RAJASTHAN HIGH COURT

                Bank of Baroda

                Vs.

                Satyendrapal

                Civil Misc. Appeal No. 622 of 2000
                            (J.C. Verma, J.)

                19.09.2000

                JUDGEMENT

J.C. Verma, J.

1. This Civil Misc. Appeal has been filed by the Bank of Baroda, against the order
dated 4-5-2000, passed by the learned Addl. District Judge No. 4, Jaipur City, Jaipur,
whereby he had allowed the application for temporary injunction filed under Order 39,
Rules 1 and 2, Civil Procedure Code by Satyendra Pal Khurana, the plaintiff
respondent No. 1 in the suit who is the real contesting respondent.

2. The brief facts of the case are that a firm named as M/s. R.S. Rubber Industries Ltd.
Jaipur, consisting of five partners namely; Tilak Raj Parnami, Smt. Usha Parnami,
Satyendra Pal Khurana, Smt. Bela Khurana and Smt. Lajwanti Khurana, had started a
business on the plot allotted to them by the RIICO. The firm had taken a loan from the
present petitioner. The property on which the business had started was allotted in the
name of the business had started was allotted in the name of the partners of the firm.
The loan as taken by the firm remained unpaid with the result that the appellant Bank
had moved the debt Recovery Tribunal, Jaipur, against eight persons namely, the
Firm, the five persons and the guarantors. At the time of filing of the recovery suit
before the Tribunal the partners the respondent Nos. 4, 5 and 6 had retired whereas
Lajwanti Khurana, had died and Satyendra Pal remained only partner alive as a sole
proprietor of the firm. The decree was passed against all the parties made before the
Tribunal. However, Satyendra Pal the respondent No. 1, moved an application that he
was the partner of the firm but he was not served and therefore, so far as the decree
against his personal name is concerned, that be set aside and this application was
accepted on 10-6-1998, by the Tribunal. However, the decree was maintained against
rest of the defendants including the firm.

3. For the recovery of the amount, the Bank had approached the Recovery Officer, for
auction of the plot No. F-957. Even the receiver was appointed to take inventory of the
goods lying in the firm. The (sic) respondents had also approached the Appellate
Tribunal at Bombay but were not successful. The property in question was also kept as
mortgage with the Bank and a certificate was also issued by the RIICO that the plot
had been allotted on the application of the partners of the firm. The title deed of the
property in question was also deposited with the Bank for creation of the equitable
mortgage for obtaining loan. In the lease deed granted by the RIICO in the year 1988,
the property in question also stood in the name of M/s. R.S. Rubber Industries Ltd.
Jaipur.

4. Satyendra Pal, the respondent No .1, approached the Civil Court in Suit No. 6/2000
for injunction with an application of temporary injunction against the Bank, playing
therein, that for the reason that the three partners of the firm had already retired and
fourth partner had died and therefore, now the property in question belongs to
Satyendra Pal, the respondent No. 1, and as such recovery could be made by the sale
of the said property.

5. It is not disputed that the property has since been sold by way of auction and the
auction money amounting to Rupees 26,85,000/- has also been deposited with the
Debt Recovery Tribunal, by the auction purchaser. However, by the said order, the
trial Court while accepting the application for temporary injunction had ordered that
no decree should be passed for the recovery of the loan against the plaintiff and the
auction should not be confirmed, with a further direction to the plaintiff that the
plaintiff shall also not alienate the property till the whole amount of debt is paid.

6. The parties had agreed that the matter can finally be decided at the admission stage
and therefore, I decide it finally at admission stage.

7. It is the contention of the learned counsel for the appellant Bank, that the trial
Court, while granting injunction has transgressed on the powers of the Debt Recovery
Tribunal, which is the statutory authority and the auction and the decree passed by the
Tribunal would stood nullified if the interim injunction is allowed to continue and
therefore, the court below has in violation of the said principles, relating to the grant of
interim injunction, exceeded its jurisdiction or has exercised the jurisdiction either not
vested in it or exercised illegally.

8. Per contra, learned counsel for the respondent, Mr. B.L. Sharma, appearing for Mr.
Satyapal Khurana, states that the respondent No.1 is duty bond to safeguard its interest
and the property in question could not have been put to sale for the reasons that the
partners had either voluntarily retired and one had expired and for the reasons that
there was no partner in the firm except the respondent No. 1; it is to be deemed that
there is no firm in existence and in such situation, the property of the firm is vested in
respondent No. 1, in his individual capacity and there is no decree passed against Shri
Satyendra Pal Khurana, and as such no auction could have been made or ordered to be
made and therefore, the order of the trial Court in granting interim injunction is
perfectly in order.

9. From the above said facts and contentions, the following points are admittedly in
existence:-

       1. The firm consisting of the five partners had started the business on the
       property in question which was allotted by the RIICO for the purpose of
       industry of the said firm through five partners.
       2. The firm through the partners did obtain the loan from the Bank;
       3. The firm had placed the title deed with the Bank as collateral security of the
       property in question;
       4. The firm had been dealing with the Bank through its partners;
       5. There is a decree in existence against the firm and against its partners in
       individual capacity and guarantors except the Satyendra Pal Khurana, as
       partner.
       6. Three partners had retired after obtaining the loan and one partner had died.
       Shri Satyendra Pal Khurana, became the sole proprietor of the firm . The decree
       passed against the firm had become final; and
       7. Recovery Certificate had been issued. The property in question has already
       been sold for a sum of Rs. 26,85,000/- against the amount of loan rupees about
       43,00,000/- and the auction money had already been deposited about a year
       back but the confirmation of the sale has been stayed.

10. The only question arises, is whether in the circumstances as mentioned above, the
firm as such was liable or not. It goes without saying that the firm had mortgaged its
property by all the initial partners including the present plaintiff. For certain reasons,
the partners retire/or even firm is dissolved, the liability as created by the firm remains
intact. In the present case, the trial Court has not appreciated the law properly only
because of the reason that one of the partner who is now the sole proprietor of the firm
has alleged that he is only the person left in the partnership firm, therefore, he is not
liable to pay the amount in question from the property mortgaged by the firm, and
accepting this argument by the trial Court amounts to exercise of the jurisdiction
illegally. There was neither a prima facie case to grant the interim injunction nor
balance of convenience in favor of the plaintiff. In the present case, the decree passed
by the DRT under the special Act had already been passed against the firm and even
the auction of the property pledged by the firm as security had also been completed
and the amount stood deposited on the issuance of the recovery certificate issued by
DRT.

11. In the circumstances none of the principles for granting the interim injunction i.e.
the prima facie case, balance of convenience etc. could not be said to have been in
favor of the plaintiff. The order passed by the trial Court can not be sustained in the
eyes of law and is set aside by the Court.
In the result, the appeal is allowed. The order dated 4-5-2000 , passed by the trial
Court on the application for temporary injunction under Order 39, Rule 1 and 2, Civil
Procedure Code is quashed and set aside. The interim injunction granted by this Court
stands vacated.

Appeal allowed.