Negotiable instrument agency principle: a personal signature with descriptive agency wording does not bind the company unless authorised.

Whether a company is bound by promissory notes signed by an individual turned on agency authority and instrument form: the court held that descriptive words beneath a personal signature do not convert the maker into the company and, absent proof that the signer was a duly authorised agent, the company is not liable on those notes. Separately, a compromise clause allocating determination of Calcutta High Court costs to the deciding court was implemented; the direction that specified costs be borne according to the compromise is upheld, with detailed cost allowances remitted to the Company Judge.

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Issues: (i) Whether the Dehra Dun Mussoori Electric Tramway Company, Limited is liable on two promissory notes signed by T.B. Gilani; (ii) Whether the direction that costs incurred in the Calcutta proceedings shall be borne by Messrs. Jhandoo Mal and Sons according to the compromise is correct.

Issue (i): Whether the company is bound by two promissory notes signed by T.B. Gilani.

Analysis: The Court examined (a) whether Gilani was a duly authorised agent of the company to make promissory notes under Section 27 of the Negotiable Instruments Act and Section 89 of the Indian Companies Act, and (b) whether the form of the promissory notes could bind the company if Gilani had been authorised. The memorandum and articles do not show authority for managing agents to make promissory notes; paras. 120 and 121 permit contracts and receipts but not promissory notes. The form of the notes names Gilani as maker with descriptive words referring to his agency beneath his signature; this contrasts with authorities where the company name appeared as maker and an official signed beneath it. Prior decisions of similar construction were applied to conclude the descriptive additions do not convert Gilani's personal signature into the company's promise.

Conclusion: The company is not bound by the two promissory notes; this issue is decided against the appellant.

Issue (ii): Whether the order directing that costs in the Calcutta proceedings be borne by Messrs. Jhandoo Mal and Sons according to the compromise is proper.

Analysis: The Court considered the compromise clause (para. 9(f)) which provided that costs in the Calcutta High Court would be decided according to the order of the Allahabad High Court. The Company Judge's direction implements that compromise provision. Objections as to particular items of claimed costs (e.g., travelling expenses) were noted but the Court held that determination of specific cost claims is for the Company Judge when the application for costs is made.

Conclusion: The direction respecting costs in the Calcutta proceedings is in accordance with the compromise and is upheld.

Final Conclusion: The appeal is dismissed; the company is not liable on the two promissory notes and the costs direction under the compromise is affirmed, leaving detailed cost claims to be determined by the Company Judge.

Ratio Decidendi: Where a negotiable instrument is signed in the name of an individual and the company is referred to only by descriptive words after the individual's signature, the instrument does not bind the company unless the maker is shown to be a duly authorised agent and the instrument's form evidences the company as maker.

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