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TMI Blog1925 (5) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... ey of ₹ 500 at the rate of Re. 1 per share. This was on the 20th February, 1921. Later on the Company gave information to Ram Chunder of the fact that 500 shares had in fact been allotted to him and called upon him to pay ₹ 2 more per share which was payable on allotment. Ram Chunder declined to pay anything till the question of agency was settled. Later on the Company made the first call of ₹ 2 per share and this too Ram Chunder declined to pay on the grounds already mentioned. 3. Ram Chunder's contention, therefore, is that his purchase of shares was conditional on his being appointed the sole agent for sale of sugar in Cawnpore and that the Company having failed to appoint him the sole agent, he is not bound to carry out his promise. 4. The liquidators have not filed ally written statement, but their case has been put something like this by their learned counsel, Mr. Indu Bhusaan Banerji, who has argued their case extremely well. The Company saay: We told Ram 'Chunder take shares we will give you agency.' We could not give Ram Chunder any agency at the time because no terms had been settled and no sugar was actually being manufactured at ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 's family. Needless to say that I entirely disbelieve Lachmi Narain as to now he obtained Ex. F, and I accept Mr. Indu Bhusan Banerji'a suggestion that the letter was obtained from Bose after the present question of contribution by Ram Chunder had started. 7. Discarding then Ex. F, there is enough in the correspondence and statement of Ram Chunder to show that Ram Chunder wanted to have the sole agency at Cawnpore and he agreed to purchase the shares only because he was told that he could not be appointed an agent without purchase by him of 500 shares. Oral testimony of what happened in February 1921 when given in May 1925 is bound to be hazy and somewhat indefinite and we have to remember this in examining the evidence of Ram Chunder and Lachmi Narain. Ram Chunder says that two gentlemen dressed in European costume went to him with Lachmi Narain for sale of shares. Then says Ram Chunder: I told the Sihabs that I wanted agency and I wanted to sell sugar. The Sahabs said that they would give me the agency. The Sahabs told me that I would get my agency if I purchased 500 shares. 8. Further on he says: If the Sahabs had not offered me the agency, I would not have a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on what that quantity would be. Then they said that Lallu Mal Ram Chunder would be required to make a certain deposit per maund for sugar delivered to them, but here again they did not mention what the amount of deposit would be. It is clear that the Company were avoiding coming to any definite terms as to the question of agency. 14. It is clear to my mind that Mr. Simeon, the agent of the Sugar Company, agreed that as a condition precedent to Lallu Mal Ram Chunder becoming subscribers to 500 shares they would be appointed the sole agents at Cawnpore for sale of sugar. This agreement on the part of Simeon was impliedly, ratified by Behari Co., by not disputing the correctness of the statement contained in Lallu Mal Earn Chunder's letter, dated the 6th of March, 1921 (Ex. A). 15. Now the question is what is the position in law of the parties? Mr. Indu Bhusan Banerji argued that the appointment of lallu Mal Ram Chunder as agents of the Company was not a condition 'precedent' to the former's purchase of shares and he relied upon three cases - two English and one Indian. These are Moti Lal Chunni Lal v. Thakorlal Chiman Lal (1912) 36 Bom. 557, In Re Richmond Hil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave been perfectly competent for Elkington, on receiving the letter of allotment, to have returned it to the Company and to have said : 'There is a complete misunderstanding in sending us this letter of allotment; referring to the correspondence that has passed between your promoter and ourselves, you will find that although we went through the form of applying for shares, the whole of that was subject to the understanding that either you should give us a resolution of the Company that we were to be under no liability upon those shares, or that we should have right of refusing to take shares upon which we were to be liable.' They did nothing of the kind. They received the letter of allotment; they kept it. 18. It is clear that the case was decided on a question of fact. So every case must be decided, mainly on the question of fact. 19. It is rather curious that none of the learned Counsel for the parties ever thought of referring to the Indian Law on the question. English Law is certainly useful in clearing up obscure points, but it is after all the Indian Law that matters most. It is conceded by the parties that there is nothing in the Companies' Act itself which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the circumstances were such that Lallu Mal Ram Chunder knew that they could not at all be appointed agents. I do not agree with this contention. There was nothing in law to prevent the Company from appointing Lallu Mal Ram Chunder their sole agents in Cawnpore by settling the terms although sugar was not being manufactured at the time. The agreement would have been that if, and when, sugar was produced in the Factory, Lallu Mal Ram Chunder would be the only firm which would sell sugar manufactured by the Company at Cawnpore. The terms were not settled, but there is no reason why they could not be settled at once and if they could not be settled it was clear that the agreement on the part of Ram Chunder to take the shares would fall through at once. 22. I hold, therefore, that in terms of the English Law it was a condition 'precedent' to Lallu Mal Ram Chunder becoming a member of the Company that they should be appointed the sole agents of the Company for sale of sugar at Gawnpore. In the language of the Indian Contract Act the agreement on the part of Lallu Mal Ram Chunder to become a member of the Company was contingent, i.e., dependent for its validity and enforce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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