SHANMUGA MUDALI Vs. KUMARASWAMI MUDALI

JUDGEMENT

(1.) The facts of the case have been stated by my learned brother, whose judgment I had the advantage of perusing and need not be repeated. I will only observe that the suit is not between the subscribers inter se or by a subscriber against the stake-holder. The stake-holder of the suit chit fund is a partnership consisting of the plaintiff and defendant and the object of the suit is to recover the moneys due to the plaintiff on the closing of the partnership. Unless the object of the main transaction is to commit an offence made punishable by the Indian Penal Code there can be no objection to enforcing the terms of a contract of this kind which is collateral to another transaction even when the main transaction itself is merely void (as where it amounts to a wager) and cannot be enforced; See Shibho Mal V/s. Lachman Das (1901) I.L.R., 23 All., 165, Bhola Nath V/s. Mul Chand (1903) I.L.R., 25 All, 639, Chekka Venkataswamy V/s. Gajjila Nagabhushanam (1904) 14 M.L.J., 326 which are cases of principal and agent. Cases of partnership are illustrated by Sharp V/s. Taylor (1849) 2 Ph., 801; 41 E.R., 1153 (case of fraud on the American law and on the English navigation laws), Johnson V/s. Lansley (1852) 12 C.B., 468; 138 E.R., 989 Beeston V/s. Beeston (1875) 1 Ex, 13, Brookman v. Mather (1913) 29 I.L.R., 27 (Avory, J.) and several others ending with. Jeffrey v. Bamford [1921] 2 K.B., 351. These are mostly cases of betting partnerships.

(2.) This leads to the question whether any offence has been committed in the formation and conduct of the main transaction, i.e., the chit fund. If it is an offence it must be one punishable under Section 294-A of the Indian Penal Code. This section and Act V of 1844 are both founded on the terms of 42 Geo. III, Clause 119 and 4 Geo. IV, Clause 60 I agree with my learned brother in thinking that there is nothing to distinguish the present case in principle from lyyanar Kone V/s. Vidoomada Cone (1858) Sud. Dec., 53, Kamakshi Achari V/s. Appavu Pillai (1863) 1 M.H.C.R., 448 and Vasudevan Nambudri V/s. Mammod (1899) I.L.R., 22 Mad., 212. Sankunni V/s. Ikkora Kirtti (1919) M.W.N., 570 and Nagappa Pillai v. Arunachalam Chetty are not of much help as there is not much discussion on the question of what constitutes lottery.

(3.) The word " lottery " is not defined either in the Indian Penal Code or Act V of 1844 nor in the English Statutes. A definition has been attempted in Volume XV of Halsbury, Section 605, page 299, apparently with reference to the decided cases but, when the cases are examined, we are landed into difficulties. The only decision of the House of Lords available is Wallingford V/s. Mutual Society (1880) 5 App. CAS., 685; the facts of which have been fully stated by my learned brother. The observations of the Lord Chancellor (Lord Selborne), and Lords Blackburn, Hatherley and Watson (vide my learned brother's judgment) on the question whether the transaction was illegal under the Lottery Acts are very brief. In Halsbury, Volume XV, page 300, the case is cited as authority for the proposition when the scheme has for its object the carrying on of a legitimate business, the fact that it provides for the distribution of its profits in certain events by lots will not vitiate the scheme. If so all chit funds, the main object of which is the promotion of co-operation, prudence and thrift, ought to be regarded as legitimate even though there is an element of chance and this is apparently the ratio decidendi of Iyyanar Kone V/s. Vidoomada Cone (1858) Sud. Dec., 53 and Kamakshi Achari V/s. Appavu Pillai (1863) 1 M.H.C.R., 448. In Chitty on Contracts, the opposite opinion of Jessel, M.R., in Sykes V/s. Beadon (1879) 11 Ch. D., 170 was regarded as overruled by the decision of the House of Lords in Wallingford v. Mutual Society (1880) 5 App. Cas., 685. It seems to me that Lord SELBOBNE S reason for holding that the society was not affected by the Lottery Act is indicated in the sentence The other Act relied on had reference to persons who kept lottery offices at which the public were invited to pay for lottery tickets and that Act could have no application to the case.