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2. The facts leading to the decree in this case, and the execution proceedings are that a contract dated 15.10.1986 was entered into between M/s. Binode Engineering & Mechanical Works, a registered firm, ("the judgement-debtor firm") and the Union of India for the supply of 3850 tonnes of cast iron sleeper plates. Due to certain disputes in the course of the performance of the contract (the details EFA (OS) 36/2013 Page 1 of which are not relevant at this stage of the execution proceedings), the matter was referred to arbitration in 1996 (through a letter dated 21.12.1996). The award was passed on 25.03.1998 in favour of the Union of India, the decree-holder, for an amount of ` 81,31,371/- (` 35,36,750/- towards the value of scrap and ` 45,94,621/- towards interest at the rate of 12% per annum on the value of the scrap from 01.09.1988 to 31.12.1996) and against the judgement-debtor firm.

The award was then made a rule of Court under Section 17 of the Arbitration Act, 1940 in CS (OS) 815A/1998 on 15.03.2004, after dismissing objections raised by the judgement debtor firm.

3. Around the same time as the award, the judgement-debtor firm became non-functional due to differences between the partners. Subsequently, the Union of India sought to initiate execution proceedings against Satish Kumar Jhunjhunwala (the petitioner/appellant), an admitted partner of the firm at the time of signing of the contract, in Execution Case No. 119/2008 before this Court. This case was then transferred to the High Court of Calcutta by an order dated 17.04.2007, to facilitate execution against the property of Mr. Jhunjhunwala. Before the Calcutta High Court, Mr. Jhunjhunwala took the plea that the proceedings against him were not maintainable as the recovery could only be against the firm as such, and not against its partners. In the meantime, an application, EA No. 471/2008, filed for stay of the decree under Order XXI Rule 26 of the CPC by the judgement-debtor firm was also rejected by this Court. Subsequently, the Union of India filed an application under Order EFA (OS) 36/2013 Page 2 XXI Rule 50(2) CPC, before a Single Judge of this Court in order to satisfy the decree as against the properties of Mr. Jhunjhunwala by obtaining leave to proceed against his assets. The Single Judge granted leave under Order XXI Rule 50(2), leading to the present appeal.

4. Learned senior counsel for Mr. Jhunjhunwala, Mr. Rakesh Tiku, made a three-fold submission: first, that since Mr. Jhunjunwala was neither provided notice of the underlying suit (either before the arbitral tribunal or at the time of filing of the award under Section 14 of the Arbitration Act before this Court) or of the execution proceedings, until the stage at which the proceedings reached the Calcutta High Court, making his assets liable would amount to creating a liability unfounded in the decree itself, which an executing court cannot do. Secondly, the learned senior counsel argued that the words "execute such decree against any person, other than such a person as is referred to in clause (b) or clause (c) of sub-rule (1) of Rule 50 of Order XXI" are to be read in contradistinction to the persons, i.e. partners, referred to in clauses (b) and (c), and thus, do not refer to partners of the firm at all, but rather to other persons. Finally, the learned senior counsel argued that after transferring the decree, the transferor court, i.e. this Court, has no jurisdiction in respect of the proceedings. Mr. Tiku also argued that Rule 50 in using the words "[c]ourt which passed the decree" envisaged the Court that heard the underlying matter and passed the decree (an expression of liability), and not the same Court, i.e. this Court, sitting in its EFA (OS) 36/2013 Page 3 execution powers. Thus, although the present application seeking leave was filed before the Single Judge of the Delhi High Court (the Court which passed the original decree in the matter as well), the argument states that the application must lie to the same court, i.e. the same bench or judge, that heard the underlying matter. For this, learned senior counsel placed reliance on a decision of the Patna High Court, Kalu Ram and Ors. v. Sheonand Rai Jokhi Ram, AIR 1932 Pat 323, and a decision of the Madras High Court, Pottiswami, alleged partner of Pottiswami and Brothers v. Salt Sulaiman (Mitta), AIR 1942 Mad 501.

10. In this case, the "court which passed the decree" was the Delhi High Court, i.e. the Court which made the arbitral award in question a rule of Court under Section 17 of the Arbitration Act, 1940. In execution proceedings pursuant to the decree, which were also seized of by this Court, the matter was transferred under Section 39, CPC given that the assets sought to be utilized in the execution of the decree were situated in the jurisdiction of the Calcutta High Court. However, in the proceedings before the Calcutta High Court the question of the liability of Mr. Jhunjhunwala came to the fore. Concededly, Mr. Jhunjhunwala did not appear in his own name under Rule 6 or 7 of Order XXX, nor did he submit to on the pleadings, nor was he adjudged as a partner, nor was he served with a summons as a partner at any stage of the proceedings. The mandate of Order XXI, Rule 50 (1) clearly excluded automatic recovery against his assets. Rather, the Union of India, the judgement-holder, was required to obtain leave under sub-rule 2. Here, Mr. Jhunjhunwala's argument that sub-rule (2), if read as against sub-rule 1, does not refer to partners of the firm, but to third persons, is unappealing. Clauses (b) and (c) of sub-rule 1 do not exhaust all categories of partners that may be proceeded against, such that it could be said that sub-rule (2) only deals with third persons. Indeed, clauses (b) and (c) only concern certain categories of partners who have either admitted liability, or have been put on notice and failed to tender a reply, such that they can EFA (OS) 36/2013 Page 9 be proceeded against. Other individuals, or more specifically, other partners, may be proceeded against under sub-rule (2) after their liability is established in the manner provided for in the sub-section. Consequently, Mr. Jhunjhunwala's second argument also falls, i.e. given that he was not party to any proceedings before the arbitral tribunal, or the decreeing Court, executing the decree against his assets would amount to creating liability, which is an impermissible activity for an executing court. This argument also, in the Court's opinion, misses the core of Rule 50, the import of which is to ensure if individual partners have not been involved in the proceedings, -in which case they would be covered under clauses (b) or (c) of sub-rule 1, -their assets may still be utilized in the execution proceedings if the 'court which passed the decree' grants leave after hearing the individual on the question of his liability vis-à-vis his relationship with firm. That is precisely the stage of proceedings that this case is currently at, i.e. determining whether Mr. Jhunjhunwala was a partner at the time of signing the contract between the judgement-debtor firm and the Union of India, such that - in consonance with the general principle laid out in Section 25 of the Partnership Act - he can be made personally liable. Accordingly, unless the claim of the decree- holder that the decree should be passed against the partners personally has been decided against the decree-holder by the decreeing court, in which case the executing court is bound by the limitation placed on the decree itself and cannot execute it against the partners personally, the same question can be raised through an application under rule EFA (OS) 36/2013 Page 10 50(2). (See, Topanmal Chhotamal v. Kundomal Gangaram and Ors. AIR 1960 SC 388.)