Promissory Note Agency: company not bound absent clear on face agency; joint family property chargeable against coparceners' shares.

Promissory note law: a negotiable instrument executed solely in an agent's name does not bind the company unless the instrument on its face or by necessary inference shows it was executed for the company; mere benefit to the company or after the fact evidence of purpose is insufficient, so the company is not liable and the suit against it fails. Joint family liability: where the promissory note was signed by the manager of a joint Hindu family, the family property is chargeable to the creditor and coparceners may be decreed liable to the extent of their shares; the Official Assignee's representation does not bar proceeding against those shares.

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Issues: (i) Whether the loan of Rs. 35,000 obtained on July 22, 1934 was borrowed by P.L. Jaitly personally or on behalf of the Lower Ganges Jumna Electric Distributing Co. Ltd. (L.G.J.E.D. Co.), and whether the company is liable to the plaintiff; (ii) Whether the sons of P.L. Jaitly (respondents Nos. 5 and 6) are liable to the extent of their share in the joint family property.

Issue (i): Whether the loan was to P.L. Jaitly personally or to the L.G.J.E.D. Co., and whether the company is liable.

Analysis: The promissory note was executed in the sole name of P.L. Jaitly without any express indication on its face that he was signing for the company. Though evidence showed the company benefited by funds being paid into Court to meet the company's liabilities, the instrument itself lacked any clear statement that it was made on behalf of the company. The Court examined authorities on negotiable instruments, agency and company liability (including principles under Section 89 of the Indian Companies Act) and concluded that mere benefit to the company or knowledge of the loan's object by the lender does not alone bind the company. Suspicion was cast on the timing and authenticity of the letter (Ex. 16) purportedly showing the loan was for the company; the Court rejected the plaintiff's witness evidence that the letter was contemporaneous and found it likely written later. On the totality of facts, the indications were that the loan was advanced to Jaitly personally on his personal security rather than to the company.

Conclusion: The loan was to P.L. Jaitly personally and the L.G.J.E.D. Co. is not liable; the suit against the company was rightly dismissed (decision in favour of respondent as to the company).

Issue (ii): Whether respondents Nos. 5 and 6 (two sons of Kesri Narain) are liable to the extent of their share in the joint family property.

Analysis: The promissory note was signed by P.L. Jaitly as manager of the joint Hindu family and, applying the principles governing joint family liability, the Court held that the family property is liable to the creditor. The Official Assignee represents P.L. Jaitly's interests, but the Court would not assume the Official Assignee had already realized or seized all family shares; accordingly the creditor could seek a decree against the sons to the extent of their share in the family property. Objections that the sons could not be proceeded against without impleading the father were rejected because the Official Assignee represented the father.

Conclusion: Respondents Nos. 5 and 6 are made liable under the decree to the extent of the joint family property in their hands; decree granted against them to that extent (decision in favour of appellant as to liability of those respondents).

Final Conclusion: The appeal is dismissed except to the limited extent that respondents Nos. 5 and 6 are held liable to the extent of their shares in the joint family property; overall the primary claim against the company fails and the appellants obtain limited relief against the two named respondents.

Ratio Decidendi: A company is not bound by a promissory note signed in the sole name of its managing agent unless the instrument on its face or by necessary inference clearly shows it was executed on behalf of the company; mere benefit to the company or later evidence of purpose is insufficient to impose liability on the company.

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