Smt. Antoneta Cicilia Fernandes Vs. Smt. Rita Maria Fernandes and ors. - Court Judgment

E.S. Da Silva, J.

1. This appeal is directed against the order of the learned Civil Judge, Senior Division, Margao, dated 30th August, 1994, in Special Execution Application No. 2/91/A whereby the learned Judge has rejected, on remand made by this Court in First Appeal No. 40/94 on 20th June, 1994, the appellant's application for setting aside the attachment and sale made of certain properties purportedly belonging to the appellant and her husband in execution application filed by the respondent No. 1 decree-holder against the respondents No. 2 and 3, the judgment-debtors.

2. It is not necessary to recapitulate all the facts in this case and suffice is to say that the respondent No. 1 upon securing a decree of the learned Civil Judge, Senior Division, Margao, against respondent No. 3's firm, consequent upon an arbitration award which was made the rule of the Court, sought to execute the same against the assets of one of its partners, the husband of the appellant. As a result two flats and two shops from the building known as 'Nascimento Anna Piedade Mansion' belonging to the appellant's husband Jose Remedios Fernandes situated in the property 'Malbhat' of Margao were attached and put to auction for the purpose of their sale in order to guarantee with their proceeds the satisfaction of the aforesaid decree. The appellant by alleging that she was the wife of the partner married to him under the regime of communion of assets and as such entitled to the right of moiety in the common properties of the couple objected to the attachment as being null and void in view of the clear provision of Article 1114 of the Portuguese Civil Code. The executing Court however was not impressed with this attempt of the appellant to release the attachment even after holding an inquiry under Order XXI, Rule 58 of the Civil Procedure Code as directed by this Court in First Appeal No. 40 of 1994 and ultimately came to negotiated the appellant's move by the impugned order which is under challenge.

3. We have heard learned Counsel and also gone through the impugned order and though we agree with the finding arrived at by the learned Civil Judge we are unable to share the reasoning on which the learned Judge chose to support his decision. We nevertheless hold that the impugned order need not however be disturbed although for reasons entirely different from the ones adopted by the learned Civil Judge.

4. Mr. Usgaokar, learned Counsel for the appellant, while assailing the impugned order of the learned Civil Judge has advanced two sets of submissions. It was firstly contended by the learned Counsel that having regard to Order XXI, Rule 50(1) and (2) of the Civil Procedure Code and since in this case no leave was sought for by the respondent No. 1 under sub-rule (2), the attachment in sale of the joint property cannot be sustained. We are afraid that, irrespective of the merits of this contention, no such submission is available to the appellant in this regard. Admittedly, the appellant is not a partner of the respondent No. 3's firm in respect of whose liability the respondent No. 1 sought to execute the decree against the assets of one of its partners, namely the husband of the appellant Jose Remedios Fernandes.

Order XXI, Rule 50(1) lays down :---

'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 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.'

Sub-rule (2) reads as follows:-

'50 (2) : Where the decree-holder claims to be entitled to cause the decree to be executed against any person other than such a person as is referred to in sun-rule (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.'

In the case of Gambhir Mal Pandiya (since deceased) and after him his heirs and legal representatives & others v. J. K. Jute Mills Co. Ltd., Kanpur & another), : [1963]2SCR190 , it was held that Order XXI, Rule 50(2) deals with executions but really is a part of the provisions relating to suits against firms contained in Order XXX and must be viewed alongside to get the true meaning of the words 'the liability of such person'. Order XXX permits suits to be brought against firms. The summons may be issued against the firms or against persons who are alleged to be partners individually. The suit however proceeds only against the firm. Anybody who is summoned can appear and prove that he is not a partner and never was but if he raises that defence he cannot defend the firm. Persons who admit that they are partners may defend the firm, take as many pleas as they like but cannot enter upon issues between themselves. When the decree is passed which is against the firm such a decree is capable of being executed against the property of the partnership and also against two classes of persons individually, namely, (1) persons who appeared in answer to summons served on them as partners and either admitted that they were partners or were found to be so and (2) persons who were summoned as partners but stayed away. The decree can also be executed against persons who were not summoned in the suit as partners but Rule 50(2) of Order XXI gives them an opportunity of showing cause and the plaintiff must prove their liability. This inquiry does not entitle the person summoned to re-open the decree. He can only prove that he was not a partner and in a proper case that the decree is the result of a collusion, fraud or the like. The proper meaning of the words the liability of such person' in Order XXI, Rule 50(2) is that primarily the question to try would be whether the person against whom the decree is sought to be executed was a partner of the firm when the cause of action accrued.

It is thus clear that the remedy of Rule 50(2) can be availed of only by the persons within a partnership or his issue as such.

5. It is the case of the appellant that since the assets sought to be attached or sold are joint assets belonging to her and her husband in communion by virtue of her right of moiety it is not open for the decree-holder in this particular case to attach the undivided property which belonged to both.

6. In this regard it was sought to be contended that admittedly the appellant is the wife of Jose Remedios Fernandes, a partner of the respondent No. 3 and there is also no dispute that matters regarding matrimonial assets of Goan married couples are regulated by the provisions of the Portuguese Civil Code.

7. Mr. Usgaokar has drawn our attention to several provisions of the Portuguese Civil Code and the Portuguese Commercial Code to drive out his point that no liability can be demanded in this case from the joint assets of one of the partners of the firm who is married under the regime of communion of assets. He has taken us through Articles 1096, 1097, 1098, 1108 and 1113 of the Portuguese Civil Code which reads thus:-

'1096: It is lawful for the spouses to stipulate, before the solemnisation of the marriage and within the bounds of law, whatever they think fit in respect of their properties.

1097: Such contracts shall not be valid, unless they are recorded by way of public deed.

1098: In the absence of any contract, it is deemed that the marriage is done as per the custom of the country, except when it is solemnised in contravention of the provisions of Article 1058 Clause 1 and 2; because in such a case it is deemed that the spouses are married under the simple communion of acquired properties.

1108: The marriage as per the custom of the country consists in the communion between the spouses of all their properties, present and future, not excluded by law.

1113: The debts incurred during the subsistence of the marriage by act or contract of both the spouses, or by the husband with the consent of the wife, or by the wife with the permission of the husband, or by the wife alone in the cases where it is permitted by Article 1116, are of joint liability.

Paragraph 1. Where the common properties are not enough for the payment of the debts referred to in this Article, the exclusive properties of any of the spouses shall be liable for the payment.

Paragraph 2. The spouse who has been compelled to pay any of the said debts or the major part thereof through his/her exclusive properties, shall have the right to be repaid through the exclusive properties, if any, of the other spouse to the extent the payment has exceeded half of his/her liability.'

This is regarding the civil liability incurred by any of the partners of a marital society under their personal law. So far the commercial law is concerned, Article 10 of the Commercial Code lays down that the payment of commercial debts of the husband which have to be made from his moiety of the common properties may be demanded before the marriage is dissolved or before there is a separation, the wife however, having to be given notice to seek in this separation within ten days immediately after the date. In its turn Article 15 lays down that the debts originating from the commercial acts contracted solely by the businessman husband without the consent of the wife shall be presumed to be for the common of the couple.

8. The second submission of the learned Counsel in this connection is that the liability for breach of agreement sought to be enforced against partners is always a civil liability and not a commercial one. It was contended that if it is a civil liability then Article 1114 applies and if not, Article 10 of the Commercial Code is attracted. It was further urged that it is civil liability which arises from a contract and because the appellant's husband did not fulfil the conditions of the same contract the Arbitrator has awarded compensation for breach of the contract. The argument is that compensation for damages on account of breach of contract sought for from a partner of a firm is always a civil liability. For that purpose the learned counsel has placed reliance on section 4 of the Indian Partnership Act, 1932 which gives the definition of partnership as a relation between persons who have agreed to share the profit of a business carried on by all or any one of them acting on behalf of all and defines persons who have entered into partnership with one another as partners. Section 73 of the Contract Act, 1872, states that when a contract has been broken, the party who suffers from such breach is entitled to receive from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it.

9. We are unable to accept this submission of the learned Counsel again. As rightly contended by Mr. Bruto D'Costa, learned Counsel for the respondent No. 1, it is an acknowledged position in this case that the husband of the appellant is a partner of the respondent No. 3's firm entrusted even to operate its accounts. The deed of partnership clearly indicates that the husband of the appellant is not merely a sleeping partner and instead it reveals that he was active in the partnership business of the firm. As a partner of the firm he took up the work of the construction of the respondent No. 1's building and hence by reason of his activity incurred the liability which has thus a commercial activity as its source. It was therefore submitted that Article 10 is not at all attracted in this case since the liability sought to be enforced is not from the appellant's husband's moiety. Further, according to the learned Counsel, the appellant also lost the last chance to prove that the activity of her husband which is the source of liability incurred by respondent No. 3 firm, was not for the common gain of the couple when the matter was remanded to the Civil Court for the purpose of inquiry under Order XXI, Rule 15 of the Civil Procedure Code. Having failed to establish this requirement it is not open now to the appellant to claim that the commercial activity of her husband which has originated the liability sought to be enforced by respondent No. 1 is not meant for the common gain of the couple.

10. There is indeed great force in the argument and in this regard the submissions of the learned Counsel deserve acceptance. Article 10 of the Commercial Code merely records the cases arising out of commercial debts of the husband whose payment has to be made from his moiety on the common properties, while Article 15 concerns to all debts originated from the commercial acts contracted solely by the husband in the exercise of his activity as a businessman. Thus, in our view, the factual situation of the present controversy seems to take it straightaway within the purview of Article 15 of the Commercial Code. We have therefore no hesitation in holding that the liability of the appellant sought to be enforced by respondent No. 1 in execution of the decree is to be deemed as joint and common liability for which the entire properties are liable. Hence the attachment and sale of the common assets cannot be faulted with in view of the presumption arising out of Article 15 of the Commercial Code which presumption was not at all rebutted by the appellant inspite of the opportunity made available to her.

11. In the result we see no substance in this appeal which therefore deserves to be rejected. The appeal is accordingly dismissed and the impugned order dated 30th August, 1994 in Special Execution Application No. 2/91/A is hereby affirmed to the extent of the finding recorded that the objection of the intervenor, vide Exhibit 37, is devoid of any merits and thus bound to be negotiatedd. Order accordingly.