Satyala Sanyasi vs Bhogavalli Sanyasi alias Bullodu

The lower Court has now submitted its findings. I may mention that I formulated three questions provisionally but the case depends on the

answer to the third alone. As regards that question, the facts as found may be thus stated. The suit promissory note was executed on 27th August,

1930 and on the same date the plaintiff, the defendant and three others entered into a partnership. It was then agreed that the plaintiff on behalf of

the partnership was to bid for the right to sell toddy and obtain a license in his name. At the auction held a month thereafter, he became the

successful bidder. The license has since been produced and bears the date 23rd September, 1930. On these facts the lower Court has held that no

transfer is involved in the transaction and that the suit promissory note is therefore enforceable.

The question really to be decided is, whether the partnership formed in the circumstances mentioned above is illegal or not. That again depends

upon whether any part of Rule 27 to which I made reference in my previous order, has been infringed. That Rule runs thus:

No privilege of supply or vend shall be sold, transferred or sub-rented without the Collector''s previous permission.

No question of ""selling"" the privilege or ""subrenting"" it, arises on the facts here. Then the point remains, was there a ""transfer"" of the privilege? If

the partnership involved a transfer, it would be illegal; otherwise, not. For the purpose of deciding whether or nor there was a transfer, I now turn

to Nalam Padmanabham Vs. Sait Badrinatt Sarda and Others, . The learned Judges there observe,

It is no doubt true that every contract of partnership is not necessarily a transfer but it is equally clear that such a contract may in many cases

involve a transfer. Thus if two persons agree to start a business in partner-shin and to contribute capital therefor, there is no transfer involved in the

transaction. But if one person carrying on a trade and possessing stock and capital, admits another into partnership with himself, making the stock

and capitals, the joint property of both, it is impossible to contend that there is not a transfer in such a case.

Adopting this test, I must hold on the facts that no transfer is involved in the present partnership. At the time the plaintiff bid for the right, the

partnership had already come into existence. If the plaintiff had, on the contrary, first purchased the right and then entered into the partnership,

there would in such a case be a transfer by him of the right in favour of the firm. The facts here disclose that the persons concerned first entered

into the partnership with the object of acquiring the right and that the plaintiff on the firm''s behalf some time later acquired that right. In the case just

cited the facts were entirely different, as the licence was first obtained and then the partnership was entered into.

Mr. Narasaraju, the defendant''s learned Counsel, contends that even if it be held that the contract is not illegal, it is in any event opposed to

public policy. I am afraid I cannot accede to this contention. What is ""public policy"" with reference to an enactment, except what is manifested by

its provisions? The Abkari Act lays down that it is illegal to sell, transfer or sub-rent the privilege. To attempt to discover a policy with a view to

make illegal, things not expressly prohibited, seems unwarranted. The argument in effect is, that although only three acts are in terms forbidden, the

Courts must somehow infer some kind of policy, which would render illegal other acts, though not so specified. In Natla Bapiraju v. Puran Achutha

Rajajee (1910) M.W.N. 549 Miller and Krishnaswami Aiyar,. JJ. held that Section 13 of the Abkari Act ""does not prohibit a person who has no

licence from holding an interest in the manufacture or vending of the liquor jointly with licensed manufacturer or vendor,"" which is the same thing as

holding, that a partnership for the sale of liquor is not per se illegal. Consistent with this view, in Nalam Padmanabham Vs. Sait Badrinatt Sarda

and Others, as already observed, the test was laid down, does the partnership involve a transfer or does it not? - for what the rule prohibits is the

transferring"" of the privilege and not the entering into of a partnership in regard to it. Moreover, what may be illegal under one enactment may not

be so under another. For instance, the Opium Act (I of 1878) enacts that no one shall sell opium except as provided by it. There is no such

prohibition under the Abkari Act, for Section 15 enacts that no liquor shall be sold without a licence from the Collector, while as already stated,

the Opium Act says ""no-one shall sell opium"". This shows that the argument based on the so-called public policy is, as I have pointed out,

extremely misleading.

Mr. Narasaraju contends that the recent decision of the Full Bench Ramanayudu v. Seetharamayya (1934) 68 M.L.J. 570 (F.B.) concludes the

point in his favour. I do not think I can agree with his contention. Although the learned judges there refer to the judgment of Anantakrishna Aiyar, J.

in Nanna Vazhmuni v. Nathamuni (1929) 122 I.C. 342 who quotes the passage I have already referred to from Nalam Padmanabham Vs. Sait

Badrinatt Sarda and Others, it is significant that no dissent is expressed from that passage; on the contrary, mention is made in the Full Bench

judgment of the fact,

The partnership was formed after the first defendant had become the successful bidder,

Which clearly distinguishes that case from the present. I therefore hold that the suit promissory note is enforceable.

As regards the other contention of the defendant that the plaintiff''s proper remedy was to sue for the dissolution of the partnership, I must hold

that it cannot prevail.

In the result, the Civil Revision Petition is allowed and the suit is decreed with costs throughout.