TMI Blog1959 (12) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... shares; one share to be held by a group consisting of three partners; another by a group comprising of two; the third by another group of two partners; and the fourth share by five partners. Paragraph 4 of the deed also provides that the profits or losses of the partnership should be divided among the 12 partners in the manner mentioned therein. Paragraph 8 states that the closing stocks of tobacco, beedi leaves, etc., held by the partners on 31-12-1124 should be taken over by the firm's head office either as outright purchase or for commission sales; and the cost of such goods be credited in the accounts of the partners who held them. The other relevant provisions of the partnership deed are that the daily collections of each shop are to be sent to the head office on the same day, or thrice a week; are to be credited to the respective shops; and certain persons are to manage and to attend full time to the firm's business. The details concerning the shops and which partner held what licence can best be described by giving the following extract from paragraph 4 of the statement of case to this court: Shop Class of licence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Cochin Government Gazette and shall then have the force of law. 6. Whoever in contravention of this Act, or of any rule or order made under this Act, or of any licence or permit obtained under this Act-- (a) possesses tobacco for the purpose of sale, or (b) transports tobacco, or (c) imports or exports tobacco, or (d) sells tobacco, or (e) cultivates tobacco, shall on conviction before a Magistrate, be punished for each such offence with fine which may extend to five hundred rupees. We should now give the relevant parts of the Notifications that were applicable for the auctions, at which the partners had obtained the licensees. It is Notification N.D. 148 and is dated May 20, 1948. The relevant parts are the following: 1. The A class licensees will have the right of import and sale to B class licensees as provided for under the rules. They may also purchase tobacco from any of the stockist licensees, or from another A class licensees in the State. B class licensees will have the privilege of sale only to consumers and to the C class licensees in accordance with the conditions of such licences. B class licenses should make thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dullah v. Allah Diya ([1927] I.L.R. 8 Lah. 310) and Lonappan v. Ouseph (27 Cochin 22). Against these is Velu Padayachi v. Sivasooriam (A.I.R. 1950 Mad. 444), which the counsel for the assessee urges to have been overruled by Umacharan Shaw v. Commissioner of Income-tax ([1959] 37 I.T.R. 271). We feel the decision in Velu Padayachi (A.I.R. 1950 Mad. 444) to be correct and not to have been overruled by Umacharan Shaw v. Commissioner of Income-tax ([1959] 37 I.T.R. 271). But before assigning our reasons it is but proper to state what has been decided in the other cases. In Gouri Shankar v. Mumtaz Ali Khan ([1878-80] I.L.R. 2 All. 411) there was a lease for three years of a Government ferry with a covenant not to underlet or assign the lease without the leave of the person who had granted it, but the lessee admitted another as his partner and the Full Bench held that such a partnership was not void by reason of the covenant not to underlet or assign the lease. The decision in Radhey Shiyam v. Mewa Lal ([1929] I.L.R. 51 All 506) is more helpful to the assessee; for there was an agreement between the licensee and a third person for sharing the profits and losses in the business under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such a transfer would cover any alienations of the partial benefits as well, and the licensee cannot declare himself a trustee of the benefits in favour of another and himself. If doing that contravenes the rule against transfers, and we think it does, entering into a partnership also amounts to such a violation, as a partner is a trustee for his other partners. It is, therefore, clear that a licensee by entering into a partnership passes partial but substantial interests in what he has in favour of another, and thereby does what the rule seeks to forbid without permission. The same result is reached when prohibition against transfer of possession is analysed; for it cannot be disputed that by becoming a partner a licensee in possession of the goods converts without transfer of corpus his possession into that of an agent. The vicarious possession is then substantially different and the rule against transfer is attracted. We therefore think the view of Horwill, J., in Velu Padayachi v. Sivasooriam A.I.R. 1950 Mad. 444, that mere entering into partnership amounts to transfer of licensee's right is correct and the contract to do so is void because such a transfer is prohibited. W ..... X X X X Extracts X X X X X X X X Extracts X X X X
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