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In Re: Jajodia Cotton Mills Ltd. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtKolkata
Decided On
Reported inAIR1927Cal612
AppellantIn Re: Jajodia Cotton Mills Ltd.
Cases ReferredLindus v. Melrose
Excerpt:
- .....on the 11th 1 june 1926 the jajodia cotton mills, ltd. j made an application for an order that the japan trading co., ltd. may be res trained from proceeding with the petition for winding up presented by them, from taking any further steps in respect thereof, and from issuing any further advertisements, and the said petition be struck out and taken off the file and proceedings thereunder stayed.2. the petition for compulsory winding up and the petition of the jajodia cotton mills, ltd., have come on for hearing before me together. i have had the advantage of hearing elaborate arguments on both sides. everything that learned counsel who have appeared in this case have by their industry been able to lay their hands on has been brought to my notice and i now proceed to consider the-points.....
Judgment:

C.C. Ghose, J.

1. On the 2nd June 1926 an application was presented before me on behalf of the Japan Trading Co., Ltd., for an order that the Jajodia Cotton Mills, Ltd. be wound up under the provisions of the Indian Companies Act. The usual directions for advertisement of the substance of the petition were given and the petition was made returnable on 2nd July 1926 for hearing. On the 11th 1 June 1926 the Jajodia Cotton Mills, Ltd. J made an application for an order that the Japan Trading Co., Ltd. may be res trained from proceeding with the petition for winding up presented by them, from taking any further steps in respect thereof, and from issuing any further advertisements, and the said petition be struck out and taken off the file and proceedings thereunder stayed.

2. The petition for compulsory winding up and the petition of the Jajodia Cotton Mills, Ltd., have come on for hearing before me together. I have had the advantage of hearing elaborate arguments on both sides. Everything that learned Counsel who have appeared in this case have by their industry been able to lay their hands on has been brought to my notice and I now proceed to consider the-points raised.

3. The Jajodia Cotton Mills, Ltd. have-taken four points before me. They are conveniently summarized in paras. 12 and 20 of the petition of the Jajodia Cotton Mills, Ltd. The case of the Japan Trading Co. is that they are the holders in due course of a promissory note executed on the 24th July 1925 for a sum of Rs. 6,00,000 and that the said promissory note was presented to the Jajodia Cotton Mills, Ltd. for payment, but it was dishonored and returned unpaid. Thereafter it is alleged that the Japan Trading Co. caused a letter to be written to and delivered to the Jajodia Cotton Mills, Ltd. on the 31st March 1926, drawing attention to the fact of the dishonor of the promissory note and giving statutory notice under Section 163 of the Indian Companies Act to enable them to make an application to this Court for winding up.

4. The promissory note runs as follows:

'Calcutta 24th July 1926.' ('1926 ' is struck out and '1925' written in place of it, and the name 'Sukhdeodas Ramprosad', who are the Managing Agents of the Jajodia Cotton Mills, Ltd., appears below). Then the body of the note runs as follows:

On the 31st March 1926 we promise to pay to Messrs. Sukhdeodas Ramprosad or order the sum of rupees six lakhs (Rs. 6,00,000) value received.

D.H. Wilmer.

5. Then there is a Nagri signature purporting to be that of Radhakissen Santalia, and against the signature of D.H. Wilmer and Radhakissen their description is added, i.e., Directors, Jajodia Cotton Mills, Ltd. Below the signatures of the two Directors is the signature of the Managing Agents, Sukhdeodas Ram prosad, who are described as such in the promissory note. On the left hand side there is the seal of the Company. 'Jajodia Cotton Mills, Ltd., Incorporated 1919.'

6. On the back of the promissory nota the following endorsement occurs:

Pay to the Japan Trading Co. Ltd., or order.

Sukhdeodas Ramprosad

By Ranglal Jajodia, a partner.

7. The first point taken on behalf of the Jajodia Cotton Mills, Ltd. is that the promissory note in question is not a note made by the Company and that as such is not binding on the Company. In support of this contention attention has been drawn by learned Counsel for the Jajodia Cotton Mills to two casas, viz., Dutton v. Marsh [1871] 6 Q.B. 361 and Srilal Mangtulal v. Lister Antiseptic & Dressing Co. Ltd. : AIR1925Cal1062 . On the other hand, Mr. A.K. Roy, appearing for the Japan Trading Co., Ltd. has contended that the promissory note in question was in fact and in truth a note made by the Company, and that as such it was and is binding on the Company. In support of his contention Mr. Roy has drawn attention to several cases, soma of which I shall notice presently.

8. It is settled law that in making bills of exchange Directors of a limited Company must be careful not to use forms which pledge their personal credit. Thus for instance where the promissory note ran as follows:

'We, the Directors of the A B Company, do promise to pay, etc.' and where the promissory note was signed by the Directors it was held that such a promissory note made the Directors personally liable although the seal of the Company was on the promissory note, see Dutton v. Marsh [1871] 6 Q.B. 361. Where the promissory note ran as follows:

I promise to pay, etc.,

(Sd.) - J.H. Smethurst Laundry, Ltd.

J.H. Smethurst,

Managing Director,

it was held not to make the Director personally liable : see Chapman v. Smethurst [1909] 1 K.B. 927.

9. Again where the promissory note ran as follows:

I promise to pay etc.,

but it was signed

For the M. Railway Company

J.S. Secretary,

it was held that the Company was bound : see Alexander v. Sizor [1869] 4 Ex. 102.

10. Again where the promissory note ran as follows:

We jointly promise to pay (sic) 600 for value received in stock on account of the Company,

and it was signed by three Directors, it was held that the promissory note was one by which the Company was bound see Lindus v. Melrose [1858] 3 H. &. N. 177.

11. The above cases may be taken as typical of the line of cases relating to this matter and scrutinizing the promissory note in question as closely as possible and giving to the arguments which have been advanced by Mr. Roy my very best consideration and not overlooking the points sought to be made in the joint affidavit of D.H. Wilmer and Radhakissen Santalia, a copy of which has bean annexed to an affidavit made by one of Mr. Roy's clients, I have come to the conclusion that the promissory note in question is one which did not and does not bind the Company. Therefore so far as the first point is concerned, that must be decided in favour of the Jajodia Cotton Mills, Ltd.

12. The second point taken by Mr. Bannarjee relates to the question of the proper stamp having been put on the promissory note in question. Whatever defect the promissory not had, has been cured by the certificate of the stamp officer, and I am of opinion that the objection has now no substance.

13. The third objection taken by Mr. Bannerjee is that there has been material alteration in the document after execution thereof and that as such the instrument has bean avoided. I have considered what is in the promissory note and I am satisfied that it was a clerical error which had been corrected and that there has been no material alteration of the 'kind suggested by Mr. Bannerjee in the course of his argument. Therefore the third objection has no substance and must be decided against Mr. Bannerjee.

14. The fourth objection is this : The Jajodia Cotton Mills, Ltd. urge that on the 28th May 1926 an arrangement was arrived at with the Japan Trading Company and the partners of Sukhdeodas Ramprosad, whereby the latter made over two cheques to the Japan Trading Co. for Rs. 20,000 each, one bearing date 29th May 1926 and the other 31st May 1926, and it was agreed that the Japan Trading Co. would not take any proceedings against the Jajodia Cotton Mills, Ltd. and free and release the said Company in respect of all claims, if any, on the said promissory note. It is further stated on behalf of Mr. Bannerjee's clients that as against the cheque which bore date the 29th May 1926 a sum of Rs. 20,000 was paid in cash to the Japan Trading Co., and that on a receipt being asked for, no receipt was granted and that in consequence of the refusal on the part of the Japan Trading Co. to grant a receipt for the said sum of Rs. 20,000, payment of the second cheque was stopped. This contenton is referred to at great length in the affidavit of Yukie Ohsaka, and it appears to me that the matter cannot be disposed of merely on affidavits but must necessitate investigation on oral evidence. There is also another point taken on behalf of the Jajodia Cotton Mill?, Ltd., being the point elaborated in para. 18 of the petition of that Company. That also is dependent on an enquiry into the facts and such enquiry, in my opinion, cannot be satisfactorily held merely on affidavits.

15. I have therefore to consider what should be done in this case, and I have come to the conclusion t that the Japan Trading Co. have not made out a sufficient case for an order under Section 162 of the Indian Companies Act. The result therefore is that the petition for winding up must be dismissed with costs, the Japan Trading Co. being left to take such steps as they may be advised to enforce such rights as they may have by reason of their being endorsees and holders of the promissory note in question.

16. What I have stated just now disposer of the application for a compulsory winding up. It follows therefore that it is unnecessary to make any order are the petition of the Jajodia Cotton Mills-except that they will be entitled to the costs of that application.


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