depot subject, however, to objections by the judgment-debtors. This order was, however, vacated by it on 5-2-1979 at the instance of P.L. Dua and others ; the acquiesance in of Jai Kishen and Sham Lal notwithstanding.
4. The appeal preferred by P. L. Dua and others, which had been tiled by them in the name of the firm M/s Jai Kishen Sham Lal and sons, was ultimately heard and disposed of by the First Additional District Judge, Jammu to whom it had lateron been transferred. He dismissed it on 21.5.1981, holding that they not being parties to the suit in which the impugned decree had been passed, had no right to challenge it in appeal ; the only remedy open to them being to challenge it in a regular suit. This decision was accepted by P.L. Dua and others, who eventually challenged the aforesaid decree in regular suit, being Civil Suit No. 92 of 1981, brought by them on 3-10-1981 in the Court of Sub Judge (C. J. M.) Jammu.
5. With the dismissal of this appeal, proceedings in the execution application were reopened by the decree holder. On 14-11-1981, he made an application that the judgment-de
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