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1997 DIGILAW 325 (HP)

GULAB SINGH v. STATE OF H. P.

1997-08-06

M.SRINIVASAN, P.K.PALLI

body1997
JUDGMENT M. SRINIVASAN, CHIEF JUSTICE, J.—The third respondent got licence for running vends for the sale of Indian Made Foreign liquor and country liquor in Mandi District during the financial year 1986-87. The petitioner herein entered into a contract on 1st day of May, 1986 with the third respondent for having sale agency for the year 1986-87, the details of which are set out in the contract. A copy of the contract has been produced before us as Annexure R-1. The petitioner did not pay the amount due to the third respondent and a claim was made by the third respondent. The matter was referred to the Arbitrator .under Section 73 of the H.P. Co-operative Societies Act, 1968. The Arbitrator passed an award for Rs. 30,000/-in favour of the third respondent. Claiming that more would be due to the third respondent an appeal was filed by the third respondent to the Joint Registrar (Development) Co-operative Societies. By an order dated 29th of March, 1990, the Joint Registrar allowed the appeal and granted an award of Rs. 1,50,910/- including interest, arbitration charges and fee making a total of Rs. 1,74,429.07 paise minus Rs. 23,518.42 paise allowed as a relief to the petitioner herein. 2. This writ petition has been filed by the petitioner challenging the said award passed by the Joint Registrar. The first contention of the petitioner is that I the contract between the petitioner and the third respondent would amount to transfer of the licence obtained by the third respondent and it is, therefore, illegal and void. The third respondent is not entitled to enforce the said contract and claim any amount from the petitioner, as has been done in the arbitration proceedings. Consequently, according to the learned Counsel for the petitioner, the award passed by the Arbitrator as well as the Joint Registrar is unsustainable and it has to be quashed. 3. This objection was not raised before the Arbitrator or before the Joint Registrar. It is for the first time raised by the petitioner in this Court. The objection cannot be said to be purely a question of law as it depends upon the terms of the contract between the petitioner and the third respondent. 3. This objection was not raised before the Arbitrator or before the Joint Registrar. It is for the first time raised by the petitioner in this Court. The objection cannot be said to be purely a question of law as it depends upon the terms of the contract between the petitioner and the third respondent. The question of fact whether the contract would amount to transfer of licence or merely an appointment of agent to run the business must be decided by the Arbitrator in the first instance as a fact finding authority and later by the appellate authority, namely, the Joint Registrar. Such question not having been raised by the petitioner herein before the fact finding authority, it is not open to him to raise that question for the first time under Article 226 of the Constitution of India, as this Court is not sitting in appeal over the order of the Joint Registrar or the award of the Arbitrator. 4. In any event, a copy of the contract having been produced before us by the respondents as Annexure and as we have gone through the terms thereof, we have no hesitation whatever to say that it is an appointment of an agent to run the business of the third respondent and not transfer of the licence as such. Clauses 5,9,10 and 15 of the contract are in the following terms : "5. That the second party will work as Sale Agent for the year 1986-87 only at the pleasure of the first party and such sale agency can be terminated without any claim or compensation on breach of duties, responsibilities, liabilities as contemplated under law and the agreement, i that event the first party will be at liberty either to run the vends itself or through any other sale agent. The second party will have also an opportunity of being heard in the matter. 6 to8.......... 9. That the second party will sell the liquor on such rates as may be mutually agreed by the parties. 10. That the second party undertakes to maintain proper accounts of the stock and sale as per Excise Laws and will be responsible to show its accounts to both the Officials of the Excise Department and the first party. The parties will bear all the taxes including Income Tax according to their own income. 11 to 14. ............. 15. 10. That the second party undertakes to maintain proper accounts of the stock and sale as per Excise Laws and will be responsible to show its accounts to both the Officials of the Excise Department and the first party. The parties will bear all the taxes including Income Tax according to their own income. 11 to 14. ............. 15. That as per Excise Laws and rules made thereunder the second party is to take and carry to its vends Indian Made Foreign Liquor from L-1 and naturally the vouchers/bills will be in the name of the first party and if the second party take such liquor on credit he will take the same at his own risk and cost to which the first party will not be responsible in any manner whatsoever. To ensure the compliance of this condition the first party, to the knowledge of the second party, has already intimated the L-1 Holder in that behalf". 5. A perusal of the above Clauses show clearly that the petitioner was only an agent to run the business of the third respondent and the licence was not transferred to the petitioner as such. The learned counsel for the petitioner contends that it Is only a nomenclature in the document and it will not erase the real nature of the transaction which is a case of transfer of licence. Learned Counsel has placed reliance on the clause which reads that the petitioner had agreed to pay a sum of Rs. 3,32,025/- in total to the third respondent herein. Learned Counsel contends that the provision for such payment would itself show that it was a case of transfer of licence. We are unable to accept this contention. The very sentence on which the petitioner relies shows that the payment is for having sale agency for the year 1988-87 and it is not for transfer of licence. Hence, we reject the contention that there was a case of transfer of licence. 6. It is next contended by the learned Counsel that Rule 37 of the Himachal Pradesh Liquor Licence Rules, provides that every licence under the rules is granted subject to the conditions set forth in the rule. Hence, we reject the contention that there was a case of transfer of licence. 6. It is next contended by the learned Counsel that Rule 37 of the Himachal Pradesh Liquor Licence Rules, provides that every licence under the rules is granted subject to the conditions set forth in the rule. Clause-27of the said Rule reads that the licence shall not allow any person to conduct sales in his behalf unless the name of such person has been previously submitted to the collector for approval and endorsed on his licence. Learned counsel contends that this rule has been violated and, therefore, the contract between the petitioner and the third respondent is void abi nitio. it is, further contended that contract cannot be enforced by the parties. Reliance is placed on a judgment of Patna High Court in Hadibandhu Behera v. Gopal Sahu and others, AIR (30) 1943 Patna 374. The relevant rule under the Bihar and Orissa Excise Act was that no transfer or sublease, whether entire or partial, of a licence shall be made except with the previous permission of the collector. The Division Bench of the Patna High Court took the view that there was a case of transfer of the licence as such. The plaintiff in that case was a licensee when he filed the suit for recovery of the amount. The Court found that the contract was illegal and it could not be enforced at his instance. That ruling will have no application in the present case. 7. Our attention is also drawn to the judgment of Calcutta High Court in Suwala Jain v. Clive Mills Co. Ltd., AIR 1960 Calcutta, 90. The Court in that case held that where the contract itself is forbidden by law and, as such illegal, the arbitration clause which forms part of the contract is also illegal and void. It is further held that if the arbitration agreement is illegal, and therefore, legally non-existent, the fountain head of the Arbitrators jurisdiction disappears and any award which the Arbitrator may have made purporting to act under the legally non-existent arbitration clause is also invalid. It was a case of forward contract prohibited expressly by the Forward Contracts Regulation Act, 1952. That ruling will have no application in the present case in view of the facts of the case. It was a case of forward contract prohibited expressly by the Forward Contracts Regulation Act, 1952. That ruling will have no application in the present case in view of the facts of the case. It is seen that in Annexure R-1, the petitioner herein was a member of the society for the purpose of conducting its business. Clause-17 provides that the petitioner would become the nominal member of the society. Thus, the business conducted by the society through the petitioner would amount to a business conducted by human agency which is only a person who has to carry on its business and when the business is carried on by the petitioner, who is a member of the society, it cannot be said that Clause-27 of Rule 37 has been violated in this case. 8. Apart from the above, the more clinching circumstance is that this writ petition is not sustainable at the instance of the petitioner who was himself a party to the alleged illegality. If according to the petitioner, the contract is illegal, he was a party to the illegality and he cannot come to this Court and claim a relief under Article 226 of the Constitution of India against the award against him. This Court will not help a person who was a party to the illegality. The Court will refuse to exercise its extra ordinary jurisdiction in all such cases. 9. In this case we have already found that on merit also the petitioner has no case and even otherwise the petitioner cannot invoke the jurisdiction of this Court under Article 226 of the Constitution of India Consequently, this writ petition fails and is dismissed. No costs. 10. The interim order, if any, is vacated. Petition dismissed.