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Nanna Vazhmumi Mudali Vs. Nathamuni and anr. - Court Judgment

LegalCrystal Citation
CourtChennai
Decided On
Judge
Reported in122Ind.Cas.342
AppellantNanna Vazhmumi Mudali
RespondentNathamuni and anr.
Cases Referred and Behari Lal Shah v. Jagodish Chunder Shaha
Excerpt:
contract act (ix of 1872), section 23 - partnership in abkari business--illegality--burden of proof--non-production of license, effect of--madras abkari act (i of 1886). - .....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 munsif and passed a preliminary decree in favour of the plaintiff for the taking of accounts in the light of the findings of the district munsif on the other issues which were not disputed before the district judge. the 1st defendant has accordingly preferred the present second appeal 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 munsif, the 1st defendant held a license to sell toddy in a shop. according to him, he took.....
Judgment:

Anantakrishna Ayyar, J.

1. The plaintiff instituted on 14th February, 1921, a suit for taking of partnership accounts between him and defendants Nos. 1 and 2 and for the recovery of the amount to be found due to him on the taking of the accounts. The only defence was that the partnership 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 Munsif. The present 1st defendant preferred an appeal. On 19th February, 1925, the learned Subordinate Judge reversed that decree and remanded the suit to the District Munsif for a fresh trial, on the ground that the trial by the District Munsif 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 retrial consider a new ground pressed before the lower Appellate Court by the defendant, viz., that the partnership was illegal. At the re-trial, the 1st defendant 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 then contended by the defendant That amendment was allowed by the District Munsif by his order dated 8th October, 1925. The 1st defendant filed a further additional written statement on 20th October, 1925, to the amended plaint. On 21st December, 1925, the then District Munsif, while finding all the issues raised in the case in favour of the plaintiff dismissed the plaintiff's suit. His finding on the 5th issue 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 Munsif and passed a preliminary decree in favour of the plaintiff for the taking of accounts in the light of the findings of the District Munsif on the other issues which were not disputed before the District Judge. The 1st defendant has accordingly preferred the present Second Appeal 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 Munsif, The 1st defendant 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 (I of 1886). The license under which the 1st defendant had the privilege of selling toddy has not been produced by the 1st defendant. 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 the 1st defendant must fail. He had 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 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 the 1st defendant produced was a license of the year 1921-1922, The learned District Munsif refused to receive it. That license was taken back from the lower Court by the Vakil for the 1st defendant and in the course of the argument before me no form of license was produced, the defendant relying on the notification in 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 the 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 the 1st defendant, 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 the 1st defendant held'. 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.' 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 the 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 the 1st defendant and the other two (plaintiff and 2nd defendant) was contrary to law. As his Lordship the Chief Justice in O.S.A. No. 72 of 1925, a man who, like the 1st defendant 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.

3. 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, the 1st defendant's Vakil produced only a license granted to a third party for the year 1919 1920 and not any license granted for 1918-1919. The 1st defendant had plenty of opportunities to prove his case, and I do not think that I should in the circumstances allow the 1st defendant to produce in second appeal additional evidence even, if there be no other legal objections in his way of doing so.

4. It goes without saying that the production of the license granted to the 1st defendant is essential to enable the Court to properly adjudicate on the question of illegality of the partnership raised by the 1st defendant. In Natla Bipiraju v. Puram Achutta Rajajez 5 Ind. Cas. 456 : 20 M.L.J. 337 : (1910) M.W.N. 549 : 7 M.L.T. 176 Miller and Krishna-swami Iyer, 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'. In O.S.A. No. 72 of 1925, the late learned Chief Justice and Mr. Justice Ramesam observed as follows: The license which was granted is not forthcoming. It is 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 the 1st defendant, 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. ' See also Appadurai Mudali v. Murugappa Mudali 96 Ind. Cas. 91 : 51 M.L.J. 12 : 23 L.W. 709 : A.I.R. 1926 Mad. 772 by Odgers and Madhavan Nair, JJ., no doubt, in matters contrary to public policy, Courts should not lend their 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 Hals-bury in Connolly v. Consumers Cordage Co. (1903) 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 may turn out to be fatal to the claims of either of the parties to the litigation. ' 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., observed in Scott v. Brown (1892) 2 Q.B. 724 : 61 L.J.Q.B. 738 : 4 R. 42 : 67 L.T. 782 : 41 W.R. 116 : 57 J.P. 213: 'It matters not whether the defendant has pleaded the illegality or whether he has not. If the evidence adduced by the plaintiff proves the illegality the Court ought not to assist him.' 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 the 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 allegal or contrary to public policy. (Section 23 of the Indian 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. The 1st defendant 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.

5. 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 as Nalan Padmanabhan v. Badri Nadh Sarda 10 Ind. Cas. 126 : 35 M. 582 : 9 M.L.T. 459 : 31 M.L.J. 425 : (1911)1 M.W.N 371, '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 capitals, the joint property of both, it is impossible to contend that there is not a transfer in such a case.' 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 the 2nd defendant 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 the 1st defendant...It seems to be clear that at the time the partnership was formed he had not begun the trade in toddy and had no stock which he made the joint property of all the three...' Therefore, in that view also the learned District Judge was, I think, right in overruling the contention of the 1st defendant, as the partnership in the particular case did not involve a transfer. In Appadurai Mudali v. Murugappa Mudali 96 Ind. Cas. 91 : 51 M.L.J. 12 : 23 L.W. 709 : A.I.R. 1926 Mad. 772, Odgers, J., and Madhavan Nair, J., decided ' where it was alleged that a partnership between defendants Nos. 1 to 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 the defendants Nos. 2 and 3 instead of all the three persons, but the liceiise 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 the 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..'

6. The 1st defendant is no doubt entitled to take objection that the partnership entered into by him with the plaintiff and the 2nd defendant 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 the 1st defendant at this stage to adduce additional evidence.

7. In this view I do not propose to discuss the various decisions cited before me by the learned Advocates on either side in second appeal, viz., Marudamathu Pillai v. Rangasami Moopan 24 M. 401, Thithi Pakurudasu v. Bheemudu 26 M. 430, Namasivaya Kurukkal v. Subramania Ayyan 34 Ind. Cas. 927, Khoday Gangadara Sah v. Swaminadha Mudali : AIR1926Mad218 , Ganapathi Brahmayya v. Kurella Ramiah 51 Ind. Cas. 45 : 43 M. 141 : 10 L.W. 476 : 38 M.L.J. 123 of this Court; Karsan Sadatshio Patil v. Gatlu Shivaji Patil 19 Ind. Cas. 422 : 37 B. 320 : 15 Bom. L.R. 227, Nazaralli Sayed Imam v. Babamiya Dureyatimsha 30 Ind. Cas 913 : 40 B. 64 : 17 Bom. L.R. 701 and Champsay Dossa v. Gordhandas Kessowji 40 Ind. Cas. 805 : 19 Bom. L.R. 381 of the Bombay High Court; Jnanendra Nath Bhattacharjee v. Chandi Chiran Jaha 29 Ind. Cas. 480 and Behari Lal Shah v. Jagodish Chunder Shaha 31 C. 798 : 8 C.W.N. 635 of the Calcutta High Court as I consider that the case before me could be disposed of on the grounds already mentioned by me.

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


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