TaxTMI 
TaxTMI 
1945 (10) TMI 14
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....d he deposited a sum of Rs. 2,500, with the Municipal Board, Unao, as security for the grant of a licence for the company which they intended to float. It was agreed that the partnership agreement between them and the plaintiff would be drawn up later. According to the plaintiff he was given an assurance that the money deposited by him would be returned within two months irrespective of whether the licence was granted or refused by the Government. It was further agreed that he was to bear no share of the expenses incurred in obtaining the licence, or bringing the Unao Electric Supply Co. Ltd. into existence. In accordance with this agreement J. Reuben, according to his version, deposited with the Municipal Board, Unao, Rs. 2,500 on 4th July 1939. The U.P. Government, however, declined to grant the necessary licence to float the proposed company for supply of electrical energy for lighting and domestic purposes in the town of Unao. Thereupon the security deposit of Rs. 2,500 was refunded by the Municipal Board, Unao, to the Civil Engineering Company, Cawnpore. The plaintiff demanded the return of the sum of Rs. 2,500 and on the defendants' refusal to comply with this request the sui....
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....ed District Judge it was contended among other pleas on behalf of J. Reuben (the plaintiff respondent in this Court) that he was not the defendants' partner. All that he had agreed to was that he would be their partner in the managing agency of the limited liability company for supply of electrical energy to Unao town which was to be floated; but as the company never came into existence there could be no managing agency business and accordingly no partnership whereof he could be a member. The relation of parties inter se was that of promoters of a company and inasmuch as the sum of Rs. 2,500, which was deposited with the Municipal Board, Unao. was his money, he was entitled to a return thereof. This plea was accepted by the learned District Judge who allowed the appeal and decreed the claim with costs in both Courts and interest pendente lite and in future till realisation at the rate of six per cent. per annum. Dissatisfied with this decision the defendants have preferred this second appeal. The only question argued before us was whether the plaintiff and the defendants were partners as held by the trial Court or if they were only promoters of a company which never came into exist....
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....ntiff was to be taken as a partner only in the managing agency business. In his statement of the case made before the trial Court on 21st February 1941, it was distinctly stated by the defendants' counsel that the terms of the partnership were contained in Ex; 1: It is clear from an examination of that document that the defendants had offered to take J. Reuben as a partner in the managing agency of the "Electric Supply Concern," which was to be floated. This offer was accepted by the plaintiff respondent. We, therefore, start on the basis that it was agreed between the parties that they would be partners in the managing agency business of the limited liability company which was to be floated for supply of electricity to Unao. The question, therefore, which arises for determination is whether any partnership actually came into existence. Section 4 of the Partnership Act runs as follows:- " 'Partnership' is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. Persons who have entered into partnership with one another are called individually 'partners' and collectively 'a firm,' and the name under which ....
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....nd an agreement with its result." Reviewing the circumstances of the present case in the light of these observations it is clear that the business in which the present parties were to be partners never came into existence. According to section 2 (9A) of the Companies Act (VII of 1913), "managing agent" means a person, firm or company entitled to the management of the whole affairs of a company by virtue of an agreement with the company, and under the control and direction of the directors except to the extent, if any, otherwise provided for in the agreement and includes any person, firm or company occupying such position by whatever name called. Thus there can be no business of managing agency so long as the company, whereof the managing agency is in contemplation, does not come into existence. It is conceivable that persons may agree to become partners in a business, whereof the object is to float companies and to acquire their managing agency. It is further conceivable that such an agreement may be entered into with regard to the managing agency of only one company; but in the case last supposed the parties concerned could not be partners in the managing agency business. In this ....