TMI Blog1935 (12) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... ip of which they were members, and of which they asked for a dissolution, consisted of 24 persons contrary to the provisions of sub-s. 2, S. 4, Companies Act. This application was rejected by the learned Additional Judicial Commissioner on the ground that the plaintiffs could not at one and the same time approbate and reprobate and that the plaintiffs' proper remedy, if any, was by a suit. 3. Plaintiffs then brought suit No. 89 of 1932, and the same learned Additional Judicial Commissioner dismissed the suit on the ground that the question of the illegality of the partnership agreement should have been made a ground of attack or defence in the Court of first instance, and that as it was not raised then it could not be raised thereafter and the suit was dismissed accordingly. It is against that order dismissing the suit that this appeal has been filed. The point stressed in argument before us is that the Court had no jurisdiction to take cognizance of a suit brought by members of an illegal partnership and that therefore the consent decree, and everything that has been done in pursuance thereof, is a nullity. It may be noticed here that as the result of the proceedings instit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h establish that when in a cause, which the Judge is competent to try, the parties without objection join issue and go to trial upon the merits, the defendant cannot subsequently dispute his Jurisdiction upon the ground that there were irregularities in the initial procedure which, if objected to at the time, would have led to the dismissal of the suit. 5. Now in entertaining this as a suit for the dissolution of partnership and of accounts the Court was acting within its jurisdiction. As the principal Court of civil jurisdiction prima facie it had jurisdiction; and there is authority for the statement that a party seeking to rely upon an exception, whether it be to S. 9, Civil P.C., or to any other general rule of law, must prove it : 1934 P C 84 Ramayya v. Lakahmi Narayana, 1934 P C 84=148 I C 327=61 I A 177=57 Mad 443 (P C). It may be said however that a Court has no jurisdiction to try a suit brought by an illegal association as such or to grant an illegal association, as such, relief. It has no inherent jurisdiction to give its assistance and authority to an association that the Legislature declares illegal, and were it plain that the consent decree was a decree dissolving ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulted in the judgment a certain definite and material issue was raised by the parties and determined judically or by consent, it would be contrary to public policy to allow the same parties to re-agitate the same matter in subsequent legal proceedings. Estoppel by matter of record rests on this principle, and although it may be said in one sense to exclude the truth, it is essentially just and righteous: (1900) 2 Q B 240 Wright v John Bagnall Sons, (1900) 2 Q B 240=69 L J Q B 551=82 L T 346=48 W R 533=64 J P 420. 7. There is no difference within the meaning of S. 11, Civil P.C., between a certain definite and material issue which has been raised or which should have been raised. There is no difference in this matter between a consent decree and a decree passed per invitum: 36 Bom 283 Bhaishanker Manashanker v. Morarji Keshavji, (1912) 36 Bom 283=12 I C 535. There is however a difference between res judicata and estoppel. Res judicata ousts the jurisdiction of the Court while estoppel does no more than shut the mouth of a party. Estoppel never means anything more than that a person shall not be allowed to say one thing at one time and the opposite of it at another time; while r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the suit. 10. Paras. 5 and 6 of the plaint in that suit are pertinent to the present inquiry. These paragraphs refer to the alleged disputes between the parties, and the causes which led to the filing of that suit are as under : Para. 5.-The parties agreed that defendant 12 should manage the entire business, do the accounts work, and should be in charge of the funds belonging to the partnership, and have in his possession and control all machinery, buildings and stock-in-trade; that the account of the partnership should be made up every six months, i. e. on 31st March and 30th September of each year; that the partnership will open in the account books, provident fund, workmen's compensation funds, depreciation fund and such other fund as they think necessary for the carrying on of the business. Para. 6. - Defendants 1, 2 and 12 have been guilty of gross misconduct in the affairs of the partnership: (a) Since 22nd March 1928 no accounts have been made up at all by them in spite of being called upon to do so; (b) defendant 12 entrusted the work of management of salt works and keeping the accounts, etc., and of receiving and making payments to defendants 1 and 2 who have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et off the purchase money against the amount due to them from the partnership and to pay the purchase money, if any, to the Receivers. 12. The Receivers obtained possession of the works from the defendants. The plaintiffs then requested the Receivers to permit them to have a hand in the management of the business and also not to sell the works until the accounts were finally settled. The Receivers declined to accede to either of these requests. The plaintiffs then moved the Court for an order being passed in their favour on both these points. Having failed in that application they made an application in that suit under S. 151, Civil P.C., to have the consent decree vacated on the ground that the partnership in suit was illegal. They failed in that attempt also. They then filed the present suit and asked for the following reliefs: (a) A declaration that the order dated 12th August 1931 appointing Receivers and Commissioners in Suit No. 132 of 1931 of the Court of the Judicial Commissioner of Sind is ultra vires and not enforceable, and that further the preliminary decree passed in the suit directing accounts to be taken between the parties and granting other reliefs is a nulli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the accounts as being without consideration, such promise is in no sense unlawful or opposed to public policy. In the circumstances of the present case the promise by the plaintiffs to pay what may be found due by them is supported by ample consideration. The defendants were admittedly in possession and management of the salt works. They agreed to stop carrying on the works and to hand over possession of the works to the receivers with power to sell the works and offered to render true and proper accounts in consideration of the parties agreeing that if as the result of the stoppage and sale of the works and the taking of accounts any sum was found due by one party to the other such sum shall be paid. Nor is there any allegation much less proof in this case that the consent of the plaintiffs was obtained by fraud undue influence or coercion or by any other improper means which would have enabled them to avoid the agreement in issue had such agreement not been incorporated in the decree. The authorities which lay down that a consent decree may be vacated on the same ground on which a private agreement not incorporated in a decree may be vacated have therefore no application what ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ship had contravened the express provisions of S. 4, Companies Act. There was no averment that the partnership is not a registered one. There is no provision of law declaring a partnership agreement to be void which had not been registered though required by S. 4, Companies Act, to be registered. To my way of thinking it is doubtful if such an agreement is void under S. 23, Contract Act. The object of the partnership was not to break the law. It would be too far fetched to think that that was the object with which the partnership was formed. Illegality in the mode of the formation of a partnership is not the same thing as an illegality in regard to the consideration or object of the agreement. 17. With all respect to the learned Additional Judicial Commissioner, some of the reasons given by him in support of his finding may not be convincing, but he has given a definite finding that he had jurisdiction to entertain the first suit and to pass the decree in question. That being so, the remedy of the plaintiffs, if any, to have that finding set aside, was by way of appeal in the same suit and not by a separate suit. 18. If the decree in question had not been passed by consent, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is no warrant for holding that when the grounds on which a private agreement may be avoided do not exist a suit may still be filed to set a consent decree aside on the grounds which would not be available to the plaintiff had the decree not been passed by consent. The plaintiffs do not attack the compromise on the ground of fraud or on any of the other usual grounds which are urged to set aside a private agreement; but all that they say in that behalf is that the plaintiffs were ignorant of the provisions of the law, that a partnership of more than 20 persons which was not registered was illegal and that it was in consequence of this ignorance that they not only filed their first suit but entered into the compromise. The obvious answer to that argument is that ignorance of law is no excuse in a Court of law, much less in a Court of equity, when in consequence of such ignorance the plaintiffs have caused irreparable loss to the other side. A compromise made by a party cannot be set aside on the ground that he made it in ignorance of law in force in British India, see S. 21, Contract Act, and 8 Cal 138 Ram Niranjan Singh v. Prayag Singh, (1882) 8 Cal 138=10 C L R 66 at p. 141. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpromise in this case was not to avoid litigation. All the equities in this case are clearly against the plaintiffs. If the partnership was illegal they had no right to compel the defendants to hand over possession of the works to the Receivers and Commissioners appointed by the trial Court, to stop the defendants from carrying on the business for their own benefit and to make them agree to the property being sold and to render accounts. The defendants have carried out their part of the agreement and there is no reason why the plaintiffs in their own turn should not carry out their part of the agreement and pay what is found due by them. 23. Lastly, the plaintiffs not only failed to satisfy the learned Additional Judicial Commissioner in the proceedings under S. 151, Civil P.C., taken by them in the first suit that ex facie the plaint disclosed facts which ousted the jurisdiction of the Court, but they have failed to satisfy us on that point. The mere fact that there were more than twenty persons ranged on either side was not sufficient for the Court to hold that the relief sought in the plaint could only be allowed on the strength of an illegal partnership. There was a lease of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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