9911796707
TMI Blog1945 (10) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... g Company, Cawnpore; that they intended to float a limited liability company to be known as the Unao Electric Supply Co. Ltd., for which they had procured a permit from the Unao Municipal Board. It was further represented that they would obtain the managing agency of the Unao Electric Supply Co. Ltd., (which was yet to come into existence) and offered to take him as a partner in the managing agency provided he deposited a sum of Rs. 2,500, with the Municipal Board, Unao, as security for the grant of a licence for the company which they intended to float. It was agreed that the partnership agreement between them and the plaintiff would be drawn up later. According to the plaintiff he was given an assurance that the money deposited by him wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant of a licence. In these circumstances the plaintiff approached the defendants at Cawnpore and asked them to take him as a partner in the enterprise. The defendants agreed to do so on condition that he deposited Rs. 2,500 as security money with the Municipal Board, Unao, on behalf of the Civil Engineering Company, Cawnpore. This, according to the defendants' case, was to be treated as partnership money. But as the Government refused to grant the licence the security money deposited was returned by the Municipal Board and was withdrawn by all three partners. It was not disputed that the money was actually received by defendants 1 and 2. It was argued on these facts, among other pleas, that no suit for recovery of the amount claimed was mai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he relation of parties inter se was that of promoters of a company and inasmuch as the sum of Rs. 2,500, which was deposited with the Municipal Board, Unao. was his money, he was entitled to a return thereof. This plea was accepted by the learned District Judge who allowed the appeal and decreed the claim with costs in both Courts and interest pendente lite and in future till realisation at the rate of six per cent. per annum. Dissatisfied with this decision the defendants have preferred this second appeal. The only question argued before us was whether the plaintiff and the defendants were partners as held by the trial Court or if they were only promoters of a company which never came into existence. The facts on which the question falls t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aintiff was exerting himself to promote the new company in the capacity of a would be partner in the managing agency which was to be created after the company had come into existence. It was, according to the view taken by the District Judge, impossible to hold that the plaintiff became a partner in the Unao Electric Supply Company by writing the letter Ex. A-1. The defendants, he opined, had agreed to take the plaintiff a partner in the managing agency of the Unao Electric Supply Company and not in any other business. Having heard the learned counsel for the parties we are of opinion that the learned Judge in the Court below has taken a correct view of the matter and this appeal cannot succeed. Before dealing with the law applicable to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment between a number of persons; (2) the agreement must be to share the profits of the business; and (3) the business must be carried on by all or any of the persons concerned acting for all. All these elements must be present before a number of persons can be called partners. As remarked by Desai in his Law of Partnership, page 15, the agreement must be to carry on business by way of present partnership. An agreement to carry on business from a future date will not result in partnership until that date arrives, unless the parties choose to commence business before that date. What is essential to constitute partnership is the actual existence of a business carried on by partners. Therefore, so long as the business, whereof the profits the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the light of these observations it is clear that the business in which the present parties were to be partners never came into existence. According to section 2 (9A) of the Companies Act (VII of 1913), "managing agent" means a person, firm or company entitled to the management of the whole affairs of a company by virtue of an agreement with the company, and under the control and direction of the directors except to the extent, if any, otherwise provided for in the agreement and includes any person, firm or company occupying such position by whatever name called. Thus there can be no business of managing agency so long as the company, whereof the managing agency is in contemplation, does not come into existence. It is conceivable that person ..... X X X X Extracts X X X X X X X X Extracts X X X X
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