A partnership formed to work a license issued under the Cotton Control Order is void under Section 23 of the Indian Contract Act, but if the parties are not in pari delicto, the plaintiff is entitled to enforce its right to claim rendition of accounts.

1. This Letters Patent Appeal is directed against the judgment of a learned Single Judge who allowed the second appeal preferred by the plaintiff and reversing the judgment and decree of the Court of first appeal directed the trial Court to proceed further with the suit for rendition of accounts.

2. The plaintiff is a co-operative society working under the name and style of Dhuri Co-operative Marketing-cum-Processing Society, hereinafter called the society. It is registered under the Punjab Co-operative Societies Act and is a corporate body. Defendant 2 is a partnership firm known as Balak Ram Budh Ram (referred to hereinafter as the firm) of which defendant-appellant Budh Ram is the proprietor. Defendant-respondent 4 is only pro forma and he was connected with the plaintiff society but did not join in the suit. On 30th September, 1957, a partnership deed, Exhibit P. 1 was executed between the society acting through Pritam Singh, defendant-respondent 4, and the firm through its proprietor Budh Ram, defendant-appellant. The firm was holding a license under Cotton Control Order, 1955, promulgated by the Central Government in exercise of the powers conferred on it by Section 3 of the Essential Commodities Act, 1955 . Clause 9 of the Order provides that-

"No person shall purchase, sell, store or carry on business in cotton or shall hold cotton in hypothecation or against a pledge except under and in accordance with the conditions of a license in Form "A".

Exception--Nothing in this clause shall apply-

(a) to a manufacturer;

(b) to a person who purchases or stores cotton for his own use and not for the purpose of sale and who does not at any time have in his possession a quantity of cotton exceeding 24 bales of ginned and pressed cotton or boras of ginned cotton;

(c) to cotton known as Assam/Comilla;

(d) to any transaction of sale or purchase of cotton authorised in writing by the licensing authority.

(e) to a grower in respect of cotton produced by him.

Form "A" in which the license is to be issued is prescribed by the Order itself and is appended thereto. Where the applicant is a corporation or a partnership firm, the names of the directors or the partners, as the case may be, have to be stated in the application form. According to the terms of the agreement, Exhibit P. 1 the newly constituted partnership by the society and the firm was to take Karkhana (factory) on lease for ginning purposes. This document is silent as to whether the partnership so formed was intended for the sale and purchase of cotton as well which was controlled by the Cotton Control Order or that it was confined only to the ginning of cotton. One of the material issues framed in the case, therefore, was whether the partnership between the parties was only for ginning purposes. The trial Court decided this issue against the plaintiff and dismissed the suit. We are not referring to the other issues as findings thereon are not material for the purposes of the present appeal. The Court of first appeal concurred with the finding of the trial Court, and held that the business activity of the partnership was not restricted to ginning purposes only and that it was a partnership between the firm and the society for indulging in purchase and sale of cotton as well. The lower appellate Court took the view that since the business of buying cotton and selling Barnaula and Rui could not have been carried on by the partnership without a proper license under the aforesaid Cotton Control Order, the partnership constituted under Exhibit P. 1 for carrying on illegal business activities, was, therefore, void as it was hit by Section 23 of the Indian Contract Act. In the second appeal preferred on behalf of the plaintiff, it was contended before the learned Single Judge that the object of partnership was only to take on lease the Karkhana for ginning purposes and the firm defendant 2 which held a license under the Cotton Control Order alone carried on the business of buy