TOHRA BIBI Vs. ZABEDA KHATOON

JUDGEMENT

(1.) The substantial question of law, which calls for decision in this appeal, is one of novelty, and our attention has not been drawn to any judicial decision which covers it precisely. The circumstances, under which the question arises for decision, are not disputed. One Haniff Meah, the predecessor-in-interest of the defendants, is alleged to have carried on a hide business in partnership with the predecessor of the plaintiffs. The case for the plaintiffs is that Haniff was the managing partner that the assets were under his control, and that from the profits of the partnership business, not only had savings been made but purchases effected of valuable immovable properties. Haniff died on the 28 January 1908, and left as his heirs the persons who have been joined as defendants to this suit. On the 8 June 1908, the plaintiffs commenced the present action to wind up the partnership business, to accounts from the representatives of the managing partner to ascertain and distribute the assets, and for incidental reliefs. The defendants denied the alleged partnership, and resisted the claim on various other grounds relating to the merits of the case with which we are not concerned at the present stage. Meanwhile disputes had broken out amongst the members of the family of Haniff, and a suit, for partition of the estate left by him had been commenced on the original side of this Court on the 2 July, 1908. In that suit, a receiver was appointed on the 17th August 1908 in respect of the subject-matter of the litigation, that is, the entire estate left by Haniff. Thereupon the defendants in the present litigation intimated to the Court of first instance on the 29 August 1908 that the receiver had been appointed, and prayed that the plaintiffs might be directed to take steps to join the receiver as a party defendant. The plaintiffs, though duly informed, took no notice of this application, and ultimately decided to proceed with the suit in the absence of the receiver. The case was then tried out in the Court of first instance and a preliminary decree was made for taking of account and for other purposes appropriate to a suit to wind up a partnership business. Upon appeal by the defendants to the District Judge, this preliminary decree has been reversed, and the case has been remanded for re-trial. The District Judge has made a conditional order, the terms of which are difficult to follow: the order, in fact, has satisfied neither party, as is abundantly clear from the arguments which have been addressed to us. The plaintiffs alone, however, have appealed against the order, and on their behalf it has been argued that the order is without jurisdiction, inasmuch as the Court could remand a case only under Order XLI, Rule 23, of the Code of 1908, which contemplates the reversal of a decision of the original Court upon a preliminary point. It has been suggested in fact, that, as in the present instance, the case had been tried on the merits by the Subordinate Judge, the Court of appeal could not make an order under Rule 23. On behalf of the respondents, it has been argued, on the other hand, that the District Judge ought to have held that the receiver was a necessary party, and that he had inherent power to set aside the preliminary decree made by the original Court and to send back the case for re-trial after the receiver had been added as a party defendant. The argument, in substance, has been that the conditional order made by the District Judge ought to be discharged. From the arguments which have been addressed to us, it is clear, therefore, that two questions arise for consideration, namely, first, whether in a suit to wind up a partnership business brought by one partner against the representatives of a deceased partner, it is necessary to join as party defendant the receiver, appointed by a competent Court, to take charge of the estate of the deceased; and, secondly, whether when a decree has been made by the original Court in a suit improperly framed by reason of the failure of the plaintiff to join a necessary party as a defendant, it is competent to the Court of appeal to set aside that decision and to remand the case for re-trial with directions to add all necessary parties.

(2.) In so far as the first of these points is concerned, it must, in our opinion, be answered in the affirmative. The principle, upon which a receiver of property may be regarded as a necessary party to a particular suit, was explained by this Court in the case of Jotindra Nath Choudhury V/s. Sarfaraj Miah 14 C.W.N. 653 : 6 Ind. Cas. 214. The test to be applied is, whether property in the hands of the receiver is intended to be affected by the result of the litigation, because if the property is intended to be so affected, the receiver is a proper and a necessary party by way of addition to and not in substitution for the parties primarily responsible. It may be conceded that the appointment of a receiver does not by itself debar a creditor of the person over whose estate the receiver is appointed from pursuing his legal remedy by action against such debtor, or from bringing a suit for relief touching the same property: this general rule, however, is subject to the qualification that the suit so brought does not in any way, interfere with the possession or jurisdiction of the Court by which the receiver was appointed. If the contrary view were maintained, and the decree made in such a suit was allowed to operate to the disturbance of the custody of the receiver, when he had not been made a party to the suit, the very object of the appointment of a receiver might be defeated; that object is to protect the estate from unnecessary and expensive litigation: to preserve it for the equal benefit of those equally interested in its distribution, and to keep the property at all times within the control of the Court by which the receiver has been appointed. Now in the case before us. the plaintiffs seek for a decree for ascertainment of the assets and for distribution thereof amongst themselves and the representatives in interest of their deceased partner their allegation is that the representatives have not rendered any account of the partnership business, and that they have retained exclusive possession of the whole of the properties, to a portion at any rate of which they claim a substantial interest, and which are now in the custody of the receiver as part of the estate of Haniff. On the 29 August 1908, the receiver, in fact, furnished security to the extent of Rs. 50,000 and took possession of the entire estate of Haniff including the assets of the disputed hide business. If the plaintiffs succeed in this litigation and their allegations are established to be well-founded, they will be entitled not merely to a decree for accounts of the partnership business, but also to possession of the assets. It has been faintly suggested, indeed, that in so far as the accounts are concerned, an order may be made upon the defendants to render them, and for this purpose the presence of the receiver is not necessary. This position, however, is obviously fallacious. It may be conceded, as was ruled by this Court in the case of Haji Mahmud Akbar v. Dwarka Nath Sirkar 11 C.L.J. 658 : 6 Ind. Cas. 63 that the right to call for an account upon the dissolution of a firm is mutual, and each partner is entitled to an account from his co- partner of their partnership dealings and transactions, unless he has legally waived or parted with such rights; the legal representatives of a deceased partner are entitled to an account from the surviving partner, and are themselves bound to account in so far as the deceased partner had the management or control of the assets of the firm. It is clear, however, that in order that such accounts may be properly taken by the Court and effectively rendered by the defendants, they must have access to the assets and the account books of the partnership, and these assets and account books are in the custody of the receiver as belonging to the estate of Haniff. The receiver is, therefore, not merely a proper but also a necessary party to the proceedings. We have further examined the records of the partition suit now pending on the original side of this Court, and it is clear from a comparison of the schedule of properties attached to the plaint in that suit, with the schedule of the properties claimed by the plaintiffs in the present litigation as acquired out of the profits of the partnership business, that a considerable number of items is identical. If, therefore, the plaintiffs succeed in the present suit, they will be entitled to a decree for recovery of possession of shares of the properties now in the custody of the receiver. The learned Vakil for the plaintiffs has, however, contended that the receiver, who has been appointed only in respect of the properties comprised in the estate of Haniff, has no concern with what does not in reality belong to him. This argument is manifestly fallacious. The receiver has been appointed to take charge of all the properties comprised in the partition suit, and from an examination of the proceedings therein, it is fairly clear that many of the properties in which the present plaintiffs claim a share are claimed in the partition suit by the representatives of Haniff as their exclusive properties. The receiver has been appointed in respect of the subject-matter of that litigation and Mr. R.C. Sen, an Advocate of this Court, who has been appointed the receiver, has stated to us that all the properties mentioned in the schedule to the plaint in the partition suit as the subject-matter of that litigation are in his custody. It also appears from an examination of the schedule to the plaint in that suit that the parties lay claim to certain partnership business, though it is not clear whether the description is comprehensive enough to include the hide business which is the subject-matter of the present litigation. One thing, however, is beyond the possibility of dispute. If the plaintiffs succeed in the present litigation, the decree must affect the property now in the custody of the receiver. Although, therefore, the receiver would not have been a necessary party to the present litigation if no attempt had been made thereby to interfere with the right of the receiver to the property entrusted to his case the position is entirely different when the object of the litigation is manifestly to affect the property and rights vested in him. We must, consequently, hold that the receiver was a necessary party, and that as soon as the fact of his appointment was intimated by the defendants to the Court, and brought to the notice of the plaintiffs, the latter ought to have taken steps to add him as a party defendant with the leave previously obtained of this Court in its original side.

(3.) The second question, which next requires consideration, is whether it was competent to the Court below and whether it is competent to this Court to set aside the orders, to remand the case, and to direct the plaintiffs to re-constitute the suit by the addition of the receiver. The learned Vakil for the appellants has contended that the order of remand made by the Court below is ultra vires as beyond the scope of Order XLI, Rule 23 of the Code of 1908. In our opinion, there is no foundation for this contention. It may be conceded that the terms of Rule 23 are not comprehensive enough to cover the present case, inasmuch as the decision of the original Court did not proceed upon any preliminary point: but this circumstance does not justify the conclusion that the Court may not have wider power than those conferred by that Rule. It may be observed at the outset that there is no provision in the present Code corresponding to Section 564 of the Code of 1882, which provided that the Appellate Court should not remand a case for a second decision except as provided in Section 562. So long as Section 564 formed a part of the Code of 1882, the result was that an order of remand could only be made where the lower appellate Court had disposed of the suit upon a preliminary point. Under that Code, a question might and in fact did arise, whether if an order of remand was made in contravention of the provisions of Section 562, that is when the suit had been disposed of not upon a preliminary point, but upon the merits of the whole case after a full hearing, the order was absolutely void or merely irregular. There was considerable divergence of judicial decision upon this point, as shown by the cases of Rameshur Singh V/s. Sheodin Singh 12 A. 510, at p. 512 Mohesh Chandra V/s. Jamiruddin 28 C. 324 Court of Wards V/s. Rama Sami 28 M. 437 and Baikuntha Nath Dey V/s. Salimulla Nawab Bahadur 12 C.W.N. 590 : 6 C.L.J. 547. The matter is, however, placed on an entirely different footing by the new Code: as Section 564 has not been re-enacted, the inference is perfectly legitimate that the legislature did not intend to restrict the power of an appellate Court to remand a case for re-trial Rule 23 makes provisions for a particular contingency but clearly its scope is neither exclusive nor all- embracing. We must consequently hold that under Section 151 of the Code of 1908, which expressly saves the exercise of inherent powers by Court of justice, it is competent to a Court to remand a case when the original Court has committed any error, omission or irregularity by reason of which there has not been a proper trial or an effectual or complete adjudication of the suit, and the party who complains of such error, omission or irregularity, has been thereby materially prejudiced. In fact, a similar power had been exercised by Courts even under the repealed Code, notwithstanding Section 564, as is shown by the cases of Salima Bibi V/s. Sheik Muhammad 18 A. 131; Rojit Ram V/s. Kateswar Nath 18 A. 396; Habib Baksh V/s. Baldeo Prasad 23 A. 167 : (1901) A.W.N. 39 Badam V/s. Nathu Singh 25 A. 194 : (1903) A.W.N. 6. In each of these cases, an erroneous procedure had been adopted by the Court of first instance, which had resulted in a mistrial of the suit; in the third of these cases, the suit had been brought in the name of a wrong person as plaintiff, and the appellate Court directed the plaint to be amended and remanded the case for re-trial. Indeed, if such a power is denied to a Court, a failure of justice may be inevitable, as is well illustrated by the case before us. We have held that the receiver was a necessary party, and ought to have been added as a defendant. The decree, therefore, made by the Court of first instance in the absence of the receiver, ought not to be allowed to stand, but if the appellate Court has no power to remand the case and to direct a re-trial after the receiver has been properly added as a party defendant, what would the position be? The only alternative course would be for the Court to dismiss the suit as improperly constituted: this obviously is a position which ought not to be accepted, if there is any escape from it. We are of opinion, therefore, that the receiver ought to be added as a party to the suit and the case ought to be re-tried, and we feel no doubt that this Court has ample power to give the necessary directions.