P D JAIN Vs. H S SEHGAL

JUDGEMENT

(1.) This judgement would dispose of R. S. A. 144/73 Cross-objections and Cr. M. (M) 175/73.

(2.) P.D. Jain and A.P. Jain, Appellants in R. S. A. 144/73 were carrying on business in partnership in the name and style of Bishamber Dass and Sons prior to March, 1958. In March, 1958, a joint stock company by the name of Bishamber Dass and Sons (P) Ltd.," was constituted by them with P.D. Jain as its Managing Director and the other appellant as its Chairman, and the said business was continued. It further appears that the assets of the firm were transferred to the company on its constitution. In May, 1965, the Board of Directors of the company decided to transfer the assets of the company to the said partnership firm. In 1969, the Board decided to wind up the company voluntarily. The decisions were ratified by the company in its general meeting in November, 1969. The winding up proceedings were commenced on January 5, 1970 and were completed on March 18, 1970. The winding up proceedings have since been confirmed by this Court by its order of January 29, 1971 by virtue of which the company was dissolved.

(3.) Sometime in July, 1966, the respondent, H.W. Sehgal acting as Karta of M/s. Sehgal Industries Works, filed a suit, out of which the Second Appeal has arisen, against the company as well as the aforesaid individuals for recovery of Rs. 1800/-, Rupees 1500/- on account of value of goods supplied and Rs. 300/- on account of damages, on the allegation that P.D. Jain aforesaid had placed an order on the respondent for providing and hoisting of N. Trusses, Frame Rafters and Purlings at the company's factory at Mathura Road, near Faridabad on behalf of the company. The claim far damages was based on the plea that the defendants failed to supply the material with which the remaining contracted goods had to be fabricated and the respondent was thus deprived of the profit which the respondent would have made if the default had not been committed. The company, defendant No. 1 in the suit, denied the allegations that any order was placed by it with the respondent. The appellants, who were defendants Nos. 2 and 3, also denied the allegation that any order had been placed by them with the respondent. By its judgement and decree of January 14, 1972, the trial Court returned the finding that the respondent was entitled to a decree for Rs. 1500/- with proportionate costs against the company on account of the goods supplied and the claim of the respondent to this extent was decreed. The suit as against the appellants was dismissed with costs on the ground that on the respondent's plea in the plaint there was no privity of contract between the respondent and the appellants in their personal capacity. The claim of the respondent against the defendants for damages to the extent of Rs. 300/- was also dismissed. The respondent did not file any appeal against the rejection of the claim of Rs. 1500/- against the appellants but challenged the judgement and decree of the trial Court in appeal with regard to the rejection of the claim of Rs 300/- on account of damages. The respondent succeeded in the appeal and by its judgement and decree of April 19, 1973, the First Appellate Court granted to the respondent a decree for Rs 300/- against the appellants in their personal capacity under Section 70 of the Contract Act on the finding that even though the contract had been entered into between the respondent and the company, the appellants had benefited by the work done by the respondent since the appellants were the owners of the factory and were liable to pay the damages to the extent of Rs 300/- to the respondent. The Court justified the claim in these words :