J D ITALIA Vs. DCOWASJEE

JUDGEMENT

(1.) The appellant sued on the original side of this Court for a declaration that a partnership between him and the defendant was dissolved on 80 September 1988 and for an order directing that the accounts of the partnership be taken from 1 October 1937 to 30th September 1988. No oral evidence was given as the parties had agreed that the action should be tried on the correspondence and certain other documents. It is common ground that the partnership commenced before 23 August 1937. The record does not disclose the exact date of the agreement; but this is not material. The partnership was formed for the purpose of acquiring licences for the carrying on of a retail business in toddy in shops in the City of Madras. Licences were obtained, but they were only issued in the name of the plaintiff. The defence was that as the licences stood in the name of the plaintiff alone, the partnership was illegal and therefore the suit was not maintainable. This plea was accepted by Krishnaswami Ayyangar J., who tried the action, and consequently he non-suited the plaintiff who has appealed. During the pendency of the appeal the respondent died and his legal representatives have been made parties in his place. The situation disclosed is an unusual one and it is necessary to set out the course of events. For the year commencing 1 October 1937, the Collector called for tenders in respect of toddy shops in Madras and on 23 August 1937 the plaintiff submitted a tender on behalf of the partnership, but in his own name. The plaintiff had already informed the Secretary of the Board of Revenue of the partnership and it may be taken that the revenue authorities were fully aware of the arrangement at all material times. On 28 August 1937 the tender was withdrawn but two days later the letter of withdrawal was withdrawn. On 3l August, the tender was accepted in respect of 14 toddy shops, but subsequently two other shops were included. On 2 September, formal notice of the partnership was given by the plaintiff in a letter addressed to the Commissioner of Excise. The plaintiff added that the shops would remain in his name. The defendant took exception to the issue of the licences to the plaintiff alone and consequently on 11 September the plaintiff wrote to the Collector asking that the licences for the shops should be issued in the joint names of "J. D. Italia and D. Cawasji", or in the name of "J. D. Italia and Co.", whichever the Collector might think fit. On 24 September pending the decision on the question of the issue of the licences in the joint names, the Collector issued a temporary licence in the name of the plaintiff. On 20 October the plaintiff again wrote asking that the licences be issued in the joint names of himself and the defendant. It was not until 10 March 1988 that the Collector replied, and the reply was to the effect that the request could not be granted. As the plaintiff had made a full disclosure of the position before his tender was accepted, he naturally asked for the reconsideration of this decision. On 11 April the Collector wrote inquiring whether the plaintiff was prepared to register a company Italia and Co., with himself and Mr. D. Cawasji as partners and with himself authorised to act in the name of the company. Although he used the word "company" the Collector was obviously inquiring whether the plaintiff was prepared to register the partnership under the Partnership Act. The plaintiff had to communicate with the defendant, who was resident in Bombay, and this occasioned delay. On 30 April the Collector called for a reply within one week and stated that otherwise the licences would be issued in the plaintiff's name only. The plaintiff asked for time to reply until 1 June, but this was not granted. On 18 May the Collector wrote to the plaintiff informing him that the licences of the 16 toddy shops would be issued in his name only and that he should produce security to the extent of Rs. 15,000 in the place of the Government promissory notes belonging to the defendant which had been deposited as part of the required security. At the outset each partner had furnished half of the security.

(2.) The defendant refused to comply with the suggestion of the Collector that the partnership should be registered and the plaintiff be authorised to represent the partnership. His reason for doing so is obvious. The business was being carried on at considerable loss and the defendant wished to avoid his agreement with the plaintiff, if he could possibly do so. The plaintiff objected to the requirements of the Collector that he should provide fresh security in the place of that furnished by the defendant, and a number of letters passed, between the plaintiff and the Collector and the defendant and the Collector. In a letter dated 4 August 1938 the plaintiff wrote to the Collector objecting to the promissory notes for Rs. 15,400 which the defendant had deposited being handed over to him. In this letter the plaintiff said: The notes have been deposited by me under a covering letter signed by me, and I shall hold you responsible if the notes were handed over to anyone without my authority. You have accepted the partnership in the beginning, and on your acceptance the notes were deposited. Mr. D. Cawasji is trying to get out of this, which in law is impossible. The revenue authorities insisted on the plaintiff furnishing fresh security, which he eventually did. The defendant's Government promissory notes were returned to him by the Collector on 31 March 1939, six months after the expiry of the period for which the partnership was formed. It is common ground that the defendant controlled the management of the shops from 1 February 1938 until 19 June 1938 and that he was contributing his share of the funds required for the carrying on of the business till 13 July 1938. Altogether he contributed Rs. 1,37,422-10-7.

(3.) Throughout the year only temporary licences were issued. These licences throughout stood in the name of the plaintiff and were renewed every fort-night. There can be no doubt that up to 18 May 1938, these temporary licences, although issued in the plaintiff's name alone, were intended to apply to the partnership. Up to that date, the revenue authorities appeared to be agreeable to the business being carried on in partnership and it was only when the partners failed to follow the suggestion of the Collector that the partnership should be registered and the plaintiff authorised to represent it that they decided that they would only recognise the plaintiff.