TaxTMI 
TaxTMI 
1951 (9) TMI 29
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....aging director of the Kalyanmal Mills Ltd., Indore, incorporated under the Indore Companies Act. (Act No. VI of 1914) and respondent No. 2 is his son who is also a permanent director of the abovesaid mills. Both the respondents are proprietors of the firm Tilokchand Kalyanmal and Co., Indore, which seems to be a joint family business firm. This firm works as secretaries, treasurers and agents of the Kalyanmal Mills Ltd., Indore. On 17th November, 1947, the Kalyanmal Mills Ltd., and Tilokchand Kalyanmal and Co., both executed a promissory note for a sum of Rs. 2 lacs at four and a half per cent, interest in favour of the Bank of Indore Ltd. wherein they jointly and severally premised to pay the sum to the Indore Bank. The pro-note was ren....
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....ords: "The company and the secretaries, treasurers and agents have jointly passed a promissory note to the Bank of Indore Ltd., for Rs. 1,00,000 which sum has been received by the secretaries, treasurers and agents, and not by the company, and there is no entry in respect thereof in the company's books. This appears to be in contravention of section 87D of the Indore Companies Act." On the basis of the Auditor's report, Mr. Jagjiwandas Tulsiram Shah, a shareholder of the mills, lodged a complaint on 21st January, 1950, against the two respondents under section 87-D of the Indore Companies Act which is identically the same as section 87-D of the Indian Companies Act. The complaint also alleged that the loan had been repaid to the bank ....
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.... that this joint and several "pro-note" executed in this manner cannot come within the term "guaranteeing a loan". In his opinion the word "guarantee" in section 87-D should be literally construed; but in the opinion of the learned Government Advocate, it should be construed in a liberal sense and its meaning should not be restricted to mean a contract of guarantee as defined under section 126 of the Contract Act. The portion of section 87-D of the Indore Companies Act which is similar to the same section of the Indian Companies Act, that is material for the purposes of this appeal, runs as follows: "(1) No company shall make to a managing agent of the company or to any partner of the firm, if the managing agent is a firm.........., a....
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....The essence of a guarantee is that the guarantor agrees to discharge his liability only in one event, i.e., when the principal debtor fails in his duty. "Let him have the loan, I will see you paid," or "if he does not pay I will" . . are phrases ordinarily used when a guarantee is given. In other words, a guarantee presupposes the existence of a principal debtor, and , if in any contract there never was at any time another person who can properly be described as "the principal debtor" in respect of whose default a guarantee can be given, there cannot be said to have been any "guarantee" either in its technical meaning or in its ordinary meaning. So, in my opinion a promissory note executed jointly by a company and its managing agents does n....
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....rms and within the spirit and scope of the enactment. Where an enactment may entail penal consequences, no violence must be done to its language to bring people within it, but rather care must be taken that no one is brought within it who is not within its express language. To determine that a case is within the intention of a statute, its language must authorise the court to say so, but it is not admissible to carry the principle that a case which is within the mischief of a statute is within its provision so far as to punish a crime not specified in the statute, because it is of equal atrocity or of a kindred character with those which are enumerated. If the Legislature has not used words sufficiently comprehensive to include within it....