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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO.1902 OF 2009
Smt. Parvatibai Shivajrao Shendge )
widow, senior citizen, aged about 70 years )
residing at Flat No.101, First floor, Sukhada )
Co-operative Housing Society Limited, )
Sir Pockakhanwala Road, Worli Mumbai-18 )..Petitioner
Vs.
1.The Sangali Sahakari Bank Ltd.
a Co-operative Bank registered under the
)
)
the Maharashtra Co-operative Societies Act, )
1960 having office at 151, Sangli Sahakar )
Bhavan, S.K.Bole Marg, Dadar, Mumbai-28 )
2. M.B.Shinde, Special Recovery Officer and )
Sales Officer, Sangali Sahakari Bank Ltd., )
having office at 151, Sangli Sahakar )
Bhavan, S.K.Bole Marg, Dadar, Mumbai-28 )
3. The Divisional Joint Registrar, Co-operative )
Societies, Mumbai Divisiion, Mumbai )
4. Messrs Vilas Transport, a firm having )
address at 309, Navratan Building, 69, )
P'Dmello Road, Carnac Bunder, Mumbai-09 )
5. The State of Maharashtra through )
Government Pleader, High Court, Bombay )..Respondents
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Mr. V. R. Dhond with Mr. T. N. Tripathi and Ms. Sapana Rachure i/b T. N. Tripathi
& Co. for the Petitioner
Mr. V. A.Thorat, Sr. Advocate with Mr. Harinder Toor i/b Mr. Subhash Bane for
Respondents No.1 & 2
Ms. Imam Calcuttawala, AGP
CORAM: DR. D.Y. CHANDRACHUD, J.
DATE: 5th November , 2009
ORAL JUDGMENT :
1. Shivajirao Krishnaji Shendge was a partner of a firm by the name of Vilas
Transport Company which was constituted on 16th September 1992, under
a Deed of Partnership. One of the partners was his son, Prakash Shivajirao
Shendge and two others were Vilas Shendge and Jaysingrao Shendge. The
partnership firm submitted an application on 23rd March 1998 to the First
Respondent for the grant of a loan in the amount of Rs.1.30 crores. The
application was signed by all the partners including Shivajirao. The loan
was sanctioned by the Chairman of the Bank on 30th March 1998, who
incidentally also happened to be one of the partners of the firm. The bank
had also extended an over draft facility in the amount of Rs.30 lacs to the
partnership firm. All the four partners confirmed an outstanding of Rs.
212.26 lacs as on 31st March 2001 and furnished undertakings that the
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3account would be regularised before 30th June 2001. Shivajirao Shendge
died on 23rd December 2001. Upon his death a letter was addressed by one
of his sons, Prakash Shendge, who also happened to be a member of the
Legislative Assembly in the State of Maharashtra, on 27th July 2005 to the
Chairman of the Bank recording that he had been unable to fulfill the
understanding that had been arrived at between the parties for the
repayment of the amount of Rs.5 crores, due to his pre-occupation as a
member of the Legislative Assembly. By a letter, an assurance was held out
to the bank that an amount of Rs.5 crores would be paid within a period of
15 days. That assurance was not complied with. The Bank, it may be noted
is a co-operative Bank registered under the Maharashtra Co-operative
Societies Act, 1960.
2. The Bank instituted two applications for the recovery of its dues under
section 101 of the Maharashtra Co-operative Societies Act, 1960. On 13th
September 2002, the Assistant Registrar of Co-operative Societies allowed
both the applications by decreeing the claim of the bank. In one recovery
certificate the total amount decreed was Rs.2.68 crores approximately,
while in the second, the amount was Rs.2.25 crores. The claim for interest
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4was allowed. Both the recovery certificates attained finality, since no
Revision Application was filed under section 154 of the Maharashtra Co-
operative Societies Act, 1960. Execution proceedings were initiated by the
Bank. An attachment has been levied by the bank on a residential flat,
being flat 101, situated at Sukhada Co-operative Housing Society Ltd. at
Worli. The attachment was questioned by taking out an Application under
Rule 107(19) of the Maharashtra Co-operative Societies Rules, 1961. The
application was rejected by the Special Recovery and Sales Officer by an
order dated 29th April 2009. The order rejecting the applications was
questioned in Revision before the Divisional Joint Registrar under section
154. By an order dated 3rd August 2009, the Divisional Joint Registrar,
dismissed the Revision Application. Proceedings have been instituted
before this Court under Article 226 of the Constitution by the widow of
Shivajirao Shendge.
3. On behalf of the Petitioner, it has been submitted that in the recovery
proceedings that were instituted in 2002, the husband of the Petitioner was
not impleaded as a party. The Petitioner was not a party as an heir of her
deceased husband who had died on 23rd December 2001. The flat in
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5question, which has been attached was not offered as security to the Bank
and the share certificate, at present stands in the name of the Petitioner.
The bank has attached the flat on the ground that the husband was a
partner of the firm. It is urged that, the assets of the Petitioner’s deceased
spouse can be proceeded against only to the extent to which they were
assets to the partnership. The residential flat was not an asset of the
partnership and could not have been attached, in execution of the recovery
certificate. Reliance was placed on a Judgment of a Division Bench of this
Court in Mathuradas Canji Matani Vs. Ebrahim Fazalbhoy 1 and on a
Judgment of the Supreme Court in Her Highness Maharani Mandalsa
Devi Vs. M. Ramnarain Private Ltd., 2 in support of the proposition that,
if the Plaintiff takes the risk of not joining the legal representatives of a
partner of a partnership firm who is dead on the date of the institution of
the proceedings, the right of recourse is restricted only as against the
assets of the partnership and not the personal assets of the deceased
partner. In the present case, it was urged that, on the date on which the
recovery proceedings were instituted under section 101 the spouse of the
Petitioner had died. His heirs were not brought on the record and as a
1AIR 1927 BOM 581
2AIR 1965 SC 1718
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consequence the recovery certificate can be executed only against the
assets of the partnership and against the separate properties of the partners
who were impleaded as parties to the proceedings. The recovery certificate,
it was urged, cannot be executed as against the personal assets of the
deceased partner.
4. On behalf of the Bank, it was urged that in the present case, the loan was
granted and the over draft facility was sanctioned on the application of all
the partners during the life time of Shivajirao Shendge. The loan
application came to be sanctioned by the Chairman of the Bank, who also
happened to be one of the partners of the partnership firm. During his life
time, Shivajirao Shendge subscribed an undertaking together with all the
partners agreeing to regularise the account. Even after the death of
Shivajirao, one of the partners, who happened to be the son of the
deceased partner and a member of the Legislative Assembly, had assured
that the account would be regularised within a period of 15 days. Counsel
submitted that the recovery certificates attained finality. The Petitioner has
not challenged the recovery certificates. The Petitioner moved the State
Government in a second Revision Application and at the same time
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instituted Writ proceedings before this Court. Moreover, it was urged that
the recovery certificates would establish that the estate of the deceased
partner was substantially represented by the presence of his son Prakash
Shendge, who was already on the record of the recovery proceedings
initiated under section 101 and by the three other sons of the deceased.
Counsel stated that on 27th April 2002, the Bank had during the pendency
of the proceedings before the Assistant Registrar, drawn the attention of the
authority to the circumstance that Shivajirao had died and placed on
record the names of the legal representatives. The Bank requested that his
legal representatives should be brought on record and both the recovery
certificates dated 13th September 2002 record the names of his heirs
namely, Ramesh, Suresh and Sandip, as being on record.
5. In considering the merits of the rival contentions, it would be appropriate
to refer to the relevant statutory provisions on the subject. Rule 1 of the
order 30 of the Civil Procedure Code, 1908, provides that any two or more
persons claiming or being liable as partners and carrying on business in
India may sue or be sued in the name of the firm, if any, of which, such
persons are partners at the time of the accrual of the cause of action. Rule
4 provides that notwithstanding anything contained in section 45 of the
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Indian Contract Act, where two or more persons may sue or be sued in the
name of a firm and any of such persons dies, whether before the institution
or during the pendency of any suit, it shall not be necessary to join the
legal representatives of the deceased as a party to the suit. Rules 49 and 50
of Order 21 respectively deal with attachment of partnership property and
the execution of a decree against a firm. Rule 50 stipulates that, where a
decree has been passed against a firm, execution may be granted i)against
any property of the partnership; ii) against any person who has appeared
in his own name or who has admitted on the pleadings that he is, or has
been adjudged to be, a partner; iii) against any person who has been
individually served as a partner with a summons and has failed to appear.
Under sub rule (2) of Rule 50, where a decree holder seeks to execute a
decree against any person other than one specified in (ii) and (iii) above,
he may apply to the Court which passes a decree for leave to do so.
6. A Division Bench of this Court held in Mathuradas Canji Matani Vs.
Ebrahim Fazalbhoy,3 that where a partner was dead on the date of the
institution of the suit and a liability is sought to be fixed on the private
estate of a deceased partner apart from his interest in the partnership
3AIR 1927 BOM 581
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assets then, the legal representatives must be added. The Division Bench
took note of the fact that there was substantial similarity in the language
used in Order 30 and Order 21 Rules 49 and 50 with the corresponding
rules of practice in England, The Division Bench cited the dictum of Romer
L.J. In Ellis Vs. Wadeson to the effect that, if the legal representatives of a
deceased partner are not added expressly as Defendants and the action is
brought against the firm in the name of the firm, then judgment can only
be obtained as against the surviving partners and be enforced against them
and against the assets of the partnership. The issue was considered by the
Supreme Court in Her Highness Mandalsa Devi (Supra). The Supreme
Court held that in a normal case where all the partners of a firm are
capable of being sued a suit may be filed and a decree obtained against the
firm under Order 30 and such decree may be executed against the property
of the partnership and all the partners by following the procedure of Order
21 Rule 50 of the Code of Civil Procedure. However, the Court noted that,
there may be certain cases where it is found that one of the partners cannot
be sued or cannot be adjudged a Judgment Debtor. Dealing with the case
of a partner who has died, the Supreme Court observed as follows:
“Again take a case where the creditor of a firm institutes a suit
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10against a firm and one of its partners at the time of the accrual of
the cause of action is dead at the time of the institution of the suit.
The suit against the firm is really a suit against all the partners
who were its partners at the time of the accrual of the cause of
action, including the dead partner. Order 30 Rule 4 of the Code of
Civil Procedure enables the creditor to institute the suit against
the firm in the firm name without joining the legal representative
of the deceased partner. The suit is, therefore, competent, but no
suit can be instituted nor can a decree be obtained against a dead
person. The decree passed in such a suit will, therefore, bind the
partnership and all the surviving partners, but will not affect the
separate property of the deceased partner”
The Judgment of the Supreme Court enunciates the proposition that, Order
30 Rule 4 enables the creditor of a partnership firm to institute a suit in the
name of the firm without joining the legal representatives of a deceased
partner and such suit would be competent. The decree that is passed in
such suit would bind the partnership and the surviving partners. However,
the decree would not affect the separate property of the deceased partner.
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The Supreme Court, it may be noted, cited with approval the dictum of
Romer L.J. in Ellis Vs. Wadeson, which had been relied upon in the
judgment of the Division Bench of this Court in Mathuradas’s case.
7. In the present case, the crux of the issue is as to whether, as a matter of
fact, the estate of the deceased partner was validly represented in the
proceedings which led up to the issuance of a recovery certificate.
8. In companion Writ Petition No.2020 of 2009, which has been filed by the
Bank in order to impugned the correctness of the order passed by the
Minister, Co-operation, granting stay of the recovery proceedings on 7th
August 2009, the bank has specifically averred in paragraph 9(v) of the
Petition that, on 27th April 2002, it had addressed a letter to the Assistant
Registrar of Co-operative Societies informing him that Shivajirao Shendge
who was a partner of the firm had died on 23rd December 2001 and
mentioned there the names of his legal representatives. A copy of the letter
addressed by the Bank to the Assistant Registrar, which bears an
endorsement of the Registrar dated 29th April 2002 has been placed on
record. The Recovery certificates which were issued on 13th September
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2002 clearly show the presence of i) Ramesh Shendge; ii) Suresh Shendge;
iii)Sandipan Shendge, in their capacity of heirs. Obviously these persons
could have been present only as heirs of the deceased partner Shivajirao
Shendge. Apart from his three sons as aforesaid, the fourth son, Prakash
Shendge, who was a partner of the partnership firm was already on record.
In these circumstances, the material before the Court is sufficient to
establish that the estate of the deceased partner was substantially
represented in the proceedings before the Assistant Registrar of Co-
operative Societies.
9. Indeed, the loan in the present case was taken by the partnership firm
during the life time of the deceased partner. The loan application, as
already noted, was signed by all the partners including the partner who
died, subsequently. The loan was sanctioned by the Chairman of the Bank
who also happened to be a partner of the firm. All the partners had
furnished an undertaking to regularise the account. Even after the death of
his father, one of the partners who was a member of the Legislative
Assembly had by his letter dated 27th July 2005, assured the Bank that he
would pay an amount of Rs.5 crores within a period of 15 days. That
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assurance has not been fulfilled. Section 25 of the Indian Partnership Act
1932, provides that every partner is liable, jointly with all the other
partners and also severally for all acts of the firm done while he is a
partner. In Dena Bank Vs. Bhikhabhai Prabhudas Parekh & Co. (2000) 5
SCC 694 and in Ashutosh Vs. State of Rajasthan & ors. (2005) 7 SCC
308, the Supreme Court observed that a partnership firm is only a
compendious name for all the partners. It does not have any existence
apart from its partners. A decree in favour of or against the firm in the
name of the firm has the same effect as a decree in favour of or against the
partners. While the firm is incurring a liability it can be assumed that all
partners were incurring that liability and so the partners remain liable
jointly and severally for all the acts of the firm.
10.In the present case the concurrent finding of both the adjudicating
authorities below is that, the residential flat in question was the property
of the deceased partner. It is an admitted fact that the residential flat was
originally allotted by HUDCO to the deceased partner in his life time.
11.In these circumstances, the plea for the raising of attachment was
misconceived and the Application was correctly rejected by the Competent
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Authority. The order of the Divisional Joint Registrar, dismissing the
Revision does not called for interference.
12.The Petition shall accordingly stand dismissed.
ig (Dr. D.Y.Chandrachud, J)
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