9911796707
TMI Blog1963 (1) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... ip. In a mediation, it was settled that he second defendant should take over the business with all assets and liabilities and that ₹ 5000/- should be given to the plaintiff in full quit of his share and claims. Defendants 1, 3 and 4 proposed to continue the business in partnership. Therefore, they also undertook to pay the said sum and consequently, all the defendants executed a promote for ₹ 5000/- on 5-6-1953 agreeing to repay the same on demand with interest at 12 per cent per annum. On their failure to pay the amount in spite of demands, the plaintiff sent notices to which they sent replies making false allegations that they were only sureties for the safe upkeep of the lorry by the second defendant and that they did not execute the promote undertaking to pay the liability. These allegations are unsustainable and false. The suit is therefore laid for recovery of the amount. Neither Act IV of 1938, nor Act V of 1954 has application as all the defendants are Income Tax assessees and they did not also possess agricultural lands." The four defendants filed separate written statements, but their pleas were substantially identical. They alleged that the partnership ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tiff merely received a share of the earnings made by the lorry. The suit was only for the recovery of the money due on a promissory note, which represented the amount paid by the plaintiff for the purchase of the lorry, to the second defendant. Therefore the suit pronote was not tainted by illegality or validity, on any of the grounds urged by the defendants. The learned Judge also found that, even if the partnership was void, in the interests of justice plaintiff would be entitled to get back the amount, which he advanced to the second defendant. The learned Judge found that defendants I, 3 and 4 were sureties, for the payment of the debt by the second defendant. He found also that, in any event, even if the contract out of which the suit promissory note came into existence, was void or illegal, the defendants I, 3 and 4 as sureties would be liable to pay the amount to the plaintiff. A decree was, therefore, passed in favour of the plaintiff for the suit amount. 4. The present Letters Patent Appeal is filed by the defendants I to 4 from the above decision. After the filing of the appeal, the first appellant died and his legal representatives were brought on record. 5. All the po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts. These accounts were filed into Court. Each of the partners was entitled to a half share in the business. In the presence of three mediators, it was proposed to settle the account of the partnership, as the plaintiff decided to stop his connection with the business, because the defendant was not properly bringing into account the receipt or the income. When the mediators looked into the accounts, they found ₹ 6ooo/- and odd to the credit of the plaintiff. They asked the plaintiff to give up the profits and take only ₹ 5000/- invested by him and asked the second defendant to pay the amount to the plaintiff and take the lorry. Both the plaintiff and the second defendant accepted the decision of the panchayatdars. In his examination-in-chief itself, the plaintiff deposed that before the mediators, accounts of the partnership were settled and the settlement was entered in the account books and the plaintiff signed on one page and the second, defendant on another page. The Accountant wrote the entries, and then Ramanujam Pillai, P. W. 2, wrote the suit promissory note. In cross-examination, the plaintiff added: "The assets and liabilities were taken into account an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e plaintiff advanced as capital, and the amount of the suit promissory note, from that circumstance it will not be possible to ignore the admitted facts, that after the capital was advanced, the lorry was purchased the business was conducted for a considerable time between the two partners each agreeing to take half share in the profits and losses, and on differences arising between them mediators settled those differences, the execution of the suit promissory note and the defendants 1,3 and 4, standing as sureties, forming an essential element in the settlement of the accounts of the partners. Therefore, we have to differ with respect from the finding of the learned Judge, and we confirm the Ending of the trial Court, that the suit promissory note represented the amounted by the second defendant to the plaintiff on the settlement of the accounts of the partnership. 7. The learned Judge, apparently, did not consider it necessary to decide whether the partnership was illegal, being opposed to public policy and being in contravention of the provisions of the Motor Vehicles Act. A considerable volume of decided cases was cited before him, as they were cited before the trial Court, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of the Act or the Rules thereunder a criminal offence punishable with fine. Section 123 provides for the punishment of a person who causes or allows a motor vehicle to be used without a permit required under Sub-section (i) of Section 42 or in contravention of any condition of such permit relating to the route on which or the area in which or the purpose for which the vehicle may be used. It is clear, therefore that, the partnership in using the motor vehicle, for which the permit had been obtained in the second defendant's name, contravened the provisions of the Motor Vehicles Act. The partnership was illegal and opposed to public policy. 8. In Maniarn Hiria Gowder v. Naga Maistry, AIR1957Mad620 , the Bench consisting of the learned Chief Justice Rajamannar and Panchapakesa Aiyar, J., after referring to a long catena of cases starting from Velu Padayachi v. Sivasooriam Pillai, AIR1950Mad444 (FB), observed, that an agreement of partnership which will entail a transfer of licence or permit granted by the Government, when there is an express provision prohibiting such a transfer, was illegal and void ab initio. That decision dealt with a case, where there was a partn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the partnership as well as the other partner, and the running of the lorry with the permit of the 2nd defendant, involved a contravention of the Motor Vehicles Act, namely, the user of the lorry by the owner namely the partnership, who had no licence in its name. The view in Velu Padayachi's case, AIR1950Mad444 (FB), is still good law, and therefore, we are of the opinion that the partnership in this case was an illegal one, and therefore the suit claim which arose out of the settlement of the accounts of the partnership is also illegal and cannot be so enforced. 10. Point 2: The second point for consideration is whether even if the suit claim becomes illegal and unenforceable for the abovesaid reasons, the plaintiff can be given any relief by way of getting back the moneys invested by him in the partnership, as an equitable relief. In the view of Basheer Ahmed Sayeed, J., the plaintiff could be given such a relief in the alternative, and for this purpose, he relied upon two decisions of this Court in AIR1955Mad536 and AIR1957Mad620 , was a case where the plaintiff who had entered into a partnership in respect of a cinema theatre to be conducted under the licence of one of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel Mr. V. Thiagarajan who appeared for the respondent (plaintiff) referred to a line of cases in India and also a line of cases in England, which appear to us, however, to deal with totally different situations. Shiam Bihari Lal v. Malhi, 38 Ind Cas 178 : AIR 1917 All 54 was a case of the Allahabad High Court where the defendant obtained a licence from the Government to sell drugs and contracted with the plaintiff that, in consideration of the latter advancing moneys to the former, he would share the profits with him in a certain proportion. The relevant rules prohibited transfers and sub-leases of the licence except with the sanction of the Collector. The Allahabad High Court held that the contract in favour of the plaintiff was neither a transfer nor a sub-lease of the licence, as it did not entitle him to sell any goods of any sort of the description covered by the licence. In Radhey Shiam v. Mewa Lal, 116 Ind Cas 89 : AIR 1929 AH 210, which also arises from the Allahabad High Court, there was an agreement with a liquor contractor, and there was a transfer whereby in consideration of money contributed by the latter, the former agreed to give him a share in the profits arisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39; lord to levy, their Lordships on the facts of the case held that the tenant was entitled to recover the amount under the common law, because, the parties were not in pari delicto. That case was decided on its own facts and could not be applied properly to the present case. 14. There was further a faint attempt by the respondent's learned counsel to apply the principle called the doctrine of unjust enrichment referred to in Govindarajulu Naidu v. S. S. Naidu, (1958)2MLJ148 , a case decided by Ramaswami, J.: from the point of view of Section 41 of the Specific Relief Act following the decision of this Court in AIR1955Mad536 . That decision could also be distinguished, for the reasons already mentioned. We are therefore of the opinion that, in the circumstances of this case, the plaintiff cannot be given any relief for recovery of the amount advanced by him to the illegal partnership. 15. Point 3: On the third point regarding the liability imposed on the sureties, defendants I, 3 and 4, by the judgment of Basheer Ahmed Sayeed, J., the following considerations arise. The finding that defendant 1, 3 and 4 joined in the execution of the bond only as sureties has been arrived at ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
