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Jhandu Mal and Sons Vs. Official Liquidators of the Dehra Dun Mussoori Electric Tramway Co. Ltd. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtAllahabad
Decided On
Reported inAIR1930All778
AppellantJhandu Mal and Sons
RespondentOfficial Liquidators of the Dehra Dun Mussoori Electric Tramway Co. Ltd.
Excerpt:
- - and sons' and was endorsed twice by them 'm......sons through lala bool chand. the appellant put in a petition on 3rd august 1928 to the learned company judge containing certain items of claim nos. 1 to 9 amounting in all to rs. 6,490-7-0. of these items the order of the company judge deals with items 1 to 4, which are claims by the appellant on two promissory notes of 7th november 1921 and 21st november 1924. these promissory notes are signed by mr. t.b. gilani, and below his signature there appear on one promissory note the words:managing agent, dehra, dun electric tramway company limited.2. on the other promissory note below the signature of mr. gilani the words written are:agent, dahra dun mussoorie electric tramway company limited.3. the learned company judge has held that the dehra dun mussoorie electric tramway company.....
Judgment:

Bennet, J.

1. This is a Letters Patent appeal from a judgment of the learned Company Judge, dismissing the claim of the appellant applicant Messrs. Jhandoo Mal and Sons through Lala Bool Chand. The appellant put in a petition on 3rd August 1928 to the learned Company Judge containing certain items of Claim Nos. 1 to 9 amounting in all to Rs. 6,490-7-0. Of these items the order of the Company Judge deals with items 1 to 4, which are claims by the appellant on two promissory notes of 7th November 1921 and 21st November 1924. These promissory notes are signed by Mr. T.B. Gilani, and below his signature there appear on one promissory note the words:

Managing Agent, Dehra, Dun Electric Tramway Company Limited.

2. On the other promissory note below the signature of Mr. Gilani the words written are:

Agent, Dahra Dun Mussoorie Electric Tramway Company Limited.

3. The learned Company Judge has held that the Dehra Dun Mussoorie Electric Tramway Company Limited, now in liquidation, are not rendered liable by these promissory notes. It is contended on behalf of the appellant that this decision is incorrect. Under Section 27, Negotiable Instruments Act:

Every parson capable of binding himself or of being bound, as mentioned in Section 26, may so bind himself or be bound by a duly authorized agent acting in his name.

4. Under Section 89, Companies Act:

a promissory note shall be deemed to hare been made on behalf of a company if made... in the name, or by, or on behalf or on account of, the Company by any person acting under its authority, express or implied.

5. The first thing therefore which the appellant has to show is that Mr. Gilani was the authorized agent of the Company for the purpose of making promissory notes within the language of Section 27,, Negotiable Instruments Act, or that he was acting under the authority of the Company, express or implied, as laid down in Section 89, Companies Act. The appellant has been unable to satisfy us on these points. He has referred to the Memorandum of Association of the Company Clause (t), which merely states that one of the objects of the Company is to make promissory notes. It is not stated that the managing agents are to make these promissory notes. In the Articles of Association, paras. 120 and 121 power is given to the managing agent to make contracts and sign receipts on behalf of the Company; but there is no power given to the managing agent to make promissory notes on behalf of the Company. It accordingly follows that Mr. Gilani is not shown to be the duly authorized agent of the company for the purpose of making promissory notes. Accordingly therefore, even if Mr. Gilani had acted in the proper form which would have bound the Company, the Company is not bound because Mr. Gilani was not the authorized agent of the Company for this purpose. The next point in this connexion is whether the form employed in the promissory note would bind the Company if Mr. Gilani had been duly authorized to bind it. Reference has been made to several cases and the appellant relied on Chapman v. Smethurst [1909] 1 K.B. 927. In that case the promissory note was signed by:

J.H. Smethurst's Laundry and Dye Works, Limited, J.H. Smathurst, Managing Director.

6. It was held that the Company was bound by this promissory note. But that promissory note is easily distinguished from the two promissory notes in the present case, because in Chapmam v. Smethurst [1909] 1 K.B. 927 the name appearing as the maker of the promissory note was the name of the company, and J.H. Smethurst, Managing Director, merely signed below the name of the Company to show which official signed the name of the Company. On the contrary in the present case the name of the maker of the promissory note is Gilani, and the words appended after his name are mere description of Gilani. In Sree Lal Mangtu Lal v. Lister Antiseptic Dressing Co. Ltd. : AIR1925Cal1062 a hundi was drawn in favour of a firm 'M. and Sons' and was endorsed twice by them 'M. and Sons' and 'M. and Sons', Managing Agents 'L.A. and Co.' It was held that the Company 'L.A. and Co.' were not bound by this promissory note, and that the words 'Managing Agent, L.A. and Co.' were merely description of M. and Sona. That case is practically the same as the present case, and following that ruling we hold that the form in which the two promissory notes were drawn up precludes the appellant from making the Company liable on these two promissory notes.

7. The next point in regard to which we have been addressed is about that portion of the order of the learned Company Judge which states:

Accordingly I direct that the costs in the Calcutta case incurred or that will properly be incurred by the Company in liquidation shall be borne by Messrs Jhandoo Mal and Sons according to the compromise.

8. This compromise between the parties in Calcutta dated 5th July 1928, stated in para. 9(f) as follows:

That the costs incurred by the parties in the Calcutta High Court will be decided as payable to and by the parties according to the order of this Hon'ble Court,'

9. It is admitted that 'this Hon'ble Court' refers to the Allahabad High Court in which this application was made. Objection is taken on behalf of the appellant that the Official Liquidator claims a large sum as his travelling expenses to Calcutta. It is denied on behalf of the Official Liquidator that any such claim has been made, and we consider that when the application for costs is actually made to the learned Company Judge it will be a matter for him to decide. The order of the Company Judge before us is, in our opinion, in accordance with the term 9(f) in the compromise between the parties.

10. The order of the learned Company Judge before us deals with items 1 to 4 only in the application of 3rd August 1928, and does not deal with items 5 to 9 in that application. On those items we express no opinion, and it will be for the learned Company Judge to decide those items if application is further made to him on the subject. Accordingly we dismiss this appeal with costs.


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