Gujarat High Court
Unid Global Corporation vs Oswal Salt And Chemical Industries on 18 September, 2018
Author: R.M.Chhaya
Bench: R.M.Chhaya
C/IAAP/3/2017 IA ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
CIVIL APPLICATION (OJ) NO. 1 of 2018
IN R/PETN. UNDER ARBITRATION ACT NO. 2 of 2017
WITH
CIVIL APPLICATION (OJ) NO. 1 of 2018
IN R/PETN. UNDER ARBITRATION ACT NO. 3 of 2017
WITH
CIVIL APPLICATION (OJ) NO. 1 of 2018
IN R/PETN. UNDER ARBITRATION ACT NO. 4 of 2017
=====================================================
UNID GLOBAL CORPORATION FORMERLY KNOWN AS M/S OCI CORPORATION Versus KANDLA EXPORT CORPORATION ===================================================== Appearance:
Mr. Mihir J. Thakore, ld. Senior Counsel assisted by Mr. Tejas Karia, Ms. Shruti Sabharwal, Ms.Grishma Ahuja and Mr. Shalin Jani, learned counsel for Shardul Amarchand Mangaldas & Co., for the applicants
- Decree Holder Mr.Saurabh N. Soparkar, learned Senior Counsel assisted by Mr. Archit P. Jani and Mr. Sahil M. Shah, learned counsel for the opponents ===================================================== CORAM: HONOURABLE MR.JUSTICE R.M.CHHAYA Date : 18/09/2018 COMMON CAV IA ORDER The prayers prayed for in all these applications are identical and therefore, the same were heard together and are hereby disposed of together by this common order.
2. The applicant - original petitioner (Decree Holder) of Civil Application (OJ) No. No.1/2018 in Page 1 of 36 C/IAAP/3/2017 IA ORDER IAAP No.2/2017, has prayed for the following reliefs:
"(A) Allow the present application;
(B) Direct opponent No.3 to disclose on oath within one week from today the assets owned by him in his individual capacity and on his failure to do so, take appropriate action for violation of the order of this Hon'ble Court;
(C) Direct opponent No.3 to attend and appear before this Hon'ble Court on date fixed by the Hon'ble Court for his examination by the applicant."
3. The applicant - original petitioner (Decree Holder) of Civil Application (OJ) No. No.1/2018 in IAAP No.3/2017, has prayed for the following reliefs:
"(A) Allow the present application;
(B) Direct opponent Nos.2 & 3 to disclose on oath within one week from today the assets owned by them in their individual capacity and on their failure to do so, take appropriate action for violation of the order of this Hon'ble Court;
(CI) Direct opponent Nos.2 & 3 to attend and appear before this Hon'ble Court on date fixed by the Hon'ble Court for their examination by the applicant."
4. The applicant - original petitioner (Decree Holder) of Civil Application (OJ) No. No.1/2018 in IAAP No.4/2017, has prayed for the following reliefs:
"(A) Allow the present application;
(B) Direct opponent Nos.2 & 3 to disclose on oath within one week from today the assets owned by them in their individual capacity and on their failure to do so, take appropriate action for violation of the order of this Hon'ble Page 2 of 36 C/IAAP/3/2017 IA ORDER Court;
(CII) Direct opponent Nos.2 & 3 to attend and appear before this Hon'ble Court on date fixed by the Hon'ble Court for his examination by the applicant."
5. The applicants herein preferred total nine petitions being IAAP Nos.2 to 10 of 2017 before this Court for enforcement of arbitration Award passed by GAFTA, confirming in further appeal by Queen's Bench, Commercial Court and even the Court of appeal in U.K. This Court vide order dated 08.08.2017, rejected the objections raised by the opponents and it has been held to be decree by this Court under Section 49 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Act" for short). The opponents challenged the said order by way of Special Leave (Civil) Appeal No.9733/2018 and the Apex Court vide order dated 01.05.2018 was pleased to dismiss the said appeal. To complete the record, the order dated 08.08.2017 passed by this Court was first challenged by way of First Appeal before this Court, which was dismissed on the ground of non maintainability (This judgment reported in 2018 (1) GLH 221]. The said order was challenged before the Apex Court being Special Leave Petition (Civil) Diary No.9733/2018, which has been dismissed.
6. Thereafter, these applications are filed for proceeding further with the execution of the award, which is deemed to be decree of this Court. In these applications, it was contended by the applicants that vide order dated 18.12.2017, this Court directed the Page 3 of 36 C/IAAP/3/2017 IA ORDER opponents to file an affidavit in each civil application for declaration of the assets. It is further averred by the applicants that opponent Nos.3 and 4 respectively claim to be authorized representatives of opponent No.1 and have filed affidavit dated 03.02.2018 enclosing the statement of affairs of opponent No.1 as on January, 2018. However, the names of the partners of opponent Nos.1 firm and their assets have not been disclosed. It is further contended that as opponent No.2 herein has admitted that his partner having been served with the copy of petition, has been impleaded as party in the present application. It is also contended that the oral order dated 18.12.2017 also applies to opponent Nos.2 & 3 /3 respectively and therefore, the applications deserve to be allowed, as prayed for.
7. The contention raised in all three applications are similar and identical, opponent No.3 of OJCA No.1/2018 in IAAP No.2/2017 has filed an affidavit in Civil Application (OJ) No.129/2018 in IAAP No.2/2017 and one Mr. Ashok A. Singhvi, has filed an affidavit in Civil Application (OJ) No.131/2018 in IAAP No.4/2017.
8. It is contended by the opponents that the applications are devoid of merits since award/decree is passed by GAFTA Board on 16.04.2015 and the same cannot be executed against the private respondents since they have not been made party before the Arbitral proceedings before the GAFTA Board, but for Page 4 of 36 C/IAAP/3/2017 IA ORDER the first time are joined in the execution proceedings. That the opponents have already filed an application to delete them as party in the execution proceedings on various grounds. It was also contended that the applications for deletion are required to be heard prior in time, then only the question of deciding the captioned application would arise. It was also contended that opponent No.1 partnership concern has filed an affidavit on 03.02.2018, wherein the assets have been disclosed. Opponent No.1 has also disclosed the assets since the firm is the judgment debtor and it was party before the Arbitral proceedings and it is averred that the said assets of the firm are disclosed voluntarily without any direction of this Court. It was also contended that there is no civil application for declaration of assets and therefore, the contentions raised by the applicants that the opponents were required to file affidavit disclosing the assets is not correct and misleading. It was also contended that the private opponents have not disclosed the assets and it is also denied that the decree can be executed against the private person even though he has not been made party to the main proceedings. It is also denied that the order passed by this Court vide order dated 18.12.2017 directing the private person/s to disclose the assets and it is reiterated that their application for deletion deserves to be heard prior in time. Suffice it to say that, other affidavit filed by Mr.Ashok Singhvi in Civil Application (OJ) No. No.1/2018 in IAAP Nos.3/2017 are identical Page 5 of 36 C/IAAP/3/2017 IA ORDER worded.
9. Heard Mr. Mihir J. Thakore, learned Senior Counsel assisted by Mr. Tejas Karia, Ms. Shruti Sabharwal, Ms.Grishma Ahuja and Mr. Shalin Jani, learned counsel for Shardul Amarchand Mangaldas & Co., for the applicants - Decree Holder and Mr.Saurabh N. Soparkar, learned Senior Counsel assisted by Mr. Archit P. Jani and Mr. Sahil M. Shah, learned counsel for the respective opponents.
10. Learned counsel for the parties have also filed their written submissions, which are taken on record.
11. Mr. Mihir J. Thakore, learned Senior counsel for the applicants contended as under:
a) That as provided under Order XXI, Rule 41 of Code of Civil Procedure (hereinafter referred to as "the Code" for short), the applicants as judgment creditors have right to undertake the crossexamination of the judgment debtor himself or where the judgment debtor is a corporation, any officer of such corporation or any other person to the extent of the properties and assets held by the judgment debtor. Referring to the provisions of Order XXI, Rule 41 of the Code, it was contended that the said provisions provide to ascertain the assets of the judgmentdebtor in order to see that the decreetal amount can be realized by taking appropriate steps, such as attaching the assets.Page 6 of 36
C/IAAP/3/2017 IA ORDER b) That partner of the opponent can be
examined as per the above provisions to provide details of the assets held by the partnership firm and also with regards to the relevant partners of the said firms at the time when the cause of action accrued.
c) Mr. Thakore, contended that the affidavits filed on behalf of opponent No.1 firm are vague, incomplete and do not disclose the vital facts, more particularly the assets of the firm and the same is not in accordance with Form 16A to Appendix E of the Code.
d) Relying upon the provisions of Section 4 read with Section 25 of the Partnership Act, 1932, it was contended that the partnership firm is not a distinct legal entity, but it is a group of partners. Therefore, the suit against the firm is a suit against all its partners and as provided under Section 25 of the Act, all the partners of a partnership firm are liable individually as well as collectively even to the extent of their personal properties. Referring to the definitions of words "partnership", "partner", "firm" and "firm name" as provided in Section 4 of the Partnership Act, it was contended that it is open to a creditor of the firm to recover the debt from any one or more of the partners, as each partners shall be liable as if the debt of the firm has been incurred on his Page 7 of 36 C/IAAP/3/2017 IA ORDER personal liability. It was also contended that the decree in favour of or against a firm has the same effect as a decree in favour of or against the partner.
e) On the aforesaid basis, it was contended that thus the decree passed against the firm in the instant case would apply in individual capacity to the partner as well and other partners can therefore be held to be liable for the amount to be paid under the award and the properties held by them in their individual capacity can be attached for satisfying the decree.
f) Referring to the provisions of Order XXX, Rule 1 and 2 of the Code, it was contended that the partners may sue or be sued in the name of the firm. That, the said provisions provide several persons, who are doing business as partners can sue or can be sued in the name of the firm. That the said provisions also provide that any party can apply for a statement of the names and address of partners in the firm.
g) Further referring to the provisions of Order XXI, Rule 50 of the Code, it was contended that the said provisions enable the execution of decree against the partners of the firm. It was also contended that thus, Section 25 and Section 4 of the Partnership Act, and the provisions of Order XXX, Rule 1 and 2 of Code, as well as the Page 8 of 36 C/IAAP/3/2017 IA ORDER provisions of Order XXI,Rule 50 recognize the liability of partners for the acts of the firm and therefore, the applications for execution of decree passed against the firm against any of its partner are maintainable. The said provisions clearly provides that a decree passed against a firm can be executed against any property of the partnership, or any person who has appeared in his own name under Rule 6 or Rule 7 of Order XXX or who has admitted on the pleadings that he is, or who has been adjudged as a partner, and against any person who has been individually served as a partner with a summons and has failed to appear. Referring to the provisions of Order XXI, Rule 50 (2) of the Code, it was contended that the said provisions provide that the decree holder can execute a decree against any persons other than the person as referred under Order XXI Rule 50(1) of the Code, as being partner in the firm with the leave of the Court which has passed the decree. It was therefore, contended that the awards in question are therefore liable to be executed even against the individual opponents.
Thus, the decree passed against the partenrship firm can be executed against all those persons who were partners of the firm at the relevant time when the cause of action arose. Referring to Section 25 of the Act, it was contended that the said provision clearly provides that partners of the firm are jointly and severally liable for the acts done under or by the name of the partnership Page 9 of 36 C/IAAP/3/2017 IA ORDER firm.
h) Mr.Thakore, further relying upon the judgments of the Apex Court rendered in the cases of Ashutosh Vs. State of Rajasthan & Ors. [(2005) 7 SCC 308], Income Tax Officer (III), Circle I, Salem and Anr. Vs. Arunagiri Chettiar [AIR 1996 SC 2160], Bajit Singh Vs. Food Corporation of India [2015 SCC Online P & H 19962] and Gambhir Mal Pandiya Vs. J.K.Jute Mills, Kanpur & Co. [AIR 1963 SC 243], contended that even though at the time of filing of the suit, names of the partners were not mentioned when decree is passed against the partnership firm, the same can be executed against the partners with the leave of the Court and provisions of Rule XXI, Rule 50(2) of the Code, specifically provide for the same.
i) That as held by the Apex Court in the case of Gambhir Mal Pandiya (supra) or the provisions of Order XXI, Rule 50 (2) of the Code allows execution of the decree against the persons not mentioned under Order XXI, Rule 50(1) of the Code on determination of that person's liability as partner in the firm. It was contended that the only defense available in such case, is that he is not a partner of the judgmentdebtor firm and the decree has been passed as a result of fraud or collusion.
j) Mr. Thakore further relied upon the judgment of the Madras High Court rendered in the Page 10 of 36 C/IAAP/3/2017 IA ORDER case of Zodias Traders India Vs. Seychelles Public Transport Corp. [203 (6) CTC 301].
On the above mentioned contentions and relying on the above cited judgments, learned counsel for the applicants submitted that present applications be allowed and the applicants be permitted to cross examine the partners of partnership firm - entity named as opponent No.3 in all the matters.
12. Mr. Saurabh Soparkar, learned Senior Counsel for opponent No.1 in all the matters at the outset contended that the applicants have voluntarily misinterpreted the oral order of this Court dated 18.12.2017, which makes it apparent that this Court had directed the opponents only to file an affidavit in each civil applications, where no directions of this Court for filing affidavit of disclosure of assets. It was contended that thus the civil applications are primarily based on complete and deliberate misinterpretation of oral order dated 18.12.2017. Therefore, the applications being misconceived, deserve to be dismissed.
13. It was contended that the partnership concern has already filed an affidavit on 03.02.2018 and have disclosed the assets since partnership firm is judgmentdebtor and party to the arbitration proceedings. It was further contended that the said disclosure has been made voluntarily and without any direction to do so. That the individual opponents were not parties to the arbitration proceedings and Page 11 of 36 C/IAAP/3/2017 IA ORDER are not the judgmentdebtors and therefore, individual opponents have already filed civil application for deletion as party respondents and the same was required to be decided prior to the adjudication of the present application since the decree cannot be executed against the individual opponents as they were not the party to the main proceedings.
14. That the applicants have not obtained any leave of the arbitral Tribunal for seeking execution of the decree against the individual opponents and that they have been directly made parties to the present execution proceedings for the first time. That no rejoinder is filed to the AffidavitinReply and any grievance regarding nondisclosure remained the applicants to have filed rejoinder.
15. As regards the contentions raised by the applicants, it was contended that by these applications, the applicants have not sought any relief to the effect that the opponents should disclose the names of the partners of opponent partnership firm and therefore, such direction cannot be issued by this Court. That the provisions of Order XXX, Rule 1 and 2 of the Code is not applicable to the execution proceedings and would apply only to the suit proceedings and the said provisions can be resorted to only when the firm is the plaintiff in the said suit and the same would not apply in a situation where a partnership firm is the defendant.
Page 12 of 36C/IAAP/3/2017 IA ORDER 16. It was also contended that the opponent partnership firm is under legal obligation to
disclose the names of the partners at the stage of execution proceedings and therefore, the contention to the effect that the opponents may disclose the names of the partners deserves to be negatived. It was further contended that the partnership firm is only a judgmentdebtor and individual partners are not judgmentdebtors. Though the partners may be liable for acts done by partnership firm, partners do not ipso facto become the judgmentdebtors. For the partners to be made judgmentdebtors, leave of the Court which has passed the decree, is to be sought for as provided under Order XXI, Rule 50 of the Code.
17. It was also contended that none of the individual opponents appeared in their own name before the Arbitral Tribunal or have not admitted on pleadings before the Arbitral Tribunal that they are partners of partnership firm and therefore, the applicants are required to file appropriate application seeking leave as provided under Order XXI, Rule 50 of the Code before GAFTA Tribunal.
18. Referring to the provisions of Order XXI, Rule 50 of the Code, it was contended that the said provisions clearly provide that the decree holder has to apply to the Court, which passed the decree, for leave and in the instant case, the applicants are, therefore, required to approach GAFTA Tribunal, which passed the decree. It was also contended that the Page 13 of 36 C/IAAP/3/2017 IA ORDER applicants cannot now contend that as provided under Section 49 of the Act, since the Arbitral award is deemed to be decree of this Court, the applicants will have to apply to this Court for the purpose of seeking leave to execute the decree against the partners of the partnership firm. Referring to the provisions of Section 49 of the Act, it was also contended that this Court has only recognized the foreign award to be enforceable under the said Act and therefore, it cannot be said that this Court has passed the decree.
19. On the aforesaid grounds, it was contended that the the applicants are required to approach GAFTA Appellate Tribunal. Relying upon the judgment of this Court in the case of Vijaychandra Prabhatilal Sharma Vs. Manek Metal Syndicate, Bombay, [1990 (1) GLH 417], it was contended that the executing Court cannot fix liability of person, who was not summoned in the suit. Even referring to the provisions of Order XXI, Rule 41 of the Code, it was contended that the said provisions provide for examination of the judgmentdebtor as regards his properties and the same would not be applicable to the persons, who are not judgmentdebtors. It was also contended that as in the instant case, individual opponents are not judgmentdebtors, they cannot call upon the opponents under Order XXI, Rule 41 of the Code. The applicants have not stated that under which provisions, they are seeking disclosure of the assets of the opponents. Even as per the applicants, they have to file an Page 14 of 36 C/IAAP/3/2017 IA ORDER application seeking leave of the Court under Order XXI, Rule 50 of the Code for seeking execution of the decree against the individual partners of the partnership firm and therefore, it is clear that the individual opponents have wrongly been impleaded by the applicants in the present execution proceedings and therefore, they deserve to be deleted by the party respondents by this Court.
20. In order to buttress the aforesaid submissions, learned counsel for opponent No.1 relied upon the judgments of Madras High Court reported in AIR 1979 MAD 25 and 1979 (1) GLR 380.
21. Mr. Thakore in further reply, to the contentions raised by learned counsel for the opponents, contended that the provisions of Order XXI, Rule 41 of the Code are not empty formalities, but are provided with specific purpose of collecting true and correct information about the affairs and status of the properties and assets of the judgmentdebtor, which can be sold and realized for the purpose of executing the decree. Relying upon the judgment of the Bombay High Court in the case of M/s. LA Builde Associates Vs. Bipinchandra Narandas Dalal [(2013) 6 AIR Bom. R 406, it was contended that if such affidavit does not disclose the assets fairly and sufficiently, further inquiry into the correctness of such affidavit and contents of the documents, can be made by the Court. In order to do so, the Court can also exercise inherent powers under Section 151 of Page 15 of 36 C/IAAP/3/2017 IA ORDER the Code by directing the judgmentdebtor to file a further affidavit of assets. It was also contended that by filing applications for crossexamination of individual opponents, the applicants have prayed this Court for further inquiry into the correctness of the disclosure affidavit filed by opponent No.1, so as to ascertain the correct position regarding assets and partners of the opponents.
22. Referring to the judgment of the Bombay High Court in the case of M/s. LA Builde Associates (supra), it was contended that the judgmentdebtor or its authorized officer can be directed to cross examine in order to verify the correctness of the affidavit filed for disclosure of assets and even warrant can be issued under Order XXI, Rule 41 (3) of the Code and therefore, it is incorrect to say that the applicants have not raised any objection against the vagueness/incorrectness or insufficiency of the disclosure affidavit. Relying upon the submissions made, it was contended that the applicants herein have right to examine the partners of the opponents firm to allow it to seek information regarding the assets held by the said firm. It was further submitted that it is settled proposition of law that the partners are liable to satisfy the decree passed against the partnership firm. Partnership firm is not distinct from its partners and in case of a decree passed against the firm, the judgment debtor is not only the firm, but also the partners as it is the decree, in effect, passed against the partners in the Page 16 of 36 C/IAAP/3/2017 IA ORDER firm. It was contended that in such situation, the opponents are required to disclose the names of the relevant partners of the firm i.e. both current partners and partners at the time of cause of action having arisen to allow the applicants to proceed against such partners in the manner prescribed under law including seeking leave of this Court to try the liability of such partners as per Order XXI, Rule 50(2) of the Code. It was, therefore, contended that this Court ought to direct further inquiry by directing all the opponents to file further affidavits of disclosure in proper format and by directing the named partners in the present applications under consideration to be present before the Court for crossexamination of individual opponents, so as to ascertain the assets of the opponents and so as to ascertain the partners both current and previous of the partnership firm in order to fully satisfy the awards passed in favour of the applicants.
23. Referring to the provisions of Order XXX, Rule 1 and 2 of the Code, it was contended that this provisions not only reflect the said proposition of law that partnership firm has no legal entity, but also recognizes the requirement of disclosure of partner's name, so that the decree passed thereon could be executed against those persons.
24. Relying upon the judgment of the Calcutta High Court, in the case of Kirtana Kumar Guha Vs. Pulin Page 17 of 36 C/IAAP/3/2017 IA ORDER Krishna [AIR 1938 Cal.316], it was contended that the suit filed against the partnership firm would technically mean a suit against the partners of the firm. It was contended that reference to the provisions of Order 30, Rule 1 of the Code is made only for the purpose of establishing that the relationship between the partners and the partnership firm is based on principles of agency, which is also recognized by the Code. Relying upon the judgment of the Bombay High Court in the case of Her Highness Mandalsa Kumari Devi Vs. Ramnarain Private Ltd. [AIR 1959 Bom, 529], it was contended that the provisions of Order XXX, Rule 1 of the Code ought to be read in conjunction with Order XXI, Rule 50 of the Code, thus the suit filed against the partnership firm is effectively since the firm does not possess legal entity and applying the same principles, where the decree is passed against the partnership firm, partners are jointly and severally liable to the decree holder and if the person is adjudged as a partner of the firm, he would render himself liable.
25. Further relying upon the judgment of the Madras High Court in the case of T.P.Kuppuswami Mudaliar Vs. The police Pictures [AIR 1955 Mad 154], contended that the provisions of Order XXI, Rule 50(2) of the Code specifically allows the judgmentcreditor to proceed against the partners who do not fall within the purview of Order XXI, Rule 50(1)(b) and (c) of the Code by seeking leave from the Court. The only defense which is available to a person against whom Page 18 of 36 C/IAAP/3/2017 IA ORDER the decree is sought to be proceeded under Order XXI Rule 50(2) of the Code is that, he was not a partner of the partnership firm at the time when the cause of action arose. However, once a person is adjudged as a partner, he cannot negative his liability which has accrued against him due to the decree.
26. Referring to the facts on hand, it was contended that this Court passed a decree for enforcing the award. Since there has been a dispute as to who are the partners of the partnership firm, the applicants have right of proper inquiry by way of cross examination of the known persons of opponent No.1 under Order XXI, Rule 41 of the Code, to determine the partners at the relevant point of time when the cause of action arose. It was also contended that in order to meet the ends of justice, the partners who have admitted to be the partner of the partnership firm should be called upon by the Court, so as to compel them either to reveal the necessary information with regard to the compensation qua the firm for the time period when the transaction happened and to disclose their personal assets in order to satisfy the claim under the awards. Referring to the provisions of Section 47 of the Code, it was contended that the executing Court is not only competent, but has a statutory duty to determine all questions arising between the parties to the suit in which the decree was passed, or their representatives and relating to the execution discharge or satisfaction of the decree. The question Page 19 of 36 C/IAAP/3/2017 IA ORDER as to whether a particular person was or was not a partner of the judgment debtor firm on the relevant day is a question arising between the parties in the suit or their representatives relating to the execution of the decree and hence, it can be determined by the executing Court alone. Referring to Section 49 of the Act, it was contended by Mr. Thakore, that where the Court is satisfied that the foreign award is enforceable the award shall be deemed to be a decree of that Court. Therefore, this Court which has empowered to grant leave to the applicants to execute the awards against individual opponents. Further, relying upon the judgment of the Hon'ble Supreme Court in the case of Fuerst Day Lawson Ltd. Vs. Jindal Exports Ltd. [(2001) 6 SCC 356], he contended that since this Court has already recorded its satisfaction with respect to the enforceability of the awards and has held the awards to be the decrees of this Court, the next stage would be the speedy execution of the decrees of this Court as per the due procedure of law. He relied upon the judgment of the Bombay High Court in the case of Noy Vallesina Engineering Spa Vs. Jindal Drugs Limited [(2006) 5 CR 155] and Cooverji Varjang and Anr Vs. Cooverbai widow of Nagsey Champsey [AIR 1940 Bom. 330], it was contended that there cannot be any bifurcation of the decree relating into multiple proceedings. Further, necessary inquiry with regard to information of partners and the assets of the said partners has to be made by the Court who passes the decree. It was contended that this Court would be the Page 20 of 36 C/IAAP/3/2017 IA ORDER proper forum to approach and to grant leave to the applicants under Order XXI, Rule 50(2) of the Code to proceed against the partners of opponent No.1 in the present petitions, seeking cross examination of known partners of the opponent No.1 ought to be allowed to enable the judgment creditor to obtain relevant information.
27. It was also contended that in view thereof, even considering that, none of the individual opponents against whom the awards are sought to be executed fall under Order XXI, Rule 50 (1) of Code. The combined effect of the provisions of Order XXI, Rule 50 (2) of the code, Section 47 of the Code and Section 49 of the Act is that this Court is vested with powers to determine the liability of individual opponents as partners in firm and the awards passed against the firm can be executed against individual opponents with the leave of this Court. It was also contended that, the judgment of this Court in the case of Vijaychandra Prabhatilal Sharma & Anr. Vs. Manek Metal Syndicate, [AIR 1990 Guj. 190 and (1990) 2 GLR 992], relied upon by the opponents is not applicable to the instant case. Referring to the facts of the case, it was contended that in the said case, decree was transferred to another Court for execution and therefore, the Court relying upon Section 42 of the Code, held that executing Court cannot decide the liability of the person, who was neither served with the summons in the suit nor was adjudged as a partner in the firm. It was also Page 21 of 36 C/IAAP/3/2017 IA ORDER contended that the decree is not transferred to this Court for execution and therefore, in the instant case, is not covered under Section 41 of the Code. Referring to Section 49 of the Act, it was contended that this Court has passed the order as provided under Section 49 of the Act and the award is deemed to be a decree of this Court. It was also contended that the Court, which passed the decree, possesses power to execute a decree passed against a firm against any person other than a person referred to in clause (b) and (c) of subrule (1) of Rule 50 of Order XXI of the Code. It was also contended that even in the case of Ravindra Finance Vs. Yaanai Tobacco Co. & Ors. [AIR 1979 Mad. 25], the Court has observed that under Order XXI, Rule 50 (2) of the Code, the Court which passed the decree can grant leave to execute the decree against person other than the persons mentioned thereunder. It was also contended that the facts of the present case are totally different and decree is not transferred and therefore, the judgment of this Court in the case of Bhaktibai Mohanlal Patel Vs. Pari Vithaldas Gopaldas [1979 (1) GLR 380], would not be applicable.
28. On the above mentioned background, learned counsel for the applicants submitted that present applications for crossexamination of the partners of the partnership entities named as opponent No.1 be allowed to enable the applicants to crossexamine such partners as to the extent of assets of the partnership firm and the names and details of the Page 22 of 36 C/IAAP/3/2017 IA ORDER partners both currently and at the time of cause of action towards satisfaction of the decree of this Court. It was also contended that the applicants will be severally prejudiced as without information as to the assets of the opponent No.1, the applicants will not be able to enforce the decree. It was also contended that even in order to enable the applicants to seek leave of this Court under Order XXI, Rule 50 (2) of the Code, to proceed to execute the decree of this Court against the relevant partners of opponent No.1, it is imperative that the present applications be allowed and the opponents be directed to appear for crossexamination and to provide the information as sought by the applicants. It is also submitted that this Court may pass appropriate direction preventing the alienation or transfer of assets as disclosed by the opponent No.1, so as to preserve the properties and assets or pass any order that this Court deemed fit to protect the interest of the applicants.
29. Upon considering the submissions and the contentions raised by learned counsel for the parties and the judgments relied upon by both the sides, it deserves to be noted that the prayer prayed for is against opponent No.3 in Civil Application (OJ) No.1/2018 in IAAP No.2/2017 and against opponent Nos.2 & 3 and 3 in Civil Application Nos.2/2018 in IAAP No.3/2017 and 3/2018 in IAAP No.4/2018.
Page 23 of 36C/IAAP/3/2017 IA ORDER
30. It further deserves to be noted that in all three applications, opponent No.3 has filed its reply. Record clearly establishes the fact that before Arbitral Tribunal, opponent No.1 was very much party to the proceedings and are partnership firm, registered under the Indian Partnership Act, 1932. Section 25 thereof provides that "every partner is liable, jointly with all the other partners and also severally, for all acts of the firm done while he was a partner". Therefore, every partner of opponent No.1 in each application would be liable jointly and severally though in the reply filed by opponent No.3 it is not disclosed whether opponent No.3 is partner of opponent No.1 or was partner of opponent No.1 when the cause of action arose or not. Upon examining the said aspect, only because it is contended that the individual opponents were not parties to the Arbitral Proceedings and therefore, it cannot be executed against individual opponents, which also cannot be accepted in toto. As per the provisions of Section 49 of the Arbitration Act, this Court vide order dated 08.08.2017 declared that the Arbitral award is deemed to be decreed by this Court and therefore, the contention raised by the opponents that no leave is obtained for Arbitral Tribunal or for the said purpose, the applicant Page 24 of 36 C/IAAP/3/2017 IA ORDER having obtained an award is not remedyless and cannot be directed to go back to GAFTA Tribunal and therefore, the contention that the applicants are required to file appropriate application seeking leave as provided under Order 21, Rule 50 of the Code of Civil Procedure before GAFTA Tribunal, deserves to be negatived outright. Hence, the applicant can prefer an application as provided under Order 21, Rule 50 of the Code before this Court.
31. Considering the provisions of Section 49 of the Code and the aforesaid legal position, with respect, the ratio laid down by this Court in the case of Vijaychandra Prabhatilal Sharma (supra) would not apply to the case on hand.
Rule 50, Order XXI of the Code provides as under:
Execution of decree against firm.(1) Where a decree has been passed against a firm, execution may be granted
(a) against any property of the partnership;
(b) against any person who has appeared in his own name under rule 6 or rule 7 of Order XXX or who has admitted on the pleadings that he is, or who has been adjudged to be, a partner;
(c) against any person who has been individually served as a partner with a summons and has failed to appear:
Provided that nothing in this subrule shall be deemed to limit or otherwise affect the provisions of [section 30 of the Indian Page 25 of 36 C/IAAP/3/2017 IA ORDER Partnership Act, 1932 (9 of 1932)].
(2) Where the decreeholder claims to be entitled to cause the decree to be executed against any person other than such a person as is referred to in subru1e(1), clauses (b) and
(c), as being a partner in the firm, he may apply to the Court which passed the decree for leave, and where the liability is not disputed, such Court may grant such leave, or, where such liability is disputed, may order that the liability of such person be tried and determined in any manner in which any issue in a suit may be tried and determined.
(3) Where the liability of any person has been tried and determined under subrule (2) the order made thereon shall have the same force and be subject to the same conditions as to appeal or otherwise as if it were a decree.
(4) Save as against any property of the partnership, a decree against a firm shall not release, render liable or otherwise affect any partner therein unless he has been served with a summons to appear and answer.
(5) Nothing in this rule shall apply to a decree passed against a Hindu Undivided Family by virtue of the provisions of rule 10 of Order XXX."
32. Thus, the decree against the firm can be executed against any property of the partnership. It can also be executed against any person, who has appeared in his own name under rule 6 or Rule 7 of order 50 or who has admitted on the pleadings that he is, or who has been adjudged to be, as a partner. Subrule (2) of Rule 50, Order XXI of the Code envisages a situation where a decree holder claims to be entitled to cause the decree to be executed against any person other Page 26 of 36 C/IAAP/3/2017 IA ORDER than such a person as is referred to in subrule (1) of Rule 50 of Order 30 of the Code and therefore, present applications are maintainable even against opponent Nos.2 and 3. However, as opponent Nos.2 and 3 has disputed the liability, said aspect will have to be applied and determined as provided under subrule (2) of Rule 50, Order XXI of the Code in the facts of the case.
33. The procedure as prescribed under Order 30 of the Code is not dealt with extensively as the same would apply at the stage of filing of the suit or during the trial. The contention that opponent No.3 has been wrongly impleaded by the applicants would be subject to the provisions of Order 21, subrule 2 of Rule 50 of the Code. However, as noted hereinabove, as the present applications are only limited to the directions to opponent Nos.2 & 3 and 3 respectively, the applications are dealt with only considering the prayers prayed for and the question of any other direction to be issued to opponent Nos.1 and 2 are kept open.
34. Considering the plethora of judgments relied upon by both sides, the fact remains that in exercise of jurisdiction under Section 49 of the Arbitration Act, this Court has declared that the Page 27 of 36 C/IAAP/3/2017 IA ORDER award of Arbitral Tribunal is decree of this Court, which is confirmed in SLP (Civil) Diary No.9733/2018 and therefore, the purpose for which the applications are filed, the same are maintainable before this Court as the execution, which is sought for in the main application is of the decree of this Court and therefore, this Court has power and jurisdiction to execute the decree against the firm as provided under Rule 50, Order XXI of the Code.
35. As per the award, it transpires that the respective partnership firm was made party before the Arbitral proceedings and as noted hereinabove, the award passed by the Arbitral Tribunal, which is confirmed by GAFTA Tribunal, is now decree by this Court. Considering Sec. 25 of the Partnership Act, partners of the respective firms, when cause of action arose and those who are partners since then and continues as partners, can be held liable for satisfaction of the decree. The applicants as decree holders can execute a decree against an individual partner as well. Opponent No.1 Firm has not disclosed before this Court that as to who are the partners at the relevant period and who have continued to be the partners of opponent No.1 Firm in each of the applications, however, in light of such clear cut provisions of the Page 28 of 36 C/IAAP/3/2017 IA ORDER Partnership Act and this Court being an executing Court has power and jurisdiction to execute a decree against the partners as mentioned hereinabove in exercise of powers granted under Order XXI, Rule 50 read with Sections 47 and 15 of the Code. The decree which is passed under Section 49 of the Act by this Court, considering the award of the Tribunal to be deemed to have been decree by this Court cannot be rendered to be paper decree and the provisions of Order 21, Rule 50 of the Code would clearly apply in the instant case.
36. Provisions of Order 21, Rule 50(2) of the Code permit the decree holder desirous to execute a decree against the person being partner of the firm, but not covered by subrule (1) and the same provides for leave of the Court. It is condition precedent to execution of a decree that such person is to be given an opportunity to contest the assertion of the decree holder into dispute and liability under the decree. It would be appropriate to refer to the judgment of the Apex Court in the case of Gambhir Mal Pandya (since deceased) & Ors. Vs. J.K.Jute Mills Co. Ltd. reported in AIR 1963 SC 243, wherein the Apex Court has considered the provisions of Order 21, Rule 50 of the Code and has observed thus:
Page 29 of 36C/IAAP/3/2017 IA ORDER "4. Order 21 R. 50 of the Code of Civil Procedure reads as follows:
50. (1) Where a decree has been passed against a firm, execution may be granted
(a) against any property of the partnership;
(b) against any person who has appeared in his own name under R.6 or R.7 of Order XXX or who has admitted on the peadings that he is, or who has been adjudged to be, a partner;
(c) against any person who has been individually served as a partner with a summons and has failed to appear:
Provided that nothing in this subrule shall be deemed to limit or otherwise affect the provisions of S. 247 of the Indian Contract Act, 1872.
(2) Where the deereeholder claims to be entitled to cause the decree to be executed against an person other than such a person as is referred to in subrule (1) clauses (b) and (c) as being a partner in the firm, he may apply to the Court which passed the decree for cave, and where the liability is not disputed, such Court may grant such leave, or, where such liability is disputed, ma order that the liability of sue person be tiriedy and determined in any manner m which any issue in a suit may be tried and determined.
(3) Where the liability of any person has been tried and determined under subrule (2), the order made thereon shall have the same force and be subject to the same conditions as to appeal or otherwise as if it were a decree.
(4) Save as against any property of the partnership, a decree against a firm shall not release, render liable or otherwise affect any partner therein unless he has been served with a summons to appear and answer."
(5) This rule deals with the execution of decrees obtained against firms. It enables the decree to be executed against the partnership assets. It also enables that the decree may be executed against any one who appeared in the suit, and Page 30 of 36 C/IAAP/3/2017 IA ORDER admitted that he was a partner or who was lawfully adjudged in the suit to be one. It also enables that the decree may be executed against any person lawfully summoned in the suit as a partner but who did not choose to appear individually to defend the action. Lastly, it provides that if it is desired to execute the decree against a person as being a partner of the firm who does not belong to the categories already mentioned. then the leave of the Court must be obtained and the Court before granting such leave should summon that person whose liability, unless he admits it, should be tried as an issue. So far, the matter is quite simple.
The difficulty appears only when one be ' to 've a meaning to the expression "the liability 0 such person. and this raises the question : what kind of defence are open to such a person? The learned AttorneyGeneral has argued that the expression admits of a narrow construction, a Wide construction and a construction which is in between the two. The narrow construction according to him, is that only issue to be tried is whether that person was a partner or held himself out to be one. The wide construction according to him, is that the issue may take in all defences open to the partnership not raised in the suit and also all defences personal to that person to avoid his individual liability. Under the middle view, according to him, the Court is to try an issue relating to the personal liability of that person. On the other hand the learned AdvocateGeneral of the Punjab, who appeared for the respondent Company, contends that if the person summoned, admits that he is a partner, there is nothing further to try, and execution can issue against him individually without trying any other issue he may wish to raise. This contention as raised by the learned Advocate General prevailed in the Allahabad High Court, while the contention of the learned AttorneyGeneral was accepted by Agarwala,J.
(6) Order 21, R. 50(2) of the Code deals with executions, but really is a part of the provisions relating to suits against firms. Those provisions are contained in 0.30 of the Code, and must be viewed alongside to get the true meaning of the words. Order 30 and the provisions of R50 of 0.21 were taken from O. XLVIIIa of the Rules Page 31 of 36 C/IAAP/3/2017 IA ORDER of the Supreme Court in England. Though there are slight variations in language, the provisions of our Code are in pari materia with the provisions of the Rules of the Supreme Court, as amended in 1891. Under common law, an action against firms was not known. All actions had to be brought against the partners individually. After the Judicature Acts, rules were framed in 1883, which enabled actions to be brought against firms in the names of the firms.
(7) The rules provided forms for appearances by person who entered appearances in answer to summons lawfully issued; but the later rules which are more exhaustive, though they do not dispense with the forms of appearance, prescribe how the presence of the firm and of individual partners is to be secured & how defences are to be raised. It is not necessary to reproduce the English rules. They are to be found in the Annual Practice. Vol. I.p. 1151 (1962). The rules of 1891 are almost reproduced as 0.30 and 0.21 R. 50 of the Code of Civil Procedure. Order 30 deals with procedure in suits against firms in the firm name, and 0.21 R. 50, with the execution of decrees obtained against firms. These provisions are in themselves a Code. To understand, the meaning of R. 50(O.21). one must first consider the provisions of 0.30 which contains ten rules. The first rule enables a plaintiff to sue in the name of the firm, two or more persons liable as partners, or of which they were partners when the cause of action accrued; and the plaintiff may also apply to the Court for a statement of the names and addresses of the persons who were, at the time of the accrual of the cause of action partners in such firm. The rule also permits the signing of the written statement and the verification by one partner only. The second rule enables the defendant to ask for the disclosure of the names of partners, where a firm sues as a plaintiff. The third rule then provides for service of summons upon the firm and the partners. Such summons may be served, as the Court may direct.
(a) upon all or any of the partners; or
(b) upon any person having control or management of the business, at the principal place of Page 32 of 36 C/IAAP/3/2017 IA ORDER business of the firm within India.
A service upon the firm is deemed to be good service, whether all or any of the partners are within or without India. But if the firm is dissolved to the knowledge of the plaintiff, the summons must be served on every person within India whom it is sought to make liable. The fourth rule provides for right of suit on death of partner. We are not concerned with that eventuality. The fifth rule then provides that where the summons is issued to a firm under R3, every person served shall be informed by notice whether he is served as a partner or as a person having the control and management of the business or both; but in the absence of notice, the person is deemed to be served as a partner. Rule 6 lays down that person served as partners in the name of the firm shall appear individually in their own names, but all subsequent proceedings shall, nevertheless, continue in the name of the firm. Rule 7 then says that if a notice is served upon a person having the control or management of the partnership business, he need not appear unless he is a partner. Rule 8 enables a person served as a partner to appear under protest denying that he is a partner but the appearance does not preclude the plaintiff from serving a summons on the firm and obtain an ex parte decree, if no other partner appears. The remaining rules do not concern us in this case.
(8) From the above analysis, it is clear that a plaintiff need sue only the firm, but if he wants to bind the partners individually he must serve them personally, for which purpose he can get a discovery of the names of partners of the firm. Persons served individually may appear and file written statements, but the proceedings go on against the firm only. They may, however, ap pear and plead that they are not partners or were not partners when the cause of action arose. But even if no other partner appears, there may be a decree against the firm if the firm has been served with the summons. The gist of 0.30 thus is that the action proceeds against the firm, and the defence to the action by persons admitting that they are partners is on half of the firm. Persons sued as partners may, however, appear and seek to establish that they are not partners or Page 33 of 36 C/IAAP/3/2017 IA ORDER were not partners when the cause of action arose; but if they arise this special plea, they cannot defend the firm. This was laid down in connection with the analogous provisions of the English rule in Weir and Co. v. Me Wear and Co. 19252 KB 127. Partners appearing and admitting their positions as partners can only defend the firm, because the suit continues in the firm's name. The law is thus not concerned with a tight between the partners inter se, and an action between the partners is not to be tried within the action between the firm and the plaintiff. Of course, the partners who admit that they are partners need not raise a common defence. They may raise inconsistent defences, but all such defences must be directed to defend the firm and the plaintiff must surmount all such defences. See Ellis v. Wadeson (1889) 1 QB 714. The purport of the rules as well as the two English cases which have correctly analyzed the rules on the subject (the English and the Indian rules being alike) is that the partnership is sued as a partnership and though the partners may put in separate defences, those defences must be on behalf of the firm. If some of the partners do not appear, those that do, must defend the firm; but if no proper defence is raised by them, the plaintiff cannot be deprived of a judgment. The judgment and decree thus obtained are executable against the partnership assets. This brings in the provisions of 0.21. R50 of the Code.
(9) That rule enables a decree obtained against a partnership firm to be executed against the property of the partnership. Next, it enables the decree to be executed individually against a person who appeared in his own name under R. 6 or R.7 of 0.30 or who admitted on the record or was adjudged to be a partner. Next, the decree can be executed against any person who is served individually as a partner but has failed to appear. Next, it permits the decree to be excluded with the leave of the Court against persons belonging to the category of the person above mentioned, provided that they are summoned and either admit their liability of after an issue is tried, their liability is determined."
Thus, the decree can be executed against a Page 34 of 36 C/IAAP/3/2017 IA ORDER person, who has not been summoned in the suit as partner, but Order 21, Rule 50(2) of the Code gives them an opportunity of showing cause and plaintiff must prove their liability.
37. In light of the aforesaid view, considering the prayers prayed for in each of the applications, various contentions raised by learned counsel for the parties and legal provisions, more particularly Order 21, Rule 50(2) and Section 151 of the Code, present applications are accepted in part and accordingly, the following directions are given :
(i) In Civil Application (OJ) No.1/2018 in IAAP No.2/2017, opponent No.3 is directed to file an affidavit on oath and disclose whether he was a partner in opponent No.1Firm when cause of action arose and whether he is continued as partner as on date and if he was/is the partner shall also disclose the assets owned by him in his individual capacity;
(ii)In Civil Application (OJ) No.1/2018 in IAAP No.3/2017 and Civil Application No.1/2018 in IAAP No.4/2017, opponent Nos.3 and 4 are directed to file an affidavit on oath and disclose whether they were partners in opponent No.1 Page 35 of 36 C/IAAP/3/2017 IA ORDER Firm when the cause of action arose and whether they are continued as partners as on date and if they were/are the partners shall also disclose the assets owned by them in their individual capacity;
(iii) Such affidavit shall be filed by the respective opponents before this Court latest by 20th October, 2018.
38. In light of the aforesaid, at the same time, opponent Nos.2 & 3/3 respectively are at liberty to take recourse under subrule (2) of the Rule 50, Order 21 of the Code. In light of the aforesaid, after the affidavit is filed, it would be open for the applicants to take available recourse under subrule (2) of Rule 50, Order XXI of the Code. The other prayers prayed for in these applications are kept open and the applicants are at liberty to file appropriate application after the affidavit is filed by the respective opponents.
With the above clarification, present applications stand disposed of accordingly.
Sd/-
(R.M.CHHAYA, J) SUCHIT Page 36 of 36