GANESHNARAYAN JAGDAMBA PRASAD Vs. INDIAN TEXTILE SYNDICATE

JUDGEMENT

(1.) A very interesting question relating to the law of insolvency arises in this appeal. The appellant firm was dissolved on 19-12-1951. The respondent company filed a suit against the appellant firm and obtained a decree on 14-11-1952. The appellant firm consists of several partners, but in the suit filed by the respondent company only one partner was served) viz. Bhagwatiprasad, and he appeared in answer to the summons. On 10-12-1952, the respondent company took out an insolvency notice addressed to the firm calling upon the firm to pay the judgment debt within the time specified in that notice. The appellant firm took out a notice of motion on 8-1-1953, to set aside the insolvency notice. The learned Insolvency Judge dismissed the notice of motion) and it is from that order that this appeal is preferred.

(2.) THE contention of the respondent company is that it has obtained a decree against the appellant firm, that the insolvency notice is addressed to the appellant firm, that there is an obligation upon the appellant firm to satisfy the judgment debt, and that the insolvency notice is in proper form, and the learned Judge below was right in dismissing the notice of motion to set aside the insolvency notice. As against this what is contended on behalf of the appellant firm is that the decree which was obtained by the respondent company could only be executed against the partner Bhagwati prasad who had been served, it could not be executed against the other partners, and to the extent that the insolvency, notice was addressed to all the partners which constituted the firm the insolvency notice is bad. Now, the position that arises in respect of a decree passed against a firm under the Civil Procedure Code is not and cannot be disputed. Partners can be sued in the firm name under Order 30 and Order 30 provides how service is to be effected. Certain consequences follow upon all the partners of a firm not being served and those consequences are set out in Order 21, Rule 50. Sub-rule (1) of that rule provides that a decree can be executed, which has been passed against a firm, against the property of the partnership and against any person who has appeared in his own name under Rule 6 or Rule 7 of Order 30 or who has admitted on the pleadings that he is, or who has been adjudged to be, a partner, and against any person who has been individually served as a partner with a summons and has failed to appear. There is no dispute that the only person who falls under clause (b) or clause (c) of Order 21, Rule 50 (1), is Bhagwatiprasad, and no other partner can fall under either of these two clauses. Then Sub-rule (2) provides :

(3.) THEREFORE, the short position that arises for our consideration is whether, although a decree could not have been executed without the leave of the Court against all the partners, it is open to a judgment-creditor to call upon ail the partners to satisfy the judgment debt. If the judgment-creditor had attempted to execute the decree against all the partners, he would have been met with the answer that he could not do so unless he had obtained leave under Order 21, Rule 50 (2 ). The question is whether these partners can give a similar answer to a judgment-creditor who takes out an insolvency notice that he cannot take out an insolvency notice against them because they are not liable to discharge the judgment debt unless he has obtained the leave of the Court. Now, the in solvency notice itself mentions that the amount is payable under a decree whereon execution has not been stayed,. Therefore, if there is a decree in favour of a judgment-creditor of which the execution has been stayed, the judgr-ment-creditor is not entitled to take out an insolvency notice in respect of that decree. In our opinion, Order 21, Rule 50 (2), constitutes a statutory stay of execution of the decree against partners other than those who have been served. Therefore, when the insolvency notice was taken out by the respondent com-pany against the appellant firm, the execution of the decree was statutorily stayed against all the partners except Bhagwatiprasad, and if that be the true position, it is clear that the insolvency notice is bad to the extent that it is addressed to the judgment-debtors against whom the execution of the decree has been stayed by statute.