T. Ramanujalu Naidu vs S. Anjappa and another

Ramaprasada Rao, J.—The plaintiff in O.S. 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 for 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 4892 which was under

a hire purchase with one Rickobdas Chordia. The plaintiff was unable to pay the instalment 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-bolder 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 said understanding, he handed over Exs. 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 off 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 licence or the permit in favour of the partnership, but was prolonging the issue. In or about 1st September, 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 asserting of his rights, and having failed,

instituted O.S. No. 858 of 1958 on the file of the City Civil Court, Madras for accounts and for other reliefs. There also, the allegation was that

there was a partnership by name, Sri Anjanevaswami 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 far 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 be was a partner

in the lorry transport service. That suit can be laid by a partner when the partnership itself is Illegal and, in that sense, that 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 ask 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 as disclosed in the first defendant''s ledger. But, for reasons better known to himself, the plaintiff took up the matter in appeal,

Under Ex.A-20, Mr. S. Ganesan, Principal Judge of the City Civil Court (as be then 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 19th November 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 10th September 1962 seeking for the reliefs already

staled. The learned trial Judge, in this action, once again relying upon Varadarajulu Naidu v. Thavasl Nadar 1963 II M.L.J. 20 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

Rickobdas and also towards the subsequent advances made by him to make the vehicle roadworthy. 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 re-delivered to

him. He, however, denied the 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 that 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 were 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 Varadarajulu Naidu v. Thavasi

Nadar 1963 II M.L.J. 20 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 land soon after the judgment was rendered in

O.S. No. 858 of 1958, City Civil Court...(sic) dismissed. It is as against this, the present appeal has been filed.

Learned counsel for the appellant rays 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 Kanniappa Nadar v. Karuppiah Nadar 1962 II M.L.J. 109 (F.B.) 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 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 in limine on that ground. We may at once state that the ratio in Varadarajulu Naidu v. Thavasi Nadar

1963 II M.L.J. 20 has been reversed by the Supreme Court in a judgment reported in Visvanatham Pillai v. Shanmugam Pillai 1969 I 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 owning buses benami and

applying for permits on that basis. Applying this principle, this Court, in the judgment in K.E. M. Mohamed Ibrahim Marcatr and another v.

Perumal Padayachi A.S. 568 of 1967 to which one of us was a party, held that transactions in which persons engaged them selves initially to apply

for transfers of permits from the motor vehicles authorities so as to latterly 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 II 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 banded 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 Exs.B-9 to B12-10 the second defendant to enable him to apply to the appropriate authorities for

transfer of the permit in favour of the partnership business. According to him, the defendants 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 per runs 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 splurge cannot be said to be an illegal one or the resultant completed partnership, a void partnership. As we said, the Full

Bench of our Court in the case in Kanniappa Nagar v. Koruppaich Nadar 1962 2-M.L.J. 109 (F.B.) : 75 L.W. 119 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 favor of both the partners by reason of the rescission by are party to the contact the party in the position of the appellant he

the patty having the right of rescinding the contract by reason of the breach committed by the other will be entitled to institution of the moneys paid

by him towards the contract.

Transliterating the principle laid down, in the instant case, where she agreement of partnership to run a motor vehicle business under the name and

style of Sri Anjanayaswami Lorry Service has become impossible of performance by reason of the fact that no licence was obtained in the name of

the 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, be banded 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 banded ever to the second defendant for the

purpose of having the permits transferred in the name of the partnership. This aspect, however, does not defect the principle which we intend laying

down, that if, by reason of supervening circumstances, an agreement to enter into a partnership becomes impossible of performance, the party

who, be reason of such an internal 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 specie if he is otherwise entitled ton. 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 be 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 moneys or the property in specie is possible and that such a relief ought not to be negatived 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 Viswanatha Pillai v. Shanmugham Pillai 1969 1-M.L.J. 86. The

trial Court was prompted to render the decision on the bais of the ratio in Varadarajulu Naidu v. Thavosi Nadar (1963) II M.L.J. 20 which was

ultimately reversed by the Supreme Court in Viswanatha Pillai v. Shanmugham Pillai 1969 1 M.L.J. 86. 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 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 if sues 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.