SATISH KUMAR JHUNJHUNWALA Vs. UNION OF INDIA

JUDGEMENT

(1.) This is an appeal from an order allowing an application under Order XXI Rule 50(2) of the Code of Civil Procedure ("CPC") by the decree holder seeking leave to proceed with execution proceedings against the partners of the judgment debtor's firm.

(2.) The facts leading to the decree in this case, and the execution proceedings are that a contract dated 15.10.1986 was entered into between M/s. Binode Engineering & Mechanical Works, a registered firm, ("the judgement-debtor firm") and the Union of India for the supply of 3850 tonnes of cast iron sleeper plates. Due to certain disputes in the course of the performance of the contract (the details of which are not relevant at this stage of the execution proceedings), the matter was referred to arbitration in 1996 (through a letter dated 21.12.1996). The award was passed on 25.03.1998 in favour of the Union of India, the decree-holder, for an amount of Rs. 81,31,371/- (Rs. 35,36,750/- towards the value of scrap and Rs. 45,94,621/- towards interest at the rate of 12% per annum on the value of the scrap from 01.09.1988 to 31.12.1996) and against the judgement-debtor firm. The award was then made a rule of Court under Section 17 of the Arbitration Act, 1940 in CS (OS) 815A/1998 on 15.03.2004, after dismissing objections raised by the judgement debtor firm.

(3.) Around the same time as the award, the judgement-debtor firm became non-functional due to differences between the partners. Subsequently, the Union of India sought to initiate execution proceedings against Satish Kumar Jhunjhunwala (the petitioner/appellant), an admitted partner of the firm at the time of signing of the contract, in Execution Case No. 119/2008 before this Court. This case was then transferred to the High Court of Calcutta by an order dated 17.04.2007, to facilitate execution against the property of Mr. Jhunjhunwala. Before the Calcutta High Court, Mr. Jhunjhunwala took the plea that the proceedings against him were not maintainable as the recovery could only be against the firm as such, and not against its partners. In the meantime, an application, EA No. 471/2008, filed for stay of the decree under Order XXI Rule 26 of the CPC by the judgement-debtor firm was also rejected by this Court. Subsequently, the Union of India filed an application under Order XXI Rule 50(2) CPC, before a Single Judge of this Court in order to satisfy the decree as against the properties of Mr. Jhunjhunwala by obtaining leave to proceed against his assets. The Single Judge granted leave under Order XXI Rule 50(2), leading to the present appeal.