GARAPATHI BRAHMAYYA Vs. KURELLA RAMIAH

JUDGEMENT

(1.) The main facts of the case are not in dispute. The first defendant obtained a license to sell arrack. The principal condition in it with which this second Appeal is concerned is in these terms, "Para 16. The privilege of supply and vend shall not, without the permission of the Collector previously obtained, be sold, exchanged or sub-leased, nor, if the Collector has ordered, can an agent be appointed, without his permission first previously obtained, for exercise of any such privilege," The first defendant took the second defendant as his partner without obtaining the, Collector s sanction, Plaintiff had dealings with both the defendants and the suit is for money due on those dealings.

(2.) The first question is whether the partnership became illegal by the second defendant joining the business. Mr. A. Krishna swami Aiyar, Vakil for the respondent argued that as the license does not in terms prohibit a partnership and as the word transfer is not to be found in it, the transaction was not illegal. He relied on Karsan v. Gatlu Shivaji (1913) I.L.R. 37 Bom. 320 and on Natla Bapiraju v. Puran Achutharajajee (1910) M.W.N. 549. In the latter case the learned Judges based their decision on the fact that the license was not before them;. In Karsan v. Gatlu Shivajee (1913) I.L.R. 37 Bom. 320 the learned Judges say that the omission of certain words in the new license issued by the Government of Bombay indicated a change of intention on the part of the executive not to treat partnership as illegal. We are not in a position to gather the intention of the Madras Government on this subject. We must therefore give to the language of the clause in the license its ordinary meaning. The clause prohibits a sale by a stranger and the employment of an agent. In our opinion the taking of a partner has the effect ordinarily of selling a portion of the business to him. It has certainly the effect of making him an agent for the sale of liquor. As these are prohibited, we think that the partnership is illegal. Nalam Padhmanabham v. Sait Badri Nath Sirdar (1912) I.L.R. 35 Mad. 582. Thithi Pakurudasu v. Bheemudu (1903) I.L.R. 26 Mad. 430 and Maruda Muthu Pillai v. Rangaswami Moopan (1901) I.L.R. 24 Mad. 401 have consistently adopted this view in this Court.

(3.) The next question is whether the plaintiff had notice of the illegality of the partnership. Mr. Krishnaswami Aiyar relied on the observation of Bowen, L.J., in Hire Purchase Furnishing Company v. Richens (1887) 20 Q.B.D 387 for this purpose. The learned Lord justice had before him a case which would be governed in this country by Section 263 of the Contract Act, It was held that where the carrying on of the business which is prima facie legal becomes malum prohibited under certain circumstances, the burden of proving that the prohibition was known to the lessor was on him. Waugh v. Morris (1873) L.R.8 Q. B. cases 202 is also to the same effect. But these decisions do not affect the present case, As admitted by the plaintiff in his plaint, he knew that the first defendant alone had the license; he knew that the 2nd defendant was taken as a partner and that the partner carried on the business. Under these circumstances it was incumbent upon him to have made enquiries as to whether the Collector permitted the 2nd defendant to join in the business. The burden was on him and we must hold that he has failed to discharge it. We must take it that the plaintiff had knowledge of the illegality of the contract.