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Issues involved:
1. Discharge of surety's liability after receiving payment in a scheme of reconstruction. 2. Liability of joint family estate for debts incurred for ancestral business. 3. Legal necessity for passing a guarantee document in joint family business. Analysis: Issue 1: Discharge of surety's liability after receiving payment in a scheme of reconstruction The case involved a dispute where the plaintiff, a director of a mill company, sought payment from the managing agency firm for a debt guaranteed by them. The managing agent argued that the plaintiff, having received payment in a scheme of reconstruction, was discharged from the debt. The court cited legal precedents to establish that the liability of a surety is not discharged when the principal debtor is relieved of the debt through a scheme. The court referred to cases such as Ex parte Jacobs and In re London Chartered Bank of Australia to support the principle that the surety's liability remains intact even if the principal debtor's debt is discharged. The court held that the managing agent's defense failed, and the appeal was allowed against him. Issue 2: Liability of joint family estate for debts incurred for ancestral business The plaintiff also sought payment from the joint family estate of the managing agents, claiming that the debt was incurred for the ancestral business. The court found that there was no legal necessity for the managing agents to guarantee the debt on behalf of the mill company. The court emphasized that the passing of the guarantee document was not a case of legal necessity and did not justify making the joint family estate liable. The court highlighted that stronger evidence is required to establish legal necessity for making the joint family estate liable for debts incurred. The court dismissed the claim against defendants from the joint family estate based on lack of legal necessity. Issue 3: Legal necessity for passing a guarantee document in joint family business The court addressed the argument that passing a guarantee document was an ordinary incident of the joint family business. However, the court found that this argument was not raised as an issue during the trial, and there was insufficient evidence to establish that passing such documents was a common practice in the joint family business. The court emphasized that the passing of a guarantee document should be supported by specific evidence of it being an ordinary incident of the trade or business of the joint family. As such evidence was lacking, the court rejected the contention against the defendants from the joint family estate. In conclusion, the court upheld the plaintiff's claim against the managing agent but dismissed the claim against the joint family estate defendants due to the lack of legal necessity for guaranteeing the debt on behalf of the mill company. The judgment clarified the principles regarding the discharge of a surety's liability and the requirement of legal necessity in joint family business transactions.
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