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1974 DIGILAW 334 (MAD)

T. Ramanujalu Naidu v. S. Anjappa

1974-08-05

MAHARAJAN, RAMAPRASADA RAO

body1974
Judgment :- (RAMAPRASADA RAO, J.) 1. The plaintiff in O.S. No. 2102 of 1963 on the file of the City Civil Court, Madras is the appellant. The plaintiff filed a suit in forma pauperis for recovery of possession of his lorry MSY 4892 in specie, which is admittedly left in the possession of the first defendant, and for rendition of accounts and for costs. In the course of the trial of the suit, the plaintiff gave up his prayer for rendition of accounts. His suit for recovery of possession of the lorry is based on the following facts. It appears that the plaintiff was the owner of lorry, MSY 4892 which was under a hire purchase with one Rickobdas Chordia. The plaintiff was unable to pay the instalment due and payable under the hire purchase contract to the said Rickobdas. 2. It appears that he approached the first defendant to solve his problems by paying off the hire purchase-holder and to obtain the necessary transfer of the lorry in favour of a partnership firm called Sri Anjaneyaswami Lorry Service, which the plaintiff along with the first and second defendants intended to start by then. According to the plaintiff, it was pursuant to the said understanding, he handed over Exs. B-9 to B-12 to the first defendant so that he could make the necessary applications to the appropriate motor vehicles authorities for obtaining the transfer as contemplated by the parties. It is also the plaintiffs case that after the first defendant paid off Mr. Rickobdas, the lorry was left in the possession and custody of the first defendant but with the avowed object of using it for purposes of the partnership business which was to be run in conjunction with the lorry, APC 273 belonging to the first defendant, which the first defendant also agreed to provide as one of the assets of the partnership for running the partnership business as above. The complaint of the plaintiff is that the first defendant did not take any steps to obtain a transfer of licence or the permit in favour of the partnership, but was prolonging the issue. In or about 1st September, 1957, differences arose between the parties, and, it appears that, the running of the lorries belonging to the plaintiff and the first defendant for the benefit of the partnership was stopped. In or about 1st September, 1957, differences arose between the parties, and, it appears that, the running of the lorries belonging to the plaintiff and the first defendant for the benefit of the partnership was stopped. Thereafter, the plaintiff, after issuing the necessary notice to obtain reliefs and for the asserting of his rights, and having failed, instituted O.S. No. 858 of 1938 on the fib of the City Civil Court, Madras for accounts and for other reliefs. There also, the allegation was that there was a partnership by name, Sri Anjaneyaswami Lorry Service and the assets of the partnership consisted of the lorry belonging to the plaintiff as above as also the lorry of the first defendant as described here in before, and that the first defendant did not render a proper account of the partnership business, and therefore, the suit was laid for accounts of the partnership business and for appointment of a Commissioner for ascertaining the share of profits of the plaintiff in the said business. The defence of the first defendant in that case was that the trial Court had no jurisdiction to entertain the action and that he is the owner of the lorry, APC 273 of which he is the proprietor, and he denied that he was a partner in the lorry transport service. That suit can be laid by a partner when the partnership itself is illegal and, in that sense, that suit was dismissed, but the trial Judge made the following observations; “In the light of the principles laid down in M Hiria Gowder v. Naga Maistry A.I.R. 1957 Mad. 620 the plaintiff is not entitled to ask for accounts, though it was open to him to claim the balance of the purchase price or re-delivery of the lorry on his making good the sums advanced as disclosed in the first defendants ledger. But, for reasons better known to himself, the plaintiff took up the matter in appeal. Under Ex. A-20, Mr. S. Ganesan, Principal Judge of the City Civil Court (as be then was) again reiterated that the question whether the plaintiff would be entitled to recover the balance of the purchase price or to recover the lorry on payment of the advances made by the first defendant is left open. He, however, dismissed the appeal on the technical ground that the suit was not maintainable. He, however, dismissed the appeal on the technical ground that the suit was not maintainable. This judgment of the appellate Court was rendered on 19th November 1963. Before he filed the appeal, but after the first Court rendered its judgment, apparently taking advantage of the observations made by the trial court, the plaintiff filed the present action in forma pauperis on 10th September 1962 seeking for the reliefs already stated. The learned trial Judge, in this action, once again relying upon Varadarajulu Naidu v. Thavasi Nadar 1963 II M.L.J. 20 dismissed the suit as not maintainable. In his view, as the parties Intended to trade in licence, the Partnership itself is void ab initio, and therefore, the plaintiff was not entitled to recover even his own lorry MSY. 4892, from the first defendant in specie in view of the ratio in the above decision. We may, in passing, refer to the written statement filed by the first defendant in the present action. His case is that the plaintiff transferred possession of the lorry only for the purpose of securing the moneys advanced to the plaintiff by the first defendant both at the time when he cleared the debt in favour of Rickobdas and also towards the subsequent advances made by him to make the vehicle roadworthy. He has added that it was agreed that if the plaintiff repaid the advances made by him in respect of the lorry together with interest at 12 per cent per annum, the lorry would be re-delivered to him. He, however, denied the partnership. He would accuse the plaintiff as having removed all the papers from the first defendants place of business at Punganur, but would conclude by saying that the delivery of the lorry in specie could only be against payment of a sum of Rs. 11,000/- together with interest which amount the first defendant claimed to have advanced to the plaintiff. The second defendant is sailing with the first defendant. The following issues were framed: (1) Has this Court no jurisdiction to entertain this suit? (2) Is the plaintiff entitled to recover the lorry MSY 4892 from the defendants in specie? (3) Is the defendant liable to render accounts In respect of the earnings of the lorry MSY 4892? (4) Is the plaintiff liable to pay any amount to the defendants as claimed by the defendants in their written statement? (2) Is the plaintiff entitled to recover the lorry MSY 4892 from the defendants in specie? (3) Is the defendant liable to render accounts In respect of the earnings of the lorry MSY 4892? (4) Is the plaintiff liable to pay any amount to the defendants as claimed by the defendants in their written statement? (5) Is the suit barred by limitation? and (6) To what relief, if any, is the plaintiff entitled? 3. As we said already, the Court found that it had jurisdiction to entertain the suit, but, following the decision in Varadarajulu Naidu v. Thavasi Nadar1963 II M.L.J. 20 found Issue 2 against the plaintiff, and the Court was of the view that the plaintiff was not entitled to recover the lorry MSY 4892 from the first defendant. The Court also held on Issue S that the suit was in time as it was laid soon after the judgment was rendered in O.S. No. 858 of 1958, City Civil Court(sic) dismissed. It is as against this, the present appeal has been filed. 4. Learned counsel for the appellant says that the dismissal of the suit, in the circumstances stated above, is not warranted. He would also bring to our attention a Full Bench decision of our court reported in Kanntappa Nadar v. Karuppiah Nadar 1962 II M.L.J. 109 (F.B.) and would urge that, in the circumstances of the case, though the parties intended to engage themselves in an illegal partnership, yet at the time when they forged to act in that way, their idea to apply for transfer of the permits in a manner known to law and thereafter enter into the concerted act of the partnership business can, by no stretch of imagination, be termed to be an illegal object and if this were to be upheld, the claim for restitution of the property of the one party which is, admittedly, in the possession of the other, who all joined together in such a venture, is certainly maintainable and the suit ought not to have been dismissed in limine on that ground. We may at once state that the ratio in Varadarajulu Naidu v. Thavasi Nadar 1963 II M.L.J. 20 has been reversed by the Supreme Court in a judgment reported in Visvanatham Piltal v. Shanmugam Pillai 1969 I M.L.J. 86 (S.C.). We may at once state that the ratio in Varadarajulu Naidu v. Thavasi Nadar 1963 II M.L.J. 20 has been reversed by the Supreme Court in a judgment reported in Visvanatham Piltal v. Shanmugam Pillai 1969 I M.L.J. 86 (S.C.). There, the Supreme Court succinctly observed that the view that only an owner should have a permit to enable him to carry on business of motor vehicle operation, is an erroneous view. They also observed that in India, benami transactions are recognised and not frowned upon, and there is nothing in the Motor Vehicles Act which express)) or by implication bars benami transactions or persons owning buses benami and applying for permits on that basis. Applying this principle, this Court, in the jugdment in K.E.M. Mohamed Ibrahim Marcalr and another v. Perumal Padayachi A.S 568 of 1967 to which one of us was a party, held that transactions in which persons engaged themselves initially to apply for transfers of permits from the motor vehicles authorities so as to latterly engage themselves in motor vehicles operations as a partnership business would not be void ab inito. We need not, however, expand this concept since the proposition arising in this case according to us, has been well settled, even before the Supreme Court rendered its decision as above, by a Full Bench of Our Court reported in Kanniappa Nadar v. Karuppiah Nadar 1962 II M.L.J. 109 (F.B.). 5. Before we refer to the ratio therein, the facts in this case are not disputed. The plaintiffs case is that he banded over his lorry to the first defendant with the specific object of the first defendant joining him in a partnership business by providing his own lorry as one of the partnership assets and running the two lorries together in partnership along with the assistance rendered by the second defendant as a working partner. It is also the plaintiffs case that he handed over Exs. B-9 to B12- to the second defendant to enable him to apply to the appropriate authorities for transfer of the permit in favour of the partnership business. According to him, the defendants did not pursue the matter. It is also the plaintiffs case that he handed over Exs. B-9 to B12- to the second defendant to enable him to apply to the appropriate authorities for transfer of the permit in favour of the partnership business. According to him, the defendants did not pursue the matter. But, as the Supreme Court has said, it is not illegal under the Motor Vehicles Act for persons applying for permits in respect of buses owned by others, and as benami transactions are permissible under the provisions of the Motor Vehicles Act, it appears to us that the initial venture into which the plaintiff and the defendants wanted to plunge control be fa d to be an illegal one or the resultant contemplated partnership, a void partnership. As at said, the Full Bench of our Court in the case in Kanniappa Nadar v. Karrupaiah Nadar 1962 2-M.L.J 109 (F.B.); 75 L.W. 119 has made the following observations: “Where an agreement of partnership like the present one has either become impossible of performance by reason of the fact that no joint licence bad been obtained id favour of both the partners by reason of the decisions by one party to the contract, the party in the position of the appellant (i.e. the party having the right of rescinding the contract by reason of the breach con muted by the other, will be entitled to restitution of the moneys paid by him towards the contract” Transliterating the principle laid down, in the instant case, where the agreement of partnership to run a motor vehicle business under the name and style of Sri Arjansyaswami Lorry Service has become impossible of performance by reason of the fact that no licence was obtained in the name of the partnership either at the instance of the first defendant or the second defendant, the plaintiff cannot suffer thereby and is not precluded from set king for restitution of the lorry which, according to him, be banded over to the first defendant as an asset of the contemplated partnership and which partnership did not come through for reasons belt r known to the parties. Though the first defendant would say that the agreement was to obtain the licence in the name of the second defendant, the plaintiffs evidence is that the papers were (landed over to the second defendant for the purpose of having the permits transferred in the name of the partnership. This aspect, however, does not deflect the principle which we intend laying down, that if, by reason of supervening circumstances, an agreement to enter into a partnership becomes impossible of performance, the party who, be reason of such an initial agreement, parted with money or property to the other in the contract, cannot be deprived of the bent fit of claiming back the said amount or the property in specie if he is otherwise entitled to it. This means, that the equities of all the parties have to be worked out aid if the party claiming such restitution has to pay to the other party any amount during the working of the said initial agreement of parties, then he has to pay the said sum to the other party, subject to such adjustment of equities by one partner against the other. We are of the view that restitution of such moneys or the property in specie is possible and that such a relief ought not to be negatived on the only ground that the agreement of partnership has become impossible of performance or has later been found as an illegal partnership. In the instant case, however, no such illegal partnership can be spent in view of the decision of the Supreme Court in Viswanatha Pillai v. Shanmughom Pillai 1969 1-M.L.J. 86. The trial Court was prompted to render the decision on the bais of the ratio in Varadarajulu Naidu v. Thavosi NadarA.I.R. 1957 Mad. 620 1963 II M.L.J. 20which was ultimaely reversed by the Supreme Court in Viswanatha Pillai v. Shanmugham Pillai 1969 1-M.L.J. 86 In this view, the summary disposal of the suit as was done by the Sixth Assistant Judge, City Civil Court, Madras, is not correct. He has to, therefore, find on the other issues, and in particular on Issues 2, 3, and 4 render a decision there in. We agree which the trial Court that the Court has jurisdiction to entertain the suit and the suit is not barred by limitation. He has to, therefore, find on the other issues, and in particular on Issues 2, 3, and 4 render a decision there in. We agree which the trial Court that the Court has jurisdiction to entertain the suit and the suit is not barred by limitation. The appeal is, therefore allowed in part and the judgment and decree of the trial Court are set aside and the subject matter is remitted to the Court below for a fresh adjudication on if sues not decided upon. The costs will abide the result in the Court below. 6. It is, however, trade clear by the learned counsel for the plaintiff himself that it was never his intention either in this action or in the previous action to seek for accounts as regards the lorry belonging to the first defendant.