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TMI Blog1945 (10) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... s done business under the name of P.L. Jaitly and Co. The business was started by one Murlidhar, who died in the year 1934. He had three sons, Parshotam Lal, Narotam Lal and Kesri Narain. Though Murlidhar was the formal head of the family, the business from 1929-1930 was managed by the eldest son, P.L. Jaitly. Of the eight defendants mentioned, the first is P.L. Jaitly and Co. and the second and third are P.L. Jaitly's brothers. The next three are sons of P.L. Jaitly and the following two are sons of Kesri Narain. As P.L. Jaitly was an insolvent, he was not sued personally and in his place, we find as the ninth defendant the Official Assignee of Calcutta. Before proceeding further, we may mention that P.L. Jaitly and Co. were managing agents of the Lower Ganges Jumna Electric Distributing Co. Ltd. which is in liquidation. We shall refer to it hereafter as the L.G.J.E.D. Co In circumstances to be described later, P.L. Jaitly took a loan of Rs. 35,000 from Joshi Parshotamji on July 22, 1934, and it not disputed that the money was paid into Court on behalf of the L.G.J.E.D. Co. In the original plaint it was stated that, a claim against the L.G.J.E.D. Co. would be made before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08-15-8 paid by P.L. Jaitly and Co. It is further explained that no personal claim is made against P.L. Jaitly (apart from the shares which it is prayed may be sold) as he has been declared an insolvent and a claim as regards his personal liability will be laid in the insolvency proceedings. Written statements filed by the members of the family allege that the money was borrowed by P.L. Jaitly as agent of the L.G.J.E.D. Co. on behalf of and for the purposes of that company and that the plaintiff was aware of this fact. It is contended, therefore, that that company alone is liable. In a written statement filed by the L.G.J.E.D. Co., this is denied. It is said that the money was advanced to P.L. Jaitly in his personal capacity and that he alone is liable for payment. Reference is made to a letter dated July 22, 1934, written by P.L. Jaitly to Joshi Parshotamji and it is alleged that it was written collusively long afterwards in order to shift the liability to the L. G. J. E. D. Co. The materiality of this will be explained shortly. Finally it is said that the money never came into the hands of the company and the company never benefited by it. We may now explain the circumsta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requirement in connection with the Lower Ganges Jumna Electric Distributing Co. Ltd." It will be observed that there is no reference in Ex. 15 to the object of the loan and that there is nothing in Ex, 16 but the reference to its object. In both letters P.L. Jaitly states that he has borrowed the money and executed the pro-note. It is not easy to understand why it should have been thought necessary on July 22, 1934, to send Joshi Parshotamji this second letter. There were numerous issues, the most important of which is the second, which reads: "2. Whether the money was borrowed by Mr. P.L. Jaitly in his personal capacity or on behalf of Messrs. P.L. Jaitly and Co. as Managing Agents of the L.G.J.E.D. Co. Ltd., only, and if the latter is the case, is defendant only liable for the payment of the debt?" The Additional Civil Judge held that the creditor had no separate cause of action against the sons of P.L. Jaitly. His property had vested in the Official Assignee and extended to the interest of the sons in the joint family property. The plaintiff must look to the Official Assignee so far as this property is concerned. There could be no doubt, the Additional Civil Judge fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the company. P.L. Jaitly had referred in this letter to "my pro-note" and stated both in it and in the other letter, Ex. 15, that he had executed it. The learned Judge repelled the contention that the company should be held liable because it benefited by the deposit of the money in Court. Learned Counsel for the appellant hardly disputed that so far as the suit is based on the promissory note, the L.G.J.E.D. Co. could not be held liable, having regard to the provisions of section 89 of the Indian Companies Act. Indeed we see from the judgment of the Court below that this was frankly conceded there. But he argued from the fact that the company benefited and that the letter Ex. 16 showed that Joshi Purshotam knew for what purpose the money was being borrowed that the company should be held liable. Undoubtedly the suit was not a simple suit on a promissory note; there was the additional security of the shares in the Gorakhpur Co. which had been pledged with the creditor. But this in no way affects the liability of the L.G.J.E.D. Co. It affects only P.L. Jaitly himself. It may, therefore, be thought doubtful whether the suit can be said to be based directly on the consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration and not on the promissory note, but otherwise it does not, we think, assist the appellant. The question was whether restitution should be ordered under section 65 of the Indian Contract Act where the mortgage on which the suit was based was found to be invalid. The Chief Court of Oudh refused to make such an order on the ground that no such claim had ever been pleaded and left the plaintiffs to seek their remedy by separate suit. Their Lordships expressed the opinion that this attitude towards the question of pleading was unduly rigid: "A defendant who when sued for money lent pleads that the contract was void can hardly regard with surprise a demand that he restore what he received thereunder." This dictum too can have no bearing on the present case unless it is first found that the money was lent by Joshi Parshotamji to the company. Certainly on that finding restoration should be made, but then there would be no question of the loan being invalid so as to make it necessary to apply section 65. The appellant's learned Counsel strongly relied on Secretary of State for India v. G. T. Satin [1930] I.L.R. 11 Lah. 375 . In that case the plaintiff, a contractor, suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt below that P.L. Jaiitly executed the promissory note as manager of the joint family, but there is no justification for extending the principle to a company, for which there is a special provision in section 89. The Allahabad ruling was followed by another Bench the following year in Raghunath Singh v. Sri Narain [1923] I.L.R. 45 All. 434 . A stricter view was taken by a single Judge of the Calcutta High Court in Ramgopal Ghose v. Dhirendra Nath Sen [1927] I.L.R. 54 Cal 380 where it was held that a suit based solely on a promissory note can be brought only against the person signing it, but in a suit aptly framed, it was added, the plaintiff might claim in the alternative the amount of the original debt for which the promissory note was given as security, proceeding against the property of the joint family as a whole. The view taken by the Privy Council in Abdul Majid Khan v. Saraswatibai [1934] A.L.J. 79 " was that where a promissory note is signed by the manager of a joint Hindu family in his own name, the money may have been borrowed by him for his own individual purposes or for the purpose of the joint family business. If the latter is pleaded, it must be pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and third parties, it being said that so far as third parties are concerned, a company can be made liable on a bill or note only where it expresses on the face of it that it was made, accepted of endorsed by or no behalf of or on account of the company or where that fact appears by necessary inference from what the face of the instrument itself shows. This was with reference to section 47 of the Act of 1866. It is doubtful whether such a distinction would now be held sound. The decision in that case that the company was not liable was upheld on appeal to a Bench, vide The New Fleming Spinning and Weaving Company Ltd., In re [1880] I.L.R. 4 Bom. 275. The suit had been brought by a third party in whose favour the note had been endorsed. The Bench did not refer to the distinction suggested by the learned single Judge. They based their decision on the general principle which the Privy Council have since emphasized. In Dutton v. Marsh [1881] L.R. 6 Q.B. 361 four directors of a joint stock company signed a promissory note and the company's seal was affixed at one corner of the note. It was held that they were personally liable, for there was nothing in the note itself to exclud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s an intention to bind the company, and that, even if Joshi Purshotamji was informed at the time of execution that the loan was being taken for the company, the company would be liable. The circumstances suggest just the reverse. We are also disposed to regard with the greatest suspicion the letter .Ex. 16, for writing which on July 22, 1934, there appears to have been no necessity at all. We are not prepared to accept the evidence of Hari Krishna Bhatt about this. We have little doubt that the letter was written later, probably with the object suggested by the company. For these reasons, we are satisfied that the suit against the company was rightly dismissed. It was further contended on behalf of the appellants that a decree should have been passed against P.L. Jaitly's three sons, though, apparently by inadvertence, only two are referred to in this connection in the memorandum of appeal, these being Trilok Nath and Loknath (Amar Nath being excluded). The Additional Civil Judge observed that the Official Assignee was competent to seize the entire share of P.L, Jaitty and his sons in the joint family property. He assumed that he had done so and held that the creditor could not b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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