Brodhurst and Mahmood, JJ.
1. This was a suit for recovery of Rs. 1,043-15-1 1/2, principal and interest, due upon a sarkhat (agreement) executed by the defendants on the 5th September 1884. In that agreement is included a sum of Rs. 1,500, which the defendants promised to pay to the plaintiff as the sub-lessees of a license obtained by the plaintiff from the revenue authorities under the Excise Act for distillery. The suit was defended upon various grounds, but it was decreed by the Court of First Instance.
2. Upon appeal the Lower Appellate Court reversed the decree of the first Court upon a question of law, which has to be considered by us here, as it is the main point upon which this second appeal has been preferred to us. The learned Judge of the Lower Appellate Court has held that the sum of Rs. 1,500 included in the sarkhat could not be lawfully taken into account, because it represented money due upon a contract of sub-leasing a license, which contract was opposed to the Excise Act (XXII of 1881), by Section 5 of which enactment it is only persons to whom the license has been granted who can take benefit of it, and by Section 12 of the same enactment such licensee can take advantage of the license subject to the terms of the license itself and not in contravention thereof. Again, Section 35 and the following Sections provide for regulations which bind the licensee and subject the license to certain conditions, and Section 42 in general terms says that any person who breaks any rule made under the Act, or any condition of a license granted under the Act, for the breach of which rule no other penalty is herewith provided, shall be punished with a fine of Rs. 50.
3. In this case the license which had been obtained by the plaintiff in 1883, contained in para. 12 express prohibition against sub-letting the benefits of the license, and there can be no doubt that the sub-letting of the license by the plaintiff to the defendants was an action in contravention of the terms of the license above-mentioned, and was so punishable under Section 42 of the Excise Act (XXII of 1881).
4. We therefore hold that the sub-letting of the license was an action contrary to law within the meaning of Section 23 of the Contract Act (IX of 1872) and as such not enforceable by us as a Court of justice.
5. Mr. Conlan in arguing the case on behalf of the appellant has relied upon a Full Bench ruling of this Court in Gauri Shankar v. Mumtaz Ali Khan, I.L. R., 2 All., 411, and the learned Counsel contends that that case is an authority to support the proposition that the restrictions upon sub-leasing a license are intended only for the protection of the public revenue and do not vitiate the contract entered into by a licensee with a third party. So far as that case is concerned it is enough to say that Regulation VI of 1819, upon which the case proceeded, is in many respects different, both in point of nature and policy, from the Excise Act (XXII of 1881) with which this case is concerned, and that the ruling cited is one in which there was a case of partnership, and the license did not contain any express prohibition against such partnership being entered into.
6. Pandit Sundar Lal in supporting the case for the respondents has called our attention to certain English cases--Ritchie v. Smith, 18 L. J. C. P., 9; Cundell v. Dawson, 17 L. J. C. P., 311; Smith v. Mawhood, 15 L. J. Exch. 149; Taylor v. The Crowland Gas & Coke Co., 23 L.J. Exch. 254--for supporting the contention that in connection with Excise Acts, the person to whom the license is given is the only person who can avail himself of such license, and that it would be defeating the policy of such enactments if such licensee is allowed to sub-lease the license by any agreement. Again, the learned pleader relies upon a ruling of the Calcutta High Court in Judoonath Shaha v. Nobin Chunder Shaha, 21 W. R., 289, where Sir Richard Couch, in dealing with the Bengal Excise Act, held that ' a contract by which a licensee lets the shop and the use of the license for a fixed term, receiving rent, is contrary to the policy of the law, and comes within the rule that a contract which is illegal, or is contrary to public policy, cannot be enforced.' We are of opinion that the general effect of those cases and especially the last mentioned case is that no licensee under the excise laws can transfer the license or sub-lease it to any person, and that it would be defeating the policy of the law if such contracts were to be allowed. This view is based not only upon the general principle that anything which defeats statutory provisions or is against the public morals should not be allowed, but upon the especial matters of the excise law that the capacity of the licensee is a inatter to be taken into account, and that the consideration of the public morals also forms part of the granting of such license with reference to the character of such licensee. We hold therefore that the Lower Appellate Court was right in holding that the suit, taking into account the sum of Bs. 1,500 as rent due under the license which the plaintiff had taken from the revenue authorities, and sub-leased to the defendants, was not maintainable. That Court has also found that once the item of Rs. 1,500 is kept out of account nothing of the account proffered by the plaintiff himself remains due to him. This being so, we dismiss the appeal with costs.