CHHEDI LAL Vs. PUNNU LAL

JUDGEMENT

(1.) This appeal and the connected second appeal No. 1590 of 1926 arise out of the same suit. The suit was brought for accounts and recovery of some money as the share of the plaintiffs. There is a large number of defendants. Some of them, including Ram Narain, who support the plaintiffs appeal, contended that the plaintiffs were entitled to succeed in the suit and these defendants also were entitled to a share of the profits after accounts had been taken. The suit was mainly contested by defendant 1 Punnu Lal.

(2.) The facts which were alleged in the plaint are briefly these: In the year 1912, an association of more than 20 persons was formed with the object that a business should be started and with the gain of that business education should be imparted to the children of the members of the caste to which the members of the association belonged. The money was also to be spent on other charitable purposes. If, after the charitable purposes had been met, there remained any surplus, it was to be distributed among the members of the association. The father of the defendant 1, Girdhari Lal, was the manager of the business, and on his death defendant 1 took up the management Later on the charitable portion of the objects of the association was not carried out, and a large sum of money accumulated in the hands of defendant 1 as the profits of the business. The plaintiffs wanted a share in the profits after settlement of accounts. The defence, which has prevailed before the Court below, namely the association was an illegal one, having been formed in contravention of Section 4, Companies Act, and therefore the suit could not be maintained, was not taken in the written statement. The suit was decreed by the Court of first instance, and defendant 1 was called upon to furnish accounts. Defendant 1 thereupon filed an appeal to the District Judge. In the meanwhile the preliminary decree culminated in a final- decree, and a second appeal was filed in the Court of the District Judge by defendant 1. The learned District" Judge, after taking some evidence, came to the conclusion that in the circumstances, which were placed before him, the company should have been registered under Section 4, Companies Act and that not having been done the suit was not maintainable. The learned Judge accordingly dismissed the plaintiffs suit, with the result that both the appeals were allowed. In this Court two appeals have been filed by the plaintiffs against the two decrees made by the learned District Judge.

(3.) The only point which we have to determine is the construction of the language of Section 4, Companies Act. The learned Judge found that when the company was started and for some years after that the profits were devoted to the welfare of the community to which the members belonged, but, later on, after the breaking of the war, probably because large profits were made, the charitable object of the association was given up and profits were appropriated by the defendants. The learned Judge thought that, although in the beginning the object of the association was a charitable one, later on the object became a pecuniary one and therefore, it was not open to the parties to carry on the business without having registered the association. Being of this opinion, as we have said, the learned Judge dismissed the suit.