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(Manna) Vazhmuni Mudali Vs. Nathumuni Mudali and ors. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai
Decided On
Reported inAIR1930Mad361
Appellant(Manna) Vazhmuni Mudali
RespondentNathumuni Mudali and ors.
Cases Referred and Behari Lall v. Jagodish Chunder
Excerpt:
- - on one simple point i think the contention of defendant 1 must fail, he has not produced the license under which he had the privilege of selling the toddy. 72 of 1925 a man who, like defendant 1, sets up a case in which he attempts to take advantage of his own wrong, must prove his case to the hilt. but there could be no doubt that courts should in the first instance be satisfied that what a party is seeking to carry out is clearly against what has been declared to be against public policy......the contract of partnership was illegal and opposed to public policy. on plaintiff's appeal the learned district judge on 6th december 1927 reversed the decision of the district munsiff and passed a preliminary decree in favour of the plaintiff for the taking of accounts in the light of the findings of the district munsiff on the other issues which were not disputed before the district judge. defendant 1 has accordingly preferred the present s.a. no. 467 of 1928 against the decision of the district judge.2. the main contention urged by the learned advocate for the appellant is that the agreement of partnership is illegal and that the suit was rightly dismissed by the district munsiff. defendant 1 held a license to sell toddy in a shop. according to him, he took the plaintiff as a.....
Judgment:

Anantakrishna Ayyar, J.

1. The plaintiff instituted on 14th February 1921 a suit for taking of partnership accounts between him and defendants 1 and 2 and for the recovery of the amount to be found due to him on the taking of the accounts he only defence was that the partner ship ended in a loss and that there was nothing due to the appellants. A decree for Rs. 570 was passed in favour of the plaintiff on 9th April 1923 by the District Munsiff. The present defendant 1 preferred an appeal. On 19th February 1925, the learned Subordinate Judge reversed that decree and remanded the suit to the District Munsiff for a fresh trial, on the ground that the trial by the District Munsiff was irregular as no preliminary decree seemed to have been passed as should have been done in the case of partnership suits. While remanding the suit the learned Subordinate Judge suggested that the Court of first instance might at the re-trial consider a new ground pressed before the lower appellate Court by the defendant, viz., that the partnership was illegal. At the re-trial, defendant 1 put in an additional written statement on 31st July 1925 that the partnership in question was illegal, and opposed to public policy. The plaintiff then applied to have his plaint amended by alleging that he would be entitled to a decree for the money advanced by him in case the Court should hold that the partnership was illegal as was contended by the defendant. That amendment was allowed by the District Munsiff by his order dated 8th October 1925. Defendant 1 filed a further additional written statement on 20th October 1925 to the amended plaint. On 21st December 1925 the then District Munsiff, while finding all the issues raised in the case in favour of the plaintiff, dismissed the plaintiff's suit. His finding on issue 5 was that the contract of partnership was illegal and opposed to public policy. On plaintiff's appeal the learned District Judge on 6th December 1927 reversed the decision of the District Munsiff and passed a preliminary decree in favour of the plaintiff for the taking of accounts in the light of the findings of the District Munsiff on the other issues which were not disputed before the District Judge. Defendant 1 has accordingly preferred the present S.A. No. 467 of 1928 against the decision of the District Judge.

2. The main contention urged by the learned advocate for the appellant is that the agreement of partnership is illegal and that the suit was rightly dismissed by the District Munsiff. Defendant 1 held a license to sell toddy in a shop. According to him, he took the plaintiff as a partner in respect of the toddy business and that such agreement of partnership is prohibited by the Madras Abkari Act (1 of 1886). The license under which defendant 1 had the privilege of selling toddy has not been produced by defendant 1. The defendant's case was that the license was taken away by the plaintiff. This is what the learned District Judge said on this point.

On one simple point I think the contention of defendant 1 must fail, He has not produced the license under which he had the privilege of selling the toddy. His explanation is the easily made one that the license has been taken away by the plaintiff. Even if he had not the original license, he could quite easily have got a copy of it from the Collector or have produced at any rate a copy of the license which was in force in 1918-1919, the year of the partnership. At the re-trial all that defendant produced was a license of the year 1921-1922. The learned District Munsiff refused to receive it. That license was taken back from the lower Court by the vakil for defendant 1, and in the course of the argument before me no form of license was produced, the defendant relying on the notification in the Fort St. George Gazette of the conditions of sale of Abkari privileges for the year 1918-1919. After the argument had concluded, I waited.... The vakil for defendant then produced a license granted to a third party. But it was granted for 1919-1920, and not 1918-1919. I do not think that I should presume, in favour of a man who is making a case of the kind made by defendant 1, that the license for 1918-1919 was in identically the same terms as the license for the year 1919-1920... It must be taken then that there is no proof of the terms of the license which defendant 1 held.

3. After referring to certain decisions, the learned District Judge observed as follows:

Following these decisions, I hold that, since the license relating to the year 1918-1919 of the partnership has not been produced, there are no grounds for saying that the contract of partnership was illegal.

4. After discussing the terms of the partnership between the parties and after observing that there was no deed of partnership to evidence the agreement of partnership, the lower appellate Court in para. 5 of its judgment observed as follows:

It seems to me that there are no sufficient grounds for holding that the agreement between defendant 1 and the other two (plaintiff and defendant 2) was contrary to law. As His Lordship, the Chief Justice said in O. S A. No. 72 of 1925 a man who, like defendant 1, sets up a case in which he attempts to take advantage of his own wrong, must prove his case to the hilt. I am clear that the respondent has not proved his case.

5. The appellant has produced before me a license granted to a third person for the year 1918-1919, and has sought to have the same admitted in evidence. I, however, do not think that at this stage, and in second appeal, I should allow him to do so. The plaint was filed on 14th February 1921, and the additional written statement in which he took this new plea was filed by him on 31st July 1925. The appeal was pending before the lower appellate Court from 22nd June 1926 till 6th December 1927. The learned District Judge remarks that even after the arguments were heard on 21st September 1927 and judgment reserved to get a copy of the High Court judgment in O.S.A. No. 72 of 1925, defendant 1's vakil produced only a license granted to a third party for the year 1919-1920 and not any license granted for 1918-1919. Defendant 1 had plenty of opportunities to prove his case, and, I do not think that I should in the circumstances allow defendant 1 to produce in second appeal additional evidence, even if there be no other legal objections in his way of doing so.

6. It goes without saying that the production of the license granted to defendant 1 is essential to enable the Court to properly adjudicate on the question of illegality of the partnership raised by defendant 1. In Natla Bapiraju, v. Achuta Rajaju : (1910)20MLJ337 , Miller and Krishnaswami Ayyar, JJ., with reference to a similar argument observed as follows:

The Subordinate Judge sustained this objection and dismissed the suit. The license is not on record and it is impossible for us to say that the partnership contravenes any condition therein set forth.

7. In O.S.A. No. 72 of 1925, the late learned Chief Justice and Ramesam, J., observed as follows:

The license which was granted is not forthcoming. Is it impossible to say why it was not produced. Had he produced the same, we would have been in a position to say, as we are not now, what exactly were the restrictions imposed upon his enjoyment of the license. The onus of establishing the illegality of the contract obviously lay heavily on defendant 1, and I am content to dispose of this case on the ground that this burden he never discharged in the Court below in spite of the latitude given to him.

8. See also Appadurai Mudali v. Murugappa Mudali A.I.R. 1926 Mad. 772, Odgers and Madhavan Nair, JJ. No doubt in matters contrary to public policy, Courts should not lend there aid in favour of persons who seek their aid to carry out something which is illegal and contrary to public policy: but there could be no doubt that Courts should in the first instance be satisfied that what a party is seeking to carry out is clearly against what has been declared to be against public policy. As observed by Lord Halsbury in Connolly v. Consumer's Cordage Co. [1904] 89 L.T. 347:

their Lordships entertain no doubt that it is the right and duty of the Court, at any stage of the cause, to consider, and, if it is sufficiently proved, to act upon an illegality which might turn out to be fatal to the claims of either of the parties to the litigation.

9. The Lord Chancellor added, that:

their Lordships did not doubt that the learned Judges who tried the case in the Court below had a right, and that it was their duty, if they thought the facts were established, to take care that the process of the Court should not be used for the purpose of establishing a claim that ought not to be permitted to be enforced in a Court of Justice.

Lindley, L.J.

10.observed in Scott v. Brown [1892] 2 Q.B. 724:

It matters not whether the defendant has pleaded the illegality or whether he has not. If the evidence adduced by the plaintiff proved the illegality, the Court ought not to assist him.

11. While the duty of the Court is not to render its aid to the enforcement of transactions which are illegal, it is at the same time, incumbent that the illegality should be 'sufficiently proved' (in the words of Lord Halsbury), and that the 'facts were established' (in the words of Lord Chancellor). A partnership is prima facie legal, unless it is proved that the object of the same was illegal, or that the object of the partnership necessarily involved something illegal or contrary to public policy. (Section 23, Contract Act). The defendant who alleged the illegality has not succeeded in establishing the necessary facts which would enable the Court to come to that conclusion. Defendant 1 not having produced the necessary materials before the Court, I am unable to say that the learned District Judge was wrong in his decision on this point.

12. On the second contention raised by the learned advocate for the appellant, I propose to say only a very few words. It could not be said that every partnership relating to abkari business involves a transfer. As observed by Benson and Sundara Iyer, JJ., in the case reported in Padmavabham v. Badrinath Sarda [1912] 35 Mad. 582:

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 the circumstances 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 the capitals, the joint property of both, it is impossible to contend that there is not a transfer in such a case.

13. The learned District Judge considers this question in para. 5 of his judgment. He says:

there is no deed of partnership and one has to gather what the terms were from the oral evidence of the parties. As I understand the evidence, the case is not one of the respondent, having a going toddy trade and taking the other two (plaintiff and defendant 2) into partnership. So far as I can gather, each of the three parties contributed an equal share of money and the business was started, the license being taken in the name of defendant 1. It seems to be clear that at the time the partnership was formed he had hot begun the trade in toddy and had no stock which he made the joint property of all the three....

14. Therefore in that view also the learned District Judge was, I think, right in overruling the contention of defendant 1, as the partnership in the particular case did not involve a transfer. In Appadurai Mudali v. Murugappa Mudaly A.I.R. 1926 Mad. 772 Odgers and Madhavan Nair, JJ., decided:

where it was alleged that a partnership between defendants 1, 2 and 3 in the matter of an abkari business was illegal and opposed to public policy because the abkari license stood only in the names of defendants 2 and 3, instead of three persons, but the license itself was not produced... that, in the absence of evidence to show that it was a condition of the license that all the names of licensees or persons concerned in that particular trade or business by way of partnership etc must appear on the face of the license, the partnership could not be held to be illegal; and that there was nothing prima facie illegal in such a partnership under the Abkari Act.

15. Defendant 1 is no doubt entitled to take objection that the partnership entered into by him with the plaintiff and defendant 2 was illegal and contrary to public policy; but he should have produced proper materials before the Court to enable the Court to properly adjudicate on such pleas. He not having done so in the present case, the lower appellate Court was right in passing a preliminary decree in favour of the plaintiff and directing the usual accounts to be taken. I do not propose that this litigation, begun on 14th February 1921 should further be prolonged by allowing defendant 1 at this stage to adduce additional evidence.

16. In this view, I do not propose to discuss the various decisions cited before me by the learned advocates on either side in the second appeal, viz: Marudamuthu Pillai v. Rangasami Moopan [1901] 24 Mad. 401; Thithi Pakurudasu v. Bheemudu [1903] 26 Mad. 430; Namasivaya Gurukkal v. Subramania Ayyar [1916] 34 I.C. 927; Gangadhara Sah v. Sivaminatha Mudali : AIR1926Mad218 ; Brahmayya v. Ramiah [1920] 43 Mad. 141; of this Court Karsan v. Gatlu Shivaji [1913] 37 Bom. 320; Nazaratti Syad Imam v. Babamiya Dureyatimsha [1916] 40 Bom. 64; Champsey Dossa v. Gordhandoss Kessowji [1917] 19 Bom. L.R. 381; of the Bombay High Court; Jnanendra Nath v. Chandi Charan Saha [1915] 29 I.C. 480 and Behari Lall v. Jagodish Chunder [1904] 31 Cal. 798 of the Calcutta High Court, as I consider that the case before me could be disposed of on the grounds already mentioned by me.

17. The result is that the second appeal is dismissed with costs.


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