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Motiram Vs. Kunwar Muhammad Abdul Jalil Khan - Court Judgment

LegalCrystal Citation
CourtAllahabad
Decided On
Judge
Reported inAIR1924All414; 78Ind.Cas.441
AppellantMotiram
RespondentKunwar Muhammad Abdul Jalil Khan
Excerpt:
companies act (71 of 1882), section 4 - 'person', meaning of. - u.p. zamindari abolition & lands reforms act, 1951 [act no. 1/1951]. section 3(4) & u.p. land revenue act, (3 of 1901). sections 14-a (3) & 14; [s.rafat alam, r.k.agarwal & ashok bhushan, jj] expression collector- held, it includes additional collector. powers and functions of collector can be exercised by additional collector under section 198(4) of 1950 act, provided he has been so directed by collector of the district. [1996 aihc 3628 overruled]. - if, in our opinion, the appellant is wrong in that contention, then the appeal must fail. the obligations of the appellant and the representatives of har prasad as agents are contained in an agreement which is one of partnership and also one of agency--it is dated the 20th of..........respect of whatever interest he happened to hold in the company through her as trustee. again, as regards moti ram it is to be noted that the contracting person in the first instance was the same moti earn who had a personal interest in the company and the appellant and har prasad were bound to account to him and to him alone both for the shares in which he had his own beneficial interest and the shares which he held as a trustee for his grandsons. a similiar consideration applies to the case of no. 8 bithal das who, as guardian of his minor son kishen gopal, also figures with another man as a proprietor having a direct beneficial interest in the partnership. but the accountability of the company to bithal das was an accountability to him alone both as regards his beneficial interest.....
Judgment:

1. This is an appeal from a preliminary decree in which the defendants were held liable to account to the plaintiff for the profits in a Cotton Ginning Factory which had accrued on the shares originally held by one Kunwar Muhammad Abdul Ghafur Khan, a deceased ancestor of the plaintiff. The original defendants were Moti Ram and Lala Har Prasad. The latter died during the tendency of the suit and his heirs have been duly brought on the record. They have not appealed from the preliminary decree. Moti Ram, the present appellant, was sued in the character of an agent who had received moneys as and for the use of the plaintiff. He was alleged to be withholding a sum which, with interest, amounted to over Rs, 35,000. He admitted that there was a considerable sum of undistributed profit. The principal point upon which he relied as enabling him to retain this money was that the Company was an illegal association inasmuch as it consisted of more than 20 persons and, therefore, violated the conditions of Section 4 of the Indian Companies Act of 1882 which prohibits the formation of an unregistered Company in excess of that number. If, in our opinion, the appellant is wrong in that contention, then the appeal must fail. The Companies Act of 1882 nowhere defines 'person'. We are, therefore, thrown back upon the General Clauses Act (No. X of 1897). Person' is there defined to include any Company or Association or body of individuals whether incorporated or not. It is, therefore, obvious that 'person' can be used to include a collection of people and an appropriate illustration which will at once occur to Indian lawyers is that association of individuals known as a joint Hindu family. Analogous thereto are the varying number of beneficiaries who are, from time to time, interested beneficially in property vested in a trustee or trustees. The obligations of the appellant and the representatives of Har Prasad as agents are contained in an agreement which is one of partnership and also one of agency--it is dated the 20th of August 1910 and, omitting for a moment the consideration of the legality or otherwise of the inception of the contract, the liability to account was in that agreement clearly provided for, nor is there any dispute as to the actual failure to deliver accounts throughout the period as to which default is alleged.

2. The appellant takes his stand as we have said on the illegality of the above-mentioned agreement. He contends that on an investigation and enumeration of the persons beneficially interested in the partnership their number amounts to more than 20. The number of the various members of the partnership enumerated as they themselvesthought correct, amount Mixaowy to 20. Mr. Peary Lal Banerji, however, contends that, inasmuch as Moti Bam is scheduled as holding shares on behalf of his two grandsons, his name should be cut out and the beneficiaries, his two grandsons, substituted in it. It may be noticed Moti Earn is himself beneficially interested in another block of share No. 12 is given as

Musammat Mohani.........for self and guardian of Moti Lal, is minor, adopted son of Ganeshi Lal.

3. The appellant's contention as regards this lady is that she must be counted as one person in respect of her own personal interest in that block of shares and a second person by reason of her holding of an interest in the Company as the guardian of Moti Lal. If both these points were conceded, namely, the cutting out of Moti Ram's name at No. 4 and the substitution of his two grandsons and if the name of Moti Lal, the adopted son of Ganeshi Lal, had also to be added at No. 12 in addition to the name of Musammat Mohani then the number of persons would undoubtedly be over the prescribed limit of 20. We, however, do not agree with the view put forward by the appellant and it is to be noticed that at p. 25 where the agreement is set out Moti Ram is in fact counted as two persons; that is to say, he is counted in respect of the block of shares of which he should receive the profit to his own use and benefit and also of the shares which he holds as trustee for his two grandsons, even on that assumption the number of persons do not exceed 20. We do not agree with the view that the name of Moti Ram must give place to that of his two grandsons, nor do we agree that it is necessary to indicate as regards Musammat Mohani and Moti Lal that both of their names should be reckoned in the constitution of this Company. In fact, there were, as the appellant would wish us to delete or to accept, two Moti Earns. There was throughout the whole transaction one Moti Earn to whom the Company was accountable. In the same way the Company was accountable only to tlje one lady Musapvmat Mohani independently of the circumstance that she in her turn would be accountable to Moti Lal, the adopted son of Ganeshi Lal, in respect of whatever interest he happened to hold in the Company through her as trustee. Again, as regards Moti Ram it is to be noted that the contracting person in the first instance was the same Moti Earn who had a personal interest in the Company and the appellant and Har Prasad were bound to account to him and to him alone both for the shares in which he had his own beneficial interest and the shares which he held as a trustee for his grandsons. A similiar consideration applies to the case of No. 8 Bithal Das who, as guardian of his minor son Kishen Gopal, also figures with another man as a proprietor having a direct beneficial interest in the partnership. But the accountability of the Company to Bithal Das was an accountability to him alone both as regards his beneficial interest and as regards the shares which he held in a representative capacity for other persons. The number, however, would exceed 20 if certain persons, presumably members of a joint Hindu family and so found by the Judge, were in fact separate and thus capable of being regarded as separate contracting parties. The learned Subordinate Judge considered all the arguments put forward and came to the conclusion that the persons alleged to be joint were in truth joint and could be represented by one member of the joint family and that as regards the others, specially Moti Earn and Musammat Mohani and Bithal Das, that in truth they J had been accurately described in the agreement. When these principles are applied to I the document in question it becomes clear that the partnership certainly did not exceed 20 and probably did not exceed 18 persons. Agreeing with the learned Subordinate Judge, we hold that the partnership was not invalid in its inception and that the appellant and the representatives of Har Prasad are accountable to the plaintiff for his share in the profits for the period claimed. We also agree with the lower Court that the plaintiff having procured a succession certificate for the shares in the Factory can maintain the action for profits. We, therefore, dismiss the appeal with costs and fees on the higher scale.


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