Supreme Court: In the present case, an appeal was made against the decision of the Patna High Court (‘the High Court’) confirming the order of the Subordinate Judge, Motihari in execution proceedings. The 4-Judges Bench of M.C. Mahajan, C.J., and N.H. Bhagwati*, B. Jagannadhadas, and T.L. Venkatarama Ayyar, JJ., noted that the appellants (decree-holder) filed an application for execution of a decree and sought leave under Order 21 Rule 50(2) of the Civil Procedure Code, 1908 (‘CPC’) to proceed against the respondent as legal representative of the respondent’s father, Khemchand Lohia, who had died in the meanwhile. The Supreme Court held that the procedure adopted by the courts below were erroneous and the courts were wrong in dismissing the appellants’ execution application on the ground that in absence of service of summons upon Khemchand Lohia as partner, he was not liable to pay decretal amount.
The Supreme Court held that the leave deserved to have been granted, and the executing court should have first determined whether Khemchand Lohia was partner of the firm or not, thus, the matter was remanded to the executing court.
Background
On 12-4-1934, the appellants obtained a decree for Rs 17,774 and interest against the firm of Khemchand Kamal Nayan and the said decree was transferred on 25-8-1943 for execution to the Subordinate Judge. One of the firm’s alleged partners, namely, Khemchand Lohia had not been served with summons as a partner, nor had he appeared at the suit’s hearing. On 21-10-1943, Khemchand Lohia executed a deed of gift transferring certain properties to the respondent, his adopted son. As these properties were attached in execution of the decree, the respondent preferred objections to the attachment under Order 21 Rule 58 of CPC, but the same were disallowed. Thus, in January 1945, he instituted a suit under Order 21 Rule 63 of CPC for a declaration that the properties attached belonged to him by virtue of the deed of gift executed by Khemchand Lohia and could not be sold in execution of the decree.
The Subordinate Judge decreed the suit in the respondent’s favour and on appeal, the decree was upheld by the High Court. The High Court held that Khemchand Lohia was not served with summons as a partner nor had he appeared at the hearing, thus he was not bound by the decree dated 12-4-1934 and he was free to execute the deed of gift of the properties in the respondents favour in October 1943. Thereafter, on 20-4-1949, the appellants filed an application for execution before the Subordinate Judge and asked for leave under Order 21 Rule 50(2) of CPC to proceed against the respondent, as the heir and legal representative of Khemchand Lohia (deceased).
The respondent contended that the decree was not binding on Khemchand Lohia and that the respondent had acquired a title to the properties sought to be proceeded against by virtue of the deed of gift and not as the result of survivorship or succession and that therefore the properties were not liable to be sold for the satisfaction of the decree. The Subordinate Judge dismissed the appellants’ application, and on appeal, the High Court confirmed the dismissal. The High Court agreed that no summons had been served upon Khemchand Lohia as a partner and that he was not liable to pay the amount of the decree. It was also held that the respondent was not the legal representative of Khemchand Lohia for the properties which were sought to be proceeded against, and which constituted the subject-matter of the gift made by Khemchand Lohia during his lifetime.
Analysis, Law, and Decision
The Supreme Court opined that the procedure adopted by both the courts below was wrong as it could not be disputed that the respondent being the adopted son of Khemchand Lohia was his legal representative and thus, leave should have been granted under Order 21 Rule 50(2) of CPC to execute the decree against Khemchand Lohia or his estate if it was admitted that Khemchand Lohia was a partner of the firm of Khemchand Kamal Nayan. The Supreme Court opined that if the liability was disputed, the court should have ordered that the liability of Khemchand Lohia as a partner should be tried and determined in any manner in which any issue in a suit might be tried and determined.
The Supreme Court stated the courts below mixed up the question of the liability of Khemchand Lohia as a partner of the firm with the question whether the properties sought to be attached belonged to him or were gifted away by him to the respondent by the deed of gift dated 21-10-1943. The Courts below had concluded that the respondent was not the legal representative of the deceased Khemchand Lohia with respect to the properties sought to be proceeded against, which had been gifted away by Khemchand Lohia to him during his lifetime.
The Supreme Court thus opined that the orders passed by both the courts below were wrong and the executing court should have determined in the first instance whether Khemchand Lohia was a partner of the firm of Khemchand Kamal Nayan. The Supreme Court stated that if the said question was decided in favour of the appellants, then they would be entitled to leave under Order 21 Rule 50(2) of CPC to execute the decree against Khemchand Lohia’s estate and thereafter, proceedings in execution against Khemchand Lohia’s estate and the assets of Khemchand Lohia that came to the hands of the respondent could be entertained.
The Supreme Court thus allowed the appeal, reversed the judgments passed by the courts below, and ordered that the matter should be remanded to the executing court to determine whether Khemchand Lohia was at all material times a partner of the firm of Khemchand Kamal Nayan. The Supreme Court further directed to grant leave to the appellants under Order 21 Rule 50(2) of CPC to execute the decree against Khemchand Lohia’s estate and the assets of Khemchand Lohia that come to the hands of the respondent if that question was decided in favour of the appellants.
The Supreme Court stated that the whole confusion was created by the appellants in the execution proceedings initiated on 20-4-1949 to determine that the gift alleged to have been made by Khemchand Lohia in favour of his adopted son, the respondent, was collusive, illegal, fraudulent and inoperative and that in spite of the gift, the property in the hands of the respondent would be ancestral property and would be liable for the payment of the decree under execution. Thus, the Supreme Court opined that each party should bear and pay its own costs throughout.
[Basant Lal v. Shiva Kumar Lohia, (1954) 2 SCC 917, decided on 10-12-1954]
*Judgment authored by: Justice N.H. Bhagwati
Advocates who appeared in this case :
For the Appellants: N.C. Chatterjee, Senior Advocate (R.C. Prasad, Advocate, with him);
For the Respondent: B.C. Misra and Mohan Behari Lal, Advocates.
**Note: Execution of decree against firm
In Ashutosh v. State of Rajasthan, (2005) 7 SCC 308, the Supreme Court stated that the execution under Order 21 Rule 50 of the Civil Procedure Code, 1908 (‘CPC’), could only be granted where a decree had been passed against a firm. A decree against the firm must perforce be in the firm’s name. Under this Rule, execution might be granted against the partnership property, and it might also be granted against the partners; in which case the decree-holder might proceed against the separate property of the partners.
In Gambhir Mal Pandiya v. J.K. Jute Mills Co. Ltd., 1962 SCC OnLine SC 279, the Supreme Court stated that the decree could also be executed against persons who were not summoned in the suit as partners, but Order 21 Rule 50(2) of CPC gave them an opportunity of showing cause and the plaintiff must prove their liability. This enquiry did not entitle the person summoned to reopen the decree and he could only prove that he was not a partner, and in a proper case, that the decree was the result of collusion, fraud, or the like. Once he had admitted that he was a partner and had no special defence of collusion, fraud etc., the Court must give leave forthwith.
