RAMAN KUMARAN Vs. ABOOBACKER KUNHI

JUDGEMENT

(1.) THIS is an appeal from a decree dismissing a suit for dissolution of a partnership and for appointment of a receiver to wind up the affairs of the partnership.

(2.) THE defendant was plying a bus service on the route, taliparamba Cannanore, under the name and style of "peeyam transports". THE permit for the bus stood in the name of "peeyam transports". THE defendant took the plaintiff as a partner in the business under Ext. A-1 dated 31-5-196 1. He made over the bus to the partnership at a value of Rs. 35. 000, out of which rs. 17,500 was to be paid by the plaintiff to the defendant and that was to be his contribution to the capital of the partnership. THE defendant was to manage the affairs of the partnership and as remuneration be was to be paid Rs. 350/-per month. THE collections of the partnership have to be kept by the plaintiff and he was to keep the accounts. All appointments in the partnership business have to be made by the defendant with the consent of the plaintiff. THE profit or loss of the partnership should be divided or suffered equally between the parties. THEse, in substance, are the main terms of Ext. A-1. Alleging that differences of opinion have arisen between the parties and that it is impossible to carry on the business in partnership, the plaintiff has filed the suit.

(3.) THE question to be considered is whether the partnership agreement was forbidden by law, or was of such a nature that if permitted it would defeat the provisions of any law or was opposed to public policy. In order to show that the partnership is illegal, it is necessary to establish that the object of the partnership is one the attainment of which is contrary to law or that the object being legal, its attainment is sought in a manner which the law forbids. In Anderson Ltd, v. Daniel 1924-1 K. B. 138, Atkin L. J. , formulated the principle as follows: "the question of illegality in a contract generally arises in connexion with its formation, but it may also arise, as it does here, in connexion with its performance. In the former case, where the parties have agreed to something which is prohibited by Act of Parliament, it is indisputable that the contract is unenforceable by either party. And I think that it is equally unenforceable by the offending party where the illegality arises from the fact that the mode of performance adopted by the party performing it is in violation of some statute, even though the contract as agreed upon between the parties was capable of being performed in a perfectly legal manner. " THEre are two principles involved. THE first is that a contract which is entered into with the object of committing an illegal act is unenforceable. THE second is that a court will not enforce a contract which is expressly or impliedly prohibited by statute. THEre has been no transfer of the permit to the plaintiff or to the partnership under Ext. A-1 agreement. THE agreement did not provide for the transfer of the permit to the partnership. But in the plaint there is a statement that with the formation of the partnership the permit also became the property of the firm. That is a statement of the legal effect resulting from the transfer of the bus to the partnership and of agreement to run the business in partnership thereafter. We cannot go outside Ext. A-1 to find out the intention of the parties. If the inevitable effect of the transfer of the bus to the partnership was a transfer of the permit also, we would have thought that the intention of the parties was the doing of an act prohibited by law. We think that neither the formation of the partnership in the business of transport nor the transfer of the bus to the partnership had that effect. THE transfer of the bus to the partnership was not forbidden by law. S. 31 of the Motor Vehicles Act only requires that the transferor and the transferee should report the transfer to the registering authority. Persons may be partners in a business and yet the property by means of which the business is carried on may not be the property of the firm but the separate property of one or more of the partners. (See Fromont v. Coupland 130 E. R. 271 and Miles v, Clarke 1963-1 All. E. R. 779 ). A permit even if considered as a personal privilege and cannot be transferred without the consent of the transport authority, it was not necessary that there should have been a transfer of the permit in question to the partnership for the formation of the partnership. A partnership in the business of transport could have been constituted without a transfer of the permit, and we think that it was so constituted. THE fact that the parties did not provide for the transfer of the permit to the partnership and the fact that a partnership could be formed in the business without a transfer of the permit to the partnership should conclude the question that there was no intention to do a prohibited act in ext. A-1. Nor has a contract prohibited by law been made. In'lindley on partnership', 12th Edition, page 132, it is observed: "illegality is never presumed, but must always be proved by those who assert its existence; but if the illegality is either apparent on the face of the proceedings or appears in the course of the trial, the court will itself take cognizance of the illegality and act accordingly even though the illegality is not relied upon by either party. " In Manbharibai v. B. R. Mill AIR. 1956 Nagpur 225 the court said: "illegality is never presumed, but must always be proved by those who assert its existence".