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S. Vairava Nadar Vs. Pothikachala Nadar - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Reported inAIR1936Mad603; 165Ind.Cas.765
AppellantS. Vairava Nadar
RespondentPothikachala Nadar
Cases ReferredAppudurai Mudali v. Murugappa Mudali
Excerpt:
- - the petitioner argues that although the partnership itself may be an illegal one, he (the petitioner) was not a member of the partnership, that he was a stranger to it and that his transaction with the partnership merely being a loan transaction was a perfectly legal one and he refers to ganapathi brahmayya v. what is the position here ? 4. clearly, under the abkari act the license could not stand in the name of more than one person and the evidence of the defendant was that it stood in the name of the first executant of the promissory note (pillaiyar nadar); and that evidence has not been challenged. 5. in the present ease there is a finding that the plaintiff did know of it which is clearly a distinguishing feature;.....although in that case the position was different because that was a suit by one member of an illegal partnership against another. the distinguishing feature in this case is that the plaintiff was not a member of this partnership at all but was a stranger to it. certain cases are referred to in my judgment and one of them is a decision of odgers and madhavan nair, jj., viz., appudurai mudali v. murugappa mudali 1926 23 mlw 709. there one of the distinguishing features was that there was no evidence that the plaintiff ever knew that an illegal trade had been carried on. i quote the following from my own judgment at p. 731:it was a question whether on the evidence of the plaintiff he could be said to be particeps criminis in the carrying on the illegal trade because, assuming that.....
Judgment:
ORDER

Beasley, C.J.

1. This is a Civil Revision Petition against the judgment of the District Munsif dismissing the plaintiff's suit. The plaintiff is the petitioner. The claim was for Rs. 153 balance due on a promissory note dated 25th September 1930 and executed by the defendant and five others to the plaintiff for Rs. 850 with interest at 12 per cent per annum. On settlement, Rs. 900 was agreed to be paid by the defendant to the plaintiff on 9th June 1933. The other five executants paid their quota. The defendant did not pay his portion of the amount, i.e., Rs. 150. Hence the suit. The defendant filed a written statement pleading (1) discharge found against by trial Judge, and (2) that the purpose for which the amount was borrowed was not valid in law. The promissory note is Ex. A and there are six executants to it, the present respondent being the third executant, and there is the following recital:

We have this day borrowed from you Rs. 850 in cash for our toddy-shop business. On demand we promise to pay to you or order or the person holding authority from you this sum of rupees eight hundred and fifty with interest at one rupee per cent per mensem and take back this note.

2. The defendant's contention was that the money was lent for the purpose of a partnership which was forbidden by law, namely, the toddy-shop business it being against the Abkari Act, for anyone except a person in whose name the license stands to carry on such a business and such a business cannot be transferred to another who does not hold a license except with the permission of the Collector. It was not contended either in the lower Court or here that any such permission had been obtained and it was conceded that the partnership was one which was forbidden by law. This question appears to me to be concluded by the findings of fact in this case which must be accepted. The point considered in the lower Court was 'whether the amount was borrowed for a purpose prohibited by law to the plaintiff's knowledge.' On this point the learned District Munsif says:

The partial admissions of plaintiff and the language in Ex. A show that the defendant's statements on this point are true. I do not believe that plaintiff was ignorant of the recitals in Ex. A. I find the point against him.

3. I take this to be a finding that the amount was borrowed for a purpose prohibited by law and the plaintiff knew of that. The petitioner argues that although the partnership itself may be an illegal one, he (the petitioner) was not a member of the partnership, that he was a stranger to it and that his transaction with the partnership merely being a loan transaction was a perfectly legal one and he refers to Ganapathi Brahmayya v. Ramiah 1920 43 Mad 141, and the citation from Lindley on Partnership, 8th Edition, p. 127, which appears on p. 144. No doubt a partnership which is an illegal one can nevertheless be sued by a. creditor of a partnership where the contract or transaction sued upon is not itself tainted by illegality, but if the contract is itself tainted by illegality, the suit is not maintainable against the partnership. What is the position here ?

4. Clearly, under the Abkari Act the license could not stand in the name of more than one person and the evidence of the defendant was that it stood in the name of the first executant of the promissory note (Pillaiyar Nadar); and that evidence has not been challenged. Therefore it is quite clear that in the absence of any evidence of the permission of the Collector having been obtained for the transfer of the license to the other members of the partnership it became an illegal one. The position therefore is that the business was one forbidden by law and it was so to the knowledge of the plaintiff according to the finding of the lower Court. In my view, if money is lent to a partnership with the knowledge that it is going to be used for purposes forbidden by law, then the amount so lent cannot be recovered. The Full Bench decision of this Court in Ramanayudu v. Seetharamayya 1935 58 Mad 727, deals with the question as to whether or not such a claim is sustainable although in that case the position was different because that was a suit by one member of an illegal partnership against another. The distinguishing feature in this case is that the plaintiff was not a member of this partnership at all but was a stranger to it. Certain cases are referred to in my judgment and one of them is a decision of Odgers and Madhavan Nair, JJ., viz., Appudurai Mudali v. Murugappa Mudali 1926 23 MLW 709. There one of the distinguishing features was that there was no evidence that the plaintiff ever knew that an illegal trade had been carried on. I quote the following from my own judgment at p. 731:

It was a question whether on the evidence of the plaintiff he could be said to be particeps criminis in the carrying on the illegal trade because, assuming that there was a prohibition in the terms of the license, there was no evidence that the plaintiff ever knew of it.

5. In the present ease there is a finding that the plaintiff did know of it which is clearly a distinguishing feature; and in my view the suit was properly dismissed on the ground that the plaintiff lent money for the purpose of carrying on a partnership which to his knowledge was forbidden by law. That being so, he was particeps criminis and could not recover. The Civil Revision Petition is dismissed with costs.


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