JAINARAIN RAM LUNDIA Vs. SURAJMULL SAGARMULL

JUDGEMENT

(1.) This appeal is directed against an appellate judgment of the Calcutta High Court, dated June 18, 1946, affirming with slight variation, the decision of a single Judge of the Original Side of that Court, dated August 14, 1944. The suit, out of which this appeal arises, was one for specific performance of a contract for sale of certain shares in a private limited company, together with fractional interest in a partnership business, and it was commenced by two plaintiffs, who are respondents Nos. 1 and 2 in this appeal, against four defendants, two of whom, viz., defendants Nos. 5 and 4, figure as appellants before us. Of the other two defendants, defendant No. 2 is not a party to this appeal at all, inasmuch as the suit against him was withdrawn and dismissed in the trial Court and his name was struck off from the list of defendants altogether. As regards defendant No. 1, though he was retained as a party, the plaintiff's gave up their claim against him before the hearing of the suit was concluded in the trial Court; and he has been made only a pro forma respondent in this appeal. The controversy in this Court, therefore, lies entirely between the two plaintiffs on the one hand and defendants Nos. 3 and 4 on the other, and to appreciate the contentions that had been raised on behalf of the appellants, a short resume of the material facts would be necessary.

(2.) On February 29, 1936, a partnership firm, known as Marwari Brothers, was brought into existence on the basis of a partnership agreement, executed on thai-date by and between a number of parties. The parties were (1) Lakshmi Devi Sugar Mills, (of which Kedar Nath Khaitan, plaintiff No. 2 was the Managing Agent), (2) Kedar Nath Khaitan, (3) Bholi Ram, (4) Gobordhan Das and his brother Badri Prosad, (5) Jainarain Ham Lundia and (6) Biseswar Nath. Under the terms of the partnership deed, the first, second, third and fifth parties had each a three annas share in the business, while the fourth and the sixth parties were each of them given a two annas share. The main object of the partnership was to promote a private limited company for the purpose of erecting and working a sugar mill in the district of Champaran in Bihar and securing for the firm the managing agency of the mill. By a supplementary deed executed on December 1, 1936, certain modifications were introduced into the original terms, and it was provided inter alia that the partnership would be for a period of 90 years, and that in case of death of any of the partners, his heir or heirs would automatically step into his place and be taken as partners without effecting dissolution of the partnership.

(3.) In pursuance of this agreement, a sugar mill was started and incorporated as a private limited company under the name of Ganga Devi Sugar Mills, Limited, with a share capital of Rs. 8 lakhs, which was divided into 800 shares of Rs. 1,000 each. Of these 800 shares, the first three parties named above, all of whom belong to Pedrona in the district of Gorakhpur and have hence been described as the Pedrona group of partners in the judgment of the High Court, subscribed for and obtained a total of 450 shares; while the remaining 350 shares were acquired by the other three parties, who being residents of Bettia in the province of Bihar, have been referred to as the Bettia group in the judgment. One hundred out of these 350 shares were obtained by Gobordhan Das and his brother Badri Prosad (defendants Nos. 1 and 2), some of which were registered in their own names and others in the names of other members of their family; 150 shares were secured by Jainarain (defendant No. 3) and 100 shares by Biseswar Nath, the father of defendant No, 4. Biseswar Nath died on November 29, 1939, and his son Madanlal became a partner in his place. On September 7, 1940, Gobordhan Das and his brother Badri Prosad separated from each other and divided the family property amongst themselves.