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1970 Supreme(MP) 110

High Court Of Madhya Pradesh
Bishambhar Dayal, C. J. and P. K. Tare, J.
VRAJ KUWAR BAI - Appellant
Versus
KUNJBIHARILAL KRISHNACHANDRA - Respondents
Letters Patent Appeal 34 Of 1963
Decided On : 10/07/1970

Advocates Appeared:
H.L.KHASKALAM, J.V.JAKATDAR, R.S.DABIR

Headnote:(1) Partnership Act, 1932 - Ss. 14 & 15 - partnership property - what is - what is the interest of partners in the firm property.

       Although partnership property is in one sense joint property between the partners, the rights of the partners really do not extend to a share in each partnership property. [Para 5

       All property in which the partners are jointly interested is not partnership property, but only that property is partnership property which answers the description given in section 14. The property is to be used exclusively for the purposes of the partnership business. It cannot be used by any partner for his personal benefit. The principles of co-ownership do not apply to partnership property. [Paras 9 & 10

       A partner has no right to transfer any property of the firm. [Para 13

       (2) Civil P.C., 1908 - O.30, R. 1 & O. 21, R. 50 - suit against partnership - all partners need not be impleaded by name if no execution is sought against personal property of the partners - decree only in name of the firm - may be executed against property of the firm. [Para 11

       (3) Transfer of Property Act, 1882 - S. 52 - doctrine of its pendens - applies to suits for specific performance also.

       Whenever a suit is pending in respect of any property, a transfer of that property by a party would be subject to the result of the suit and a suit for specific performance is certainly a suit in respect of immovable property. AIR 1948 PC 147 relied on. [Para 14

       (4) Insolvency Act, 1920 (Prov.) - Ss. 28 & 2 (1) (d) - one of the partners becoming insolvent - partnership property does not vest in the Insolvency Court - decree against firm property not a nullity even if Insolvency Court or receiver not joined.

       (5) Partnership Act, 1932 - S. 34 & 47 - one of the partners becoming insolvent - decree against partnership property without impleading Insolvency Court Of receiver - is valid against the firm property.

       Where the firm entered into an agreement with the plaintiff for the sale of the firm property, and the plaintiff brought a suit against the firm for specific performance of the contract, in the suit, all the partners were made defendant, the fact that one of the partners became insolvent is not material. The plaintiff could proceed against the two solvent partners representing the firm. Partnership property is not within the property defined in section 2 (1) (d) of the Provincial Insolvency Act and thus section 28 (2) of that Act is not attracted. As the plaintiff-decree holder was proceeding against the firm property, it was not necessary to join the Insolvency Court as party not to obtain its permission. 1963 ILJ 476 referred to. [Paras 10 & 16

BISHAMBHAR DAYAL, C. J.

( 1 ) THIS order shall also govern the disposal of Letters Patent Appeal No. 34 of 1963.

( 2 ) THESE Letters Patent Appeals arise out of a suit for specific performance filed by kunjbeharilal against three partners Bechar Bhai, Rupchand and Brijdas of firm diamond Trading Company, Raipur. The case of the plaintiff was that the partners of the firm, on behalf of the firm, agreed to sell malik makbuza rights in half share of certain fields which were partnership property, by agreement dated 22nd january, 1947. The document was executed by Rupchand, one of the partners, on behalf of the firm. On 4th November, 1947, Brijdas another partner of the firm, confirmed the agreement. The plaintiff alleged that he was always willing to perform his part of the contract, but that the defendants failed to execute the sale deed in spite of service of registered notice. The plaintiff, therefore, claimed that the defendants be directed to execute a sale deed on payment of the balance of price i. e. , Rupees 7743/4/-, or any other amount that may be found payable. This suit was filed on 26th October, 1950. On 19th March, 1952, Bechar Bhai, one of the partners, mortgaged the whole of this property with the Allahabad Bank Ltd. , claiming himself to be the owner thereof. On 22nd March, 1952, that is within a few days of this mortgage, one of the creditors of Bechar Bhai applied for adjudicating Bechar Bhai as an insolvent. On 24th September, 1955, Bechar Bhai was adjudicated insolvent. No receiver was appointed. The plaintiff did not take any steps in his suit for specific performance to join the Insolvency Court as representing the estate of the insolvent. On 3rd April, 1958, the two partners rupchand and Brijdas entered into a compromise with the plaintiff Kunjbeharilal and agreed to a decree being passed in his favour. On 23rd April, 1958, a decree for specific performance was passed in favour of Kunjbeharilal on compromise by two of the partners and ex parte against Bechar Bhai. On 23rd June, 1958, kunjbeharilal deposited the money as consideration for execution of the sale deed and applied for execution of the decree. On receipt of a notice from the executing court asking him to execute a sale deed in favour of the plaintiff, Bechar Bhai filed an objection on 19th December, 1960, informing the Court that he had been adjudicated insolvent; that the decree having been passed without impleading the insolvency Court as a party, the decree was a nullity and that the sale deed could not be executed. A similar objection was also filed on behalf of the Allahabad bank, now respondent No. 4. The Additional District Judge on 3rd April, 1962, held that the decree was a nullity and could not be executed. He, therefore, dismissed the application for execution. Against that order the plaintiff filed an appeal in this court and the learned Single Judge by order dated 10th October, 1963, reversed that order and directed the Court below to proceed with the execution of the decree according to law. Against that order of the learned Single Judge, the present Letters Patent Appeals have been filed by Bechar Bhai and the Allahabad bank Ltd.

( 3 ) THE contention of learned counsel for the appellants is that a firm has no legal personality of itself. It is merely a compendious name indicating all the partners of the firm and consequently the property of the firm is in reality the joint property of all the partners. All the partners have, therefore, a share in the property and the suit for specific performance could not be decreed in respect of the whole of the joint property after one of the partners had been adjudicated insolvent and the insolvency Court, in which the insolvent's property vested, had not been made a party The decree was, therefore a nullity. It was also further contended that in any case the decree was wholly inexecutable as no sale deed for the whole of the property could be executed either by the two solvent partners or by



























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