S. Fernandes (Entreprenure) 27 November 2009

Payment to creditor

A registered partnership firm is owing me a large sum of money money. The firm is out of state, hence dificult to moniter. We are now negotiating a programme for payment of this sum. I have now come to understand that the Partners are indebted to many people, with criminal cases (u/s138-NI) and other recovery suits against them, therefore these Partners are planning to sell their assets and run, most likely abroad. What can I do that will immediately stop them from liquidating their assets. I understand that the partnership act 1932, states that firms assets will be used to seettle firms liabilities. Now if they sell and run it will be very dificult to pin them down, even to find their where abouts will be very difficult. Please advise???

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4 Replies

M. N. Agrawal (N.A.) 28 November 2009

Dont worry if the firm liquidates by the order of court or otherwise, each partner will be jointly and severaly liable to the debts of the firm.

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S. Fernandes (Entreprenure) 28 November 2009

I realise that the liability continues notwithstanding liquidation. However if the assets are sold privately the partners will take the money and disappear. To then apprehend these persons and bring them to book will be very difficult. I am therefor wanting to know if there is anyway a creditor can stop a firm from liquidating its assets, prior to settleing its dues. What legal options are available to me to portect my dues???

Murtaza Chherawala (Proprietor) 28 November 2009

You must start a recovery proceeding for your dues. Even if the liquidation process is going on, it is not one going on through Court process. Hence, there is bound to be pilferage, especially in sale of properties.

You can also obtain an injunction order against the partners from selling the properties of the Partnership Firm. An advocate commissioner can also be appointed through court process to take charge of the assets of the Partnership Firm. You can also obtain an injunction against the partners from selling or alienating their personal properties, since they are personally liable for the debts of the Partnership.

All the above can however be done, only once you are in Court.

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Raj Kumar Makkad (Adv P & H High Court Chandigarh) 29 November 2009

A creditor can file a suit for recovery and file an application under 38 rule 5 of cpc restraining the defendants to dispose off the properties thereunder till the decision of the suit.

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