T. Ramanjulu Naidu vs S. Anjappa and Another

Ramaprasada Rao, J.—The Plaintiff in Original Suit No. 2102 of 1963 on the file of the City Civil Court, Madras is the Appellant. The Plaintiff filed a suit in forma pauperis for recovery of possession of his lorry MSY. 4892 in specie, which is admittedly left in the possession of the first Defendant, and rendition of accounts and for costs. In the course of the trial of the suit the Plaintiff gave up his prayer for rendition of accounts. His suit for recovery of possession of the lorry is based on the following facts. It appears that the Plaintiff was the owner of lorry, MSY 48)2 which was under a hire purchase with one Rickobdas Chordia. The Plaintiff was unable to pay the installment due and payable under the hire purchase contract to the said Rickobdas.

It appears that he approached the first Defendant to solve his problems by paying off the hire purchase-holder and to obtain the necessary transfer of the lorry in favour of a partnership firm called Sri Anjaneyaswami Lorry Service, which the Plaintiff along with the first and second Defendants intended to start by then. According to the Plaintiff, it was pursuant to the understanding, he handed over exhibits B-9 to B-12 to the first Defendant so that he could make the necessary applications to the appropriate motor vehicles authorities for obtaining the transfer as contemplated by the parties. It is also the Plaintiff''s case that after the first Defendant paid of Mr. Rickobdas, the lorry was left in the possession and custody of the first Defendant, but with the avowed object of using it for purposes of the partnership business which was to be run in conjunction with the lorry, APC. 273 belonging to the first Defendant, which the first Defendant also agreed to provide as one of the assets of the partnership for running the partnership business as above. The complaint of the Plaintiff is that the first Defendant did not take any steps to obtain a transfer of license or the permit in favour of the partnership, but was prolonging the issue, In or about September 1, 1957, differences arose between the parties and, it appears that, the running of the lorries belonging to the Plaintiff and the first Defendant for the benefit of the partnership was stopped. Thereafter, the Plaintiff, after issuing the necessary notice to obtain reliefs and for the assenting of his rights, and having failed, instituted Original Suit No. 858 of 1958 on the file of the City Civil Court, Madras for accounts and other reliefs. There also, the allegation was that there was a partnership by name Sri Anjaneyaswami Lorry Service and the assets of the partnership consisted of the lorry belonging to the Plaintiff as above as also the lorry of the first Defendant as described hereinbefore and that the first Defendant did not render a proper account of the partnership business and therefore, the suit was laid for accounts of the partnership business and for appointment of a Commissioner for ascertaining the share of profits of the Plaintiff in the said business. The defence of the first Defendant in that case was that the trial Court had no jurisdiction to entertain the action and that he is the owner of the lorry, APC 273, of which he is the proprietor and he denied that he was a partner in the lorry transport service. That a suit cannot be laid by a partner when the partnership itself is illegal and, in that sense, the suit was dismissed. but the trial Judge made the following observations.

In the light of the principles laid down in Maniam Hiria Gowder Vs. Naga Maistry, the Plaintiff is not entitled to sue for accounts, though it was open to him to claim the balance of the purchase price or re-delivery of the lorry on his making good the sums advanced and disclosed in the first Defendant''s ledger.

But, for reasons better known to himself, the Plaintiff took up the matter in appeal. Under exhibit A-20, Mr. S. Ganesan, Principal Judge of the City Civil Court (as he than was) again reiterated that the question whether the Plaintiff would be entitled to recover the balance of the purchase price or to recover the lorry on payment of the advances made by the first Defendant is left open. He, however, dismissed the appeal on the technical ground that the suit was not maintainable. This judgment of the appellate Court was rendered on November 19, 1963. Before he filed the appeal, but after the first Court rendered its judgment, apparently taking advantage of the observations made by the trial court, the Plaintiff filed the present action in forma pauperis on September 10, 1962 seeking for the reliefs already stated. The learned trial Judge, in this action once again relying upon Varadarajulu Naidu v. Thavasi Nadar (1963) 2 M.L.J. 30 dismissed the suit as not maintainable. In his view, as the parties intended to trade in licence the partnership itself is void ab initio and therefore, the Plaintiff was not entitled to recover even his own lorry MSY. 4892 from the first Defendant in specie in view of the ratio in the above decision. We may in passing refer, to the written statement filed by the first Defendant in the present action. His case is that the Plaintiff transferred possession of the lorry only for the purpose of securing the moneys advanced to the Plaintiff by the first Defendant both at the time when he cleared the debt in favour of Rickobdos and also towards the subsequent advances made by him to make the vehicle road-worthy. He has added that it was agreed that if the Plaintiff repaid the advances made by him in respect of the lorry together with interest at 12 per cent per annum, the lorry would be redelivered to him. He however denied partnership. He would accuse the Plaintiff as having removed all the papers from the first Defendant''s place of business at Punganur, but would conclude by saying the delivery of the lorry in specie could only be against payment of a sum of Rs. 11.000 together with interest which amount the first Defendant claimed to have advanced to the Plaintiff. The second Defendant is sailing with the first Defendant.

The following issues where framed:

(1) Has this Court no jurisdiction to entertain this suit?

(2) Is the Plaintiff entitled to recover the lorry MSY 4892 from the Defendants in specie?

(3) Is the Defendant liable to render accounts in respect of the earnings of the lorry MSY. 4892?

(4) Is the Plaintiff liable to pay any amount to the Defendants as claimed by the Defendants in their written statement ?

(5) Is the suit barred by limitation? and

(6) To what relief if any, is the Plaintiff entitled?

As we said already, the Court found that it had jurisdiction to entertain the suit, but, following the decision in Varadarajalu Naidu v. Thavasi Nadar (1963) 2 M.L.J. 30, found Issue 2 against the Plaintiff and the Court was of the view that the Plaintiff was not entitled to recover the lorry MSY. 4892 from the first Defendant. The Court also held on Issue 5 that the suit was in time as it was laid soon after the judgment was rendered in Original Suit No. 858 of 1958, City Civil Court, Madras. In the result, however the Plaintiff''s suit was dismissed. It is as against this, the present appeal has been filed.

Learned Counsel for the Appellant says that the dismissal of the suit, in the circumstances stated above, is not warranted. He would also bring to our attention a Full Bench decision of our Court reported in S.M. Kanniappa Nadar Vs. K.K. Karuppiah Nadar, and would urge that, in the circumstances of the case, though the parties intended to engage themselves in an illegal partnership, yet at the time when they forged to act in that way, their idea was to apply for transfer of the permits in a manner known to law and thereafter enter into the concerted act of the partnership business can, by no stretch of imagination, be termed to be an illegal object and if this were to be upheld, the claim for restitution of the property of the one party which is, admittedly, in the possession of the other, who all joined together in such a venture, is certainly maintainable and the suit ought not to have been dismissed limine on that ground. We may at once state that the ratio in Veradarajalu Naidu v. Thavasi Nadar (1963) 2 M.LJ. 30 has been reversed by the Supreme Court in a judgment reported in Viswanatha Pillai v. Shanmugham Pilai (1969) 1 M.L.J. 86 (S.C.). There, the Supreme Court succinctly observed that the view that only an owner should have a permit to enable him to carry on business of motor vehicle operation, is an erroneous view. They also observed that in India, benami transactions are recognised and not frowned upon and there is nothing in the Motor Vehicles Act which expressly or by implication bars benami transactions or persons owing buses benami and applying for permits on that basis. Applying this principle, this Court, in the judgment in Appeal Suit No. 568 of 1967, (K.E.M. Mohamed Ibrrhim Maricar and Anr. v. Perumal Padayachi) to which one of us was a party, held that transactions in which persons engaged themselves initially to apply for transfers of permits from the motor vehicles authorities so as to laterly engage themselves in motor vehicles operations as a partnership business would not be void ab inito. We need not, however, expand this concept since the proposition arising in this case according to us, has been well settled, even before the Supreme Court rendered its decision as above, by a Full Bench of our Court reported in Kanniappa Nadar v. Karuppiah Nadar (1962) 1 M.L.J. 109 (F.B.).

Before we refer to the ratio therein, the facts in this case are not disputed. The Plaintiff''s case is that he handed over his lorry to the first Defendant with the specific object of the first Defendant joining him in a partnership business by providing his own lorry as one of the partnership assets and running the two lorries together in partnership along with the assistance rendered by the second Defendant as a working partner. It is also the Plaintiff''s case that he handed over exhibits B-9 to B-12 to the second Defendant to enable him to apply to the appropriate authorities for transfer the permits in favour of the partnership business. According to the Defendants he did not pursue the matter. But as the Supreme Court has said, it is not illegal under the Motor Vehicles Act for persons applying for permits in respect of buses owned by others and as benami transactions are permissible under the provisions of the Motor Vehicles Act, it appears to us that the initial venture into which the Plaintiff and the Defendants wanted to plunge cannot be said to be an illegal one or the resultant contemplated partnership, a void partnership. As we said, the Full Bench of our Court, in the case in Kanniappa Nadar v. Karuppiah Nadar (1962) 1 M.L.J. 109 (F.B.) has made the following observations:

Where an agreement of partnership like the present one has either become impossible of performance by reason of the fact that no joint licence had been obtained in favour of both the partners or by reason of the recision by one party to the contract, the party in the position of the Appellant (i.e. the party having the right of rescinding the contract by reason of the breach committed by the other) will be entitled to restitution of the moneys paid by him towards the contract.

Transliterating the principle laid down, in the instant case, where the agreement of partnership to run a motor vehicle business under the name and style of Sri Anjaneyar swami Lorry Service has become impossible of performance by reason of the fact that no licence was obtained in the name of partnership either at the instance of the first Defendant or the second Defendant, the Plaintiff cannot suffer thereby and is not precluded from seeking for restitution of the lorry which, according to him, he handed over to the first Defendant as an asset of the contemplated partnership and which partnership did not come through for reasons better known to the parties. Though the first Defendant would say that the agreement was to obtain the licence in the name of the second Defendant, the Plaintiff''s evidence is that the papers were handed over to the second Defendant for the purpose of having the permits transferred in the name of the partnership. This aspect, however does not deflect the principle which we intend laying down, that if, by reason of supervening circumstances, an agreement to enter into a partner ship becomes impossible of performance, the party who by reason of such an initial agreement, parted with money or property to the other in the contract, cannot be deprived of the benefit of claiming back the said amount or the property in species if he is otherwise entitled to it. This means, that the equities of all the parties have to be worked out and if the party claiming such restitution has to pay to the other party any amount during the working of the said initial agreement of parties, then he has to pay the said sum to the other party, subject to such adjustment of equities by one party against the other We are of the view that restitution of such money''s or the property in specie is possible and that such a relief ought not to be negative on the only ground that the agreement of partnership has become impossible of performance or has later been found as an illegal partnership. In the instant case, however, no such illegal partnership can be spelt in view of the decision of the Supreme Court in Viswanath Pillai v. Shanmugham Pillai (1960) 1 M.L.J. 86 (S.C.). The trial Court was prompted to ender the decision on the basis of the ratio in Varadarajalu Naidu v. Thavasi Nadar (1963) 2 M.L.J. 30 which was ultimately reversed by the Supreme Court in Viswanatha Pillai v. Shanmugham Pillai (1960) 1 M.L.J. 86 (S.C.) In this view, the summary disposal of the suit as was done by the Sixth Assistant Judge, City Civil Court, Madras, is not correct. He has to, therefore, find on the other issues and in particular on issues 2, 3 and 4 and render a decision thereon. We agree with the trial Court that the Court has jurisdiction to entertain the suit and the suit is not barred by limitation. The appeal is, therefore, allowed in part and the judgment and decree of the trial Court are set aside and the subject matter is remitted to the Court below for a fresh adjudication on issues not decided upon. The costs will abide the result in the Court below.

It, is however, made clear by the learned Counsel for the Plaintiff himself that it was never his intention either in this action or in the previous action to seek for accounts as regards the lorry belonging to the first Defendant.