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TMI Blog1939 (11) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... defendants, was the managing agent, and we are told that the managing agency agreement was made out between him and the mills. The agency agreement is not put in as exhibit, and the only materials before the Court which give some indication of some of the terms consist of stray statements in the evidence of defendant No. 1. He stated that there was a kararnama by which the agency should be perpetuated from generation to generation. At another place he stated that it was the managing agent's sole business to borrow sums and pay them for the company without consulting the directors. Bhagirath died and defendant No. 1 was substituted in his place as the managing agent. The mill company came into financial difficulties. On January 17, 1931, de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a joint family firm, claiming that they were bound to pay the deficit. In the plaint he has offered to return the preference shares which came to him under the scheme. He has stated that he has not dealt with them and that he holds them intact. He has not yet received the share certificates from the company. Defendant No. 1 who signed the letter of January 27, 1931, had raised numerous defences which have been dealt with in detail by the learned trial Judge. The defence failed on all points except one. Defendant No. 1 contended that as the plaintiff had received half the amount in cash and the shares of the mill company, he was discharged from his debt and that no obligation of the surety survived. This contention found favour with the tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f does not discharge the surety. The statement of law is found in all recognized books on company law and also in Halsbury's Laws of England, Edn. 2, Vol. 5. In Ex parte Jacobs; In re Jacobs [1875] (10 Ch. A. 211) where the acceptor of a bill of exchange presented a petition for liquidation or composition under the Bankruptcy Act, 1869, and the creditors passed a resolution for liquidation or composition, the acceptor was held as discharged by operation of law, but the drawer was not thereby discharged from his liability. It was also held that it made no difference whether the bill-holder was present at the meeting or not, or whether he voted in favour of the resolution or against it. The drawer in the particular case stood in the position ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t not to sue, and it is by operation of law that the scheme becomes effective to relieve the company and contributories from further liability than that contemplated or imposed by the scheme. The scheme of arrangement...is...an alternative mode of liquidation which the law allows the statutory majority of creditors to substitute for the pending winding up...It seems to me, then, that the discharge being clearly by operation of law consequent upon pending statutory liquidation, the principles laid down by Hellish, L.J., in Ex parte Jacobs : In re Jacobs [1875] (10 Ch. A. 211) apply, and that there fore there is no need, and it would not be right, to introduce a reservation of rights against sureties into the scheme of arrangement". The fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not appear to have been argued before the trial Court, but having regard to these decisions defendant No. 1 has no answer. It was argued on behalf of respondent No. 1 that if the debt is considered alternative, satisfaction having been received from one party, the debt did not survive. But the basis of this contention is unsound. The liability of a surety is co-extensive, but is not in the alternative. Both the principal debtor and the surety are liable at the same time to the creditors. The discussion on this line is therefore not profitable. As the sole defence of defendant No. 1 fails, the appeal must be allowed as against him. As I have pointed out, on all other facts the trial Court had found against defendant No. 1 and we see no reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t apart from legal necessity in the present case the passing of a document of this nature was an ordinary incident of the joint family business. Relying on Raghunathji Tarachand v. The Bank of Bombay (34 Bom. 72) it was therefore urged that the joint family estate was liable. In my opinion, it is not open to the appellant to urge this contention at all. His statements in the plaint were not understood by him to mean that, no issue was raised to suggest this contention, and throughout the judgment of the trial Court this point has not been dealt with. The question whether the passing of a letter of guarantee is an ordinary incident of the trade or business of the joint family is a question of fact on which evidence is necessary. Mr. Thakor r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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