Maintainability of suit filed for accounts.

This is an appeal by the plaintiff against the decree in O.S. No. 9 of 1951, Sub-Court, Dindigul, dismissing his suit for the taking of the accounts of a dissolved partnership, for dealing in tobacco. The learned Subordinate Judge has dismissed the suit on the ground that the partnership put forward by the plaintiff was illegal as being prohibited by the Central Excises Act and the Rules framed thereunder.

The plaintiff’s case was that in or about 1945 he and the defendants (two in number) formed a partnership for trading in tobacco in Jakkamanayakkanpatti under the terms of which the plaintiff undertook to furnish the necessary finance, these advances carrying interest at 6 per cent. per annum, while the defendants were to be in charge of the day-to-day management of the business maintaining true and regular accounts, and that the profit and loss should be shared one half by the plaintiff, the two defendants together taking the other half. The agreement which resulted in these arrangements was stated to be oral but that subsequently there was some writing evidencing slight variations of these terms. The plaintiff went on to state that the partnership which was at will was carried on for sometime but had become dissolved by notice of dissolution by him, dated 18th September, 1950 and that the accounts had not been taken. The suit, therefore, prayed for the taking of an account of this dissolved partnership from August, 1945 and the usual decree after the accounts were taken.

The 1st defendant filed a written statement which was adopted by the 2nd defendant, raising primarily two defences. The first was that there was no partnership relationship between the plaintiff on the one hand and the defendants on the other but that the latter was merely working under the direction and control of the plaintiff, the plaintiff being in possession of all the accounts. It was, therefore, pleaded that there was no basis for any claim against them. The second defence was that the plaintiff traded in tobacco under a licence granted to him under the Central Excises and Salt Act (Act I of 1944) and under the provisions of that Act and the rules made thereunder the plaintiff could not validly enter into any partnership with the defendants and that consequently the suit partnership, if the Court should hold that there was any such, was illegal. The learned Subordinate Judge has upheld this second defence and dismissed the suit. This conclusion is canvassed in this appeal.

Mr. Seshagiri Sastri, learned counsel for the appellant, urged two contentions in this appeal. The first was that the Subordinate Judge was in error in considering that the suit partnership was illegal by reason of the provisions of the Central Excises and Salt Act (Act I of 1944), the argument being that this enactment was primarily concerned with revenue and that the Court should not construe the suit partnership to be illegal as prohibited merely because penalties were levied for the violation of the conditions of the licence one of such conditions being directed against licensees entering into partnership. The second line of attack on the judgment of the Court below was that as the defendants had in their written statement put forward a case that they were agents of the plaintiff, this constituted an admission of their occupying an accountable relationship to the appellant which the Court should have accepted and passed a decree for the taking of accounts.

I shall now consider these two contentions in that order. Section 6 of the Central Excises and Salt Act enacts:

"The Central Government may, by notification in the official gazette, provide that, from such date as may be specified in the notification, no person shall, except under the authority and in accordance with the terms and conditions of a licence granted under this Act engage in (to mention only the relevant clause)......(b) the wholesale purchase or sale (whether on his own account or as a broker or commission a