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Brij Mohan Vs. N.V. Vakharia and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtRajasthan High Court
Decided On
Case NumberCivil First Appeal No. 30 of 1960
Judge
Reported inAIR1965Raj172
ActsPartnership Act, 1932 - Sections 4 and 44; Medicinal and Toilet Preparations (Excise Duties) Act - Sections 6; Medicinal and Toilet Preparations (Excise Duties) Rules - Rules 84 and 85; Code of Civil Procedure (CPC) , 1908 - Order 6, Rule 17
AppellantBrij Mohan
RespondentN.V. Vakharia and ors.
Appellant Advocate J.S. Rastogi, Adv.
Respondent Advocate S.L. Mardia,; Dina N. Vakharia, Advs.
DispositionAppeal dismissed
Cases Referred and Harish Chandra v. Triloki Singh
Excerpt:
.....is whether the finding of the trial court that the partnership was illegal and therefore a suit for its dissolution and rendition of accounts could not be brought is well founded. ' we should also like to quote section 7 here which deals with offences and penalties. where a partnership is entered into, the partner as well as the original holder of the licence shall be bound by the conditions of that licence. (1) of section 6 of the medicinal and toilet preparations (excise duties) act, 1955 (16 of 1955) the central government hereby provides that no person shall engage in the production or manufacture of any dutiable goods except under a licence granted under the provisions of the medicinal and toilet preparations (excise duties) rules, 1956. 2. this notification shall come into..........for the appellant has invited our attention to a number of cases to persuade us to hold that the suit partnership was not illegal and that it is possible for us to grant the relief prayed for. we consider it unnecessary to refer to all these cases as in our opinion the present case is fully governed by the principle laid down in the decision of their lordships of the supreme court in govind rao v. nathmal, civil appeal no. so of 1960, d/-11-4-1962 (s c). that was a case of a partnership in foodgrains, which carried on its main business in the nagpur district. curiously enough, both partners--one dealing in the nagpur district and the other in the indian state of rajnandgaon held licences in their own separate names for carrying on business in grains in their respective areas but they.....
Judgment:

Modi, J.

1. This is a civil regular first appeal by the plaintiff Brij Mohan in a suit for dissolution of partnership and rendition of accounts, which has been dismissed by the trial court on a preliminary point.

2. The short facts relevant for purposes of the present appeal may be stated as follows: There was a business known as Jem Chemical and Pharmaceutical Works at Jaipur, which was originally carried on by the defendant N. V. Vakharia, and both the plaintiff Brij Mohan and defendant No. 2 Mohandas worked as his agents. On the 12th March, 1958, an agreement was entered into between all these three persons whereby they formed a partnership. This deed of partnership is at page 59 of the paper-book. The partnership took over the entire business which was earlier carried on by Vakharia, and it was inter alia stipulated that the plaintiff and defendant Mohandas would have a one-fourth share each in the profits and losses of the partnership business while Vakharia would have the remaining half. The only other candition which it is necessary to mention in this connection is that a sum of Rs. 20,000/- standing, to the credit of Vakharia, according to the final balance-sheet as prepared on the 20th March, 1958, was to be treated as his investment in the partnership business while a like sum of Rs. 10,000/- was to be treated as the capital investment of each of the other two partners.

Defendant Vakharia 'alone held a licence under the rules framed under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (Act No. 16 of 1955, hereinafter called the Act of 1955), and it is not disputed before us that this licence was neither amended nor a fresh one obtained in the name of the partnership for carrying on the business in question. Differences seem to have arisen between the partners some time in the middle of 1959 which eventually resulted in the institution of the present suit. Defendant Mohandas did not file any written statement and it was Vakharia who alone resisted the suit. He raised a number of pleas and the only one with which we are concerned at the present stage was that the partnership was illegal, and, therefore, no suit was maintainable for its dissolution and rendition of accounts. The trial court upheld this plea and dismissed the suit. Hence the present appeal.

3. The only question for determination in these circumstances is whether the finding of the trial court that the partnership was illegal and therefore a suit for its dissolution and rendition of accounts could not be brought is well founded. Our answer to this question is: Yes.

4. The matter, in our opinion, is governed by Section 6 of the Act of 1955. This section reads as follows:--'6. Certain operations to be subject to licences.

(1) The Central Government may, by notification, in the Official Gazette, provide that from such date-as may be specified in the notification, no person shall engage in the production or manufacture of any dutiable goods or of any specified component parts or ingredients of such goods or of specified containers of such goods or of labels of such containers except under the authority and in accordance with the terms and conditions of a licence granted under this Act.

2. Every licence under Sub-section. (1) shall be granted for such area, if any, for such period, subject to such restrictions and conditions, and in such form and containing such particulars as may be prescribed.'

We should also like to quote Section 7 here which deals with offences and penalties. This section is in these terms ;

'7., Offences and penalties.--If any person-

(a) contravenes any of the provisions of a notification issued under Section 6; or

(b) evades the payment of any duty of excise ' payable under this Act; or

(c) fails to supply any information which he is required by rules made under this Act to supply or (unless with a reasonable belief, the burden of proving which shall be upon him, the information supplied by him is true), supplies false information; or

(d) attempts to commit or abets the commission of any offence mentioned in Clause (a) or Clause (b), he shall for every such offence be punishable with imprisonment for a term which may extend to six months, or with fine which may extent to two thousand rupees, or with both.'

Rules 84 of the Rules made under the Act provides for the grant of a licence on the filing of an application. Rule 85 is then very important for our purposes and leaving its immaterial portion reads as follows:--

'(1).......

(2) Every licence shall be deemed to have been granted or renewed personally to the licensee and no licence shall be sold or transferred.

(3) ............

(4) If the holder of a licence wishes to enter into partnership in regard to the business covered by the licence, he shall do so after obtaining the previous sanction of the licensing authority and his licence shall thereafter be suitably amended. Where a partnership is entered into, the partner as well as the original holder of the licence shall be bound by the conditions of that licence.

(5) If a partnership is dissolved, every person who was a partner immediately before such dissolution shall send a report of the dissolution to the fincensing authority within ten days thereof.'

(6) ............'

Last but not least, we should invite attention in this connection to Notification No. S. R. O. 1295 dated the 22nd April, 1957, issued under Section 6 of the Act of 1955, which reads as follows :--

'In exercise of the powers conferred by Sub-section. (1) of Section 6 of the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (16 of 1955) the Central Government hereby provides that no person shall engage in the production or manufacture of any dutiable goods except under a licence granted under the provisions of the Medicinal and Toilet Preparations (Excise Duties) Rules, 1956.

2. This notification shall come into force with immediate effect in all the States except in the State of Bombay where it shall come into force on the 1st day of June, 1957.'

The collective effect of all the provisions and the notification which we have adverted to above, in our opinion, leads to the unmistakable result that a business like the one which the parties were carrying on in this case could not be lawfully carried without a proper licence in the name of the partnership in accordance with the provisions of Section 6 of the Act read with Rule 85 (4) of the Rules made thereunder, and that if the same was being carried on in disregard thereof, that would amount to an offence under Section 7 of the Act of 1955 punishable with imprisonment which may extend to six months or with fine which may extend to one thousand rupees or with both.

5. The question which then arises is whether it is possible for the courts of law to order a dissolution of such partnership or to order the rendition of accounts thereof. Learned counsel for the appellant has invited our attention to a number of cases to persuade us to hold that the suit partnership was not illegal and that it is possible for us to grant the relief prayed for. We consider it unnecessary to refer to all these cases as in our opinion the present case is fully governed by the principle laid down in the decision of their Lordships of the Supreme Court in Govind Rao v. Nathmal, Civil Appeal No. SO of 1960, D/-11-4-1962 (S C). That was a case of a partnership in foodgrains, which carried on its main business in the Nagpur District. Curiously enough, both partners--one dealing in the Nagpur District and the other in the Indian State of Rajnandgaon held licences in their own separate names for carrying on business in grains in their respective areas but they did not obtain any licence in the name of the partnership for carrying on its business.

Their Lordships held that a licence in the name of one of the partners was not enough as it could not be accepted as a licence in the name of the partnership, and, therefore, the whole of the partnership business was in contravention of the Food Grains Control Order, 1945. Section 3 of that Order enacted that

'No person shall deal in foodgrains as a wholesale dealer except under and in accordance with a licence issued by the Deputy Commissioner of the district.'

In this view of the matter, it was further held by their Lordships that no Court of Law would enforce a claim arising from such an illegal partnership.

6. We asked learned counsel for the plaintiff appellant how he could take out the present case from the principle of the Supreme Court decision referred to above. His answer was two-fold. In the first place, he submitted that it was perfectly legal for the plaintiff to work as an agent of the defendant Vakharia according to law even without a licence, and, therefore, the present case was distinguishable. We are entirely unable to accept this argument as sound because, so far as the plaintiff's suit is concerned, it pertains to the dissolution and accounts of the partnership which was formed on the 12th March, 1958, between him and the defendants, and it cannot possibly be accepted on the plaintiff's own case that he was a mere agent of the defendant Vakharia at and from that date. A partner is not a mere agent but something more qua the other partners. This contention clearly seems to us to be an argument of despair and we have no hesitation in repelling it.

7. In the second place, the submission of learned counsel for the appellant was that the Food Grains Control Order, 1945 had a public purpose behind it, and it was on that account that the Supreme Court had held that a partnership carrying on business falling under it, without a licence in its own name, was illegal, while the Act of 1955 with which we are concerned in this case was merely enacted for the purpose of levying and collecting excise duties on certain medicinal and toilet preparations as the preamble of the Act shows and therefore the present case should not be governed by the principle of the decision of the Supreme Court on which we propose to rely. This contention, in our considered judgment, has no force either. It is true that the Act of 1955 has been framed primarily for the purpose of levying and collecting excise duties on the production or manufacture of certain medicinal and toilet preparations containing alcohol and certain other constituents which have been therein specified. But it is equally true that in achieving this objective it has banned the manufacture of such preparations except under a proper licence obtained in accordance with the rules laid down for the purpose and made the manufacture thereof in breach of such provisions, a penal offence.

Now, as we look at the central idea behind this scheme of the Act, the purpose seems to us to be unmistakably to serve the public good because an unrestricted manufacture of such preparations is bound to be fraught with the greatest danger to the community at large. We, therefore, see no good reason why an unlicensed partnership formed to carry on business in the manufacture of alcoholic medicinal preparations should stand on a different footing from a like partnership established to carry on business in foodgrains. Both are equally illegal under the laws governing them and cannot but be visited with like consequences. This contention, therefore, is equally without any substance and we hold that the present case is fully governed by the decision of the Supreme Court in Govind Rao's case, Civil Appeal No. 30 of 1960, D/- 11-4-1982 (SC) (Supra) and consequently the plaintiff's suit for the dissolution and accounts of a partnership which is illegal cannot possibly be maintained.

8. Faced with this position, learned counsel for the plaintiff appellant prayed that we should allow him to amend his plaint. The application seeking the amendment of the plaint is at pages 1 to 6 of the Supplementary paper-book. The case which is sought to be put forward therein for the first time is that the plaintiff had entered into partnership with the defendant Vakharia as a result of the misrepresentation made by him that he had already obtained permission from the competent authority for entering into the said partnership. It is also submitted that until 18th September, 1959, the plaintiff did not know that it would be illegal to enter into the partnership in question without the previous permission of the competent authority in that behalf and that he was under a bona fide impression that the requisite permission could be obtained even ex post facto and the defendant's original licence amended accordingly.

Apart from permission to plead the above facts, the plaintiff also prays to be allowed to plead that even if it be held that the partnership is illegal, a decree be passed, in his favour for the return of Rs. 10,000/- which was entered as his capital in the partnership accounts along with profits. It also seems to have been prayed as yet another alternative that a decree for the aforesaid sum of Rs. 10,000/- be passed in his favour' with interest at the rate of six annas per cent. per annum together with pendente lite and future interest.

9. We have carefully considered this application which seems to us to be not a little involved and inconsistent and we have on the whole not felt persuaded to allow it. In the first place, this application is an unduly belated one. It will be recollected that the present suit was filed on the 6th October, 1959, Defendant Vakharia had specifically raised the defence that the partnership was illegal and so the plaintiff's suit was not maintainable and deserved to be dismissed. The suit was dismissed by the trial court on that very ground. An appeal was then filed in this Court on the 22nd February, 1960. The application for amendment came to be moved in this Court on. the 19th March, 1963, full three years after the appeal was filed. In these circumstances, we see no valid reason why the present application could not have been made by the plaintiff in the trial court itself and should have been filed at such a late stage.

Besides, this application seeks to introduce certain, facts into the plaint as respects misrepresentation or fraud allegedly practised on the plaintiff by the defendant Vakharia, and these allegations have been made for the first time in this Court when we have no doubt that these should have been very much in the mind and recollection of the plaintiff even at the time he had filed this suit in the trial court in 1959. Again, it seems to us that an application of this character, if allowed, would entirely change the nature of the plaintiff's suit. His suit, as originally filed, was and is for dissolution of the partnership and rendition of its accounts. His prayer now is that he be allowed to alter it into one for a specific sum of money namely Rs. 10,000/- which according to him was his capital investment into the partnership business together with profits or with interest. Now so far as the question of calculation of profits is concerned, it seems to us as impossible proposition unless accounts can be gone into, and that cannot possibly be allowed to be done for reasons which we have discussed above. Then again, a suit for the return of Rs. 10,000/- together with interest can hardly be held to be a suit which even remotely partakes of the nature of one for dissolution of partnership and rendition of accounts as originally filed.

10. We are fully alive to the principle that court should be liberal and at any rate not unduly rigid in allowing amendments which may be necessary for the purpose of determining the questions in real controversy between the parties. But this power has its obvious limits. It is indeed well established that where an amendment would radically or fundamentally change the character of a suit or introduce a new case therein which is inconsistent with the case originally put forward, such amendment should not be allowed, the more so when a prayer for the same happens to be made at an unconscionably delayed state of the case. See Mclnerny v. Secy, of State for India, ILR 38 Gal 797, Ma Shwe Mya v. Maung Mo Hnaung; AIR 1922 P C 249, Ram Kishen v. Alopi Pershad, AIR 1934 Lah 38, Kanda v. Waghu, AIR 1950 P C 68 and Harish Chandra v. Triloki Singh, (S) AIR 1957 SC 444.

This principle squarely covers a case like the present which was originally brought for dissolution of a partnership and rendition of accounts and is now sought to be amended as a suit for recovery of remuneration as an agent of the defendant in the circumstances discussed above. It also seems to us, if we may say so, that to permit a suit for dissolution ot an illegal partnership to be amended as for recovery of a specific sum of money would also be in the nature of allowing the plaintiff to do indirectly what he cannot do directly. In these circumstances, as a court of law, we are not prepared to allow the plaintiff the luxury of such an amendment.

11. For the reasons mentioned above, this appeal fails and it is hereby dismissed with costs.


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