A partnership is not illegal merely because it contravenes a statute that imposes a penalty for such contravention, unless the statute is designed to further a public policy.

( 1 ) THIS is an appeal by the 2nd defendant against the judgment and decree of the Subordinate Judge, Guntur, passed in favour of the plaintjff-1st respondent. 2nd respondent is the 1st defendant. Plaintiff-1st respondent had filed a suit on promissory note executed by the appellant and the 2nd respondent on the allegation that he and the appellant carried on tobacco business jointly in the year 1948 and in connection therewith, the appellant had to pay certain amount to him. As there were differences, the matter was referred to mediators and an amount of Rs. 8,000. 00was settled as being due to the 1st respondent by the appellant, who along with the 2nd respondent agreed to and executed a promissory note on 24-6-1950 for that amount payable with interest at 9 per cent per annum from that date till the date of payment. As the defendants failed to pay in spite of repeated demands orally and by a registered notice Ex. A-5 dated 5-6-1951, 1st respondent filed the suit O. S. No. 18 of 1953. Defendants 3 and 4 who are the brothers of the 2nd defendant were also added as supplemental defendants as per the order on I. A. No. 848 of 1953, but were given up at the time of trial by the plaintiff, who endorsed the same on the plaint. The case of the 2nd respondent (1st defendant) was that on a settlement of account between the appellant and the 1st respondent a certain sum of money was found due by the appellant to the 1st respondent and that the appellant represented to him at the instance of the first respondent that if a proper surety was found to join in the execution of the suit promissory note the first respondent would reduce the amount. In view of this representation, the second respondent alleged, that ho affixed his signature to the promissory note without having received even a pie from out of the consideration thereunder. He contended, therefore, that since his liability would arise only in the event of the plaintiff (the 1st respondent) not being able to realise his debt from the appellant, the first respondent should only proceed against the appellant in the first instance. The appellants case was that the suit promissory note was not true, nor valid, nor was it supported by consideration and that even as per the plaint averments and the recitals contained in the suit promissory note, the debt came into existence on settlement of accounts of a partnership which was illegal, opposed to public policy and prohibited by law. The suit promissory note is invalid and unenforceable. It was further averred that the second respondent who was a dormant partner with the appellant has colluded with the plaintiff-first respondent and got this false and frivolous suit filed. On these pleadings, issues were drawn up for determining whether defendants 1 and 2 executed the promissory note and if so whether the suit promissory note is not supported by consideration and is not enforceable at law.

( 2 ) THE trial Judge on the evidence held that the suit promissory note was executed by defendants 1 and 2 in favour of the plaintiff and that the same is supported by consideration and that the 2nd respondent is also an executant and not a surety as alleged by him. On the question of the suit promissory note being unenforceable at law, the Subordinate Judge held that there is no proof that the partnership between the plaintiff and the second defendant came into existence in contravention of the licence granted to them and such being the case the suit promissory note cannot be said to be unenforceable.

( 3 ) IN this appeal, so far as the execution and the consideration of the promissory note are concerned, the appellant does not challenge the finding of the trial court. The only question is whether the partnership is illegal and unlawful and consequently the promissory note executed in settlement of account of an illegal partnership void and unenforceable under Section 23 of the Indian Contract Act. It may be stated that the first responde