Holding

Under Sections 24 and 25 of the Indian Partnership Act, partners are jointly and severally liable for firm debts, and execution against a partner’s separate property is permissible under Order 21 Rules 49 and 50 of the CPC; the will was fraudulent, and the interest claimed was excessive, leading to a direction that the appellant pay Rs 1,00,000 in full satisfaction.

Summary

A decree for a construction work claim was passed against the State of Rajasthan and the partnership firm Sharma & Co. The State recovered the decree amount and sought execution against the firm’s securities, including a house owned by partner Smt. Dhanwanti Devi, who had earlier executed a will bequeathing the house to her grandson Ashutosh. The High Court held the will was a fraudulent device to defeat the decree and allowed execution against the partners, but the Supreme Court examined whether execution could be made against a partner’s separate property under Order 21 Rules 49 and 50 of the CPC and the liability of partners under Sections 24 and 25 of the Indian Partnership Act. The Court affirmed that partners are jointly and severally liable and execution against their separate property is permissible, but found the interest claimed at 18% per annum from 1992 excessive. Consequently, the appellant was ordered to pay Rs 1,00,000 as full satisfaction of the claim.

Issues considered

A decree against a partnership firm may be executed against a partner’s separate property?
Do Order 21 Rules 49 and 50 of the CPC apply when a partner executes a will to defeat execution?
Is the interest claimed at 18% per annum from 1992 excessive and liable to be reduced?
Is the will executed by the partner fraudulent and therefore voidable?

Legislation cited

Arbitration Act, 1940
Code of Civil Procedure, 1908s. Order 21 Rule 49, s. Order 21 Rule 50, s. Section 144, s. Section 145
Indian Partnership Act, 1932s. Section 24, s. Section 25
Transfer of Property Act, 1882s. Section 53

Subjects

partnership lawjoint and several liabilityexecution of decreefraudulent transferinterest calculationCPC Order 21willattachment of property

Judgment

ASHUTOSH A
v.
STATE OF RAJASTHAN AND ORS.

AUGUST 30, 2005
B
[RUMA PAL AND DR. AR. LAKSHMANAN, JJ.]

Code of Civil Procedure, 1908 :

Order 2 I Rules 49 & 50-Attachment ofpartnership property-Decree
against a partnership firm-Execution of-Liability ofpartners for acts done C
by the firn1-A decree for a certain amount was passed against the State in
respect of construction work of irrigation departn1ent under the Arbitration
Act, I 940--Firm filed execution and recovered the decretal amount-High
Court allowed the appeal filed by the State against the judgment and decree-
State moved application under S. 144 on 2.4. 1981-Against the said amount, D
apart fron1 two surety bonds, a house was also furnished as securities-
Partner of the firm, who was the exclusive owner of the said house, executed
a Will in I 983 bequeathing the house in favour of her grandson and she died
in I 985-A llachment order ofthe house was passed in I 992-The grandson 's
application filed under 0.2 I R. 58 for release of the house was dismissed
holding that the testator being a partner had no right to execute the Will in E
respect of the disputed house-In appeal, the High Court held that the Will
was prepared to defraud the creditor and not with an intention to bonafidely
bequeath the property to the grandson and also to defeat the execution of
decree obtained by the State-Deere/al amount was received by the State on
I 7. I 0. I 992-Partnership firm did not dispute /iability--The only dispute was F
the claim of interest from I 7. I 0. I 992-Held: Execution under 0. 2 I &. 49
may be granted against the partners, in which case the decree~holder may
proceed against the separate property of the partners-Claim of interest from
17. I 0.1992 is on the high side and excessive-Hence, debtor directed to pay
a sum ofRs. 1,00,000 in full satisfaction ofthe claim-Partnership Act, 1932,
Ss. 24 and 25. G

A decree for a certain amount was passed against the respondent-
State and in favour of a partnership firm in respect of construction work
of the irrigation department under the Arbitration Act, 1940. The said
company filed execution and recovered the decretal amount. The appeal H
1057
1058 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A preferred by the respondent-State against the aforesaid judgment and
decree was allowed ex parte by the High Court. An application under
Section 144 of the Code of Civil Procedure, 1908 was moved on behalf of
the respondent-State on 2.4.1981. As against the decretaLamount, two.
surety bonds and a house were furnished as securities.

B The partner of the firm, who was the exclusive owner of the said
house, executed a Will in 1983 bequeathing the house in favour of the
appellant and died in 1985. Attachment order in respect of the house
was passed in the Execution case in 1992. The appellant's application
under Order 21 Rule 58 CPC for release of the house was dismissed
C on the ground that the 'testator had no right to execute the Will in
respect of the disputed house. The decretal amount was received by
the respondent-State and the only dispute was with regard to interest
from 17.10.1992. The High Court dismissed the appellant's appeal on
the ground that the Will was prepared to defraud the creditor and not
D with an intention to bonafidely bequeath the property to the appellant
and to defeat the execution of the decree obtained by the respondent-
State. Hence the appeal.

Disposing of the appeal, the Court

E HELD: 1.1. It is not in dispute that the decree was passed against the
firm in which the testator was also a partner. Under the provisions of the
Partnership Act, 1932, one partner is the agent of the other. The partner
is always liable for the partnership debt unless there is implied or express
restriction. In the instant case, notice was duly served on the testator and
her husband.
F
1.2. Se<;tion 24 of the Act is based on the principle that as a partner
stands as an agent in relation to the firm, a notice to the agent is tantamount
to the principals and vice versa. As a general rule, notice to a principal
is notice to all his agents; and notice to an agent of matters connected with
G his agency is a notice to his principal.

1.3. Under Section 25 of the Act, the liability of the partners is joint
and several. It is open to a creditor of the firm to recover the debt from
any one or more of the partners. Each partner shall be liable as ifthe debt
H of the firm has been incurred on his personal liability.
ASHUTOSH v. STA TE !059

Dena Bank v. Bhikhabhai Prabhudas Parekh, [2000) 5 SCC 694 and A.
ITO v. Arunagiri Chettiar, [1996) 9 SCC 33, relied on.

2. In the instant case, the respondent-State has obtained a decree
against the partnership firm. The High Court has clearly held in its
judgment that the Will was a created document to delay the recovery B
pro~eedings. It is further seen that the liability is not disputed by the firm
or partners.

l
3. The execution under Order 21 Rule 50 of the Code of Civil
Procedure, 1908 can only be granted where a decree has been passed
against a firm. A decree against a firm must perforce be in the firm's c
name. Under this Rule, execution may be granted against the partnership
property. It may also be granted against the partners in which case the
decree-holder may proceed against the separate property of the partners.

Sahu Rajeshwar Rao v. ITO, AIR (1969) SC 667 and H.H. Maharani D
Mandalsa Devi v. M. Ramnaram Pvt. Ltd, AIR (1965) SC 1718, relied on.

4.1. It is not in dispute that the decretal amount was received by the
respondent-State dispute between the parties is only with reference to the
interest payable on the decretal amount from 17.10.1992, which according
to the respondent-State was payable by the Firm. E

4.2. It is true that justice must be done at all costs. At the same time,
one should not also forget that the justice should be tempered with mercy.
Asking a party to pay interest on the decretal amount@ 18% per annum
from 17.10.1992 is on the high side and excessive. This apart, asking both F
the parties to continue the execution proceedings at this distance of time
is also not proper. The respondent-State has to wait for some more time
to realize the fruits of the decree. Hence, the appellant is directed to pay
Rs. 1,00,000 in full satisfaction of the claim made by the respondent-State.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5345 of2005. G

· From the Judgment and Order dated 12.11.2003 of the Rajasthan High
Court in S.B. Civil Execution First Appeal No. 2 of 1998.

Manoj Prasad, Adv. for the Appellant. H
1060 SUPREME COURT REPORTS [2005) SUPP. 2 S.C.R.

A Aruneshwar Gupta, Addi. Advocate General, Naveen Kumar Singh for
the Respondents.

The Judgment of the Court was delivered by

B DR. AR. LAKSHMANAN, J.: Leave granted.

The unsuccessful appellant in S.B. Civil Execution First Appeal No.2
of 1998 before the High Court of Rajasthan is the appellant before us by
special leave. The appeal is preferred against the judgment and final order
dated 12.11.2003 passed by the High Court of Rajasthan in S.B. Civil
C Execution First Appeal No. 2 of 1998 whereby the appeal preferred by the
appellant was dismissed.

Briefly stated, the facts are that a decree for Rs.37,255.07 was passed
against the State of Rajasthan on 6.6.1970 in respect of the construction
D work of irrigation department under Arbitration Act in case No.4 of 1969
entitled Sharma & Co. v. State of Rajasthan. The said company filed
execution and recovered Rs.37,592.57. As against the said amount, two
securities were furnished, one by Shri Gurbachan Singh for Rs.2927.57 and
another by Smt. Kamla for Rs.37,592.57. Along with the aforesaid surety
bonds, House No. 79B Block Sri Ganganagar was also furnished against
E security. The appea! preferred by the State of Rajasthan against the aforesaid
judgment and decree was allowed ex parte by the High Court. An
application under Section 144 C.P.C. was moved on behalf of the State
which was registered as Civil Misc. Case No.2 of 1981. The State of
Rajasthan impleaded Sharma & Co., Smt. Kamla Devi and Shri Gurbachan
F Singh as respondents to the said proceedings. Smt. Dhanwanti Devi, the
wife of Shri Shiv Lal Sharma was the exclusive owner of House bearing
No. 80B Block Sri Ganganagar. She executed a Will dated 7.12.1983
bequeathing the aforesaid house in favour of her daughter's son Ashutosh.
Smt. Dhanwanti Devi died in May, 1985. It is stated that the probate
proceedings are pending in respect of the aforesaid Will. The District Judge,
G Sri Ganganagar allowed the application filed by the State ef Rajasthan under
Section 144 C.P.C. and held that the action can be taken against Smt. Kamla
Devi and that the applicant-State was entitled to interest from Sharma
& Co. and that the aforesaid application was maintainable under Sections ,
144 & 145 C.P.C. The Court while allowing the said application held as
H follows:
ASHUTOSH v. STATE [LAKSHMANAN, J.] 1061

"On the basis of the above discussions, we reach to the A
conclusion that this application is maintainable under Sections 144,
145 C.P.C. against the non-applicant Nos. 1 and 2 and the applicant
is fully entitled to get the action taken. Recovery against non-
applicant No.2 be made up to the extent of Rs.35,592.57 as per the
security while the action for the recovery for the interest amount of B
Rs.37,592.57 @ Rs.1.l/2 per hundred per month that would be
worked out from the date of filing the application dated 2 l.4. l 9S l
will be taken against non-applicant No. I."

The attachment order in respect of House No.SOB Block Sri Ganganagar
was passed by the District Judge in Execution Case No. 2 of 19S9 on c
21.11.1992 on the application of the State. It was reiterated that the aforesaid
house exclusively belonged to Smt. Dhanwanti Devi and she had bequeathed
the same in favour of the appellant Ashutosh on 7.12.19S3 and that Smt.
Dhanwanti Devi was not a party to the suit at any point of time. It was
prayed that House No. SOB Block Sri Ganganagar be released in his favour
as the same can not be attached in execution. It was further alleged that D
the appellant-Ashutosh had become the exclusive owner of the house
pursuant to the Will executed by Smt. Dhanwanti Devi in his favour and
no other person had any title or interest in the same house. The State of
Rajasthan filed reply to the application under Order 21 Rule 5S C.P.C. It
was asserted that Smt. Dhanwanti Devi was the partner of the aforesaid E
firm to the extent of 12Y, paise and she was liable for payment of suit
liability. It was also stated that Smt. Dhanwanti Devi had executed the Will
in order to escape from her liability to the suit claim. The Additional District
and Sessions Judge dismissed the application under Order 21 Rule 5S C.P.C.
filed by the appellant herein. It was also held that Smt. Dhanwanti Devi
had no right to execute the Will in respect of the disputed house. The Review F
Application filed by the appellant was also dismissed. Being aggrieved, the
appellant filed S.B. Civil Execution First appeal No. 2 of 199S under Order
21 Rule 5S read with Section 96 C.P.C. The High Court of Rajasthan
dismissed the first appeal filed by the appellant. The High Court he Id that
the Will was prepared to defraud the creditor and not with an intention G
to bonafidely bequeath the property to the appellant, daughter's son.
Aggrieved by the said judgment and order dated 12.11.2003, the appellant
preferred the above appeal.
We heard Mr. Manoj Prasad, learned counsel appearing for the
appellant and Mr. Aruneshwar Gupta, learned Additional Advocate General, H
1062 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A appearing for the State of Rajasthan.

Learned counsel appearing for the appellant raised two questions for
consideration. (a) A decree cannot be executed against-a partner when the
decree was against the partnership firm; (b) A decree cannot be executed
B in violation of Order 21 Rules 49 and 50 C.P.C.

Learned counsel appearing for the appellant submitted that Smt.
Dhanwanti Devi had purchased House No.SOB Block Sri Ganganagar from
the State of Rajasthan on 7. 7.194 7 and that except Smt. Dhanwanti Devi
no other person including her husband had any right, title or interest in
C the said property. It was further submitted that the proceedings in the instant
case were initiated in utter disregard of the provisions of Order 21 Rules
49 and 50 C.P.C. and, therefore, the procedure adopted as against the
property of Smt. Dhanwanti Devi was manifestly illegal and is liable to
be set aside. It was further submitted that Section 53 of the Transfer of
D Property Act, 1882 does not apply to the facts of this case and that the
Will was executed bonafidely by Smt Dhanwanti Devi on 7.12.1983 in
favour of the appellant and that there was no question to defeat the claim
of the respondent.

Per contra, Mr. Aruneshwar Gupta, learned Additional Advocate
E General, appearing for the State of Rajasthan, submitted that a partner of
a partnership firm is always liable for partnership debt unless there is implied
or express restriction and that where the transfer is made to defeat the
execution of a decree then in those cases, provisions of Order 21 Rul~s
49 and 50 C.P.C. will not be applicable. While replying to the arguments
F advanced by the learned counsel appearing for the appellant in regard to
the fraudulent transfer, Mr. Aruneshwar Gupta submitted that every transfer
of immovable pro!"erty made with intent to defeat or delay the creditors
of the transferor shall be voidable at the option of any creditors so defeated
or delayed. He further submitted that the original amount due and payable
by the firm was Rs.37593 which was received on 17.10.1992, however,
G interest of Rs.61,890 on the principal amount had become due and payable
as on 17.10.1992 and that the appellant is also liable to pay the subsequent
interest on Rs.37593 from 17.10.1992.

We have carefully considered the rival submissions and perused the
H entire pleadings, the judgments of the Courts below and all the annexures
ASHUTOSH v. STATE [LAKSHMANAN, J.] 1063

and documents filed along with the appeal. A

Both the contentions raised by the learned counsel appearing for the
appellant have absolutely no merit. It is not in dispute that the decree was
passed against the firm in which Smt. Dhanwanti Devi was also a partner.
Under the provisions of the Partnership Act, one portner is the agent of
B
the other. The partner is always liable for partnership debt unless there is
implied or express restriction. In the instant case, notice was duly served
on Smt. Dhanwanti Devi and her husband at House No. 80B, Block Sri
Ganganagar. Sections 24 & 25 of the Indian Partnership Act, 1932 can
be usefully referred to in the present context which are reproduced
hereunder: c
"Section 24- Effect of notice to the acting partner- Notice
to the partner who habitually acts in the business of the firm of
any matter relating to the affairs of the firm operates as notice
to the firm, except in the case of a fraud on the firm committed D
by or with the consent of that partner."

"Section 25 Liability of a partner for acts of the firm- Every
partner is liable, jointly with all the other partners and also severally
for all acts of the firm done while he is a partner."
E
Section 24 deals with the effect of notice to a partner. Such notice
may be binding if the following conditions are satisfied:

{a) the notice must be given to a partner;
F
(b) the notice must be a notice of any matter relating to the affairs
of the firm;

{c) fraud should not have been committed with the consent of such
partner on the firm.
G
Section 24 is based on, the principle that as a partner stands as an
agent in relation to the firm, a notice to the agent is tantamount to the
principles and vica versa. As a general rule, notice to a principal is notice
to all his agents; and notice to an agent of matters connected with his agency
is notice to his principal. H
1064 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A Under Section 25, the liability of the partners is joint and several.
It is open to a creditor of the finn to recover the debt from any one or
more of the partners. Each partner shall be liable as if the debt of the finn
has been incurred on his personal liability.

B The judgment in the case of Dena Bank v. Bhikhabhai Prabhudas
Parekh & Co. & Ors., [2000] 5 SCC 694 can be beneficially referred to
in the present context. Two questions arose for consideration by this Court
in this case. Firstly, whether the recovery of sales tax dues amounting to
Crown debt shall have precedence over the right of the Bank to proceed
against the property of the borrowers mortgaged in favour of the Bank.
C Secondly, whether property belonging to the partners can be proceeded
against for recovery of dues on account of Sales tax assessed against the
partnership finn under the provisions of the Kamataka Sales Tax Act, 1957.
We are concerned only with regard to the second question. In paragraph
18, R.C. Lahoti, J. observed as under:
D
"The High Court has relied on Section 25 of the Partnership
Act, 1932 for the purpose of holding the partners as individuals
liable to meet the tax· liability of the finn. Section 25 provides
that every partner is liable, jointly with all the other partners and
also severally for all acts of the finn done while he is a partner.
E A finn is not a legal entity. It is only a collective or compendious
name for all the partners. In other words, a finn does not have
any existence away from its partners. A decree in favour of or
against a finn in the name of the finn has the same effect as a
decree in favour of or against the partners. While the finn is
F incurring a liability it can be assumed that all the partners were
incurring that liability and so the partners remain liable jointly and
severally for all the acts of the finn."

In the case of Income Tax Officer (III), Circle-I, Salem v. Arunagiri
G Chettiar, [1996] 9 sec 33, this Court considered the question as to whether
an erstwhile partner is liable to pay the tax arrears due from the partnership
finn pertaining to the period when he was a partner. The Madras High
Court has held that he is not. Disputing the correctness of the said judgment,
the Revenue came in appeal before this Court. This Court while allowing
the appeal and setting aside the judgment of the High Court observed as
H follows:
ASHUTOSH v. STATE [LAKSHMANAN, J.] 1065

"Section 25 of the Partnership Act does not make a distinction A
between a continuing partner and an erstwhile partner. Its principle
is clear and specific, viz., that every partner is liable for all the
acts of the firm done while he is a partner jointly along with other
partners and also severally. Therefore, it cannot be held that the
said liability ceases merely because a partner has ceased to be B
partner subsequent to the said period."

We have already referred to the arguments advanced by the learned
counsel for the appellant on Order 21 Rules 49 and 50 C.P.C. The High
Court has clearly held that the Will was executed by Smt. Dhanwanti Devi
to defeat the execution of a decree obtained by the State.
c
Order 2 l Rule 49 reads thus:

"Order 21 Fl,ule 49 : Attachment of partnership property-
D
(I) Save as otherwise provided by this rule, property belonging
to a partnership shall not be attached or sold in execution
of a decree other than a decree passed against the firm or
against the partners in the firm as such.
E
(2) The Court may, on the application of the holder of a decree
against a partner, make an order charging the interest of such
partner in the partnership property and profits with payments
of the amount due under the decree and may, by the same
or a subsequent order, appoint a receiver of the share of such
partner in the profits (whether already declared or accruing)
F
and of any other money which may be coming to him in
respect of the partnership, and direct accounts and inquiries
and make an order for the sale of such interest or other orders
as might have been directed or made if a charge had been .
made in favour of the decree-holder by such partner, or as G
the circumstances of the case may require.

(3) The other partner or partners shall be at liberty at any time
to redeem the interest charged or, in the case of a sale being
directed, to purchase the same. H
1066 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.
; ... ,.
A (4) Every application for an order under sub-rule (2) shall be
served on the judgment-debtor and on his partners or such
of them as are within India.

(5) Every application made by any partner of the judgment-debtor
under sub-rule (3) shall be served on the decree-holder and
B on the judgment-debtor, and on such of the other partners
as do not join the application and as are within India.

(6) Service under sub-rule (4) or sub-rule (5) shall be deemed
to be service on all the partners, and all orders made on such
c applications shall be similarly served."

The above Rule provides that no execution can issue against any
partnership property except on a decree passed against the firm or against
the partners in the firm as such. In the instant case, as already noticed,
D the State has obtained a decree against the partnership firm. The High Court
has clearly held in its judgment that the Will was a created document to
delay the. recovery proceedings. It is further seen that the liability is not
disputed by the firm or partners and that the terms of the order dat~d 12.
2.1980 were required to be satisfied by the partners. Order 21 Rule 50
C.P.C. reads as follows:
E
Order 21 Rule 50-Execution of decree against firm-

( 1) Where a decree has been passed against a firm, execution
may be granted

F (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;
G
(c) against any person who has been individually served as
a partner with a summons and has failed to appear;

Provided that nothing in this sub-rule shall be deemed to limit
H or otherwise affected the provisions of Section 30 of the
ASHUTOSH v. STATE [LAKSHMANAN, J.) 1067

... Indian Partnership, Act 1932 (9 of 1932) . A

(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 sub-rule (I), clauses (b) and (c)
as being a partner in the firm, he may apply to the Court
B
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.
c
(3) Where the liability of any person has been tried and
determined under sub-rule (2), the order made thereon shall
have the same force and be subject to the same conditions
as to appeal or otherwise as if it were a decree.
D
(4) Save as against any property of the partnership, a decree
against a firm shall not release, render liable or otherwise
affect any partner therein unless he has been served with a
summons to appear and answer.

(5) Nothing in this rule shall apply to a decree passed against E
a Hindu undivided family by virtue of the- provisions of rule
I 0 of Order XXX."

The execution under this Rule can only be granted where a decree
has been passed against _a ·firm. A decree against the firm must perforce F
be in the firm's name. Under this Rule, execution may be granted against
the partnership property. It may also be granted against the partners, in
which case the decree-holder may proceed against the separate property
of the partners.

In the case of Sahu Rajeshwar Rao v. I.T.O., AIR (1969) SC 667, G
this Court ruled that the liability of the partner of the firm is joint and
several and it is open to a creditor of the firm to recover the debt of the
firm from any one or more of the partners. In a decree against partnership
firm, each partner is personally liable except the minor whose liability is
limited to his assets in the partnership. H
1068 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A In the case of Her Highness Maharani Mandalsa Devi & Ors. v. M
Ramnaram Private Ltd & Ors., AIR 1965 SC 1718, while considering the
scope of Order 21 Rule 50 this Court observed as follows:

"A suit by or in the name of a firm is really a suit by or in the
B name of all its partners. The decree passed in the suit, though in
form against the firm, is in effect a decree against all the partners.
Beyond doubt, in a normal case where all the partners of a firm
are capable of being sued and of being adjudged judgment-debtors,
a suit may be filed and a decree may be obtained against a firm
under Order 30 of the Code of Civil Procedure, and such a decree
c may be executed against the property of the partnership and against
all the partners by following the procedure of Order 21 Rule 50
of the Code of Civil Procedure."

We shall now advert to the submissions made by the learned Additional
D Advocate General appearing for the respondent-State. The starting point for
the litigation is the decree dated 6.6.1970 passed against the State of
Rajasthan in respect of the construction work of irrigation department. An
appeal was preferred by the State of Rajasthan on 12.2.1980, an application
under Section 144 C.P.C. was moved on behalf of the State on 2.4.1981
and Smt. Dhanwanti Devi executed a Will on 7.12.1983 and died in the
E month of May, 1985. In May, 1987, the District Judge, Sri Ganganagar
allowed the application filed by the State of Rajasthan under Section 144
C.P.C. The attachment of the property was made of the house in question
on 21.11.1992. Several other proceedings were taken thereafter by both the
parties opposing attachment and the execution etc. Ultimately, the District
F Judge dismissed the application filed under Order 21 Rules 49 and 50 C.P.C.
and the Review Application was also dismissed on 5.9.1998. Thereupon
the appellant filed S.B. Civil Execution First Appeal No.2 of 1998 and the
said appeal was dismissed on 12.11.2003. Now the parties are in this Court.

It is not in dispute that the decree amount of Rs.3 7,593 was received
G by the State on 17.10.1992. The dispute between the parties is only with
reference to the interest on the principal amount of Rs.37,593 as on
17.10.1992, which according to the State, was payable by the Firm. A sum
of Rs. 61,890 was arrived at as interest on Rs.37,593 as on 17.10.1992.
Mr. Aruneshwar Gupta submitted that the State has been dragged into Court
·H unnecessarily by filing a vexatious litigation by the appellant and, therefore,
ASHUTOSH v. STATE [LAKSHMANAN, J.] 1069
.·,
•. the State must be sufficiently compensated by directing the appellant to A
pay the interest@ 18% p.a. on Rs.37,593 from 17.10.1992 till date. Though
the argument of Mr. Aruneshwar Gupta appears to be attractive on the first
blush, yet on a reconsideration and re-appreciation of the same, the said
submission has no merits. Both the parties are in the legal battlefield for
all these years. The appellant has also succeeded before the trial Court.
B
The trial Court has held that the Will is genuine and, therefore, necessarily
the appellant has to defend all further proceedings initiated by the State
in various Courts. Mr. Aruneshwar Gupta submitted that the interest amount
of Rs.61890 as on 17.10.1992 plus the s~bsequent interest shall be ordered
to be paid to the State without showing any sympathy to a vexatious litigant.
c
It is true that justice must be done at all costs .. At the same time,
we should not also forget that the justice should be tempered with mercy.
Asking a party to pay interest on Rs.37,593 at 18% p.a. from 17.10.1992,
in our considered opinion, is on the high side and excessive. This apart,
asking both the parties to continue the execution proceedings at this distance D
of time is also not proper. The State has to wait for some more time to
realise the fruits of the decree.

We have also calculated the interest payable on Rs.37,593 from
17.10.1992 @ 18% p.a. Calculating interest at the said rate, the interest
amount comes to Rs.6,766 p.a. (approx). Multiplying Rs.6,766 X 13 years E
comes to Rs. 87,958. Adding Rs.61,890 which was arrived at as interest
as on 17.10.1992, The total interest payable on Rs.37,593 from 17.10.1992
as on today @ 18% p.a. comes to Rs.1,49,848 (Rs.87,958 + Rs.61,890)
By this order, we are directing the appellant to pay a sum of Rs. l ,00,000
in full satisfaction of the claim made by State of Rajasthan. The difference F
will be only Rs.49,848. For recovery of the same, vie need not direct the
parties to proceed further in the execution at this distance of time. Though
the interest is claimed at 18% p.a. by the State, we cannot also shut our
eyes at the prevailing bar.k rate for fixed deposits and for lending which
is not more than 6· 7%.
G
Without going into the merits of the rival claims any further, we feel
that the interest of justice would be amply met if we direct the appellant
,
herein to pay a sum of Rs. I lakh in full satisfaction of the claim made
by the State of Rajasthan. Rs. I lakh shall be paid within a period of two
months from today, failing compliance, the appellant is liable to pay interest H
1070 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A @ 1S% p.a. on Rs.37,593 from 17.10.1992 till the date of payment. Till
the sum of Rs.one lakh is paid, there will be a charge over the property
bearing House SOB Block Sri Ganganagar. The appellant shall not alienate
or encumber in any manner the property bearing House No. SOB Block
Sri Ganganagar till the_ sum of Rs. One lakh is paid and discharged,
B
The appeal stands disposed of. There shall be no order as to costs.

v.s.s. Appeal disposed on.