UNION OF INDIA Vs. SALANKAYALA PULLESWARA RAO

JUDGEMENT

(1.) THESE appeals and revisions are preferred against the orders of the subordinate judge, Narsapur, in E.As. Nos. 527/63, 555/63, I.A. No. 65/66 and E.A. No. 390/62 rejecting the claim of the income-tax department and of the sales tax department for priority in the collection of their dues. All these petitions were filed after the final decree in O.S. No. 78 of 1948. The said suit was filed by Munagala Basavaiah and Kutumba Rao, partners, against the legal representative of the deceased partner and another for dissolution of the firm, Sri Jayalakshmi Rice Mill at Undi and for accounts. The main defendants were the legal representatives of the deceased partner, Salankayala Subbiah. The first defendant in the suit was his son, Salankayala Pulleswara Rao. A preliminary decree was passed on April 6, 1951, for accounts declaring the partnership dissolved as from the date of suit, November 29, 1948. A receiver was appointed to realise the assets of the partnership, to discharge the liabilities of the partnership and to prepare a statement of profit and loss of each of the partners in respect of their shares. After the receiver filed his report and after further hearing, a final decree was passed on January 27, 1960, the material clauses thereof being :

(2.) IN the course of execution, assets amounting to Rs. 17,101.56 were realised and put in court.

(3.) THIS statement of the law cannot obviously govern the facts of the present case. THIS is a case distinguishable on facts as the State is now seeking a priority over a decree for the distribution of the partnership assets. The Indian Partnership Act has a specified scheme of distribution of assets on dissolution. The relevant sections are Sections 46, 48 and 49 which may be extracted for easy reference :