TMI Blog1958 (12) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... by the court that an association exists of which accounts ought to be taken. When the association is itself illegal, a court cannot assist the plaintiffs in getting accounts made so that they may have their full share of the profits made by the illegal association. The preliminary objection succeeds. The appeal is accordingly dismissed. - 125 OF 1955 - - - Dated:- 9-12-1958 - SYED JAFER IMAM, S.K. DAS AND KAPUR, JJ. Sardar Bahadur, for the Appellant. Achhru Ram B.C. Misra and P.K. Chakravarthy for the Respondent. JUDGMENT S.K. Das, J. This is an appeal on a certificate granted by the erstwhile Judicial Commissioner of Vindhya Pradesh, which is now part of the State of Madhya Pradesh. On behalf of respondent No. 1, Nagar Mai, who was defendant No. 1 in the suit, a preliminary objection has been taken to the effect that the suit was not maintainable by reason of the provisions of section 4 of the Rewa State Companies Act, 1935, and the appeal filed by the plaintiffs must, therefore, be dismissed. As this preliminary objection was not taken in any of the two courts below, learned counsel for the appellants wanted time to consider the point Accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the association during the period when Nagar Mal was its president, the judgments of the courts below show that the real dispute between the parties related to the sale of cloth of a consignment known as the Gwalior consignment. It appears that in April, 1946, a consignment of 666 bales of cloth had come from Gwalior and an order was passed by the Cloth Control Officer that the consignment would be allotted to Nagar Mai who would give the association an option of taking over the consignment; if the association did not exercise the option, the consignment would be taken over by Nagar Mal. It appears that there was some dispute as to whether the other members of the association were willing to take over the consignment of Gwalior cloth. We are not concerned now with the details of that dispute because we are not deciding the appeal on merits. It is enough if we say that ultimately there was an order to the effect that only 390 bales should be allotted to the association out of which Nagar Mal had given the association benefit of the sales of 106 bales, and the dispute related to the share of profits made on the remaining 284 bales. Respondent No. 1, Nagar Mal, raised various po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... int taken on behalf of respondent No. 1 is this. It is contended that by reason of section 4(2) aforesaid, the Cloth Association at Budhar was not a legal association, because it was formed for the purpose of carrying on a business which had for its object the acquisition of gain by the individual members thereof and further because it was not registered as a company under the Rewa State Companies Act, 1935; nor was it formed in pursuance of a charter from the Durbar. It has been contended before us on behalf of respondent No. 1 that by reason of the illegality in the contract of partnership the members of the partnership have no remedy against each other for contribution or apportionment in respect of the partnership dealings and transactions. Therefore, no suit for accounts lay at the instance of the plaintiffs-appellants, who were also members of the said illegal association. We consider that this contention is sound and must be upheld. On behalf of the appellants, Mr. Sardar Bahadur has urged the following points in answer to the preliminary objection: firstly, he has contended that we should not allow the preliminary objection to be raised at this last stage; secondly, he ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing by the Subordinate Judge and it appears that the bar of section 72 of the Indian Contract Act was not argued or only faintly argued before the Subordinate Judge or in the High Court. In these circumstances, their Lordships of the Privy Council held that they were unable to exclude from their consideration the provisions of a public statute. In our view, the same principle applies in the present case and section 4(2) of the Rewa State Companies Act, 1935, being prohibitory in nature cannot be excluded from consideration even though the bar of that provision has been raised at this late stage. On his second contention learned counsel for the appellants has relied on U Sein Po v. U Phyu [1929] ILR 7 Ran 540. That was a case in which three members of an association formed for carrying on a rice business claimed a decree (i) declaring the respective shares of the subscribers to that association, and (ii) directing that the plaintiffs be repaid their shares after reconverting the property of the association into cash and after payment of all debts and liabilities. The association, it was found, consisted of twenty-seven members; it was not registered and its formation was in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly reprehensible it may be for a person who has been engaged with another in various dealings and transactions to set up their illegality as a defence to a claim by that other for an account and payment of his share of the profits made thereby, such a defence must be allowed to prevail in a court of justice. Were it not so, those who ex hypothesi have been guilty of a breach of the law, would obtain the aid of the law in enforcing demands arising out of that very breach; and not only would all laws be infringed with impunity, but, what is worse, their very infringement would become a ground for obtaining relief from those whose business it is to enforce them. For these reasons, therefore, and not from any greater favour to one party to an illegal transaction than to his companions, if proceedings are instituted by one member of an illegal partnership against another in respect of the partnership transactions, it is competent to the defendant to resist the proceedings on the ground of illegality." It is true that in order that illegality may be a defence, it must affect the contract on which the plaintiff is compelled to rely so as to make out his right to what he asks. It by n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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