CHAVA RAMANAYUDU Vs. SURYADEVARA SEETHARAMAYYA

JUDGEMENT

(1.) This was a suit on a promissory note.; The plaintiff was one Chava Ramanayudu and there were four defendants. The amount claimed was Rs. 907-13-0. The first defendant admitted the claim but pleaded non-liability on the ground that the plaintiff exonerated him. The third defendant was ex parte. Defendants 2 and 4 pleaded that the suit promissory note was for advances to be made by the plaintiff for carrying on a toddy shop which they (the defendants and the plaintiff) agreed to work as partners after the first defendant had already become the successful bidder for the year 1927-1928 and that the partnership was an illegal partnership. The learned Subordinate Judge finds as a fact that the promissory note was executed for advances to be made by the plaintiff for the partnership, that the plaintiff was a partner and that the first defendant who obtained the license was not shown to have obtained the Collector's permission to work the shop in partnership. In view of these findings he dismissed the suit.

(2.) The question before the learned Subordinate Judge was and before us is whether the partnership was formed for the purpose of doing something which was either illegal or opposed to public policy. The General Sales Notification issued annually by the Commissioner of Excise under the Abkari Act laying down the general conditions applicable to all abkari and opium licenses by Clause 27, provides: No privilege of supply or vend shall be sold, transferred or sub-rented without the Collector's previous permission. Nor, if the Collector so orders, shall any agent be appointed for the management of any such privilege without his previous approval.

(3.) This condition is one of those which is set out in the abkari license. Clause 37, provides for the penalties to be inflicted on the infraction of any of the conditions of the license by a licensee or by any person in his employment. The effect of Clause 27 is that a partnership in an abkari business is prohibited unless the previous permission of the Collector has been obtained. In Nalain Padmanabham V/s. Salt Badrinadh Sarda (1911) I.L.R. 35 Mad. 582 : 21 M.L.J. 425 the facts were that A and B were farmers of opium revenue under Government. They obtained a license from the Collector for the sale of opium subject to the condition, among others, that they should not sell, transfer or sub-rent their privileges without the permission of the Collector (similar to Clause 27 in this case). A and B, without the sanction of the Collector, entered into an agreement with C, by which they admitted him. as a partner in the opium business. C having brought a suit for dissolution and winding up of the business, it was held that the agreement was void and the suit was not maintainable,, the effect of the agreement between A and B on the one hand and C on the other being to enable C to sell Opium without a license, an act directly forbidden by the opium Act and made penal by it, that the contract being intended to enable C to do-what was forbidden by law was unlawful and void, that the provisions of the Abkari and Opium Acts are not intended, merely to protect public revenue but the prohibitions contained in them are based on public policy and that the agreement was also illegal as it amounted to a transfer by A and B of their privilege to C in violation of the condition against transfer subject to which the license was granted. In the course of the judgment reference was made to Marudamuthu Pillai V/s. Rangasami Mooppan (1901) I.L.R. 24 Mad. 401 where it was said: The provisions of the Abkari Act, as a whole, show clearly that every person carrying on abkari business as a principal must be licensed, and hold that a person who has not got a license could still be a partner with one who has a license and as such partner carry on the business with or without the other would enable the unlicensed partner to evade the liabilities-intended by the law to be cast on persons carrying on abkari business.