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TMI Blog1956 (7) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... maintaining true and regular accounts, and that the profit and loss should be shared, one half by the plaintiff, the two defendants together taking the other half. The agreement which resulted in these arrangements was stated to be oral but that subsequently there was some writing evidencing slight variations of these terms. The plaintiff went on to state that the partnership which was at will was carried on for sometime but had become dissolved by notice of dissolution by him dated 18-9-1950, and that the accounts had not been taken. The suit therefore prayed for the taking of an account of this dissolved partnership from August 1945 and the usual decree after the accounts were taken. 3. The first defendant filed a written statement which was adopted by the 2nd defendant, raising primarily two defences. The first was that there was no partnership relationship between the plaintiff on the one hand and the defendants on the other but that the latter was merely working under the direction and control of the plaintiff, the plaintiff being in possession of all the accounts. It was therefore pleaded that there was no basis for any claim against them. The second defence was that the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for such area, if any, for such period, subject to such restrictions and conditions, and in such form and containing such particulars as may be prescribed." Section 8 runs thus: "From such date as may be specified in this behalf by the Central Government by notification in the official gazette, no person shall except as provided by rules made under this Act, have in his possession any excisable goods specified in such quantity as may be prescribed for the purposes of this section as the maximum amount of such goods or any variety of such goods which may be possessed at any one time by such a person." 6. In accordance with the provisions of Sections 7 and 8 the plaintiff obtained a licence in his own name on 22-12-1941. This licence authorises the plaintiff to carry on wholesale trade in tobacco during the year ending 31-13-1945 in the premises named in it subject to the provisions of the rules and this has been renewed from time to time by endorsements on the licence. One of the rules subject to which the licence must be taken to have been granted is Rule 178 of the Central Excise Rules 1944 which is in these terms: "178(1) Every licence granted or renewed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into the licenced business, he must intimate to the authorities this fact and have the licence duly amended. The breach of this rule is visited with the penalties specified in Section 9. 7. Prima facie it would be seen that, the formation of the partnership by a licensee without reporting it to the authorities within 30 days and having the licence amended by the inclusion of the names of the partners would be a contravention of the Act and the rules with the consequence that after the expiry of the 30 days the licensee could be proceeded against for violating the terms of his licence and the newly added partners for engaging in a business in tobacco contrary to Sections 6 & 8. Viewed thus, the action of the plaintiff as well as that of the defendants would clearly appear to be "prohibited by the law" so as to preclude any action between them' of the type now before the Court. It needs little argument to prove that if there was a partnership as stated in the plaint, the defendants could not file any suit for accounts since their participation in the business would be prohibited by Sections 6 and 8 of the Act and conversely a suit by the plaintiff cannot stand on any b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the defendant was not prohibited from buying. No doubt the proposition that where the object of the legislation in Imposing the penalty is merely the protection of the revenue, the statute will not be construed as prohibiting the act in respect of which the penalty is imposed is formulated but this has to be understood as the construction by the learned Judges of the statute they had to consider. In this connection I cannot do better than refer to a passage in Craies on Statutes where the position is summarised, thus (Craies on Statutes 5th Edn. Page 524): "And in considering the effect of a statutory prohibition on a contract, it is always necessary to decide whether the penalty Imposed for breach of the statute is meant as a compensation to the parson aggrieved or as a penal sanction. In the former case, the statute in effect permits the contract on payment of the penalty, i.e., it only makes it expensive; in the other, it forbids it in toto." 10. (1829) 109 ER 335 was concerned with a case where the defendant had guaranteed the payment of the price of whisky which should be consigned by five plaintiffs to a particular individual for sale as the plaintiffs' agen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the doing of the act altogether or merely to make the person who did it liable to pay the penalty. If the penalty is recurrent, that is to say, if it is imposed not merely once for all but as often as the act is done, this amounts to a prohibition. Where the object of the legislature in imposing the penalty is merely the protection of the revenue the statute wilt not be construed as prohibiting the act in respect of which the penalty is imposed." 11. In my opinion, the question really turns on whether on the proper construction of the statute the contract in dispute was or was not forbidden. If what is done, as Lord Ellenborough said in Langton v. Hughes, 1813 1 M & S 593 at p. 596 (D), is in contravention of the provisions of the Act of Parliament, it cannot be made the subject of an action. As is stated in Craies: "The sole question in either case is whether the statute means to prohibit the contract so as to make a contract infringing the prohibition invalid. If it does so, whether it be for purposes of revenue or otherwise, then the doing of the act is a breach of the law, and no right of action can arise out of it. In Melliss v. Shidley Local Board, 1885 16 QBD 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rship. 13. Looked at from the point of view of the plaintiff alone and applying the test formulated by Alderson, B. which I have extracted it is clear that in the present case the action of the plaintiff in not intimating the formation of the partnership within 30 days was in contravention of Rule 178 which I have set out already (paragraph 2 of the rule emphasising the personal character of the licence) and the continuance of the business beyond 30 days from the commencement of the partnership was also illegal. The action of the plaintiff constituted a contravention of the enactment bringing him within the scope of Section 9 of the Act. I feel therefore no hesitation in holding that this partnership was prohibited by the Central Excises and Salt Act, 1944 and the rules framed under it and was therefore Illegal. In my opinion, there is no distinction between the present case and the Abkari Act which this Court had to consider in Velu Padayachi v. Sivasooriam Pillai AIR1950Mad444 , notwithstanding that in the latter case besides the element of revenue, the regulation of the sale of liquor in public Interest was involved. 14. The other point raised by learned counsel for the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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