SALAMKAYALA PULLESWARA RAO Vs. MUNAGALA BASAVIAH KUTUMBA RAO

JUDGEMENT

(1.) The petitioner in both the revision petitions, filed O.S. No. 140/1951 in the Sub-Court, Vijayawada for dissolution of partnership or settlement of accounts of the suit firm of which the plaintiff and Munagala Kutumba Rao Munagala Basavayya were partners. Munagala Basavayya died and his legal representatives Annapurnamma and M. Samrajya Lakshmi were brought on record. An ex parte preliminary decree was passed on 13-10-1958. But it was set aside on 26-10-1960. Subsequently after contest a preliminary decree was passed on 8-12-1961 and final decree was passed on 31-3-1965. But before the above mentioned decrees were passed and before the death of Basavayya, Kutumba Rao and Basavayya were adjudicated as insolvents in I.P. No. 1/1961 on the file of the Sub-Court Vijayawada and an official Receiver was appointed. The Official Receiver was added as D-5 in the suit and became ex-parte But the High Court set aside the order of insolvency on 16/3/1959. Number of suits were filed and decrees were passed during the period from 1951 to 1958. One such decree was the decree in Os. No. 196/1954 on the file of the Additional Sub-Court, Vijayawada. In execution of that decree the Mill owned by Kutumba Rao and Basavayya was sold for a sum of Rs. 88,000/-and odd on 6-7-1957 and the sale was confirmed and hence the sale proceeds were deposited to the credit of OS No. 196/1954. After the adjudication was set aside by the High Court, the plaintiff in OS. No. 140/1951 filed 1. A. No. 949/59 in O. S. No. 140/51 for attachment of the amount of Rs. 88,000/-and the Principal Sub Judge made an order of attachment on 8-3-1959 which was effected on 28-7-1959. Some other creditors who obtained decrees against Kutumba Rao and Basavayya filed joint memo before the 1st Additional Sub-Judge in O.S. No. 196/54 on 8-4-1959 for rateable distribution under Section 73 C.P.C. and also tiled a memo of appropriations. Coming to know that such petitions were filed, the plaintiff in O.S No. 140/51 who obtained the order of attachment against the sale proceeds lying in the court of the first Additional Sub Judge as per the orders in I.A. No. 949/59 filed an application E.A. No. 657/59 impleading all the decree-holders and the judgment-debtors with the prayer that the sale proceeds lying in the court may not be paid to the respondents mentioned therein without ordering notice and hearing him When the E.A was called on 10-11-1959 neither the petitioner nor his counsel was present. Since the petitioner's counsel was not present the case was posted to next day. Even on that day the petitioner's counsel was not present. The court, therefore, passed an order as follows:-

(2.) In view of this order, the petition was dismissed. Subsequently the 1st Additional Subordinate Judge allowed the petition for rateable distribution and issued cheques in favour of the decree-holders without notice to the petitioner. The petitioner, therefore, field two revision petitions C.R.P. Nos, 934 and 935/1960 against the orders dismissing EA. No. 65/759 and also against the order granting cheques to the decree-holders. Sherfuddin Ahmed. J. following the decisions in Hiralal v. Akshoy Kumar, AIR 1933 Cal. 814 and Gyarsilal v. Shankar Rao, AIR 1950 Nag. 46 , which laid down that a custody court under Order 21 Rule 52 has no authority to make any rateable distribution unless it is the attaching Court as well, held that it is difficult to sustain the orders made by the Additional Subordinate Judge, Vijayawada ignoring the attachment. So holding, the learned Judge allowed on 7-9-1965 the C.R. Ps. and set aside the orders of the lower Court made on 11-11-1959 and directed the lower court to dispose of E.A. No. 657/59 on merits. The petition EA. No. 677/59 was, therefore, restored to the file of the learned Subordinate Judge. After it was restored to the file of the lower Court, the petitioner filed EA. No. 187/1970 to direct the respondent or their legal representatives to deposit in the court the cheque amounts taken by them from the sale proceeds in O.S. No. 196/1954.

(3.) After hearing both sides the learned First Additional Sub-Judge dismissed both the petitions While dismissing E.A. No. 657/59, the learned Sub-Judge held that the petitioner was having only a share in the partnership business run by the owners of the Mill and the petitioner was granted a decree in O.S. No. 140/51 to the effect that he is entitled to Rs. 86,000/- from out of the assets of the firm and he was granted any decree against the mill and as the mill is an asset of the partnership firm (E-I in O.S. No. 140/51) he cannot be deemed to have any rights in the Mill or the site occupied by it. It is true that D-6 in O.S. No. 140/51 and the petitioner came to a compromise according to which the petitioner is entitled to recover Rs. 20,000/- with subsequent interest from out of the assets of the Mill in full settlement of the claim against D-6 and her husband D-2 and that the petitioner should proceed against the personal properties of D-6 in execution of that compromise decree But on that account it cannot be said that the petitioner is entitled to proceed against the Mill as the Mill was the asset of the partnership firm and hence he is entitled to recover the amount of Rs. 20,000/- from the sale proceeds realised by the sale of the Mill. He also held that according to Section 49 of the Partnership Act separate properties of the partnership firm would first go in discharge of the separate debts of the partners and the surplus, if any can be paid in dis-1 charge of the debts of the firm and hence the respondents who are the creditors of Basavayya and Kutumba Rao must first go in discharge of the debts due to them and as the Mill was the separate property of these two partners the sale proceeds of the Mill should first go in discharge of the decree obtained by the respondents and as the petitioner is a separate creditor of the partners of D-1 firm in O.S. No. 140/51 he is entitled to any share in the sale proceeds of the Mill and as he is even a creditor of the firm he is also entitled to the surplus, if any, out of the sale proceeds of the Mill after the decrees in favour of the respondents are satisfied and hence the petitioner cannot claim rateables along with the respondents in the sale proceeds. He also rejected the contention of the petitioner that he is a preferential creditor by virtue of his obtaining decree in O.S. No. 140/51 on the ground that as the mill sold is the property of the firm and even assuming that the mill sold is the property of the firm third creditors of the firm will be preferential creditors in preference to the partners. The learned Subordinate Judge also held that the sale was held on 6-7-57 and it was confirmed on 25-11-1957 and so the sale proceeds were received in the court prior to 21-11-1957. Under Section 73 a decree-holder will he entitled to rateables only when he applies for execution of his decree before the assets are received in the court. But there is no decree in favour of the petitioner by then since the ex-parte preliminary decree was set aside and a preliminary decree on merits was passed on 8-2-1961 and final decree was passed on 31-3-1965. Hence the petitioner is entitled to rateables along with the respondents. He rejected the contention of the petitioner that he is entitled to rateables as he obtained orders of attachment before judgment on the ground that even though orders of attachment before judgement was passed on 25 4-1959, he is entitled to rateables along with the other creditors (respondents) since he did obtain decree by the date. When the respondents filed application for rateables and he relied upon the decision in Bisweshar Dass v. Ambika Prasad, ILR 37 All. 75 , in support of his view.