C A LOW Vs. HVLOW AND CO LTD

JUDGEMENT

(1.) The plaintiffs in this case are the executors of Mr. Henry Vales Low who died in the year 1926 and Mr. John Herbert Pattinson, described as residing at Srinagar in the State of Kashmir. Low and Pattinson carried on business for many years as H, V. Low and Co. and in the course of their business they became the lessees under a mining lease dated 28th November 1918 of a tract of coal land in the District of Birbhum. The lessor was one Mr. John Arthur Millar and the term of the lease was 999 years. The consideration for the lease was a salami of Rs. 25,000 and a covenant by the lessees to pay a minimum rent or royalty of Rs. 3000 a year payable quarterly. On 4 April 1919 Low and Pattinson agreed in writing to grant a sub-lease of the coal land to a company called the Aurrang Coal Co. Ltd. The term of the sublease was the unexpired residue of the term of the lease of 28 November 1918. The salami agreed upon was a sum of Rs. 2,50,000 of which Rs. 50,000 were payable in cash and Rs. 1,50,000 in shares in the sub-lessee company. The company also agreed to pay minimum royalty at the rate of Rs. 5000 per annum.

(2.) About the same time, Low and Pattinson agreed to transfer their business, or at any rate the greater part of it, to the defendant company. This agreement is contained in a document dated 16 April 1919. There is a recital that "the firm", i.e. Low and Pattinson, had for some time past been carrying on in Calcutta, Rangoon and elsewhere the business of Managing Agents, Agents and Managers of public and private limited companies and of privately owned business concerns and the business of dealers in and shippers of coal and coke and general merchants and commission agents and that in connexion with such business they held the managing agencies or other similar offices of the companies and concerns specified in Schedule 1. The managing agencies in the schedule include that of the Aurrang Coal Co. Ltd. Among the assets agreed to be transferred are certain leaseholds specified in Schedule 2, which do not include the leasehold interest created by the lease of 28 November 1918 and also "all the other property to which the firm is entitled in connexion with the said businesses save only as hereinafter expressly excepted." With regard to consideration, the agreement provides that the defendant company shall allot 14,765 of its fully paid-up shares of the denomination of Rs. 100 to Low and 11,485 of such shares to Pattinson. Clause 3 provides that as the residue of the said consideration the company shall pay, satisfy, discharge and fulfil all the debts and liabilities of the firm in connexion with the said businesses, subject to certain exceptions which are not material for this case.

(3.) The final document to be considered is one dated 5 March 1923. The parties to it are Low and Pattinson (called the vendors), the Aurrang Coal Company Ltd., (called the Company) and the defendant company in this suit (called the lessors). The document recites the lease granted by Millar and the agreement of 4 April 1919, and that the company has been granted possession by the vendors. The recitals proceeded: And whereas the said coal mines and premises comprised in the said lease (i.e. Millar's lease) were held by the vendors in connexion with their said firm and whereas the company has now called upon the vendors for a formal demise of the said coal mines and premises and whereas at the request of the vendors the lessors have agreed to join in these premises in manner hereinafter appearing.