The determination of the interest of an insolvent partner in a partnership property does not relate back to the date of the insolvency petition for purposes of the Indian Partnership Act.

( 1 ) THIS appeal is directed against the order dated 20-12-1960 of the learned Single judge, Sen, J. , of this Court in Misc. Appeal No. 124 of 1958 whereby the order of the executing Court setting aside the sale of the rice mill by public auction in favour of the appellant was upheld.

( 2 ) BRIEFLY stated the facts giving rise to the sale of the rice mill are these. Appellant-decree-holder and the respondent-judgment-debtor No. 1 Dwarkaprasad had entered into a partnership on 27-12-1950. However, the appellant filed a suit on 18-4-1953 for dissolution of partnership and settlement of accounts. The claim was contested by Dwarkaprasad and evidence in the suit was to be recorded on 57-1955. But on that date both the parties to the suit amicably settled their disputes and in terms of their compromise a decree was passed on that date. It was one of the terms of the compromise that the partnership property be sold through a commissioner, and that out of the half share of respondent-defendant dwarkaprasad in the sale proceeds of the partnership property appellant-plaintiff Laxminarayan be paid a sum of Rs. 20,000. 00 in full satisfaction and settlement of the accounts of the partnership inter se. Thereafter on 14-7-1955 Dwarkaprasad filed a petition for being adjudged insolvent and he was accordingly so adjudged on 13-8-1958. In the mean time, the rice mill in question belonging to the partnership was sold by public auction on 28-12-1957. An objection was, therefore, raised that as the adjudication of Dwarkaprasad as an insolvent relates back to 14-7-1955 the sale of his share in the property which had vested in the receiver was illegal and liable to be set aside. The objection found favour with the executing Court and accordingly it set aside the sale. In appeal to this Court the learned Single Judge accepting the objections confirmed that order. Hence this appeal.

( 3 ) THE only question, therefore, that falls for determination is whether the sale of the rice mill held on 28-12-1957 was illegal or not. In our view the answer to the question is that it is not illegal but perfectly valid.

( 4 ) THE executing Court as also the learned Single Judge were in eror in holding that since after the date of the decree i. e. , 5-7-1955 the partnership no longer subsisted, what was sold on 28-12-1957 was not a partnership property, and as the adjudication of Dwarkaprasad on 13-8-1958 relates back to 14-7-1955 there could be no valid sale of any property of the insolvent vesting in the receiver. No doubt it is true that as soon as Dwarkaprasad was adjudged insolvent, and as there remained surviving only one partner the partnership firm stood dissolved. For the matter of that it stood in law dissolved by virtue of the decree on 5-7-1955 even before insolvency petition was filed on 14-7-1955. Even so, the provisions of section 47 of the Indian Partnership Act specifically provide that even after the dissolution of a firm the authority of each partner to bind the firm, and the other mutual rights and obligations of the partners, continue notwithstanding the dissolution, so far as may be necessary to wind up the affairs of the firm and to complete transactions begun but unfinished at the time of the dissolution, but not otherwise. In view of this provision, therefore, it is evident that during the process of winding up of the firm and settlement of accounts finally, all the assets and liabilities of the firm continue to remain as those of partnership. It cannot, therefore, be urged that after the dissolution of the partnership whether by virtue of the decree of theCourt or by virtue of the adjudication of Dwarkaprasad as insolvent, the rice mill ceased to be partnership property or assets. In this view then the provisions of Sections 48 and 49 of the Indian Partnership Act come into play, and the partnership assets have first to be utilised for purpose of settlement of accounts between the partners and of the debts of the firm in the