- (1.) This is an appeal on a certificate granted by the erstwhile Judicial Commissioner of Vindhya Pradesh, which is now part of the State of Madhya Pradesh. On behalf of respondent no. 1, Nagar Mal, who was defendant no.1 in the suit, a preliminary objection has been taken to the effect that the suit was not maintainable by reason of the provisions of S. 4 of the Rewa State Companies Act, 1935 and the appeal filed by the plaintiffs must, therefore, be dismissed. As this preliminary objection was not taken in any of the two courts below, learned counsel for the appellants wanted time to consider the point. Accordingly, on October 28, 1958 we adjourned the hearing of the appeal for about a month. The appeal was then heard on November 27, 1958.
(2.) As we are of the opinion that the Preliminary objection must succeed, it is necessary to state the facts only in so far as they have a bearing on it. When cloth control came into force in Rewa State, the cloth dealers of Budhar a town in that State, formed themselves into an Association to collect the quota of cloth to be allotted to them and sell it on profit wholesale and retail. The Association at Budhar consisted of 25 members who made contributions to the initial capital of the association which was one lac of rupees. No formal Article of Association were written; nor was it registered. The Association functioned through a President and a pioneer worker; they kept accounts and distributed the profits. Respondent no. 1 Nagar Mal, was the President of the said Association from January 1946 to June 26, 1946. Before that, Seth Badri Prasad, one of the plaintiffs-appellants before us, was the President. Nagar Mal ceased to be President after June 26, 1946, and Seth Badri Prasad again became President. The Association worked till February 1948; then cloth was decontrolled and the work of the Association came to an end. On June 25, 1949 thirteen members of the Association out of the twenty-five brought a suit, and in the plaint their alleged that respondent no. 1, who was President of the Association, from January 1946 to June 1946, had given an account of income and expenditure for the months of January, February and March, 1946, but had given no accounts for the months of April, May and June, 1946. They, therefore, prayed (a) that defendant no. 1 (Nagar Mal) be ordered to give the accounts of the Cloth Association, Budhar, from the beginning of the month of April 1946 to June 26, 1946; (b) that defendant no. 1 be ordered to pay the amount, whatever is found due to the plaintiffs on account being done, along with interest at the rate of annas 12 per cent. per month; and (c) that interest for the period of the suit and till the realisation of the dues be allowed. Besides Nagar Mal the other eleven businessmen, who were members of the Association, were joined as pro-forma defendants, some of whom later filed an application to be joined as plaintiffs. Though the plaint did not mention any particular transaction of the Association during the period when Nagar Mal was its President, the judgments of the courts below show that the real dispute between the parties related to the sale of cloth of a consignment known as the Gwalior consignment. It appears that in April 1946 a consignment of 666 bales of cloth had come from Gwalior and an order was passed by the Cloth Control Officer that the consignment would be allotted to Nagar Mal who would give the Association an option of taking over the consignment; if the Association did not exercise the option, the consignment would be taken over by Nagar Mal. It appears that there was some dispute as to whether the other members of the Association were willing to take over the consignment of Gwalior cloth. We are not concerned now with the details of that dispute because we are not deciding the appeal on merits. It is enough if we say that ultimately there was an order to the effect that only 390 bales should be allotted to the Association out of which Nagar Mal had given the Association benefit of the sales of 106 bales, and the dispute related to the share of profits made on the remaining 284 bales.
(3.) Respondent No. 1, Nagar Mal, raised various points by way of defence, his main defence being that none of the members of the Association were entitled to any share in the profits on the sales of 284 bales of Gwalior cloth.;