BADRI PRASAD Vs. NAGARMAL

JUDGEMENT

(1.) This is an appeal on a certificate granted by the erstwhile Judicial Commissioner of Vindhya Pradesh, which is now part of the State of Madhya Pradesh. On behalf of respondent no. 1, Nagar Mal, who was defendant no.1 in the suit, a preliminary objection has been taken to the effect that the suit was not maintainable by reason of the provisions of S. 4 of the Rewa State Companies Act, 1935 and the appeal filed by the plaintiffs must, therefore, be dismissed. As this preliminary objection was not taken in any of the two courts below, learned counsel for the appellants wanted time to consider the point. Accordingly, on October 28, 1958 we adjourned the hearing of the appeal for about a month. The appeal was then heard on November 27, 1958.

(2.) As we are of the opinion that the Preliminary objection must succeed, it is necessary to state the facts only in so far as they have a bearing on it. When cloth control came into force in Rewa State, the cloth dealers of Budhar a town in that State, formed themselves into an Association to collect the quota of cloth to be allotted to them and sell it on profit wholesale and retail. The Association at Budhar consisted of 25 members who made contributions to the initial capital of the association which was one lac of rupees. No formal Article of Association were written; nor was it registered. The Association functioned through a President and a pioneer worker; they kept accounts and distributed the profits. Respondent no. 1 Nagar Mal, was the President of the said Association from January 1946 to June 26, 1946. Before that, Seth Badri Prasad, one of the plaintiffs-appellants before us, was the President. Nagar Mal ceased to be President after June 26, 1946, and Seth Badri Prasad again became President. The Association worked till February 1948; then cloth was decontrolled and the work of the Association came to an end. On June 25, 1949 thirteen members of the Association out of the twenty-five brought a suit, and in the plaint their alleged that respondent no. 1, who was President of the Association, from January 1946 to June 1946, had given an account of income and expenditure for the months of January, February and March, 1946, but had given no accounts for the months of April, May and June, 1946. They, therefore, prayed

(3.) Respondent No. 1, Nagar Mal, raised various points by way of defence, his main defence being that none of the members of the Association were entitled to any share in the profits on the sales of 284 bales of Gwalior cloth.