The point that arises for consideration in this case is whether a partnership that was entered into for the purpose of exploiting a licence for an arrack shop before the licence was obtained is void ab initio and therefore a suit based upon such partnership for settlement of accounts is not maintainable.

The facts are these. On the 8th March, 1943, plaintiff, defendant, Arjunam Pillai and Ramaswami Mudaliar agreed that the licence for the Kallidaikurichi arrack shop should be taken in the name of the defendant but that the profits from the shop should be equally divided between the four members. There was a settlement of account on 9th April, 1944, whereunder the defendant had to pay a sum of Rs. 260-4-6 to the plaintiff. On that day itself the defendant paid Rs. 130-4-6. The suit was filed for the recovery of the balance due to the plaintiff. The defendant raised various contentions one of them being that the suit was not maintainable in view of the Rules under the Madras Abkari Act I of 1886. The learned District Munsiff held that the plaintiff was not a partner but a mere financier and there was no question of any transfer of a right to vend. Following the decision of Wadsworth, J., in Rama Moopan v. Muthu Moopan1, the learned Munsiff held that the suit was maintainable.

The finding of the learned District Munsiff is obviously not based on the evidence in the case. Indeed he did not say on what evidence he came to that conclusion. P.W.1, the plaintiff, in unambiguous terms stated in his evidence as follows:

“As per the agreement the four persons agreeed that if an arrack shop was taken in auction the capital as well as the profits are to be divided between us. The Kallidaikurichi licence was taken in the name of the defendant in March, 1943. The licence was for one year from April 1st. The business was carried on for one year. At the end of the year on 9th January, 1944, we four persons settled the accounts. For my share I was entitled to get Rs. 260-4-6 from the de fendant on that day.”

This evidence leaves no doubt in my mind that the plaintiff was a partner along with three persons for the purpose of bidding at the auction and exploiting the arrack licence. On this finding the question for consideration is whether the partnership is void.

There are conflicting decisions on this question. It really turns upon the construction of clause (a) rule 27 promulgated under the Madras Abkari Act. It reads as follows:

“No privilege of supply or vend shall be sold, transferred or sub-rented without the Collector’s previous permission.”

Venkatasubba Rao, J., in Satyala Sanyasi v. Bhogavalli Sanyasi2, held that if at the time when the person bid, the partnership had come into existence and it was only subsequently he became a successful bidder, there was no transfer involved in the transaction which would be against rule 27 of the Excise Manual. This view was accepted and followed by Venkataramana Rao, J., in Rangaswami Pillai v. Narayanaswami Naicker3. In Rama Moopan v. Muthu Moopan,1 Wadsworth, J., made observations contrary to those made by the other two learned Judges. In that case the alleged partnership agreement was entered into after one of the partners successfully bid for the shop at the auction. Though the point to be decided now did not arise directly in that case, the learned Judge incidentally stated as follows:

“I may observe that to my mind it makes no difference whether the partnership agreement was entered into before the bid at the auction or after the bid at the auction, provided that the bid was not made in the names of the partners as and for the partnership.”

All these judgments were reviewed by Leach, C. J., and Lakshmana Rao, J., in Italia v. Cowasjee.4 where the facts briefly arc these. The Collector called for tenders in respect of toddy shops in Madras City. The plaintiff, a partner, submitted a tender on 23rd August, 1937, on behalf of the partnership but in his own name. The plaintiff had already informed the Secr

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