Topanmal Chhotamal vs Kundomal Gangaram And Ors.

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Not extracted

Decision Date: 8 September 1959

Coram: B.P. Sinha, P.B. Gajendragadkar, K. Subba Rao

In this case, the Supreme Court of India considered an appeal filed by special leave against a judgment of the Allahabad High Court dated 10 February 1952. The appeal arose out of a commercial dispute between the plaintiff, Topanmal Chhotamal, and the respondents, namely the firm of Kundomal Gangaram and its partners. In 1947 the plaintiff instituted Suit No. 533 of 1947 before the Chief Court of Sind at Karachi seeking recovery of a sum of money allegedly due from the firm. The summons was served on Kodumal, who was described as one of the five partners of the firm, and none of the other partners were impleaded individually. On 8 November 1948 the Chief Court of Sind decreed in favour of the plaintiff. By the time the decree was passed, the partition of India had rendered the Chief Court of Sind a foreign court, and consequently the decree could not be enforced in India. The plaintiff therefore filed a second suit before the Civil Judge at Agra, Suit No. 205 of 1949, on the basis of the foreign judgment. In that suit the firm was made the first defendant, represented by its partner Kodumal, and the other four partners were impleaded as defendants 2 to 6. The Civil Judge decreed that the plaintiff was awarded Rs. 12,140-1-0 with costs and interest at three per cent per annum against defendant No. 1 and against any property of the firm that might be found in the hands of defendants 2 to 8. No appeal was filed against that decree, so it became final. In execution of the decree the plaintiff attached certain property of the respondent-firm at Agra, principally a shop and the articles therein. Respondents 2 to 6 objected to the attachment, claiming that the shop and its contents were their personal property and not assets of the firm Kundomal Gangaram. The Civil Judge held that the assets sought to be attached were not firm assets; however, the judge ruled that while the shares of respondents 3 to 6 were not liable to attachment, the one-fifth share of Kundomal Gangaram in the firm could be validly attached. Kundomal Gangaram appealed the part of the order adverse to him, and the decree-holder filed cross-objections to that order. The High Court dismissed the cross-objections on the ground that respondents 3 to 6 had not been made parties to either the appeal or the cross-objections. It also allowed Kundomal Gangaram’s appeal, holding that the decree was directed only against the firm and its assets and therefore could not be executed against the personal property or the shares of the partners in the joint-family property. The decree-holder then filed the present appeal before this Court, seeking a declaration that he could proceed with execution against the personal properties of respondents 2 to 6. Counsel for the appellant, the Attorney-General, contended that a true construction of the decree in Suit No. 205 of 1949 required the decree to be understood as being against the firm without any limitation.

In the appeal before the High Court, it was pointed out that the appeal and the accompanying cross-objections did not name respondents 3 to 6 as parties to the proceedings. Because those respondents were not formally joined, the High Court rejected the cross-objections on the basis that the non-joined respondents could not be heard. The Court then granted the appeal filed by the partners of the firm Kundomal Gangaram. The Court reasoned that the decree issued in the earlier suit was directed only against the firm and its assets, and consequently it could not be enforced against the personal properties of the partners or against any shares they held in their joint-family property. Following that reasoning, the decree-holder initiated the present appeal with the purpose of establishing a right to execute the decree against the personal properties of respondents 2 to 6.

The learned Attorney-General, appearing for the appellant, argued that a proper construction of the decree in Suit No. 205 of 1949, filed in the Court of Civil Judge, Agra, showed that the decree was made against the firm without any express limitation. If the decree were read in that way, the appellant would be entitled, under Order XXI, Rule 50 of the Civil Procedure Code, to enforce the decree against the personal assets of the partners of the firm, namely respondents 2 to 6. To support this contention, the Attorney-General referred to the relevant statutory provisions. Order XXI, Rule 50 provides that where a decree has been passed against a firm, execution may be granted (a) against any property of the partnership; (b) against any person who has appeared in his own name under Rule 6 or 7 of Order XXX or who has admitted on the pleadings that he is, or who has been adjudged to be, a partner; and (c) against any person who has been individually served as a partner with a summons and has failed to appear, subject to the condition that nothing in this sub-rule shall be deemed to limit or otherwise affect the provisions of Section 247 of the Indian Contract Act, 1872. Order XXX, Rule 3 states that where persons are sued as partners in the name of their firm, the summons shall be served upon any one or more of the partners as the Court may direct, and such service shall be deemed good service upon the firm, whether the partners are within or without India. Rule 6 further provides that where persons are sued as partners in the name of their firm, they shall appear individually in their own names, but all subsequent proceedings shall continue in the name of the firm. The gist of these provisions, as explained by the Court, is that a decree against a firm may be executed against the partnership’s property, against any individual who appeared in the suit in his own name and was served with notice, and consequently against the personal property of such partners.

Rule 6 or Rule 7 of Order XXX of the Code of Civil Procedure allows execution against a person who, on the pleadings, has admitted that he is or has been adjudged a partner, and also against any person who has been individually served with notice as a partner but who failed to appear. Consequently, a decree directed against the firm may be executed against the personal property of those partners. The submitted legal position on this point is straightforward and has not been contested by the counsel appearing for the respondents. The dispute, however, centres on the claim that the decree which is the subject of execution expressly omits the personal liability of the partners; the contention is that, because of this alleged exclusion, the executing court is barred by Order XXI, Rule 50, from looking beyond the terms of the decree. The decree in this case is composed of two distinct portions. The first portion is expressed as follows: “I decree the plaintiff’s suit for rupees twelve thousand one hundred and forty and anna one only with costs and future and pendente-lite interest at three per cent per annum against defendant No 1 ….” If this wording alone constituted the entire decree, then the operation of Order XXI, Rule 50 would be triggered automatically, as the decree would be directed against the firm as a whole. However, the decree proceeds to add the words: “any such property of the firm M/s Kundomal Gangaram as may be found in the hands of defendants 2 to 6.” This additional clause would be superfluous if, as the learned Attorney-General argues, it merely restated that the decree targets the assets of the firm, because that effect is already achieved by the initial portion. A decree against a firm that contains no further directions is, under Order XXI, Rule 50, executable against the property of the firm that is held by its partners. To avoid a redundant or tautological construction, it is necessary to read the decree in its entirety and to integrate the two portions into a cohesive scheme. When read in this manner, the reasonable interpretation is that the first portion declares a decree against the firm, while the second portion limits the execution of that decree to the firm’s property that resides in the hands of the partners identified as defendants 2 to 6.

At the very worst, the decree may be described as ambiguous. In circumstances where a decree contains ambiguous language, the responsibility falls on the executing court to interpret its meaning. In undertaking such interpretation, the court is entitled, where the terms of the decree are unclear, to examine the pleadings and the judgment, as illustrated in the authority Manakchand v. Manoharlal. In the plaint filed in the Agra suit, Suit No 205 of 1949, the plaintiff sought not only a decree against the firm but also a personal decree against defendants 2 to 6. Those defendants, in turn, argued that a personal decree could not be granted against them because they had not been made parties to the earlier suit filed in the Chief Court, Sind, and consequently had not been personally served in that proceeding. This pleading formed the basis of their contention that the decree should not impose personal liability beyond the partnership assets that may be in their possession.

The learned Civil Judge of Agra observed that defendants numbered two to six had not been made parties to Suit No. 533 of 1947 and had not been individually served in that proceeding; consequently, the plaintiff could not obtain a personal decree against those defendants. Relying on the decision of the Madras High Court in Sahib Thambi Marakayar v. Hamid Marakayar, ILR 36 Mad. 414, the judge explained that the law did not permit the decree obtained in Suit No. 533 of 1947 to create a liability greater than that of the partnership property held by the defendants. He therefore held that a personal decree could not be granted against defendants two to six, and that relief could be limited only to the property of the firm that might be found in the hands of those partners. Accordingly, the plaintiff was awarded a decree for the sum of Rs 12,140-1-0 together with costs and pendente-lite interest at a rate of three percent per annum against defendant number one, insofar as the firm’s assets were in the possession of defendants two to six. The decretal order followed this reasoning. From the pleadings and the judge’s findings it was clear that, although the plaintiff had sought a personal decree against respondents two to six on the same grounds that would normally permit execution under Order XXI, Rule 50 of the Code of Civil Procedure, the judge, for the specific reasons he set out, refused to grant such relief and expressly confined any enforcement to the assets of the firm held by the partners. The subsequent question was whether an executing court could disregard the terms of the decree and award the plaintiff relief that had been expressly denied in the original suit. The Court affirmed the well-settled principle that a court executing a decree must take the decree as it stands and cannot go behind it, because the decree is binding and conclusive upon the parties. Accepting the appellant’s contention would have required the executing court to impose personal liability on the partners despite the decree’s clear instruction to the contrary, which was deemed impermissible. The Court concluded that the decision of the High Court was correct, dismissed the appeal with costs, and ordered the appellant to pay the court fee payable to the State.