Page 89 - MA - May 2017

with all the other partners and also determined. of the debts of a firm recourse can
severally for all acts of the firm done (3) Where the liability of be had not only to the assets of the
while he is a partner. any person has been tried and firm but to other means of relation
It is clear from Section 25 of the determined under sub-rule (2), the of the debt are also allowed. Apart
Act that the liability of the partners order made thereon shall have the from the assets of the firm, the
is joint and several. It is open to same force and be subject to the partners who have been served with
a creditor of the firm to recover same conditions as to appeal or summons in such capacity and also
the debt from any one or more of otherwise as if it were a decree. persons who have been adjudged
the partners. Each partner shall (4) Save as against any property as partners can be made liable
be liable as if the debt of the firm of the partnership, a decree against under the decree. The procedure
has been incurred on his personal a firm shall not release, also enables the judgment-creditor
liability. render liable or otherwise affect to proceed against a person who
Order 21 Rule 50 provides as any partner therein unless he has has been left out and has not been
under: - been served with a summons to impleaded as a partner by having
Execution of decree against firm : appear and answer. an adjudication of the Court that
(1) Where a decree has been The execution under this Rule the person concerned was in fact a
passed against a firm, execution may be granted against the partner.”
may be granted - partnership property. It may also The judgment in the case of Dena
(a) against any property of the be granted against the partners, Bank v. Bhikhabhai Prabhudas
partnership; in which case the decree-holder Parekh & Co. and Ors.,
(b) against any person who has may proceed against the separate [2001]247ITR165 (SC) can
appeared in his own name under property of the partners.” be beneficially referred to in the
rule 6 or rule 7 of Order XXX or who Let us now discuss hereunder present context. The question arose
has admitted on the pleadings that some more decisions of the various for consideration by the Supreme
he is, or who has been adjudged to courts which held that the partners Court in this case, inter alia, was
be , a partner; were personally liable for repayment whether the property belonging
(c) against any person who of the dues of the firm on the basis of to the partners can be proceeded
has been individually served as a principles embodied in CPC. against for recovery of dues on
partner with a summons and has In the case of N. Ranganayakulu account of Sales tax assessed
failed to appear; Vs.J. Narasimharao and Company against the partnership firm under
Provided that nothing in this and Ors. [AIR 1971 AP 58], the the provisions of the Karnataka
sub-rule shall be deemed to limit or Andhra Pradesh High Court held as Sales Tax Act, 1957. In paragraph
otherwise affect the provisions of under : 18, it was observed as under:
Section 30 of the Indian Partnership “15. It is pertinent to consider “The High Court has relied on
Act 1932 (9 of 1932). the effect of Rule 50 of Order 21. Section 25 of the Partnership Act,
(2) Where the decree-holder It provides that where a decree has 1932 for the purpose of holding
claims to be entitled to cause the been passed against a firm execution the partners as individuals liable
decree to be executed against any may be granted against any property to meet the tax liability of the firm.
person other than such a person of the partnership, against any Section 25 provides that every
as is referred to in sub-rule (1), person who has appeared in his own partner is liable, jointly with all the
clauses (b) and (c) as being a partner name under Rule 6 or 7 of Order 30 other partners and also severally for
in the firm, he may apply to the or who admitted on the pleadings all acts of the firm done while he is
Court which passed the decree for that he is a partner. Execution may a partner. A firm is not a legal entity.
leave, and where the liability is not also be granted against a person It is only a collective or compendious
disputed, such Court may grant who has been adjudged to be a name for all the partners. In other
such leave, or, where such liability partner or against a person who words, a firm does not have any
is disputed, may order that the has been individually served with existence away from its partners.
liability of such person be tried and summons as a partner but has failed A decree in favour of or against a
determined in any manner in which to appear. The underlying purpose firm in the name of the firm has the
any issue in a suit may be tried and of this rule, is that for the recovery same effect as a decree in favour of

www.icmai.in May 2017 l The Management Accountant 89