Kommineni Krishna Rao vs Kommineni Babjee Rao and another

P.L.N. Sharma, J.—The plaintiff is the appellant in L.P.A. No. 92 of 1983 while the first defendant is the appellant in L.P.A. No. 7 of 1985. Both the appeals are filed against the judgment of the learned single judge in A.S. No. 1234 of 1980. While the plaintiff filed the appeal L.P.A. No. 92 of 1983 against the rejection of the relief prayed by him for dissolution of partnership and rendition of accounts on the ground that the same is illegal and opposed to public policy, the 1st defendant filed the other appeal L.P.A. No. 7 of 1985 against the relief granted to the plaintiff for payment of the money said to be outstanding to his credit in the account.

The relevant facts are as follows:

For the purpose of convenience, the parties are referred to in this judgment as they are arrayed in the suit.

The suit was filed for partition of the plaint schedule properties into 100 equal shares and for allotment of 33 such shares to the plaintiff and for subsequent interests and profits etc.. The suit is based on the ground that the plaintiff as well as the defendants 1 and 2 were related to each other and they conceived the idea of constructing a temporary theatre at Seethanagaram and also to run the business of exhibition of cinemas in the said area. For the said purpose, they purchased the site in the name of the first defendant for convenience sake and contributed their respective shares of the consideration. The first defendant obtained licences under Forms ''A'' and ''B'' under the A.P. Cinemas (Regulation) Act, 1955 (Act 4 of 1955) (herein after referred to as ''the Act'').The first defendant was to be the managing partner of the partnership and he should manage the affairs of the cine exhibition and maintain accounts and keep the common income with him. The partnership business was started on 11-10-1970 after purchasing the necessary equipment. It was alleged that the share of the first defendant was Rs. 0-55 ps. and that of the plaintiff was Rs. 0-33 ps. and the share of the second defendant was Rs. 0-12 ps. and all the three contributed their share capital accordingly. All the monies belonged to the partnership business are with the first defendant and the profit and losses were being divided in the said ratio every year. It was also mentioned that on 15-1-1976 a written partnership deed was executed by all the three viz., plaintiff and defendants 1 and 2 and the partnership business was being run in the name and style of ''Sri Venkateswara Touring Talkies.'' In view of the fact that the licence for exhibiting cinema films under R. 12 of A.P. Cinemas (Regulation) Rules, 1970 issued under Act 4 of 1955 (hereinafter referred to as ''the Rules'') was in the name of the first defendant and not in the name of the firm, the parties are relegated to the status of co-owners from that of partners and therefore, the provisions of the Indian Partnership Act relating to the dissolution of the firm and rendition of accounts cannot be resorted to. Therefore, the plaintiff and defendants are co-owners or co-sharers in respect of the schedule mentioned property and that the plaintiff is entitled to Rs. 0-33 ps. out of hundred paise and that the first defendant was appropriating the entire profits for himself without giving the respective shares either to the plaintiff or to the second defendant and that he obtained huge profits during the years 1975-76, 1976-77 and 1977-78 in exhibiting the films in the theatre and he is liable to account as a co-sharer. In spite of the requests to render accounts relating to the profits of the said years, the first defendant refused to do so. Therefore, the suit is filed for partition of the schedule mentioned property into 100 equal shares and for recovery of 33 100th share etc.

The suit was resisted by the first defendant mainly on the ground that it was not maintainable in the present form. It was admitted they entered into a partnership to run the business and stated that it is obligatory on the members of the firm to get the partnership dissolved to obtain the relief of accounts. He also stated that he is an agent of other partners on behalf of the partnership and vice versa and therefore, the suit filed on the ground that they are co-owners or co-sharers is unsustainable. It was also mentioned in the written statement that until the dissolution of the partnership firm, the parties are partners and subsequent to dissolution, they become co-owners and therefore, the suit is not maintainable in law. With regard to the amounts for the three years mentioned in the plaint, it was stated that the same were settled up to 7-11-1976 and a full satisfaction receipt dated 3-9-1977 was given which operates as accord and satisfaction under the provisions of the Contract Act. It was further mentioned that on the allegations in the plaint, as admitted in the written statement, that the partnership was formed for running the business of exhibiting the cinemas and it is illegal and forbidden by law and it contravenes the provisions of Cinematograph Act, 1964. The terms and conditions of the license do not permit any person/persons from doing business except the licensee and the partnership entered into by the parties for doing business under the license issued in Form ''B'' is illegal and therefore, the suit is not maintainable even on that basis.

The second defendant in his separate written statement contended that they together constituted a partnership for the purpose of running the business of exhibition of cinemas and that if the Court comes to a conclusion that the properties are liable to be partitioned, he has no objection for giving away the value of the plaintiffs share in the firm after the same is determined by the Court.

The trial Court on the respective contentions of the parties framed the following issues and additional issues.

1.Whether the suit for partitions of the suit property is not maintainable under law?

Whether the plaintiff is entitled to accounts?

Whether the cause of action mentioned in the plaint is correct?

Whether the plaintiff is entitled to physical partition of the cinema-hall and its machinery and the site under the provisions of the Partnership Act?

To what relief?

ADDITIONAL ISSUES:

Whether the suit is not maintainable as it is hit by S. 69 of the Partnership Act?

Whether the suit partnership is illegal and opposed to public policy and hit by S. 23 of the Contract Act?

The learned trial Judge on consideration of the entire material placed before him held that the suit partnership is illegal and opposed to S. 23 of the Indian Contract Act and that the suit is not maintainable in the present form and that in view of the fact that they are partners and not co-owners, the suit is not maintainable. In view of the above findings, the learned Judge dismissed the suit holding that the plaintiff is not entitled to ask for partition and accounts.

Aggrieved at the aforesaid decree and judgment of the learned trial Judge, the plaintiff filed A.S. No. 1234 of 1980 in this Court. During the pendency of the appeal, an application for amendment of the plaint under 0.6, R.17, C.P.C. was filed by the plaintiff in CM.P. No. 13330 of 1980. The relief that was sought by way of amendment is to convert the suit as one for dissolution of partnership and for accounts.

The learned single Judge held that the defendants will not be prejudiced by allowing the amendment as they have already in their written statements raised the required defence. In fact the plaintiff himself stated that they are not co-owners, but they are partners and therefore, the suit on the basis of being co-owner is not maintainable. In view of the above, the learned single Judge allowed the amendment of the plaint in C.M.P. No. 13330 of 1980. The application was allowed while disposing of the appeal. Therefore the result was that the suit which was filed for partition on the basis of parties being co-owners was converted into one for dissolution of the partnership and for accounts on the basis that they are partners in the partnership firm.

Having allowed the application for amendment, the learned single Judge proceeded to dispose of the appeal. The learned single Judge came to the conclusion that the partnership is illegal and opposed to public policy and therefore, a decree for dissolution of partnership and for settlement of accounts cannot be granted. The learned single Judge also held that the case is only with reference to a partnership which is illegal and the parties cannot be termed as co-owners and therefore, the suit as originally framed is also not maintainable. However, the learned Judge granted a decree in favor of the plaintiff for the amounts outstanding to the credit of the plaintiff in the books as on 1-4-1978 viz., Rs. 28,826-12 ps. with interest at 12% P.A. Calculating the same at the said rate of interest till the date of filing of the suit, a decree was granted for Rs. 31,000/- in favor of the plaintiff with subsequent interest at 12% P.A. on Rs. 28.826-12 ps.

The plaintiff filed L.P.A. No. 92 of 1983 against that part of the judgment and decree of the learned single Judge dismissing the suit for the relief of dissolution of the partnership and for accounts, while the first defendant filed L.P.A. No. 7 of 1985 questioning the decree granted in favor of the plaintiff for a sum of Rs. 31,000/- with subsequent interest at 12% P. A. from the date of the suit till the date of realization.

Sri B. Adinarayanarao, learned counsel for the plaintiff contended that the partnership firm with the first defendant as the managing partner for conducting the business of exhibition of cinemas under the license granted in Form ''B'' under Act 4 of 1955 and the rules made there under in the name of the first defend ant is not illegal and it is not opposed to public policy and therefore, the judgment of the learned single Judge is unsustainable. The learned counsel elaborated the contention by submitting that forming a partnership by the licensee for doing business under the license issued to him does not violate any of the provisions of ''the Act'' or the Rules'' made there under and will not certainly amount to a transfer of the license within the meaning of R. 12(2) of the conditions of license as obtaining at the relevant time. R.12 (2) was subsequently omitted by G.O.Ms.No.620 (Home) dated 31-12-1983). In support of the said contention, the learned counsel placed reliance on two Bench judgments of this Court viz., Commr. of Income tax, Andhra Pradesh-IV Hyderabad v. Nalli Benkataramana, (1984) 1 Andh LT 399: (1983 Tax LR 1355) and Chennuru Ramarao Vs. Gowri Sankar Talkies, Tekkali and Others, . The judgment in the first case was rendered considering the provisions of A.P. Excise Act. The said case arose out of a reference under the income tax Act. The assesses in that case was a partnership firm consisting of about 11 partners. The partnership was evidenced by a deed. It commenced with effect from 1-10-1973 ending up to 30-9-1974. One of the partners was the successful bidder at an auction conducted under the A.P. Excise (Lease of Right to Sell Liquor in Retail) Rules, 1969 which were framed under the A.P. Excise Act, 1968 and he obtained a licence to carry on the business of buying in bulk and selling in retail. The licensee required manpower and also for raising the required capital; he entered into a partnership with others. The assesses firm applied for registration under S. 185 of the income tax Act, 1961 and filed an application in the required form. The income tax Officer came to the conclusion that the firm was not a genuine one and also observed that the partnership was formed illegally and therefore void ab initio. In coming to the conclusion, he referred to R. 19(1) of A.P. Excise (Lease of Right to Sell Liquor in Retail) Rules, 1969 which prohibits the transfer of the licence by the licensee to any other person. The income tax Officer also referred to S. 15 of the A.P. Excise Act, 1968 which prohibited the selling or buying any intoxicant by any person except under authority and in accordance with the terms and conditions of licence granted in that behalf. Therefore, the income tax Officer refused registration of the assesses firm under S. 185 of the income tax Act. The assesses -firm preferred an appeal to the Appellate Assistant Commissioner who came to the conclusion that the firm was genuine one and that the formation of a partnership by the licensee was not prohibited even though the license was in the name of one of the partners. Aggrieved at the order of the Appellate Assistant Commissioner, the department filed an appeal to the income tax Appellate Tribunal. The Tribunal agreed with the order of the Appellate Assistant Commissioner that there was no prohibition for forming a partnership. However, the Tribunal referred the matter for decision of the High Court.

It is clear from the facts of the said case that this very point which is urged before us was directly in point before the learned Judges of the Division Bench, though it arose under the Excise Act. The learned Judges extracted S. 15 of the A.P. Excise Act, 1968 as well as R.19 (1). The said rule is almost similar to Cl. 12(2) of the conditions of license in Form B, issued under A.P. Cinemas (Regulation) Rules, 1970. For comparison and better appreciation of the case, the said R. 19(1) as well as Cl. 12(2) of the conditions of licence issued under ''the Rules'' are being extracted below:

Rule 19(1) of A.P. Excise (Lease of Right to Sell Liquor in Retail) Rules, 1969

Rule 19 Transfer of licences:

(1) The licensee shall not transfer the licence for the sale of arrack or toddy to any other person.

A.P. Cinema (Regulation) Rules, 1970. Sub-rule (2) of R.12 of Form ''B'' "12. Conditions of Licence :

(1) xx xx xx xx xx xx xx xx

(2) The licensee shall not without the permission of the licensing authority, assign, sublet or otherwise transfer the licence or the licensed premises, nor shall the licensee, without permission as aforesaid, allow any other person, during the period of currency of the license, to exhibit films in the licensed premises." The Division Bench referred to number of authorities which considered similar enactments and the Rules made there under for the purpose of deciding the point. The learned Judge referred to, among others, the U.P. Excise Rules, 1910, Madras Abkari Act, Motor Vehicles Act, Berar Food Grains Control Order, 1945: and Betting and Gaming Act. The conclusions of the learned Judges were stated in para 39 of the judgment which are as follows:

The legal position can be summarised as follows:

(1) Rule 19(1) of the Rules directs that a licensee shall not transfer the licence to any other person. However, when a licensee enters into a partnership with others for sharing the profits or losses arising out of the use of the licence, there is, in the eye of law, no transfer of the licence. Consequently, there is no contravention of R. 19(1). The position cannot be compared with a situation where the licensee partner actually transfers the licence in favour of a third party.

(2) Section 15 of the Act, no doubt, requires that no person shall sell or buy any intoxicant except under the authority and in accordance with the terms and conditions of a license granted in that behalf. But S. 15 does not use words license ''granted to him'' nor is there any other specific provision either requiring the partnership to take out a license or making the formation of a partnership illegal.

The learned Judges in coming to the said conclusion relied upon the judgment in Jer and Co. Vs. Commissioner of Income Tax, U.P., and held that the judgment relied upon by the Revenue viz. Velu Padayachi Vs. Sivasooriam Pillai, is deemed to have been impliedly overruled by the judgment of the Supreme Court inJER & Co. v. C.I.T. (1972 Tax LR 2436) (supra). The same conclusion was also arrived at by the learned Judges in view of the judgment of the Supreme Court in K.M. Viswanatha Pillai Vs. K.M. Shanmugam Pillai, . The Supreme Court in the said case held that a stage carriage could be plied lawfully by the owner even though the permit was in the name of benamidar. While coming to the said conclusion, the learned Judges stated that the judgment of the Madras High Court in A.V. Varadarajulu Naidu (decd.) and Others Vs. K.V. Thavasi Nadar, is erroneous, which relied upon the decision referred to Velu Padayachi Vs. Sivasooriam Pillai, . In that view of the matter, the learned Judges of the Division Bench came to the conclusion that the judgment referred to Velu Padayachi Vs. Sivasooriam Pillai, ) above is deemed to have been overruled. The learned Judges came to the conclusion that a person in whose name the licence was granted enters into a partnership with others for doing the business for which the licence was granted, it would not amount to a transfer of the licence. Such a partnership does not contravene R.19 of the A.P. Excise Rules. It cannot be said that the said partnership is either illegal or opposed to public policy and therefore, the authorities are bound to register the same. The learned Judges also held that in any event the partnership is valid between the parties whatever may be the rights of the department.

It is necessary to notice in this connection that the judgment in A.V. Varadarajulu Naidu (decd.) and Others Vs. K.V. Thavasi Nadar, relied upon not only on the decision in Velu Padayachi Vs. Sivasooriam Pillai, but also on the decision of Division Bench of Madras High Court in K. Viswanathan Vs. Namakchand Gupta and Another, ) in coming to the conclusion which it did. The case of; Viswanthan v. Namakchand Gupta (supra) directly arose under the Cinematograph Rules as in the present case. The facts in that case were that the plaintiff therein entered into an agreement with the owner of a theatre called ''Chitra Talkies'' for taking it on lease after obtaining lease deed and license. Thereafter, partnership agreement was executed between the plaintiff and the others. Due to disputes, a suit was filed by the plaintiff for declaration that the partnership was illegal and void ab initio as being in contravention of the conditions of license. The contentions raised therein are similar to the contentions raised before us. The license was obtained in the name of the plaintiff therein. A Division Bench of Madras High Court in the said case held that the partnership was void ab initio. The said judgment was relied upon by another Bench of the Madras High Court in A.V. Varadarajulu Naidu (decd.) and Others Vs. K.V. Thavasi Nadar, while considering the provisions of Motor Vehicles Act, the Supreme Court in K.M. Viswanatha Pillai Vs. K.M. Shanmugam Pillai, ) categorically held that the decision in A.V. Varadarajulu Naidu (decd.) and Others Vs. K.V. Thavasi Nadar, is erroneous. Therefore, in our opinion, the decisions relied upon by the Bench of Madras High Court in Varadarajulu v. Thavasi Nadar (supra) must be deemed to have been overruled by the decision of the Supreme Court in Viswanatha Pillai v. Shanmugam (supra), more particularly the decision referred under K. Viswanathan Vs. Namakchand Gupta and Another,

The Bench decision referred to above (1983 Tax LR 1355) (Andh Pra) (supra) again came up for consideration before another Division Bench consisting of Punnayya and Ramachandra Raju, JJ., in the case referred to Chennuru Ramarao Vs. Gowri Sankar Talkies, Tekkali and Others, ). It is significant to notice that the judgment under appeal before us was rendered by Ramchandra Raju, J. who was one of the Judges who constituted the Bench which rendered the judgment referred to ( Chennuru Ramarao Vs. Gowri Sankar Talkies, Tekkali and Others, The case arose directly under the A.P. Cinema (Regulation) Act, 1955 (Act 4 of 1955). The facts in the present case are similar to that of the case disposed of by the learned Judges of the Division Bench. The facts which arose in Division Bench case are that the plaintiff therein, second defendant and seven others entered into an agreement of partnership to construct a cinema hall and to do joint cinema business under the name and style of ''Gowri Shankar Talkies.'' Later on, a partnership deed was also executed by all the nine persons. Subsequently, another partnership was executed with six partners and thereafter a new partnership deed was executed and the same was registered. However, the license for exhibiting films in the cinema hall was obtained in the name of the plaintiff and the same was being renewed every year. In view of the disputes, the suit was filed by the plaintiff for rendition of accounts of the dissolved partnership and for taking an account in respect of the plaintiffs share, alternatively, for dissolution of the partnership firm and for rendition of accounts etc. It is clear that the facts in this case are similar to the facts in the case decided by the Division Bench in the decision referred to Chennuru Ramarao Vs. Gowri Sankar Talkies, Tekkali and Others, The suit was dismissed by the trial Judge on the ground that carrying on cinema business in partnership when the licence was in the name of one of the partners, amounts to a transfer which is prohibited under Cl. 12(2) of the conditions of licence and therefore, illegal and void ab initio. In coming to the said conclusion, the learned trial Judge relied upon the decision in Velu Padayachi Vs. Sivasooriam Pillai, as well as the decision in K. R. Prasad v. T.V. Subbrao, (1970) 2 Andh WR 218 which followed the judgment of the Full Bench referred to Velu Padayachi Vs. Sivasooriam Pillai, . The learned trial Judge held that the suit for dissolution and for accounts is not maintainable as the partnership is illegal and is hit by S. 23 of the Indian Contract Act.

The learned Judges of the Division Bench, in the case referred to Chennuru Ramarao Vs. Gowri Sankar Talkies, Tekkali and Others, after referring to the contentions raised on both the sides and after considering all the cases cited before them ultimately came to the conclusion that the license granted in Form B and in particular Cl. 12(2) of the conditions of license does not prohibit the holder of license from entering into a partnership with any other person or persons for doing cinema business. Entering into partnership with other by the licensee will not amount to assignment or subletting or otherwise transferring of the license by the licensee and that therefore, the partnership is neither illegal nor opposed to S. 23 of the Indian Contract Act. In that view of the matter, the learned Judges allowed the appeal and set aside the judgment of the trial Court. In fact, the learned Judges during the course of the judgment in para 38 referred to the judgment which is impugned in this L.P. Appeal and stated as follows:

At this juncture, it is necessary for us to refer to a decision rendered by one of us (Ramchandra Raju, J.), (who) while disposing of A.S. No. 1234 of 1980 on 20-9-1982 relied upon the decision of the Full Bench of the Madras High Court in Velu Padayachi Vs. Sivasooriam Pillai, and the decision of the Bench of the same High Court in K. Viswanathan Vs. Namakchand Gupta and Another, . My learned brother did not accept the contention of the counsel for the appellant that the decision in Viswanathan v. Namakchand, (supra) should be deemed to have been overruled by the decision of the Supreme Court in K.M. Viswanatha Pillai Vs. K.M. Shanmugam Pillai, But a Bench of this Court in I.T. Commr. v. Venkatramana, ( 1983 Tax LR 1355) (Andh Pra) (supra), held that as the Supreme Court in Viswanathan Pillai v. Shanmugham (supra) expressly dissented from thejudgment of the Madras High Court in A.V. Varadarajulu Naidu (decd.) and Others Vs. K.V. Thavasi Nadar, it is deemed that the said decision of the Madras High Court has been overruled. The Bench of this Court further observed:

2 What we have stated about the result of the reversal of the JER and CO. Vs. COMMISSIONER OF Income Tax, U.P., equally applies to the Madras judgment in Varadarajulu Naidu''s case and it must follow that the dissent extended to Velu Padayachi''s case which was followed in Varadarajulu Naidu''s case.

The result of this ruling is that the decision of the Madras High Court in Viswanathan v. Namakchand (supra) is deemed to have been overruled along with the decision in Varadarajulu Naidu''s case (supra) by the ruling of the Supreme Court in Viswanatha Pillai''s case (supra). Consequently the unreported decision of my learned brother, P. Ramachandra Raju, J., in A.S. 1234/80, D/- 20-9-1982 should also be deemed to have been impliedly overruled.

Therefore, the Division Bench considering the provisions of the Act and the Rules made thereunder as well as the conditions of licence in Cl. 12(2) came to the conclusion that the partnership formed by a licence holder with others will not amount to transfer and that such a partnership is not illegal and it is certainly not opposed to S. 23 of the Indian Contract Act. The learned Judges also clearly held that to that extent the judgment under appeal is also incorrect and is deemed to have been overruled. The Division Bench judgment of this Court Chennuru Ramarao Vs. Gowri Sankar Talkies, Tekkali and Others, was rendered after considering the very same provisions of the Act and the Rules made thereunder as well as the conditions of licence in Cl. 12(2). It is therefore, binding on us to the extent it categorically stated that the judgment under appeal should be deemed to have been overruled in so far as the validity of the partnership is concerned. The learned Judges exhaustively dealt with all the cases and in particular referred to the judgment of this Court in Commr. of income tax v. Nalli Venkataramana ( 1983 Tax LR 1355) (supra) and came to the same conclusion as that of the Division Bench in the said case. In view of the decisions of the two Division Benches referred to above, we feel that it is not necessary to refer to all the decisions cited before us.

The learned counsel for the plaintiff also referred to us the provisions of the Act 4 of 1955, viz., Ss. 3, 4 and 9 as well as the Rules made thereunder in support of his above contention that the formation of partnership is not prohibited under the Act and the Rules. He particularly referred to R. 4 where it is stated that the firm also can obtain licence. We feel it is unnecessary to refer to those contentions and the sections as well as the Rules mentioned above in the view we have taken.

Sri T. Anantababu, learned counsel for the first defendant contended that as per S. 12 of the Partnership Act, every partner is entitled to take part in the conduct of the business and therefore, entering into a partnership by the licence with others will amount to conferring rights on other persons to use the license and therefore, it should be held to be illegal. It was further contended that the partnership may not be a legal entity under the Partnership Act, but under Act 4 of 1955 as well as certain other Acts, it is a juridical person and if a licensee enters into a partnership and allows the partnership to conduct the business, it will be illegal as it amounts to transferring of licence to a juridical person. In any event, such an action violates the second limb of Cl. 12(2) of the conditions of licence. The learned counsel elaborated his argument to the effect that even if forming of a partnership is construed as not amounting to transfer of licence, it will fall under the prohibition contained in the second limb of Cl. 12(2) which is as follows:

12(2) nor shall the licence, without permission as aforesaid, allow any other person, during the period of currency of the licence, to exhibit films in the licenced premises.

The learned counsel contended that it amounts to allowing any other person to exhibit the films. Exhibition of the films by the partnership will amount to allowing any other person to exhibit, the partnership being a juridical person. Therefore, it is contended that, in any event, the partnership is illegal and false within the prohibition contained in the second limb of Cl. 12(2) of the conditions of licence. We are afraid we cannot accept this contention. Every partner is an agent of the other. In fact, in the written statement of the 1st defendant, it was clearly mentioned that every one is an agent of the other. Therefore, it cannot be contended that forming of a partnership by itself amounts to transfer of the licence in the name of the partnership. Further, other partners cannot be treated as any other person. They are partners and they are agents of each other. The words ''any other person'' occurring in Cl. 12(2) of the conditions of licence under the Cinematograph Rules in Form ''B'' must be construed as a person who has nothing to do with the business, viz., a strager, but not a partner who is an agent of the other partners. Further, the Division Bench case in Commr. of income tax v. N. Venkataramana (1983 Tax LR 1355) (Andh Pra) (supra) dealt with a similar provision which was extracted in the foregoing paras. Rule 19(1) of the Rules made under the A.P. Excise (Lease of Right to Sell Liquor in Retail) Rules, 1969 also contained the words ''any other person''. After considering the same, the Division Bench in the above case (supra) held that forming a partnership by a person who is a holder of license for conducting the business will not amount to transfer of license within the meaning of R. 19(1) of the Excise Rules. We respectively agree with the said view and accordingly reject the contention advanced on behalf of the first defendant on this aspect. Even otherwise, when the Division Bench in Chennuru Ramarao Vs. Gowri Sankar Talkies, Tekkali and Others, clearly mentioned that the judgment under appeal is overruled on the question of legality, we cannot hold that the judgment is correct on the question of law.

The learned counsel strongly relied upon a decision in Brij Mohan Parihar Vs. M.P. State Road Transport Corporation and Others, in support of his contention that when the license is in the name of licensee, no other person can do the business under the license. We find that this judgment has no application to the facts of the case on hand. In the said case, a permit was granted in favor of State Road Transport Corporation. However, the State Road Transport Corporation entered into an agreement with a private vehicle owner allowing him to operate his vehicle under the permit obtained by Corporation as its nominee. The learned Judges of the Supreme Court held that it is not valid. The said case has no application to the facts of the present case. It is not a case of forming of a partnership. That is a case where permit holder completely effaced himself from conducting the business and entrusted the same to a private party for doing the business under the licence.

Sri.T. Anantababu, learned counsel for the 1st defendant tried to pursuade us to take a view that person includes partner and the partnership affects the transfer. We are not pursuaded to accept his contention in view what is stated above and particularly, in view of thejudgment of the Division Bench of this Court in Commr. of income tax v. Venkataramana (1983 Tax LR 1355) (supra). The learned counsel also contended that the judgments rendered by the two Division Benches referred to above (supra) (19831991 A.P./16 IX G-16 Tax LR 1355 (Andh Pra) and Chennuru Ramarao Vs. Gowri Sankar Talkies, Tekkali and Others, are incorrect in holding that the judgment of the Full Bench in Velu Padayachi Vs. Sivasooriam Pillai, is deemed to have been overruled. For the said purpose, the learned counsel referred again to the case of JER & Co. as well as Velu Padayachi''s. We are not pursuaded to accept the said contention when two Division Benches have already taken a view that the Full Bench judgment referred to in Velu Padayachi''s case (supra) is deemed to have been overruled.

In this connection, it is necessary to refer to the judgment of the High Court of Allahabad referred in JER and CO. Vs. COMMISSIONER OF Income Tax, U.P., The Division Bench, on a consideration of the provisions of the Uttar Pradesh Excise Act, 1910 the U.P. Excise Rules, 1910, held that the assesses- firm was carrying on business of vending foreign liquor but had no license in its name and was carrying on the business by virtue of the license in the name of ''D'' and it amounted to a transfer of the license by ''D'' in favor of the partnership and therefore, it is illegal and not entitled to registration. In coming to the said conclusion, the Allahabad High Court strongly relied upon Velu Padayachi Vs. Sivasooriam Pillai, . This judgment of the Allahabad High Court was reversed by the Supreme Court in the case already referred to ( 1972 Tax LR 2436) (SC). The learned Judges of the Supreme Court clearly held that the license in Form FL II did not prohibit the holder from entering into a partnership and that it merely provided that the license shall not be sub-let or transferred. It was further held by the learned Judges of the Supreme Court as follows (at Pp. 2436-37 of Tax LR):

But the license, it is clear from the record, as in Form FLII issued under the U.P. Excise Manual. The license does not prohibit the holder from entering into partnership by the holder of the license: it merely provides that the license shall not be sub-let or transferred. Since there is no prohibition against entry by the holder of the license into a partnership the question whether the partnership was illegal does not arise.

In view of the above, it is clear that the learned Judges considered a similar situation. In the present case also, Cl. 12(2) of the conditions of license does not prohibit the holder of the license from entering into a partnership. The only question is whether it amounts to a transfer. When there is no prohibition from entering into a partnership, the question of transfer does not arise on the formation of a partnership. We are bound by the judgment of the Supreme Court rendered in the case referred to (1972 Tax LR 2436) (supra). We entirely agree with the decisions of the two Division Benches referred to (supra) (1983 Tax LR 1355 (Andh Pra) and Chennuru Ramarao Vs. Gowri Sankar Talkies, Tekkali and Others, in holding that the judgment of the Full Bench in Velu Padayachi Vs. Sivasooriam Pillai, is deemed to have been overruled by the decision of the Supreme Court.

Further, the first defendant himself entered into the partnership with the plaintiff as well as the second defendant. He himself is the managing partner and conducting the business. The other two partners are only assisting him as per the terms of the partnership. It is inequitable for such a person to raise the plea that the partnership, which he himself entered into, is illegal. However, it is not necessary to rest the case on that aspect in view of our decision on the legal aspect.

At this stage, it is necessary to refer to the judgment of a Division Bench of this Court in P. R. Nancharayya v. P. Sriramamurthy, (1987) 1 Andh LT 33. The said case had to consider the provisions of ''the Act'' and ''the Rules'' made thereunder and in particular Cl. 12(2) of the conditions of licence. The facts in that case were as follows:

The first defendant therein and one R. Madhusudana Rao were the owners of a cinema theatre by name ''Vijayalakshmi Talkies'' at Gaunter. They (owners) entered into an agreement with the plaintiff therein granting a right to exhibit films in the theatre on same terms and conditions and for a particular period. Subsequently, on 5-12-1974 the 1st defendant therein and R. Madhusudana Rao (owners) obstructed the plaintiff from exhibiting the film ''Roti, Kapada Aur Makan'' and put up a banner for exhibiting the film ''Illarikam''. The plaintiff filed the suit for recovery of certain amounts representing cash as well as the value of the article retained by the defendants and also the amounts representing profits for the rest of the period for which the plaintiff was prevented from exhibiting the film by the owners. The defendants contended that the agreement was void and opposed to S. 23 of the Contract Act and as such unenforceable. On a consideration of the rival claims, the learned Judges constituting the Division Bench held that the Agreement is illegal and opposed to public policy and is in the teeth of the conditions of license and dismissed the appeal. It is at once evident that the facts of this case have no relevance for the purpose of deciding the present case on hand. It is not a case of partnership. Under the terms of the agreement, the owners of the cinema theatre allowed the plaintiff therein to exhibit the films exclusively for himself. Therefore, the owners completely effaced themselves and allowed the plaintiff therein to conduct the business of exhibiting the films tinder the license granted to them. In those circumstances, the learned Judges of the Division Bench held that it is in the teeth of Cl. 12(2) of the conditions of license and therefore, opposed to public policy. As we have stated above, the facts of this case have no application to the facts of the present case and therefore, it is distinguishable. 25. However, we are constrained to observe that the judgment was rendered by the Division Bench on 21-2-1986. The two Division Bench judgments referred to (supra) (1983 Tax LR 1355 Chennuru Ramarao Vs. Gowri Sankar Talkies, Tekkali and Others, which were rendered on 18-4-1963 and 28-12-1984 were not cited before the learned Judges and they have not been referred to in the judgment. On the other hand, the judgment of the Madras High Court referred to K. Viswanathan Vs. Namakchand Gupta and Another, was referred to with approval in the said judgment. The said case in K. Viswanathan Vs. Namakchand Gupta and Another, in a case of partnership which was dealt with and referred to by the two Division Benches of this Court referred to (supra) ( 1983 Tax LR 1355 and Chennuru Ramarao Vs. Gowri Sankar Talkies, Tekkali and Others, We are bound by the two Division Bench judgments which are directly dealt with the case of partnership.

In fact, para 38 of the judgment of the Division Bench in Chennuru Ramarao Vs. Gowri Sankar Talkies, Tekkali and Others, extracted in the forego�ing paras held that the case in K. Viswanathan Vs. Namakchand Gupta and Another, is deemed to have been overruled along with the decision in A.V. Varadarajulu Naidu (decd.) and Others Vs. K.V. Thavasi Nadar, by the Supreme Court in K.M. Viswanatha Pillai Vs. K.M. Shanmugam Pillai, . This was not brought to the notice of the Division Bench decided the case in P. R. Nancharayya v. P. Sriramamurthy ( 1987 (1) Mad LT 33) (supra).

Further, the deletion of Cl. 12(2) of the conditions of licence in Form ''B'' issued under ''the Rules'' is a pointer for holding that the legislature also never intended that entering into a partnership by the licensee for doing the business under the license will amount to a transfer.

In view of the above discussion, we hold that the suit partnership is not illegal and it is not opposed to public policy and not hit by S. 23 of the Indian Contract Act. As between the parties to the partnership, in any event, it is valid and it is binding on them. The suit as amended for dissolution of the partnership and for accounts is maintainable.

Sri T. Anantababu, learned counsel for the first respondent, next contended that allowing the amendment of the plaint sought for in C.M.P. 1330 of 1980 is illegal and unsustainable and without jurisdiction. The amendment ought not to have been allowed at the appellate stage to cure the defects in the frame of suit and it introduces a new case altogether. On the other hand, the learned counsel for the plaintiff contended that the amendment was properly allowed by the learned single Judge and no exception can be taken to the same.

In this case, by allowing the application in C.M.P. No. 13330 of 1980, the learned single Judge allowed the plaintiff to amend the plaint by incorporating a prayer for dissolution of partnership and for accounts consisting of plaintiff and defendants 1 and 2 from one of co-ownership. The plaintiff came to the Court, in the first instance, stating that there is a partnership between the parties to the suit and in spite of repeated demands; accounts are not being rendered by the first defendant. However, it was mentioned in the plaint, that the license to exhibit cinematograph films under ''the Rules'' being in the name of the first defendant and not in the name of the firm, the parties are relegated to the status of co-owners from that of the partners and therefore, the provisions of Indian Partnership Act relating to dissolution of the firm and rendition of accounts cannot be resorted to.

The first defendant in his written statement clearly admitted the allegation in the plaint that the parties to the suit entered into an agreement of partnership and that it is agreed that the first defendant should act as managing partner. It was further mentioned in the written statement of the first defendant as follows:

It is obligatory on the members of the Firm to get the partnership dissolved to obtain the relief of accounts. This suit which is filed for partition of the partnership properties and for accounts and subsequent profits is not maintainable in law and is liable to be dismissed. A scrutiny of the terms of the partnership deed clearly disclosed that the real relationship between the parties is that of partners.

It was further stated in the written statement has follows:

Until dissolution the parties are partners and subsequent to dissolution they become co-owners. The suit is therefore not maintainable in law.

In view of the above, it is clear that the first defendant himself contended that the relationship between the parties is that of partners and that a suit for dissolution of partnership and accounts lies and not a suit for partition and accounts on the basis of they being co-owners. By seeking amendment of the plaint before the first appellate Court, the plaintiff merely cured the defects in the frame of the suit as pointed out by the first defendant himself. The first defendant was never taken by surprise by the amendment of the plaint. The application for amendment is a sequel to the written statement filed by the first defendant as well as the decision of the trial Court. No further evidence nor any additional plea by way of additional written statement is necessary to decide the real question involved in the suit. The application filed for amendment viz., CM.P. No. 13330 of 1980 is a bona fide one. It is authoritatively laid down by the Supreme Court in Jai Jai Ram Manohar Lal Vs. National Building Material Supply Gurgaon, that

Rules of procedure are intended to be a handmaid to the administration of justice. A party cannot be refused just relief merely because of some mistake, negligence, inadvertence or even infraction of the rules of procedure. The Court always gives leave to amend the pleading of a party, unless it is satisfied that the party applying was acting male fide, or that by his blunder, he had caused injury to his opponent which may not be compensated for by an order of costs.

It was further held that (at p. 1269 of AIR):

However, negligent or careless may have been the first omission, and, however, late the proposed amendment, the amendment may be allowed if it can be made without injustice to the other side.

We are of the opinion that the amendment neither caused prejudice to the first defendant nor caused injury or any injustice to him. The application for amendment, as stated above, is bona fide. In a decision Konduru Seshu Reddi Vs. Vemareddy Rama Raghavareddy and Others, a Division Bench of this Court held that (at p. 121 of AIR):

All amendments ought to be allowed which satisfy the two conditions namely, (a) of not working injustice to the other side, and (b) of being necessary for the purpose of determining the real question in controversy between the parties.

It was further held that

An amendment can be followed for curing the defect in the frame of the suit.

In view of the above, we are of the opinion that allowing the amendment is legal and proper in CM.P. No. 13330 of 1980.

It is next contended by Sri T. Anantababu, learned counsel for the first defendant that when once the plaint was allowed to be amended by the learned single Judge, the first defendant should have been given an opportunity to file an additional written statement if any and also to adduce evidence if any. As a consequence of the amendment, it is contended, the first defendant is entitled to file an additional written statement. The same was resisted by the learned counsel for the plaintiff.

While allowing the application for amendment, the learned single Judge stated as follows:

As the defendant No. I has already in his written statement raised the required defense, as extracted above and that he is aware of the fact that they entered into a partnership and that a suit has to be filed for dissolution of partnership accounts, no opportunity need be given to him to file any additional written statement or lead any additional evidence.

As mentioned above, it is at once seen that all the necessary pleas in respect of partnership were already raised in the written statement of the first defendant and the evidence was also adduced. Therefore, agreeing with the learned single Judge, we feel that no further opportunity is necessary and any such opportunity will be an empty formality and time consuming one. The suit is of the year 1978 and we are in the year 1990. We are not inclined to accept the contention of the learned counsel for the first defendant in this regard.

For all the above mentioned reasons, we allow both the appeals and set aside the decree and judgment under appeal and there shall be a preliminary decree for the relief of dissolution of partnership and for accounts. The parties are at liberty to file separate application for passing the final decree in the trial Court. All objections with regard to payments, if any, made to the plaintiff and amounts due, if any, to him and other questions with regard to the amounts due to the respective parties as well as the assets of the partnership will be considered in the final decree proceedings. Each party to bear its own costs throughout.