1. A suit filed by the present petitioner against the two defendants was held to be not maintainable by the Court of Civil Judge, S.D at Broach. Defendant No. 1 is a firm and defendant No. 2 was at one time a partner of the firm. Defendant No. 2 was adjudged insolvent on 18-5-1956. On this ground an objection was taken in the written statement that the suit was not maintainable. In the written statement, an objection was also taken that the firm was itself dissolved upon the adjudication as insolvent of one of the partners and that therefore a suit against the firm did not lie. The learned Judge framed one preliminary issue, namely, whether the suit is not maintainable, and he held in the affirmative on that issue. He thereupon dismissed the suit. Hence this revision.
2. The framing of preliminary issues is referred to in Order 14, Rule 1 and Rule 2 of the CPC. Rule 1 of Order 14 of the CPC classifies issues into two kinds; (1) issues of fact, and (2) issues of law. It also mentions that at the first hearing of the suit the Court shall, after reading the plaint and the written statements, if any, and after such examination of the parties as may appear necessary, ascertain upon what material propositions of fact or of law the parties are at variance, and shall thereupon proceed to frame and record the issues on which the right decision of the case appears to depend. In other words, if the parties are at variance on a material proposition of law then an issue of law arises. If the parties are at variance with regard to a material proposition of fact, then an issue of fact arises. Then Rule 2 of Order 14 of the CPC provides as follows:
“Where issues both of law and of fact arise in the same suit, and the Court is of opinion that the case or any part thereof may be disposed of on the issues of law only, it shall try those issues first, and for that purpose may, if it thinks fit, postpone the settlement of the issues of fact until after the issues of law have been determined.”
3. It is only where the case or any part thereof may be disposed of on the issues of law that a preliminary issue can be framed and determined first. So far as defendant No. 2 goes, the fact that he was adjudged insolvent on 18-5-1956 was admitted. The plaintiff's allegations are to be found in the plaint before leading any evidence. In these circumstances, the question of law arose whether in view of the provisions of Section 17 of the Presidency-Towns Insolvency Act the suit as framed was maintainable as against defendant No. 2. In this case, the only section to be considered was Section 17 of the Presidency-Towns Insolvency Act, and the Court was right in framing the preliminary issue regarding the maintainability of the suit as against defendant No. 2.
4. But as against defendant No. 1 the contention involved a proposition of law as well as a proposition of fact. The contention of the defendant was that the partnership was dissolved automatically on the insolvency of one of the partners. But Section 42 of the Indian Partnership Act provides that subject to contract between the partners a firm is dissolved by adjudication of a partner as an insolvent. The expression ‘subject to contract’ clearly means subject to a contract to the contrary between the parties. This is clear because the same expression has been used in Sections 13, 14, 15, 16 and 17 of the Indian Partnership Act. It is true that the words ‘to the contrary’ are used in Section 19(2) of the Partnership Act, but they are used with reference to the usage or custom of trade. Whether in the present case the partnership was dissolved upon the insolvency of one of the partners is a question of fact and not one of law. It depended on the existence or non-existence of a contract to the contrary. It was not, therefore, a pure question of law and a preliminary issue should not have been framed with regard to the maintainability of the suit as regards defendant No. 1. The parties did not lead any evidence because they thought that there was a preliminary issue on a pure question of law. The lower Court, therefore, erred in treating as a preliminary issue the question whether the suit was maintainable as against defendant No. 1.
5. As regards defendant No. 2, it is contended in revision that the view taken by the lower Court on a question of law is incorrect, because the debt in Question is not a debt provable in insolvency as provided in Section 46 of the Presidency-Towns Insolvency Act, which, so far as relevant, reads as follows:
“(1) Demands in the nature of unliquidated damages arising otherwise than by reason of a contract or breach trust shall not be provable in insolvency.
(2) A person having notice of the presentation of any insolvency petition by or against the debtor shall not prove for any debt or liability contracted by the debtor subsequently to the date of his so having notice.
(3) Save as provided by sub-sections (1) and (2), all debts and liabilities, present or future, certain or contingent, to which the debtor is subject when he is adjudged an insolvent or to which he may become subject before his discharge by reason of any obligation incurred before the date of such adjudication, shall be deemed to be debts provable in insolvency.”
6. It is admitted that defendant No. 2 has been adjudicated insolvent on 18-5-1956. The plaint is in relation to debts said to have been incurred on 21-7-1956 and 23-9-1956, because it is the case of the plaintiff that after the date of the insolvency of defendant No. 2, the partner, namely, defendant No. 1 purchased some goods on these two dates. It is, therefore, contended that, as these two dates are after the date of the insolvency of defendant No. 2, the debts are not provable in insolvency. But sub-section (3) of section 45 of the Presidency-Towns Insolvency Act also embraces the debts and liabilities to which the insolvent may become subject before his discharge by reason of any obligation incurred before the date of such adjudication.
7. Now, according to the plaintiff, the goods were purchased on the two dates in question by the partnership but the defendant No. 2 is liable because he was the partner of the firm. The obligation arising out of the membership of the partnership was incurred before the date of such adjudication, although the goods were purchased after the date of adjudication. As according to the plaint, defendant No. 2 was a partner of the firm even before the date of his adjudication as insolvent, the obligation referred to was incurred by defendant No. 2 before the date of his adjudication as an insolvent, and, therefore, sub-section (3) of Section 46 of the Presidency-Towns Insolvency Act comes into play, the obligation having been incurred before the, date of such adjudication. Such debts are provable in Insolvency. To such a case the provisions of Section 17 of the Presidency-Towns Insolvency Act apply, and no suit can be filed without the consent of the Court. The lower Court was, therefore, right in holding that the suit was not maintainable as against defendant No. 2.
8. But for the reasons already given, the lower Court was not justified in framing a preliminary issue under Order 14, Rule 2 of the CPC, with regard to a mixed question of law and fact relating to the liability of defendant No. 1. The lower Court is, therefore, directed to proceed with the suit against defendant No. 1 and to decide both issues of law and fact at the same time. No order as to costs.
FG/O/D.V.C
9. Revision partly allowed.