Judgment :- 1. This is an appeal by the plaintiff in a suit for dissolution of partnership and for accounts. The trial court decreed the suit, while the lower appellants court dismissed it, on the ground that the partnership agreement was illegal. 2. The plaintiff was carrying on a wholesale business in handloom cloth, after taking out a licence as required by Clause.4 of the Madras Cloth Dealers' Control Order, 1944. The plaintiff formed a partnership with defendants 1 to 3 and one Mukundan for the purpose of carrying on this business; and the partnership carried on the said business with effect from 4-4-1946. On 13-5-1946 they executed an agreement, Ext. A-152, incorporating the terms and conditions of the partnership. The main clauses of Ext.A-152 are the following: (i) The business will be continued in the name of the plaintiff under the licence standing in his name. (ii) Each partner is to invest Rs. 2000/- each; and the profit and loss will be divided equally. (iii) If any partner other than the plaintiff desires to retire, he may do so by giving one month's notice. If the plaintiff desires to retire, he may give notice to that effect to the other partners, and then the partnership has to be dissolved. (iv) The first defendant shall maintain, all accounts, and keep all the stock in trade of the business under his responsibility. (v) The plaintiff shall be the cashier, and he shall satisfy all cash accounts to the first defendant. Mukundan retired from the partnership on 25.11.1946. On 18-3-1948 the plaintiff issued a notice Ext.A-5 to the defendants for dissolution of the firm and for accounts. They replied by Ext.A-8 dated 7-4-1948, stating that the business of the partnership had been closed down and the firm had been dissolved on 28-12-1946. Thereupon the plaintiff instituted the present suit. 3. The suit was contested by defendants 1 to 3 on several grounds. The lower courts concurrently found (i) Mukundan retired from the firm on 25-11-1946; (ii) Thereafter the partnership continued with the plaintiff and defendants 1 to 3 as partners; and (iii) The partnership was dissolved by the notice Ext.A-5. They differed only on the question of legality of the partnership. The lower courts concurrently found (i) Mukundan retired from the firm on 25-11-1946; (ii) Thereafter the partnership continued with the plaintiff and defendants 1 to 3 as partners; and (iii) The partnership was dissolved by the notice Ext.A-5. They differed only on the question of legality of the partnership. According to the trial court, the business of the firm was done in the name of one of the partners, under a valid licence which he held in respect of that business; and there was therefore no violation of any provision of the Madras Cloth Dealers' Control Order. According to the lower appellate court, it was the firm which was carrying on the business, and it had no licence. The partnership was formed to carry on business in handloom cloth without taking a licence, and therefore the partnership was illegal. The learned counsel for both parties advanced before us the same contentions. 4. S.23 of the Indian Contract Act reads: "The consideration or object of an agreement is lawful unless It is forbidden by law; or Is of such a nature that, if permitted, it would defeat the provisions of any law, or is fraudulent; or Involves or implies injury to the person or property of another; or The court regards it as immoral, or opposed to public policy. In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void." We have referred to the important clauses in the partnership agreement. The agreement was not one to form a partnership for carrying on handloom business without taking a licence as required by the Madras Cloth Dealers' Control Order. On the other hand, the partnership was formed to finance and carry on an existing business under the licence which the plaintiff had. So the partnership was not formed in violation of any law, or to carry on any illegal business. We therefore find no substance in the contention that the partnership was illegal. 5. Then the question is whether the business carried on by the partnership was in violation of Clause.4 of the Madras Cloth Dealers' Control Order. So the partnership was not formed in violation of any law, or to carry on any illegal business. We therefore find no substance in the contention that the partnership was illegal. 5. Then the question is whether the business carried on by the partnership was in violation of Clause.4 of the Madras Cloth Dealers' Control Order. The only business of the firm was wholesale of handloom cloth; and if it was carried on without a licence as required by the above clause it would be illegal; and the court will not come to the help of the aggrieved partner and give him a decree for accounts of that business. This position is not disputed. Clause.4 of the above Order reads: "Save as hereinafter provided, no person shall carry on business as a dealer or hawker or store cloth for sale on or after the 2nd May 1944, except under and in accordance with the terms and conditions of a licence granted under this Order by the licensing authority." The contention pressed before us by the learned counsel for the respondents is that a partner is different from the firm, that in this case one of the partners alone had a licence and the firm as such had no licence, and that the business carried on by the firm was in violation of the above clause of the Control Order. In support of the above contention he referred us to a Full Bench decision of the Madras High Court in Velu Padayachi v. Sivasooriam AIR. 1950 Madras 444. That case arose out of a suit for settlement of accounts of a dissolved firm, which was formed to carry on the business of vending arrack under a licence which the defendant had obtained under the Madras Abkari Act. It provided, among other things, that no liquor or intoxicating drug shall be sold without a licence from the Collector, and that no privilege of supply or vend shall be sold or transferred or sub-rented without the Collector's previous permission. It was contended in that case that the partnership was unlawful, as the formation of the partnership involved a transfer of the licence from one partner in favour of all the partners, which the Madras Abkari Act prohibited. Judicial opinion was divided in the Madras High Court; and that is why the above cage came before a Full Bench. It was contended in that case that the partnership was unlawful, as the formation of the partnership involved a transfer of the licence from one partner in favour of all the partners, which the Madras Abkari Act prohibited. Judicial opinion was divided in the Madras High Court; and that is why the above cage came before a Full Bench. After a detailed review of the case law on the subject, the learned judges stated as follows: "From the above discussion it is evident that there is a long and consistent body of opinion of this High Court from Marudamuthu v. Rangasami, 24 Mad. 401 onwards, with which we agree, that a partnership entered into for the purpose of conducting a business in arrack or toddy on a licence granted or to be granted to only one of them is void ab initio, whether the contract was entered into before the licence was granted or afterwards, in that it either involves a transfer of the licence, which is prohibited under R.27 and punishable under S.56, or a breach of S.15. Abkari Act, punishable under S.55, because the unlicensed partner, by himself or through his agent, the other partner, sells without a licence. If a partnership is lawfull at its inception, because it is not intended to infringe any provision of the Contract Act, it nevertheless becomes unlawful when it intends to conduct the business jointly on a licence granted to one only of the partners." The above decision is authority for the position that formation of partnership by a person, who has got a licence to carry on a business, for the purpose of carrying on that business jointly with other persons amounts in law to a transfer of his rights under the licence in favour of all the partners. But the partnership thus formed was held to be illegal, as the transfer of the licence was illegal. As the transfer was illegal, it also followed that the partners were doing the business without licence, which again was illegal. 6. Reference was also made by the learned counsel to the decisions of the Madras High Court in Hiria Gowder V. Naga Maistry A.I.R. 1957 Madras 620. and varada Rajulu v. Thavasi Nadar A. I. R.1963 Madras 413. As the transfer was illegal, it also followed that the partners were doing the business without licence, which again was illegal. 6. Reference was also made by the learned counsel to the decisions of the Madras High Court in Hiria Gowder V. Naga Maistry A.I.R. 1957 Madras 620. and varada Rajulu v. Thavasi Nadar A. I. R.1963 Madras 413. They are cases where persons having permits to use motor lorries formed partnerships with others for the purpose of carrying on lorry transport business with the said lorries. The transfer of permit is prohibited under S.59 (1) of the Motor Vehicles Act, 1939, except with permission of the transport authority; and the partnerships in the above cases were formed without obtaining permission of the said authority. The court followed the above Full Bench decision and held that the partnership was illegal in both cases. A Division Bench of the Kerala High Court has also taken more or less the same view in Commissioner of Income tax v. Union Tobacco Company, 1961 K.L.T. 122. It was a case where a partnership formed for conducting the tobacco business by persons, some of whom had licences for sale of tobacco, sought registration of their firm under the Indian Income tax Act, 1922. The registration was refused by the Department, holding that the partnership was illegal, as its formation involved transfer of the licences in favour of all the partners, contrary to the provisions of the Cochin Tobacco Act. The Court held that the mere entering into partnership amounts to transfer of licensee's right, and that the contract to do so is void, because such a.transfer is prohibited. 7. A number of other decisions, which take the same view, were cited before us. It is unnecessary to refer to them, as in our opinion none of these cases helps the respondents' learned counsel. They are all cases where transfer of the licence or the permit, as the case may be, or the rights thereunder was prohibited by law without the permission of the concerned authority. The Madras Cloth Dealers' Control Order does not contain any such prohibition. So, on the authority of the above decisions, it follows that the formation of the partnership involves a transfer of the licence and the rights thereunder in favour of the partnership; and the business carried on by the partnership does not therefore violate Clause.4 of the above Order. The Madras Cloth Dealers' Control Order does not contain any such prohibition. So, on the authority of the above decisions, it follows that the formation of the partnership involves a transfer of the licence and the rights thereunder in favour of the partnership; and the business carried on by the partnership does not therefore violate Clause.4 of the above Order. 8. The learned counsel for the respondents contended on the authority of the decision of the Andhra Pradesh High Court in Basavayya v. Kottayya A.I.R.1964 Andhra Pradesh 145, that the Madras Cloth Dealers' Control Order by implication prohibited the transfer of a licence issued under Clause.4 as well as the formation and working of a partnership by a licenses with non-licensees. In that case there was a partnership consisting of the plaintiff and the defendant. The plaintiff applied for and obtained a licence under Clause.4 of the Madras Cloth Dealers' Control Order for doing "retail business in mill-made cloth on his own account." The defendant was at that time the managing partner of the firm. Pursuant to the above licence, the firm carried on business in mill-made cloth; and the suit was for dissolution of the partnership and for accounts. The Court held that the partnership was void and the suit was not maintainable. The learned judges stated: "In the present case also, it is clear that the public policy underlying the enactment especially as seen from Clause.4 of the M. C. D. C. Order that only approved persons specifically licensed should be allowed to do the cloth business under the licence and the formation of partnership would be against that general public policy and would, if permitted, defeat the implied provisions of the M.C.D.C. Order especially Clause.4. So the formation of partnership is illegal. The provisions of the M. C. D. C. Order show that by implication, though not by express terms in the order, the formation and working of partnership by a licensee with non-licensees was prohibited and amounted to a violation of the conditions of the licence". With the greatest respect, we are unable to agree with the above statement. The provisions of the M. C. D. C. Order show that by implication, though not by express terms in the order, the formation and working of partnership by a licensee with non-licensees was prohibited and amounted to a violation of the conditions of the licence". With the greatest respect, we are unable to agree with the above statement. We do not see how the formation of a partnership by a licensee with non-licensees would be against any public policy underlying the provisions of the Madras Cloth Dealers' Control Order; and, in our opinion, there is no warranty to hold that the said order by implication contains a prohibition against formation of such a partnership. In a similar case, a Division Bench of the Calcutta High Court consisting of R. P. Mookerjee and P. K. Sarkar, JJ, took an exactly opposite view in Mafijuddin Khan v. Habibuddin Sheik AIR. 1957 Calcutta 336. We may also point out that the decision of the Andhra Pradesh High Court has no application to the case before us. In that case, the partnership had no licence in its name. The licence was taken four years after the partnership was formed in the name of one of the partners of the firm for doing "retail business in mill-made cloth on his own account." The rights under this licence were not in any manner transferred in favour of the partners of the firm; and the licence itself permitted the business to be carried on only on account of the person to whom it was issued. So it was a clear case where the licence by its own terms was not transferable; and the firm had no licence to carry on the business. The business of the firm would be therefore illegal, though the partnership would not be void, as stated in that decision. 9. The Andhra Pradesh High Court has in support of its decision relied on an unreported decision of the Supreme Court in Govinda Rao v. Nathumal (C. A. No. 80 of 1960). We have not been able to get at that decision. 9. The Andhra Pradesh High Court has in support of its decision relied on an unreported decision of the Supreme Court in Govinda Rao v. Nathumal (C. A. No. 80 of 1960). We have not been able to get at that decision. As far as we could gather its facts from the decision of the Andhra Pradesh High Court, the plaintiff who was a wholesale dealer in foodgrains in the Nagpur District under a licence obtained under the C. P. and Berar Food Grains Control Order, 1945, entered into a partnership with the defendants, who were in Rajasthan (which was then an Indian State) for dealing in foodgrains, Admittedly the partnership was formed for the specific purpose of exporting foodgrains to places outside Central Provinces, as the defendants could not get permits for that purpose. The partnership conducted two transactions of purchase in Central Provinces, and the suit was for dissolution of the firm and for accounts. In holding that the partnership was illegal, the Supreme Court stated: "Without going into the pleas of the defendants, it is quite clear that the appellant (plaintiff) was making it easy for the respondents to trade in food grains in Central Provinces and Berar without holding a licence, thus abetting an offence of the contravention of the Food Grains Control Order by the respondents, if not committing an offence himself." It is not necessary for us to say whether the above considerations' would apply to the Andhra Pradesh case. They have no application to the case before us. In this context, we may refer to another decision of the Supreme Court in Umacharan Shaw and Bros. v. Commissioner of Income tax 37 ITR. 271. In that, three persons formed a partnership and carried on business of sale of foreign liquor. The partnership had three shops. One partner had a licence in respect of one of the shops in his name. The licences in respect of the remaining two shops were separate; and each of them was in the name of the deceased father of each of the other partners. The application for registration of the firm under Indian Income tax Act 1922 was rejected by the Department on the ground, among others, that the formation of the partnership was in violation of the Bengal Excise Act, 1911. The application for registration of the firm under Indian Income tax Act 1922 was rejected by the Department on the ground, among others, that the formation of the partnership was in violation of the Bengal Excise Act, 1911. The Supreme Court overruled the above objection, and in doing so, it stated: "There was no evidence that the Excise licences were transferred or sub-let. The three shops, it appears were managed separately and their accounts were kept distinct. There was thus nothing which militated against the partnership." 10. The learned counsel for the appellant contended that the formation of a partnership by a licensee with non-licensees for carrying on a business, which can be carried on only under a licence, does not necessarily involve a transfer of the licence rights in favour of the partnership. According to him it is possible for the licensee to retain the licence rights for himself and carry on the business for the partnership. In support of the above contention, he relied on a Division Bench decision of the Kerala High Court in Kumaran v. Aboobacker Kunji 1967 KLT. 710. In that case, the defendant, who was conducting a bus transport service, took the plaintiff as a partner in that business. The bus was transferred 1o the partnership, but the permit stood in the name of the defendant. The partnership deed provided that the defendant shall manage the business; and that the profits and losses shall be divided equally among the partners. The plaintiff sued for dissolution of the partnership and for accounts. The defendant contended that the partnership was illegal, as the formation of the partnership involved a transfer of the permit to the partnership and transfer of a permit is prohibited except with the permission of the Transport Authority. There is a fairly elaborate discussion of the case law in the above decision; but the defendant's contention was finally rejected on the short ground that the partnership business was managed by the defendant in whose name the permit stood, and taking a partner for carrying on the business did not, therefore, involve a transfer of the permit. There is a fairly elaborate discussion of the case law in the above decision; but the defendant's contention was finally rejected on the short ground that the partnership business was managed by the defendant in whose name the permit stood, and taking a partner for carrying on the business did not, therefore, involve a transfer of the permit. On the authority of this decision, the learned counsel for the appellant contended that the partnership business in the instant case also was being managed by the plaintiff in whose name the licence stood, that the partnership was formed only for the purpose of raising finance for carrying on the business, and that the formation of the partnership in these circumstances did not involve transfer of the licence in favour of the partnership. The above decision supports the learned counsel's contention. 11. There is support for the above view in the decision of the Calcutta High Court in Mafizuddin v. Habibuddin Sheik AIR. 1957 Calcutta 336 which has been already referred to. The plaintiff in that case entered into a partnership with the defendant and carried on business of purchase and sale of silk. The defendant was the managing partner. Subsequently a licence was taken under the Bengal Silk Control Order, 1943, in the name of the defendant for running a Silk Spinning and Reeling Factory, and the partnership started that business. In a suit for dissolution of the partnership and for accounts, the defendant contended that the partnership was illegal, as it had no licence to carry on the above business. The contention was rejected by the Court first on the ground that the Silk Control Order did not prohibit the formation of any partnership for the starting of a failure business or the transfer or sub-letting of the licence rights; and secondly, on the ground that the business was managed by the person in whose name the licence stood. Dealing with the second ground, the Court said: "According to the arrangement set out in Para.2 of the plaint, defendant No.1 was in charge of the factory of the filature and solely responsible for the management thereof. The plaintiff was in charge of purchasing silk cocoons from the villagers for the purpose of the factory, the licence for which stood in the name of the defendant No 1. The plaintiff was in charge of purchasing silk cocoons from the villagers for the purpose of the factory, the licence for which stood in the name of the defendant No 1. The arrangement therefore for conducting the business was that the defendant would manage the same and the plaintiff would function as agent of the defendant though a partner. It cannot be said that even if the extreme view which had been urged on behalf on the defendant could be accepted that such an arrangement was prohibited under the Control Order. Defendant No.1 having been in sole charge of management of the filature got himself registered as the owner thereof. The said defendant kept the accounts. So far as the Control Order was concerned, the plaintiff had no intention to evade it by not getting his name registered." Reference may also be made in this context to the decision of the Chancery Court in Bungato K. Ice (1967) 2 WLR. 79. In that case, the plaintiff and the defendant entered into an agreement to carry, on the business of a licensed betting office in partnership. The agreement provided, among other things, that the capital shall be contributed equally, that the betting should be managed by the defendant, that the plaintiff would attend the office only on days on which there was more than one race meeting and on Fridays and Saturdays, that the profits of the business shall be divided equally, and that the defendant should apply for a permit to carry on a licensed betting office in his own name. Accordingly he obtained a permit, and they carried on the business. Subsequently, differences arose, and the plaintiff issued a writ seeking a declaration that the partnership had been dissolved and for accounts. The defendant contended, among other things, that the partnership was illegal, as the defendant alone had the permit under the Betting and Gaming Act, 1960, to carry on the business. Dealing with the above contention, Buckley, J., stated: "In my judgment, the Act does not require that every partner in a bookmaker's business must obtain a permit although it appears to me that it does require that every partner in a bookmaker's business who acts as a bookmaker in the course of that business must hae a permit. Dealing with the above contention, Buckley, J., stated: "In my judgment, the Act does not require that every partner in a bookmaker's business must obtain a permit although it appears to me that it does require that every partner in a bookmaker's business who acts as a bookmaker in the course of that business must hae a permit. There would, I think, be nothing wrong in A holding a bookmaker's permit and B holding no such permit carrying on a book making business in partnership, A alone being actively engaged in the conduct of the business and B contributing the capital but taking no active part in the business. Nor do I think there would be anything wrong if B, instead of taking no active part in the conduct of the business, confined his activities in the business to activities other than receiving or negotiating bets or conducting part betting operations; in other words, so long as B did not act as a bookmaker. He might