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PATNA HIGH COURT
V.Ramaswami and Kanhaiya Singh JJ.
Sewsagar Avasty
Versus
Satyanarain Sah
Appeal From Appellate Decree No. 1625 of 1954 ;
Decided On : JULY 15, 1959
CONTRACT - ILLEGALITY - STANDARD CLOTH - SALE WITHOUT LICENSE - CLAIM FOR PRICE - NOT ENFORCEABLE - APPROPRIATION OF PAYMENT - ILLEGAL CONTRACT - NOT PERMISSIBLE - PLEADING OF ILLEGALITY - NOT NECESSARY - COURT'S DUTY TO TAKE JUDICIAL NOTICE.
Fact of the Case:
Plaintiff sued defendant for the price of standard cloth supplied by the plaintiff to the defendant for being sold at their shop. The defendant had no license for selling standard cloth, which was required under the Bihar Cotton Cloth and Yarn Dealers (Licensing and Control) Order, 1944.
Finding of the Court:
The court held that the claim of the plaintiff with regard to the sum of Rs. 2,614 and odd, which was the price of standard cloth supplied by the plaintiff to the defendant, cannot be decreed in favor of the plaintiff. The court also held that the case of the defendant with regard to the payment of Rs. 3,500 was a different version of the same transaction upon which the plaintiff had based his claim and that it was necessary for the lower appellate court to investigate the case of the defendant with regard to the payment of Rs. 3,500 and give a definite finding on that point.
Issues: 1. Whether the claim of the plaintiff with regard to the sum of Rs. 2,614 and odd, which was the price of standard cloth supplied by the plaintiff to the defendant, can be decreed in favor of the plaintiff. 2. Whether the case of the defendant with regard to the payment of Rs. 3,500 was a different version of the same transaction upon which the plaintiff had based his claim.
Ratio Decidendi: 1. The court held that the claim of the plaintiff with regard to the sum of Rs. 2,614 and odd, which was the price of standard cloth supplied by the plaintiff to the defendant, cannot be decreed in favor of the plaintiff because the contract for the sale of standard cloth was illegal as the defendant had no license for selling standard cloth, which was required under the Bihar Cotton Cloth and Yarn Dealers (Licensing and Control) Order, 1944. 2. The court held that the case of the defendant with regard to the payment of Rs. 3,500 was a different version of the same transaction upon which the plaintiff had based his claim because the evidence adduced by the plaintiff proved the illegality of the contract.
Final Decision: The court allowed the appeal, set aside the judgment and decree of the lower appellate court, and remanded the case for being reheard and re-determined in accordance with law.
1. On behalf of defendant No. 1, who has presented this appeal, the first point taken by learned Counsel is that the lower appellate Court was erroneous in giving a decree to the plaintiff with regard to the sum of Rs. 2,614 and odd. being the price of standard cloth supplied by the plaintiff to the defendant for being sold at their shop, namely, Swadeshi Vastralaya. The argument of learned Counsel is that the plaintiff had license under the Bihar Cotton Cloth and Yarn Dealers (Licensing and Control) Order, 1944, which was promulgated and came into force on 14-1-1944. The defendant had no license for selling standard cloth which is defind in Sec.2(10) of the Control Order to mean "cloth stamped as such and issued for sale from godown of the District Magistrate", Sec.3 of the Control Order is as follows :
"3. Save as provided in Clause 12, no persons shall after the commencement of this Order, carry on business as a dealer except under and in accordance with the terms and conditions of a license in Form B issued by the Licensing Authority under this Order . Provided that any license issued under the Bihar Cotton Yarn (Control of Distribution) Order, 1942, or the Bihar Cotton Cloth and Yarn Dealers Licensing Order; 1943, shall, until the 31st March, 1944 or such earlier date by which a fresh license is granted under this Order to the dealer concerned, be deemed to have been granted under this Order,"
Sections 4 and 5 of the Order provide for making an application for grant of a license and the conditions under which the Licensing Authority may grant such a license. Sec. 4 is to the following effect:
"4. (1) Every application for license under this Order shall be made to the licensing authority concerned in form A for each shop or place of business in the case of wholesale dealers and retail dealers and for each area in the case of hawkers, whether or not the shop or place of business or area is in the same town or village or in different towns or villages.
(2) A fee of Rs. 5 shall be charged for wholesale dealers license, of Rs. 2 for a retail dealers license and of Re. 1 for a hawkers license, and the Treasury challan showing deposit of the fee shall be sent along with the application for a license. A similar fee shall be payable yearly by deposit in the Treasury for renewal of the license in the succeeding years."
Section 5 is to the following effect:
"5 (1) On receipt of an application in form A, the licensing authority may, if he finds that the application is in order, grant a license in form B and such license shall remain in force until the 31st day of December of the year in which it is granted.
(2) The licensing authority may for sufficient reason issue a duplicate, on payment of Re. 1 by deposit in the Treasury, with the word "duplicate" prominently appearing thereon.
(3) The license shall be renewable every year and the renewal, if allowed, shall be endorsed by the licensing authority on the license or, as the case may be, on the duplicate."
It is the admitted position in this case that the defendant had no license for selling standard cloth and it is also the admitted position that during the material period, that is to say March, 1944, to September, 1944, the Bihar Cotton Cloth and Yarn Dealers (Licensing and Control) Order, 1944 was in force. The point taken by learned Counsel for the appellant is, therefore, that the claim of the plaintiff is based upon an illegal contract and the Court cannot give assistance to the plaintiff to enforce that illegal contract. To this contention it was replied on behalf of the respondent, in the first place, that there was payment of Rs. 7,855/- and odd by the defendant and the plaintiff had appropriated a portion of this payment towards the price of standard cloth which had been previously supplied. There is no substance in this contention of the respondent because the appropriation by the plaintiff of the payment to an illegal contract is prohibited by Sec. 60 of the Contr
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