MEWA RAM Vs. RAM GOPAL

JUDGEMENT

(1.) The dispute relates to two ginning factories started under an agreement, dated the 10 November, 1902. According to the plaint, as originally filed, there were more than 20 shareholders in the factories from the very beginning and the partnership was invalid, though it was alleged that the shareholders had no knowledge of its invalidity. The main reliefs claimed were: (A) (1) For declaration that the partnership was invalid; (2) for a refund of the plaintiff's subscription out of the proceeds realized by an auction sale of the factories, or (3) for exclusion of the plaintiff from the partnership and a refund of his subscription in some other proper way. (B) In the alternative a division of the properties of the factories and, if proper, an auction sale of the property and an award to the plaintiff of a 1/8 share in their sale proceeds.

(2.) Subsequently the plaintiff amended his plaint and added a clause that though the partnership was originally invalid it became valid in 1915 because the number of shareholders became less than 20. Accordingly a further relief was added for a dissolution of the partnership or a declaration that it was dissolved and taking of accounts. In the plaint there was no mention of the amount of the subscriptions contributed by the plaintiff or the other partners, but in paragraph 9 it was alleged that the rights of the plaintiff in respect of the properties of the factories subsisted and he was the owner of a 1/8 share. In paragraph 10 it was stated that the defendant, Lala Mewa Ram, was the manager of the factories ln his written statement the defendant-appellant admitted that the plaintiff was the owner of 1/8 share and also that the defendant was the manager. The substantial pleas raised in defence were that the partnership was illegal, that the suit was not maintainable and that the claim was barred by time. Although admitting his liability to render accounts for one year, the defendants denied any further liability. In the trial Court the plaintiff abandoned the position that the partnership became legal at any stage and conceded that the number of partners had always been more than 20 since 1902. It therefore became common ground that the partnership which admittedly had been formed for the purpose of gain was for want of registration illegal under Section 4 of the Indian Companies Act.

(3.) The learned Subordinate Judge found that the plaintiff was not entitled to obtain dissolution or any decree for accounts. He further found that a claim for a refund of the subscription was barred by time. He however came to the conclusion that although the association was an illegal one the various parties to the agreement did not lose their right as owners of properties. He accordingly gave the plaintiff a decree for partition of the property and appointed a Receiver. He further held that inasmuch as the property was not capable of partition by actual division the stock-in-trade should be sold by auction. Only L. Mewa Ram, Defendant No, 1 who is the manager of the factories, has appealed. The other defendants have submitted to the decree. It cannot be doubted for a moment that this partnership contravened the provision of Section 4 of the Indian Companies Act which requires that any company or association or partnership, consisting of more than 20 persons formed for the purpose of carrying on any business that has for its objects the acquisition of gain must be registered as a company. The Association, therefore, is wholly illegal and cannot as such be recognized by the Court. Any person who comes to Court and asks for its assistance in a way which would necessarily imply a recognition of the existence of such an association is out of Court. The Court must refuse to help him even though he may have to suffer an injustice. On the other hand if the plaintiff does not want anything in furtherance of the objects of illegal association nor asks the Court to recognize the association as such, but seeks remedy in order to put a stop to this illegal association, his claim cannot be dismissed so summarily. If his position as owner of some property even though that property might have been acquired in some way not recognized by law or even prohibited by it, can be recognized then he may have a locus standi to ask the Court to do justice between the parties. It is therefore, necessary to consider in detail each of the reliefs claimed by the plaintiff and see whether it is possible to grant any of them.