Mukherjea, J. - (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Of the other two defendants, defendant No.2 is not a party to this appeal at all, inasmuch as the suit against him was withdrawn and dismissed in the trial Court and his name was struck off from the list of defendants altogether.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.
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.

It appears that ever since the sugar mill was started, there were dissensions amongst the partners who were arrayed in two opposite factions or groups, and there was constant friction and quarrel between what has been called the Pedrona and the Bettia groups. It was realised that the business could be carried on properly if one of the groups would walk out of the partnership, leaving the field entirely to the other group. Early in December, 1940, the parties met at Pedrona and there was a talk at that meeting that the Bettias might sell out their interest to the Pedronas, but no final agreement was arrived at. It is clear from the evidence, and not disputed before us, that towards the end of December, 1940, Kedar Nath Khaitan (plaintiff No.2) instructed Bhuramull, his head Gomostha, to go to Calcutta and negotiate, on behalf of the holders of 450 shares in the sugar mill, the purchase of the shares and interests of the Bettia group in the mill as well as in the partnership business. It is not disputed that on December 28, 1940, Gobordhan Das, Jainarain Ram and Madan Lai (defendants Nos. 1, Sand 4) wrote a letter to Mr. Probhu Dayal Himatsingka, a well known Solicitor of Calcutta, authorising the latter to sell to the "khaitans or anybody else" the 350 shares held by them at a price not less than Us. 700 per share, the purchaser to get by his purchase also the interest of the vendors in the partnership firm of Marwari Brothers. Badri Prosad, the brother of Gobordhan Das, admittedly did not sign this letter. Bhuramull met Himatsingka in Calcutta on December 30, 1940, and the case of the plaintiffs, as made in the original plaint, was that on January 1, 1941, there was an agreement come to between Bhuramull, representing the two plaintiffs, and Himatsingka, as representative of the four defendants, by which the latter agreed to sell to the former 350 shares in the Ganga Devi Sugar Mills, Limited, and seven annas' share in the firm of Marwari Brothers on the terms and conditions set out in the letter, dated January 2, 1941, written by Himatsingka to the plaintiffs. In substance, the terms were that those 350 shares would be sold at the price of Its. 700 per share and the purchasers would, by the purchase, acquire the seven annas' share of the vendors in the partnership business as well; all monies appertaining to the seven annas' share in the firm would go to the plaintiffs, but the amount deposited by the defendants, which stood to their credit in the books of the firm, would be returned to them. These terms, the plaintiffs averred, were confirmed by their solicitor by a letter, dated 2/3 January, 1941. It appears that soon after this exchange of letters, Gobordhan Das, defendant No, 1, repudiated, the contract and declined to sell any shares held by him. The other two partners, Jainarain and Madanlal, however reiterated their desire and willingness to abide by the agreement and sell the 250 shares belonging to them on the terms and conditions set out in the letter of their solicitor. Later on, they too resiled from the agreement and refused to comply with its terms, and this led to the institution of the present suit.

(3.)THE plaint was filed on August 18, 1941, and the two plaintiffs averred that they were ready and willing to perform their part of the agreement and claimed specific performance of the contract for sale of 350 shares in Ganga Devi Sugar Mills and seven annas' share in Marwari Brothers as against the four defendants, to wit, Gobordhan Das, Badri Prosad, Jainarain and Madanlal, all of whom it was alleged, were bound by the agreement entered into on January 1, 1941. THEre was an alternative claim for damages, in case no decree for specific performance was given.
The claim was resisted by all the four defendants. There were separate written statements filed by Gobordhan Das and Badri Prosad, and one joint written statement was put in on behalf of defendants Nos. 3 and 4.All the defendants traversed the allegations in the plaint and denied that there was any concluded agreement which could be enforced specifically. It was also asserted that the shares of the Ganga Devi Sugar Mills could not be sold except in the manner laid down in the articles of association of the company. Gobordhan Das, defendant No.1, took the further plea that he was not the owner of 100 shares which were purchased by him out of the funds of a joint Mitakshara family. The family had separated since then and as a result of the partition, only 19 shares were allotted to him. Badri Prosad adopted the same defence and alleged further that so far as he was concerned, there was no authority given to Himatsingka or anybody else to enter into a contract on his behalf, and as he had separated from his brother Gobordhan Das long before, there was no authority left in the latter to bind him by any agreement. All these facts, it was said, were fully known to the plaintiffs.