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TMI Blog1958 (12) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... the preliminary objection must succeed, it is necessary to state the facts only in so far as they have a bearing on it. When cloth control came into force in Rewa State, the cloth dealers of Budhar, a town in that State, formed themselves into an association to collect the quota of cloth to be allotted to them and sell it on profit wholesale and retail. The association at Budhar consisted of 25 members who made contributions to the initial capital of the association which was one lac of rupees. No formal articles of association were written; nor was it registered. The association functioned through a president and a poineer worker; they kept accounts and distributed the profits. Respondent No. 1, Nagar Mal, was the president of the said association from January, 1946, to June 26, 1946. Before that, Seth Badri Prasad, one of the plaintiffs-appellants before us, was the president. Nagar Mal ceased to be president after June 26, 1946, and Seth Badri Prasad again became president. The association worked till February, 1948; then cloth was decontrolled and the work of the association came to an end. On June 25, 1949, thirteen members of the association out of the twenty-five brought a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned District Judge, who dealt with the suit in the first instance, passed a preliminary decree in favour of the plaintiff-appellants. The decree directed Nagar Mal to render accounts of the Cloth Association at Budhar from April 1, 1946, to June 26, 1946, and it further directed that leaving out 106 bales of Gwalior cloth which Nagar Mai gave to the association, an account should be rendered of the rest of the 390 bales and the profits on the sale thereof shall be according to the capital shares of the members of the association. Nagar Mal preferred an appeal to the learned Judicial Commissioner of Vindhya Pradesh, who reversed the finding of the learned District Judge and came to the conclusion that the other members of the association were not entitled to participate in the profits made on the sale of 284 bales of the Gwalior cloth and inasmuch as Nagar Mal had rendered accounts with regard to all other transactions, the suit for accounts must fail. He accordingly allowed the appeal and dismissed the suit. The preliminary point taken before us is founded on the provisions of section 4 of the Rewa State Companies Act, 1935. Sub-section (1) of section 4 relates to. banking busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was maintainable for recovery of the contributions made by the appellants and also for accounts; thirdly, he has contended that on the analogy of section 69(3)(a) of the Indian Partnership Act, 1932, it should be held that the appellants had a right to bring a suit for accounts of the association which was dissolved in February, 1948. We proceed now to consider these contentions of learned counsel for the appellants. The first contention that respondent No. 1 should not be allowed to raise an objection of the kind which he has now raised at this late stage can be disposed of very easily. The objection taken rests on the provisions of a public statute which no court can exclude from its consideration. The question is a pure question of law and does not require the investigation of any facts. Admittedly, more than twenty persons formed the association in question and it is not disputed that it was formed in contravention of section 4(2) of the Rewa State Companies Act, 1935. A similar question arose for consideration in Surajmull Nargoremull v . Triton Insurance Company Ltd. [1924] LR 52 IA 126,128. In that case sub-section (i) of section 7 of the Indian Stamp Act (II of 1899) was p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision in Sheppard v. Oxenford [1855] 1 K & J 491; 69 ER 552 and Butt v. Monteaux [1854] 1 K & J 98; 69 ER 345, and rested their decision on the following passage of Lindley on Partnership (the learned Judges quoted the passage at p. 145 of the 9th edition but the same passage will be found at pp. 148-149 of the nth edition): "Although, therefore, the subscribers to an illegal company have not a right to an account of the dealings and transactions of the company and of the profits made thereby, they have a right to have their subscriptions returned; and the necessary account taken; and even though the moneys subscribed have been laid out in the purchase of land and other things for the purposes of the company the subscribers are entitled to have that land and those things reconverted into money, and to have it applied as far as it will go in payment of the debts and liabilities of the concern, and then in repayment of the subscriptions. In such cases no illegal contract is sought to be enforced; on the contrary, the continuance of what is illegal is sought to be prevented." We do not think that the decision aforesaid, be it correct or otherwise, is of any help to the appellants i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, it is competent for A to require B to hand back the money if B has not already parted with it and the illegal purpose has not been carried out: see Greenberg v. Cooperstein [1926] 1 Ch 657. The case before us stands on a different footing. It is a claim by some members of an illegal association against another member on the footing that the association should be treated as legal in order to give rise to a liability to render accounts in respect of the transactions of the association. Such a claim is clearly untenable. Where a plaintiff comes to court on allegations which on the face of them show that the contract of partnership on which he sues is illegal, the only course for the courts to pursue is to say that he is not entitled to any relief on the allegations made as the courts cannot adjudicate in respect of contracts which the law declares to be illegal (Senaji Kapurchand v. Pannaji Devichand AIR 1930 PC 300). The same view, which we think is correct, was expressed in Kumaraswami v. Chinnathambi [1950] 20 Comp Cas 286 ; ILR [1951] Mad 593. As to the last contention of learned counsel for the appellants, based on the analogy of section 60(3)(a) of the Partnership Act, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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