Judgement

B. P. SINHA, J. : The only question for determination in this appeal by the first defendant on a certificate granted by the High Court of Madras, is whether the renewal of a lease for running a salt factory, granted by the Government in favour of the appellant and others (defendants 1 to 7), could be treated as an asset of the dissolved partnership between the contesting parties. The trial court decided this question in favour of the contesting defendants. On appeal by the plaintiffs and some defendants on the side of the plaintiffs, the High Court of Madras determined this controversy in favour of those appellants. Hence, this appeal by the first defendant whose interest is identical with that of defendants 2 to 7. The reference in this judgment to appellant will, thus, include the interest of the other non-appealing defendants also.

2. The relevant facts of this case, upon which the appeal depends, may shortly be stated as follows : The contesting parties used to carry on the business of salt manufacture in accordance with the rules laid down by the Government under the Madras Salt Act (Mad. 4 of 1889) (which will, hereinafter, be referred to as the Act). It is not permissible to manufacture salt otherwise than under the provisions of the Act. The land and the factory where salt used to be manufactured by the parties, are Government property. It appears that the first plaintiff, the father of plaintiffs 2 to 4, plaintiff 5, the first defendant and the deceased father of defendants 2 to 7, had made bids for the lease of the land and the factory, and the highest bid of the defendants aforesaid, was accepted; and in pursuance thereof, a lease for 17 years from January 1926, to December 1942, was granted by the Government in favour of the first defendant and the father of defendants 2 to 7. By a deed of partnership dated March 18, 1926, the first plaintiff with a two-anna share, the father of plaintiffs 2 to 4, having a similar share, and plaintiff 5 with another two-anna share, on the one hand, and the first defendant, having a five-anna share and the father of defendants 2 to 7, with the remaining five-anna share, entered into a partnership for running the salt factory. The terms of the partnership will have to be discussed in detail hereinafter. They contributed a sum of Rs. 30,000 for paying the premium for the lease and for other incidental expenses in running the factory, in proportion to the shares just indicated. The father of defendants 2 to 7, who had a five-anna share in the business, died in August 1935, and defendants 2 to 7 were admitted as partners in place of their father. In accordance with the rules of the salt department, the requisite licence for the manufacture of salt, was granted to the first defendant and the father of the defendants 2 to 7, 192 in whose name, the lease also stood. In or about the year 1939, differences arose between the parties, but the business continued to be earned on by the defendants 1 to 7. In August 31, in accordance with the changed policy of the Government, which substituted the practice of settling salt leases by renewal of the lease in favour of those lease-holders whose conduct had been satisfactory in the opinion of the Department, for the old practice of settling salt leases to highest bidders, the Collector enquired from the old lease-holders whose record had been satisfactory from the point of view of the salt department, whether they would take renewal for a period of 25 years. The appellant as also the other defendants aforesaid, their conduct having been satisfactory, were amongst those lessees who had been invited to make applications for the renewal of their leases. Accordingly, they made their application in July, 1942, and a fresh lease for 25 years, was granted to them on April 15, 1943, for the period January 1943 to December 1967, in pursuance of the Collector s order passed in November 1942 (Ex. P-15 (a) ). The terms of the new lease will have to be di