1. This is a suit brought by the plaintiff to recover certain sums alleged to be due by the defendant to the plaintiff by virtue of an Indemnity contained in a verbal agreement set out in the 2nd paragraph of the plaint. The plaintiff alleges he carried on the business of a vendor of liquor in certain shops in Calcutta, and that in 1894 he was desirous of relinquishing his business in the shop, 148, Bow Bazar Street, and he entered into agreements with the defendant and one Basanto Coomar Shaha whereby the plaintiff was to sell the stook-in-trade of the shop and furniture to the defendant and Basanto Coomar Shaha, and that thereafter the defendant Basanto Coomar Shaha should carry on the business of vendors of liquor on their own account and responsibility. It is stated that the object of the agreement was to enable the defendant and Basanto Coomar Shaha to sell the liquor without obtaining a license, and in order to carry out this purpose, this agreement was entered into and the defendant and Basanto Coomar Shaha undertook not to contract any debt in the name of the plaintiff, and further that they were to keep the plaintiff and his estate and effects indemnified against all claims and demands against the shop, and that in further consideration of the liberty to use the name of the plaintiff to carry on the business the defendant and Basanto Coomar Shaha agreed to pay the plaintiff Rs. 100 per annum. The plaintiff alleges, the agreement was carried out and that he paid off all existing debts in the business carried on in the shop, and sold to the defendant and Basanto Coomar Shaha all the goods, stock-in-trade and entire furniture at a valuation, and made over the shop from July 1894 to the defendant and to Basanto Coomar Shaha, who thenceforward carried on the business as vendors of liquor in the plaintiff's name, but on their own joint account and responsibility. The business was carried on by the defendant and Basanto Coomar Shaha up to the end of June 1896, and disputes having arisen between them, the latter severed his connection with the business and the defendant carried on the business from the 1st July 1896 to the 31st March 1902. The plaintiff alleges that throughout this period the terms of the agreement were adhered to, except that the annual payment was increased from Rs. 100 per annum to Rs. 25 and then Rs. 30 per month, and finally to Rs. 50 per month. The plaintiff further alleges that Rs. 50 per month was paid up to January 1902, and that the instalments for the months of February and March are still due. The plaintiff alleges, that during the time the defendant carried on tile business on his own account and responsibility, he contracted debts contrary to the terms of the original agreement, in the plaintiff's name and those debts he (the plaintiff) has had to pay. The plaintiff therefore claims these amounts and also expenses which he has incurred in respect of suits instituted for recovering the same from him, and also the instalments of Rs. 50 per month for February and March, altogether amounting to Rs. 2,725-12-6.
2. The defendant in his Written statement denies all the material allegations in the plaint, and denies he has carried on the business on his own account either solely or jointly with Basanto Coomar Shaha. He says he had only interfered to assist his brother the plaintiff, and the business was throughout done for the plaintiff and in his name, and that the plaintiff is responsible for all debts and that he has advanced money to the plaintiff for the business, and states that there is a sum exceeding the plaintiff's claim due to him in respect of advances made and expenses incurred by the defendant in carrying on the business on the plaintiff's account. At the hearing the defendant raised a defence in the nature of a demurrer. It is not suggested that the plaintiff has been taken by surprise by the defence, nor has any application to adjourn the suit on that ground been made.
3. The defence is that the contract on which the plaintiff relied is one opposed to the policy of the Excise law, and, being contrary to public policy, is illegal and void. The plaintiff on the other and relies on the fact that the suit is based on an indemnity which, it is contended, is separable from the rest of the contract, and it is said that, even if the monthly instalments are not recoverable by reason of the contract being illegal, there is nothing in the Excise law to prevent his recovering under the indemnity the sum due thereunder. It seems to me that it is impossible to differentiate the claim in respect of the two monthly instalments from the claim under the indemnity. Both claims form part of the considerations for the agreement, the object of which was to enable the business to be carried on at 148 Bow Bazar Street by the defendant and Basanta Coomar Shaha trading under the plaintiff's name without the necessity of taking out a license. The plaintiff in consideration of the permission to trade in his name stipulates, first, for the payment of a money consideration, and secondly for an. indemnity against all losses, claims, demands, and expenses, in respect of the business. The claim therefore in respect of the two monthly instalments and the claim under the indemnity must stand or fall together as parts of the same agreements. It remains for me to consider whether the agreement, having regard to its general purpose and object, is illegal and void: I think it is clear that the object of the Excise Act, VII of 1878, is to prohibit persons from selling or carrying on the business of selling exciseable articles without a license, and, I think, two principles are laid down by the cases cited, which have an important bearing on the present case.
4. 1st--The case of Boistub Churn Naun v. Wooma Churn Sen (1889) I.L.R. 16 Calc. 436 lays down the principle that the prohibition by the Act of sale of liquor without a license is based upon public policy and on moral grounds, and that the purpose of the Act is not confined to the protection of the revenue. That conclusion was arrived at by the Court after a careful analysis of the sections of the Act.
5. 2nd--In another case, that of Jadoo Nath Shaha v. Nabin Chunder Shaha (1874) 21 W.R. 289 it was decided that an agreement, which contravened the policy of the Act, or which has for its object the carrying on of a business or trade in contravention of the Excise law is illegal. It is true that the decision in question was arrived at not in connection with the present Act, but with reference to the Act of 1856; but the distinction is immaterial. I think the principle, which is deduced from the earlier Act, clearly underlies the later Act also. The question is whether the agreement in suit contravenes public policy. It is said there is nothing in the agreement of indemnity against the policy of the Act and that no such agreement of indemnity is prohibited by the Act, and it is contended, that, inasmuch as the plaintiff is not suing to recover the price of articles sold to the defendant without a license nor has the plaintiff infringed the rule that a licensee may not transfer his license nor sublet his Shop, it cannot be said that the claim in suit is in contravention of the Act. It is to be remarked that the provisions against transfer of licenses and the subletting of shops for the sale of liquor show that the object and purpose of the Excise law is to make the license a personal privilege, which the Excise authorities have the sole right of granting or withholding and that the rights or privileges conferred by the license cannot be transferred by one private individual to another. But this is what the plaintiff seeks to do by the instrumentality of the agreement. It is true that the plaintiff has transferred his license, but the defendant is permitted to use the plaintiff's name and license and carry on business in every way uncontrolled by the plaintiff as if he were the licensee himself. The contract of indemnity is the means used to gain this end. The license is not to be transferred, and so far the plaintiff's responsibility in the eye of the law continues, but on the other hand the defendant is to have all the benefit of the license as if it were transferred to him, he agreeing to hold the plaintiff indemnified from all claims and demands made in respect of the business. The contract of indemnity is therefore a vital and necessary part of the arrangement and essential for the purpose of allowing the defendant to use the plaintiff's name. Section 11 says no person shall sell any exciseable article without the Collector's license. The plaintiff's object was to permit the defendant and Basanto Coomar Shaha, to sell such articles without a license. I am of opinion therefore at the objects of the agreement is to enable the defendant ' Scary on the business of vendor of liquor in contravention of the Excise Law, and that as the indemnity was an essential part of the machinery for attaining that end, the agreement and the indemnity are both illegal and void. The suit must therefore be dismissed with costs.