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NalaIn Padmanabham Vs. Sait Badrinadh Sarda and ors. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai
Decided On
Judge
Reported in(1912)ILR35Mad582
AppellantNalaIn Padmanabham
RespondentSait Badrinadh Sarda and ors.
Cases ReferredGauri Shankar v. Mumtaz Ali Khan I.L.R.
Excerpt:
.....by which person without license is enabled to sell opium void. - - 401, according be which 'the provisions of che abkari act, as a whole, show clearly that every person carrying on abkari businesses as a principal, must be licensed' and according to which 'to hold that a person who has not got a license could still be a partner with one who has a license and as such partner carry on the business with or without the other would enable the unlicensed partner to evade the liabilities intended by the taw to be cast on persona carrying on abkar business. ' it is well established that the provisions of the abkari and opium acts are not intended merely to protect the public revenue and that the prohibitions contained therein are based on public policy. , in the same case the word.....1. the suit in this ease is for the dissolution and winding up of a partnership relating to an opium business, defendants nos. 1 and 2 were farmers of opium revenue under government. they through their agents, entered into an agreement with the plaintiff agreeing to take him as a partner in their business, both with respect to their right to vend opium in the godavari district, which they had already obtained, and with respect to any further right they might thereafter obtain in adjoining districts. the partnership existed for some years. the district judge has dismissed the suit on the ground that the agreement of partnership on which the suit is based, was opposed to public policy and unenforceable in law. the plaintiff who preferred this appeal, contends that the lower court's view as.....
Judgment:

1. The suit in this ease is for the dissolution and winding up of a partnership relating to an opium business, Defendants Nos. 1 and 2 were farmers of opium revenue under Government. They through their agents, entered into an agreement with the plaintiff agreeing to take him as a partner in their business, both with respect to their right to vend opium in the Godavari district, which they had already obtained, and with respect to any further right they might thereafter obtain in adjoining districts. The partnership existed for some years. The District Judge has dismissed the suit on the ground that the agreement of partnership on which the suit is based, was opposed to public policy and unenforceable in law. The plaintiff who preferred this appeal, contends that the lower Court's view as to the nature of the contract is incorrect.

2. The first and second defendants above obtained a license from the Collector for the sale of opium. Clause 26 of the conditions, subject to which the license was given, provides that 'except with the permission of the Collector, you shall not sell, transfer or sub-rent your privilege Nor shall you, if the Collector so orders, appoint any person as your agent for the management of your privilege without previously obtaining the Collector's approval of the agent.' It is admitted that the Collector's sanction was not obtained for the partnership agreement. The object and indention of the agreement undeniably were that) the defendants and their partner, the plaintiff, should be enabled to carry on the opium business without: any license being taken out by the plaintiff for the purpose. The question we have to decide is, whether the partnership is not illegal and cannot therefore afford a cause of action to the plaintiff for any relief based on it.

3. We are of opinion, that the conclusion arrived at by the lower Court is right. Section 4 of the Opium Act (Act I of 1878) runs as follows; 'Except as permitted by this Act, or by any other enactment relating to opium for the time being in force, or by rules framed under this Act or under any such enactment, no one shall:

(a) Cultivate the poppy; (6) manufacture opium; (c) possess opium; (d) transport opium; (e) import or export opium; or (f) sell opium,

4. Section 5 gives the local Government power to make rules absolutely or subject to any conditions deemed desirable for all or any of the matters including '(f) the sale of opium and the form of duties leviable on the sale of opium by retail.' Section 9 makes it an offence on the part of any person to sell opium in contravention of the Act or of rules made and notified under Section 5. Now a contract entered into with the object of doing any act which is unlawful because forbidden by law, is unlawful and void. The contract in this case was intended to enable the plaintiff to sell opium without a license an act which is forbidden by Section 4, and made penal by Section 9. Mr. Ramchandra Ayyar for the appellant contends that according to the terms of Exhibit A, the agreement between the parties, the actual sale was not to be made by the plaintiff as the management of the business was left in the hands of the defendants, and that therefore it could not be said that any breach of Section 4 was intended, This argument cannot be accepted, because all the partners must be taken to be selling the opium which belongs to the partnership as the sale is made by the managing partner as the agent and on behalf of all the partners. In Judoonath Shaha v. Nobin Chunder Shaka (1874) 21 W.R. 289, Coneb, C.J. and Glover, J., held that an agreement whereby the holder' of a license for keeping a wine-shop let the shop and the use of the license for a fixed term receiving rent, was contrary to public policy, although there was in the statute or in the rules no express prohibition of letting out the shop. The agreement was held to be contrary to the prohibition of sale without a license. A license, it need hardly be said, is a personal privilege, see the judgment of Sale J., in Behari Lall Shaha v. Jagodish Chunder Shaha I.L.R. (1904) Calc. 798 where that learned Judge pronounced against; the validity of an agreement under which a license-holder for the sale of liquor, entered into an arrangement with another person whereby the business was to be carried on by the latter on his own responsibility, but using the name of the plaintiff, and ho was to pay the plaintiff a certain sum per month. He observes 'Section 11 says no person shall sell any excisable article without the Collector's license. The plaintiff's object was to permit; the defendant, Basanto Kumarsbaha, be sell articles without a license. I am of opinion therefore that the object of the agreement is to enable the defendant to carry on the business of vendor in liquor in contravention of the excise law' see also Raghunath Lalman v. Naithu Hirji Bhatte I.L.R. (1895) Bom. 626. Every partner is the agent of his co partners and it would be unreasonable to hold that the defendants continued to be the sole vendors of the opium when they made themselves the agents of plaintiff by admitting him as a partner. The learned vakil for the appellant cites Naila Bapiraju v. Puraniohuta Rajujee (1910) M.W.N. 549 as supporting his contention in that case Miller and Krishnaswami Ayyar, JJ. held that Section 13 of the Abkari Act (Madras Act I of 1886) 'does not prohibit a person who has no license from holding an inter.)3b in the manufacture or vending of the liquor jointly with licensed manufacturer or vendor;' but the provision of law referred be by the learned Judges, does not include the sale of liquor amongst the Acts prohibited by it. We may also point out that the language of Section 15, of the Abkari Act relating to the sale of liquors 'no liquor... shall be, soli without a license from the Collector' while, as already pointed out, Section 4 of the Oplum Act enacts' no one...shall sell opium' Having regard to the difference in the provisions 'contained in the two Acts it is unnecessary to consider that decision any further. We may point out however that the learned Judges observed that they did not feel compelled be decide otherwise by Marudamuthi Pillai v. Rangasami Mooppan I.L.R. (1901) Mad. 401, according be which 'the provisions of Che Abkari Act, as a whole, show clearly that every person carrying on abkari businesses as a principal, must be licensed' and according to which 'to hold that a person who has not got a license could still be a partner with one who has a license and as such partner carry on the business with or without the other would enable the unlicensed partner to evade the liabilities intended by the taw to be cast on persona carrying on abkar business.' It is well established that the provisions of the Abkari and Opium Acts are not intended merely to protect the public revenue and that the prohibitions contained therein are based on public policy. See Marudamuthu Pillai v. Rangasami Mooppan I.L.R. (1901) Mad. 401, Thithi Pakurudasu v. Bhemudu I.L.R. (1903) Mad. 430, Behari Lall Shaha v. Jagodish Chunder Shaha I.L.R. (1904) Calc. 798 Raghunath Lallman v. Nathu Hirji Bhate I.L.R. (1895) Bom. 626 and Hormasji Motabhai v. Pestanji Dhanjibhai I.L.R. (1888) Bom. 422. Two others cases cited on behalf of the appellant Bhikanbhai v. Hiralat I.L.R. (1900) Bom. 622 and Abdulla v. Mammod I.L.R. (1903) Mad. 156 are not in point as they relate to contracts of ferry and the provisions against; the transfer and subletting in those oases, were not statutory prohibitions. We ought perhaps to mention that the appellant's vakil wishes to make out that his client did not really become a partner with the defendants but merely became entitled to a share of the profits of the business in consideration of financing it, but this contention is obviously contrary to the case set out in the plaint and we must decline to consider it.

5. We are also of opinion that the partnership in this case was illegal for another reason as it contravened the provisions of Clause 26, of the license which prohibits the transfer of the right of sale granted to the defendants. It is contended for the appellant that the admission of the plaintiff to partnership with the defendants is not a transfer. We are of opinion that it is. It is no doubt true that every contract of partnership is not necessarily a transfer but it is equally clear that such a contract may in many cases involve a transfer, Thus if two persons agree to start a business in partnership and to contribute capital therefor, there is no transfer involved in the transaction. But if one person carrying on a trade and possessing stock and capital, admits another into partnership with himself, making the stock and capital, the joint property of both, it is impossible to contend that there is not a transfer in such a ease. The word ' transfer' says James, L.J. in Gatheroole v. Smith (1881) 17 Ch. D 1 is 'one of the widest terms that can be used' and according to Lush, D.T., in the same case the word transferable' is a word of the widest import and includes every means by which the property may be passed from one person to another', we are not concerned in construing a statute like the Opium Act with the mere form of the transaction but with the substance of it. The form may be more material in interpreting instruments under other statutes such as the Stamp Act or the Registrabion Act. Our view is in accordance with that laid down in Marudamuthu Pillai v. Rangasami Mooppan I.L.R. (1901) Mad. 401. Reliance was placed for the appeal on Gauri Shankar v. Mumtaz Ali Khan I.L.R. (1879) All. 411 where Oldfield and SpAnkee, JJ, were apparently of opinion that the copartnership in that case did not involve a transfer. The decision itself however did not proceed on that ground. The case was one relating to a ferry and according to Oldfield, J., the statute relied on in the case, did not prohibit a partnership. If the learned Judges intended to lay down the broad proposition that no partnership can amount to a tranfer, we are, with all deference, unable to agree with them. The continued effect of sections 4, 5 and 9 of the Opium Act, is to make a transfer in violation of the provisions of Clause 26 in the license (Exhibit I) illegal and the plaintiff could acquire no rights enforceable in law under Exhibit A.

6. It is contended that the form of the license used for Exhibit A was not sanctioned by the Revenue Board and that the transfer is therefore not illegal This objection was not raised in the District Court and the absence of sanction is not proved.

7. In the result we dismiss the appeal with costs of the first, third and fourth respondents.


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