JUDGMENT

KHANNA, J.:— These two appeals on certificate by Mohatta Brothers plaintiff-firm are directed against the judgment of Gujarat High Court whereby that court reversed on appeal the judgment of the trial Court awarding a decree for recovery of Rs. 77,286/0 Anna/2 Pies in favour of the plaintiff-appellant against the respondent-company and dismissed the suit.

2. The plaintiff is a partner-ship firm doing business under the name and style of Mohatta Brothers. The plaintiff-firm carried on the business of managing agency of the defendant company up to September 4, 1950. Sometime before that date, it appears the plaintiff-firm expressed an intention of giving up the post of managing agents. On July 31, 1950 Chaturbhujdas on behalf of M/s. Chaturbhujdas Kharawala Mohatta and Co. submitted scheme Ex. 168 in consultation with the plaintiff. Paras 5, 6 and 7 of the scheme were as under:

"(5) Before our this Scheme is approved by the Company the present Directors shall submit before the Company the Balance Sheets and the Profit and Loss Account upto the end of the year 1949 and get the same passed, and they shall get the Pro forma balance sheet upto the date 31-7-50 prepared by the Auditors of the Company and shall hand over the same to us, and this Scheme has been given while understanding that at present everything is according to the list of machinery given to us by the present Agents. And no one has any kind of charge or debt claimable from the Company till this day excepting the approximate amount of Rs. 4,77,850/- due to the Agents and their Kith and kin till this day and the list of which is given to us. We give this Scheme believing the said fact true.

(6) The amounts of the Agents of the Company and their Kith and kin which may have been deposited in the Company on the day the date 31-7-50 and which come to about Rs. 4,77,850/- as told by the present Agents are to be kept credited in their accounts and interest thereon is not to be given from the date 1-8-50. And when our Scheme is approved they have not to take any interest on the said amounts from the Company for five years from the date we start the work of the Mills and they have not to withdraw the said amounts for a period of ten years thereafter but the same are to be kept credited in the Company with interest at six percent. But the Company shall return the amounts earlier if it so desires.

(7) At present the amount of Rs. 3,46,466-11-8 is due to the Punjab National Bank Ltd. by the Company and the demand of giving bonus to the workers for the year 1949 is outstanding from the Company. The present Agent states that in both of the said matters payments can be made from the amounts obtained by selling the goods of stores, etc. which is lying with the Company at present, the list of which is given to us by the present Agents, and from the amounts of E. P. T. deposit and advance payments of the income-tax. On making arrangement accordingly if the debt of the Bank is not fully paid or the liability of bonus is not fully fulfilled and if the Company is found responsible in any way, then the same is to be fulfilled by the present Agent.

But after fulfilling all liabilities accordingly if any amount remains in balance the same shall be treated as assets of the Company and half of the said amount shall be returned towards the above mentioned amount deposited in the Company and which belongs to the present Agent and their Kith and kin. But on fulfilling completely the liability of the Bank from the sale of goods of the Stores, etc. if there does not remain sufficient surplus or before getting the amount of E. P. T. deposit and income-tax advance payment if the amount of bonus is required to be 1706 paid then the present Managing Agent has to give that amount first." On the following day, i.e. August 1, 1950, the following letter was addressed by the plaintiff-firm to the Board of Directors of the defendant-company:

"We Messrs Mohatta Brothers, the Secretaries, Treasurers & Agent