GHERULAL PARAKH Vs. MAHADEODAS MAIYA

JUDGEMENT

(1.) This appeal filed against the judgment of the High Court of Judicature at Ca1cutta raises the question of the legality of a partnership to carry on business in wagering contracts.

(2.) The facts lie in a small compass. They, omitting those not germane to the controversy before us, are as follows:The appellant, Gherulal Parakh, and the first respondent, Mahadeodas Maiya, managers of two joint families entered into a partnership to carry on wagering contracts with two firms of Hapur, namely, M/s. Mulchand Gulzarimull and Baldeosahay Suraj mull. It was agreed between the partners that the said contracts would be made in the name of the respondents on behalf of the firm and that the profit and loss resulting from the transactions would be borne by them in equal shares. In implementation of the said agreement, the first respondent entered into 32 contracts with Mulchand and 49 contracts with Baldeosahay and the net result of all these transactions was a loss, with the result that the first respondent had to pay to the Hapur merchants the entire amount due to them. As the appellant denied his liability to bear his share of the loss, the first respondent along with his sons filed O. S. No. 18 of 1937 in the Court of the Subordinate Judge, Darjeeling, for the recovery of half of the loss incurred in the transactions with Mulchand. In the plaint he reserved his right to claim any further amount in respect of transactions with Mulchand that might be found due to him after the accounts were finally settled with him. That suit was referred to arbitration and on the basis of the award, the Subordinate Judge made a decree in favour of the first respondent and his sons for a sum of Rs. 3,375. After the final accounts were settled between the first respondent and the two merchants of Hapur and after the amounts due to them were paid, the first respondent instituted a suit, out of which the present appeal arises, in the Court of the Subordinate Judge, Darjeeling, for the recovery of a sum of Rs. 5,300 with interest thereon. Subsequently the plaint was amended and by the amended plaint the respondents asked for the same relief on the basis that the firm had been dissolved. The appellant and his sons, inter alia, pleaded in defence that the agreement between the parties to enter into wagering contracts was unlawful under S. 23 of the Contract Act that as the partnership was not registered, the suit was barred under S. 69(1) of the Partnership Act and that in any event the suit was barred under O. 2, Rule 2 of the Code of Civil Procedure. The learned Subordinate judge found that the agreement between the parties was to enter into wagering contracts depending upon the rise and fall of the market and that the said agreement was void as the said object was forbidden by law and opposed to public policy. He also found that the claim in respect of the transactions with Mulchand so far as it was not included in the earlier suit was not barred under O. 2, Rule 2, Code of Civil Procedure, as the cause of action in respect of that part of the claim did not arise at the time the said suit was filed. He further found that the partnership was between the two joint families of the appellant and the first respondent respectively, that there could not be in law such a partner- ship and that therefore S. 69 of the Partnership Act was not applicable. In the result, he dismissed the suit with costs.

(3.) On appeal, the learned Judges of the High Court held that the partnership was not between the two joint families but was only between the two managers of the said families and, therefore, it was valid. They found that the partnership to do business was only for a single venture with each one of the two merchants of Hapur and for a single season and that the said partnership was dissolved after the season was over and therefore the suit for accounts of the dissolved firm was not hit by the provisions of sub-sections (1) and (2) of S. 69 of the Partnership Act. They further found that the object of the partners was to deal in differences and that though the said transactions-being in the nature of wager, were void under S. 30 of the Indian Contract Act, the object was not unlawful within the meaning of S. 23 of the said Act.