Allahabad High Court
Shiam Bihari Lal vs Malhi And Ors. on 17 July, 1916
Equivalent citations: 38IND. CAS.178, AIR 1917 ALLAHABAD 54(1)
JUDGMENT
1. The appeal arises out of a suit in which the plaintiff alleged that the defendants obtained a license from Government to sell drugs, and that they thereupon entered into a contract with the plaintiff to the effect that in consideration of the plaintiff advancing some money, the defendants would give the plaintiff the profits derived to the extent of one-anna out of six-annas, and in the event of there being a loss the plaintiff would-suffer the loss to the extent of one-anna. The Court of first instance found that the contract had been entered into and gave the plaintiff a decree. The lower Appellate Court has reversed the decree of the Court of first instance, holding that the contract was illegal having regard to the provisions of the Excise Act and the rules made thereunder. The rule which is alleged to have been violated by the alleged contract is Rule 82, which is in the following terms:--Transfers and sub-leases of licenses are not permitted except under sanction of the Collector. The Collector shall not allow a transfer or sub-lease unless good and sufficient reason be shown to his satisfaction and unless the transferee or sub-lessee is, in his opinion, fit and qualified to hold such license. The contract alleged by the plaintiff does not seem to us to be either a "transfer" or a "sub-lease" of the license. The alleged contract would not entitle the plaintiff to sell any goods of any sort or description, covered by the license. As between Government and the defendants, the latter would remain solely liable for the non-performance of the contract and the conditions under which the license was granted. The case of Hormasji Motabhai v. Pestanji Dhanjibhai 12 B. 422 : 6 Ind Dec. (N.S.) 766 is relied upon. In that case the licensee had taken in a partner. It was part of the conditions of his license that he should not take a partner. What he did, therefore, was contrary to the express conditions of his license. The case of Nalain Padmanabham v. Sait Badrinath Sarda 10 Ind. Cas 126 : 35 M. 582 : 9 M.L.T. 459 : 21 M.L.J. 425 : (1911) M.W.N. 371 has also been relied upon. In that case the rule was that the licensees should not sell, transfer or sub-rent their privileges" without the permission of the Collector. There is a marked distinction between the words used in that rule and in the present case, which, as we have mentioned, only forbids the "transfer" or 'sub-lease" of the license. The concluding words of the rule show that they refer to ,a person who was by virtue of the contract actually to be the-holder of the license. In our opinion if the contract be as is alleged by the plaintiff, it is not void by virtue of Rule 82. We accordingly allow the appeal, get aside the decree of the lower Appellate Court and remand the case to that Court, with directions to re-admit the appeal under its original number and to proceed to hear and determine the same according to law having regard to what we have said above. Costs here and heretofore will be costs in the cause.