1. The appellant in this appeal was the licensee of the toddy shop at Minnal for the year beginning 1st October, 1932. The auction at which defendant's bid was accepted was on 8th August, 1932. On the 31st August appellant entered into an agreement with the respondent which is embodied in Ex. A. This is a brief document called a 'partition' and apart from a penalty clause with which I am not now concerned, its terms are that appellant should bear one half of the expenses of running the business and that the sale proceeds should be divided between appellant and respondent every month. Respondent alleging that appellant had not paid him his half share of the profits, filed a suit for accounts. Appellant contended, amongst other things, that the agreement was illegal and could not therefore be enforced. The District Munsif of Sholinghur accepted this contention, the Subordinate Judge of Chittoor rejected it and remanded the suit for disposal after taking accounts. Against that order of remand the present appeal has been filed.
2. The decision of the appeal depends upon the determination of the question whether the privilege of the supply and sale of toddy has or has not been transferred by the appellant. Such a transfer is admittedly prohibited by the terms of the licence. The learned Subordinate Judge holds that there is no such transfer on two grounds:
(i) because appellant and respondent did not enter into any partnership; and
(ii) because their agreement was anterior to the actual issue of the licence.
3. It is difficult to understand how the Subordinate Judge arrived at the first of these conclusions. The issues framed by the District Munsiff assume that the relation between appellant and respondent was a partnership. They certainly agreed in the words of the definition (Contract Act, Section 239) to 'combine their property, labour or skill' in the business and to ' share its profits'. I find that the agreement constituted appellant and respondent partners.
4. The question then arises whether by the constitution of this partnership there was any transfer of the privilege of selling toddy in this particular shop. The Subordinate Judge holds in effect that that privilege comes into existence only with the grant of the licence and therefore on the date of the agreement there was nothing to transfer. It is argued for the appellant' on the other hand that the privilege was acquired as soon as appellant's bid was accepted. If that be so, it is clear that appellant has transferred that privilege to the partnership.
5. Though the issue was not perhaps raised in this direct form it seems to me that the decision of the Full Bench in Ramanaidu v. Seetharamayya (1934) 68 M.L.J. 570 : I.L.R. 58 Mad. 727 is conclusive on this point in favour of the appellant. That was a case of a partnership constituted after the date of the auction and before the date of the issue of licence. The judgment sets out these dates on page 733 and states:
The money was therefore lent to the partnership after the first defendant had become the successful-bidder at the auction and was the person in whose name the licence would be issued.
6. Again on page 734 it is stated
The partnership was formed after the first defendant had become the successful bidder. The licence would therefore be issued in his name.
7. These passages seem to me to show that the learned Judges in that case took it for granted that the issue of a licence was something following automatically upon the acceptance of a bid and that it is the acceptance of the bid which confers the privilege. The decision, I think, can be explained on no other ground. The learned Subordinate Judge, however, has preferred to rely upon two later decisions each that of a single Judge.
8. The first of these Satyala Sanyasi v. Bhogavalli Sanyasi : AIR1935Mad895 , is obviously of no assistance to the respondent. Tha is a clear case of a partnership formed before the auction and in giving his decision Veiikatasubba Rao, J., expressly distinguishes the Full Bench ruling by queuing the words:
The partnership was formed after the first defendant had become the successful bidder.
9. The second case is reported in Rangaswami Pillai v. Narayanaswami Naicken (1935) 70 M.L.J. 691 and this certainly does support the Subordinate Judge's judgment. But this is only because in my opinion, and with all respect to him, the learned Judge who decided it has not correctly stated what the Full Bench decided. In Rangaswami Pillai v. Narayanaswami Naicken (1935) 70 M.L.J. 691, no dates are given, but it is stated that the partnership was formed 'at least a month before the actual grant of licence.' On p. 692 the learned Judge says:
If a case is authority for what it decides the Full Bench decision is only an authority for the proposition that where a partnership is entered into subsequent to the grant of licence it would be illegal.
10. I am entirely unable to see how such an appreciation of the Full Bench decision can be formed when the Full Bench after setting out the dates, declares to be illegal a partnership formed before the grant of a licence.
11. I am accordingly of opinion that the facts of this case are covered by the Full Bench decision and that the formation of the partnership was a transfer.
12. One final argument is however urged for the respondent and that is that what was transferred was not the privilege of supply and sale of toddy because respondent's duties in the partnership were confined to the supervision of the procuring of toddy from the trees and had nothing to do with the actual process of selling it. I am unable to accept any such narrow interpretation of the words 'Privilege of supply and sale'. The privilege or right which was conferred upon appellant by the Government was that of carrying on the whole business of selling toddy, and in that business the procuring of toddy from trees is obviously a necessary part. The agreement contains no clause to the effect that respondent was prohibited from controlling in any way the operation and methods of sale - and from the legal point of view, appellant, his partner, is also his agent in the business which he personally carries on on behalf of the partnership. It is argued further that the reasons for the prohibition of transfer are in no way affected by the agreement in this case. It is not for me to speculate up6n those reasons. It is enough to recognise that transfer is in fact prohibited, and to hold, as I do hold, that the partnership in this case amounts to such a transfer.
13. This appeal must therefore be allowed, and the decree of the District Munsif restored, and respondent's suit be dismissed with costs throughout.
14. Leave refused.