Contribution Between Judgement-Debtors

Code of Civil Procedure

Liability under a decree: 

Persons liable jointly and severally under a decree are in the same position as joint promisors.

All the liable persons will bound a contribution to the extent of their respective shares towards the discharge of the decree. e.g. If A and B are the persons liable jointly and their share is 20% and 80% respectively then A have to contribute 20% towards discharge of the decree and B have to contribute 80% for the same.

A co-debtor may not be liable to contribute if he shows that the other co-debtor had an amount of joint money sufficient to discharge the decree. e.g. If A and B are the persons liable jointly and their share is 20% and 80% respectively. If A proves that B is having joint money which is sufficient to discharge the decree then A may not be liable to contribute towards discharge of decree.

A decree-holder can recover his decretal debt from one or more or any of the judgment-debtors and the latter can compel contribution from the other judgment debtors, who have not been compelled to pay. e.g. D is a decree-holder who can recover his decretal debt from A, B and C who are the judgement debtors. If D recovers all of his decretal debt from A then A can compel the contribution from B and C.

In the absence of a contract to the contrary, the liability to contribute is not affected by the release of any judgment-debtor by the decree-holder.

Vayangara Vadaka Vittil Manja v Pariyangot Padingara Kurupath Kadugochen

The question as to whether there is any right of contribution as between persons against whom a joint decree has been passed depends upon the question whether the defendants, in the former suit were wrong-doers in the sense that they knew or ought to have known that they were doing an illegal or wrongful act. In that case, no suit for contribution will lie. If an act is manifestly unlawful, or the doer of it knows it to be unlawful as constituting either a civil wrong or a criminal offense, he cannot maintain an action for contribution or indemnity to him for the commission of such act is also void. Thus, where a decree for costs against two defendants jointly was executed against one of them, who had set up a false defense in the suit in collusion with the other, and the former sue the latter for contribution. It was held that the suit would not lie.

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Further reading:

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Reference:

1) Ipleaders

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Subodh Kumar Gupta v. Shrikant Gupta & Ors.

 

(a) In Subodh Kumar Gupta v. Shrikant Gupta & Ors., (1993) 4 SCC 1, the Supreme Court considered a case wherein a partnership firm having its registered office at Bombay and factory at Mandsore. Two partners - defendants were residing at Mandsore while the third partner-plaintiff shifted to Chandigarh and an agreement had been drawn up between the partners at Bhilai for dissolution of the firm and distribution of assets. The suit was filed by the plaintiff in the Court at Chandigarh for dissolution of the firm and rendition of account on the ground that the defendants at Mandsore misappropriated partnership’s fund and the aforesaid agreement was void and liable to be ignored. The Court held that in view of the provisions of Section 20 of CPC, suit can be entertained in a place where cause of action had arisen fully or partly. The mere bald allegation by the plaintiff for the purpose of creating jurisdiction would not be enough to confer jurisdiction or allege that the agreement was void would not be enough unless the agreement was set-aside by the competent court. The court must find out by examining the provisions carefully, as to whether the suit can be entertained by it. Generally, cause of action would arise at the place where the defendant resides, actually and voluntarily, or carries on business or personally works for gain or the cause of action arises wholly or in part.

Preamble: Indian Partnership Act, 1932

PREAMBLE

[IX OF 1932]

(IN ITS APPLICATION TO THE STATE OF MAHARASHTRA) (Received the assent of the Governor-General on 8th April, 1932) AMENDED BY MAH. 29 OF 1984 (1-1-1985) 1

AN ACT TO DEFINE AND AMEND THE LAW RELATING TO PARTNERSHIP. WHEREAS it is expedient to define and amend the law relating to partnership; It is hereby enacted as follows:

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Explanation of Preamble of Indian Partnership Act, 1932:

This is the IX i.e. Ninth Act of year 1932.

It had received assent of the Governor General on Dt. 8-4-1932.

The Act was enacted by Parliament of India.

In its application in State of Maharashtra it was amended by 29^th Act of Maharashtra on Dt. 1-1-1985.

The present Act superseded the earlier law relating to Partnership, which was contained in Chapter XI of the Indian Contract Act, 1872.

Nature of Partnership:

Partnership is a form of business organization, where two or more persons join together for jointly carrying on some business. It is an improvement over the ‘Sole –trade business ’, where one single individual with his own resources, skill and effort carries on his own business. Due to the limitation of resources of only a single person being involved in the sole-trade business , a larger business requiring more investments and resources than available to a sole-trader, cannot be thought of in such a form of business organisation. In partnership, on the other hand , a number of persons could pool their resources and efforts and could start a much larger business, than could be afforded by any of these partners individually . In case of loss the burden gets divided amongst various partners in a Partnership.

Scope:

There is no restriction on the exercise of such powers as partnership chooses at any time to exercise, except such prohibitions on illegal, immoral or fraudulent conduct as apply equally to individuals.

1- A partnership may itself be a member of another firm if the partners of the constituent firm consent thereto.

2- If it appears that all the partners have either authorized or ratified the contract, no further question as to its validity ordinarily remains. The cases where the question of the validity of partnership contract arises is where one partner has made the contract without specific authority from his co-partners. As to their implied scope partnerships may be divided into the classes of the non-trading and the trading. Some powers can be exercised by partners in partnership of either type. Thus a partner may retain an attorney protect the interests of the firm.

Case Laws:

1) Poppatlal Shah vs. State Of Madras AIR 1953 SC 274: It was held that, “The preamble is an admissible aid to construction . It throws light on the intent and design of the legislature and indicates the scope and purpose of the legislation itself.”

2) Tribhuban Parkash Nayyar Vs. Union Of India (1969) 3 SCC 99.: It was held that, “Preamble cannot be used to control or qualify precise and unambiguous language of the enactment . It is only when there is a doubt as to the meaning of a provision, that recourse may be had to the preamble to ascertain the reasons for the enactment and hence, the intention of Parliament.”

(Note: Paragraph in Red are taken as it is from the original Act while Paragraphs in Black are the Explanations of the same)

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IPA - Short Q & A -1

Hello friends please welcome to this blog related to only notes. This blog is giving you notes on partnership law in India.

Watch the video.

Short Question and answers on Indian Partnership Act, 1932

Q. What is short name of Indian Partnership Act, 1932?

Ans. There is no specific short name for this Act, but in many contexts Act IX of 1932 or IPA Act, 1932 is used.

Q. What is purpose of Indian Partnership Act?

Ans. This Act is to define and amend the law relating to the partnership.

Q. When IPA had received the assent form Governor General?

Ans. on Dt. 8-4-1932.

Q. In which State the IPA Act was amended and in which year?

Ans. In its application in State of Maharashtra it was amended by 29^th Act of Maharashtra on Dt. 1-1-1985

Q. In which State it was not enacted?

Ans. In State of Jammu and Kashmir.

Q. Why it was not enacted in State of Jammu and Kashmir?

Ans. In State of Jammu and Kashmir, due to operation of Article 35A and Article 370 it was having special status and hence the IPA was not enacted in the State.

Q. On which day the Act was enacted across the India?

Ans. On Dt. 1-10-1932.

Q. Which Section of IPA was not enacted in 1932?

Ans. Section 69.

Q. When Section 69 of IPA was enacted?

Ans. On 1-10-1933.

Q. Who enacted the IPA Act?

Ans. The Act was enacted by Parliament of India.

Q. The IPA supersedes which Act?

Ans. The IPA Act superseded the earlier law relating to Partnership, which was contained in Chapter XI of the Indian Contract Act, 1872.

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