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V. Kalyanasundaram Pillai v. R.M.L.S Chockalingam Chettiar
Structured Summary of the Court Opinion
Factual and Procedural Background
The appellant was made lessee of certain salt pans in Tirunelveli district under an indenture marked Ex. B-2 between the Governor-General-in-Council and the appellant. To procure the lease and pay rents the appellant borrowed substantial sums from the respondent, who then sued in O.S. No. 42 of 1947 in the Subordinate Judge's Court at Tuticorin seeking recovery of Rs. 1,08,229-8-8 with interest and enforcement of a charge on all salt manufactured and gathered at the pans. On 24 June 1949 a compromise decree (settling the debt at Rs. 90,000) was recorded providing for instalment payments and containing: (a) a clause (paragraph 4) that upon default in any instalment the plaintiff (respondent) would automatically be receiver of the salt pans to realise the decree amount and remain in possession until the amount was wiped off; and (b) a clause (paragraph 5) permitting enforcement of the charge on the pans and salt by executing the decree according to law.
After default in instalment payments, the respondent applied for execution of the decree, seeking appointment of a receiver and sale of the salt pans pursuant to the charge. The Subordinate Judge overruled the appellant's objections and ordered sale in execution. The appellant earlier filed C.M.A. No. 462 of 1950 challenging the automatic receiver provision but did not press that point at hearing and the appeal was dismissed. The present appeal challenges the order directing sale of the salt pans in execution.
The Subordinate Judge had held that although salt licences contain rules preventing assignment, sub-letting or alienation on pain of termination of the lease, a sale is not void ab initio; if the Commissioner later accepts a sale, the purchaser obtains title. Because that contingency had not occurred, the learned Judge concluded the sale in execution was not prohibited and directed steps for proclamation and fixing an upset price.
Legal Issues Presented
- Whether a compulsory sale in execution of the lessee's rights in salt pans (by court auction under a decree) is void ab initio because it amounts to an alienation or transfer prohibited by the lease clause and the statutory/regulatory regime governing salt licences (including Rules under Central Act I (1) of 1944 and earlier Madras Salt Act provisions), or by analogy to prohibitions under the Abkari (liquor) regime.
- Whether the receiver's taking possession of the salt pans under the compromise decree amounts to an assignment or transfer of the licence-holder's rights (i.e., whether possession by a receiver is tantamount to transfer for purposes of statutory prohibitions).
- Whether, because of the alleged prohibition on alienation, there is any property capable of being charged under Section 60 of the Transfer of Property Act and therefore whether a charge and execution sale can validly be created and enforced.
Arguments of the Parties
Appellant's Arguments (Mr. V. Ramaswami Aiyar)
- Reliance on the Full Bench decision in Velu v. Sivasooriam, ILR (1950) Mad 987 — which held that a partnership entered into to conduct business under a licence granted only to one person is void ab initio — to argue that transfers or alienations related to licences contrary to statutory/regulatory prohibitions are void and against public policy.
- Clause 12 of Ex. B-2 (prohibiting assignment, underletting or parting with possession without the lessor's written consent) reflects a public-policy prohibition; therefore, a compulsory sale in execution would be void.
- Invoked the Abkari Act provisions (Rule 27, Clauses and Sections cited) to show that licence transfers in related regulated industries are prohibited as against public policy, arguing the same should apply here.
- Contended that a receiver's possession might amount to an assignment or de facto transfer; however, he accepted that the receiver is in custodia legis and pointed to Mullah's Civil Procedure Code on the nature of receivership (suggesting some limits to treating the receiver as an assignee).
- Alternate contention: If Clause 12 prohibits alienation, then there is no transferable property under Section 60 of the Transfer of Property Act; relying on decisions concerning 'inam' grants (e.g., Sundararajulu v. Papiah ILR (1938) Mad 767 and Upendra Singh v. Meghnath Singh) he argued that a limited or non-transferable interest cannot be charged and thus an execution sale would be void ab initio.
Respondent's Arguments (Mr. T. L. Venkatarama Aiyar)
- Distinguished the Abkari regime from the Salt Act regime: prohibitions motivated by public-policy concerns in the Abkari Act do not translate directly to salt licensing, which is fiscal in character and contemplates regulated transfers.
- Relied on decisions (including Sitaramamurti v. Guruswami ILR (1949) Mad 849 and Soorampalli Reddi v. Motamarri Seetharamayya & Sons S.A. No. 1914 of 1944) holding that partnerships and transfers connected with salt licences were not illegal and that the statute recognises interests arising from transfers (subject to registration/acceptance by the Collector).
- Pointed out that the rules framed under Central Act I (1) of 1944 (notably Rules 102–105) expressly permit transfer and relinquishment of licences, subject only to registration/acceptance by the Collector; Clause 12 in the lease only preserves the Collector's right not to recognise transfers absent his permission and is a contractual term rather than a statutory prohibition capable of rendering transfers void between parties.
- Argued the analogy with 'inam' grants was inapposite; even so, cited case law distinguishing public-purpose grants from private commercial arrangements.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Velu v. Sivasooriam, ILR (1950) Mad 987 (Full Bench) | Held that a partnership formed to conduct business under a licence granted to one person (arrack/toddy) is void ab initio; emphasised public-policy prohibitions under the Abkari Act against transfer. | The court noted appellant's reliance on this Full Bench decision but distinguished it: Velu concerned the Abkari (liquor) context and public-policy considerations peculiar to intoxicating liquors, and thus its rule was not applied to the salt-licence facts before the court. |
| Sitaramamurti v. Guruswami, ILR (1949) Mad 849 | Addressed whether a licence to manufacture salt could be a partnership asset; held that entering into a partnership under the Salt Act is not illegal and the lease could be deemed a partnership asset. | The court relied on this decision to support the proposition that, unlike under the Abkari Act, partnerships and transfers connected with salt licences are not necessarily illegal and thus that Velu should not be extended to the Salt Act context. |
| Soorampalli Reddi v. Motamarri Seetharamayya & Sons, S.A. No. 1914 of 1944 (and L. P. A. 3 of 1946) | Considered partnership and transfer issues concerning the manufacture and sale of salt; held there is a significant difference between the Abkari Act and the Salt Act and that transfers/partnerships connected with salt works are not akin to prohibited transfers under the Abkari Act. | The court treated this authority as directly analogous: Clause 12 in Ex. B-2 is similar to the clause considered there, and the decision supports the view that the Salt Act/regulations recognise transferee interests even where Collector's recognition is required. |
| Italia v. Cowasjee, 1944-1 Mad L J 97 | Was considered in Soorampalli and approved by the Full Bench in Velu (as noted in the opinion). | Mentioned as part of the jurisprudential background; the court referenced it in discussing how previous courts treated analogous questions, but did not base its primary ruling directly on it. |
| Nagamma v. Secretary of State, 42 Mad L J 318 | Held that Section 11 of the Madras Salt Act applies to transfers by way of mortgage and that a mortgage of a salt pan without leave of the Commissioner is of no effect against him; indicated that such transfers may be valid inter partes even if not binding on the Collector. | The court cited this case to show that transfers (including mortgages) may be valid between parties though not effective against the Commissioner until registered or accepted, supporting the view that statutory provisions do not render transfers void between private parties. |
| Sundararajulu v. Papiah, ILR (1938) Mad 767 | Concerned 'inam' grants and held that certain limited interests conferred by grants were not transferable; used by appellant to argue that a non-transferable interest cannot be charged or sold. | The court explained the appellant's reliance on this authority but rejected the analogy: grants/inams with limited public-purpose interests differ from a commercial lease/licence subject to statutory regulation and contractual terms. |
| Upendra Singh v. Meghnath Singh, 18 Pat 370 | Approved principles that certain Crown grants or limited interests are not transferable and that liability to involuntary alienation reflects the scope of voluntary transfer. | Referenced by the court as part of the line of cases on limited public grants; the court declined to apply those principles to the commercial lease and statutory framework governing salt licences. |
| Rajah of Vizianagaram v. Dantavada Chellia, 28 Mad 34; Lakshmanaswami Naldu v. Rangamma, 23 Mad 31; Vaidhianatha Aiyar v. Yogambal Animal, 50 Mad 441; Venkatarama Aiyar v. Chandrasekhara Aiyar, 44 Mad 632 | Authorities addressing alienability/transferability of inams and distinctions between public-purpose grants and privately transferable grants. | These decisions were cited by respondent's counsel to distinguish public-purpose grants from private/commercial grants; the court observed them but deemed it unnecessary to decide the case on those lines because the statutory rules under Central Act I (1) of 1944 governed the matter. |
| Mullah's Civil Procedure Code (textbook reference, p.1140) | Statement of law on the nature of receivership and 'custodia legis' (used in argument concerning whether receiver's possession constitutes assignment). | The court noted the reference but observed it was unnecessary for present purposes to decide whether putting the receiver in possession equates to an assignment; the court accepted that receiver's possession need not be treated as an assignment in this case. |
Court's Reasoning and Analysis
The court proceeded by applying and comparing the statutory/regulatory framework applicable to salt licences with the principles relied upon from the Abkari (liquor) regime and decisions concerning inam/grant transfers. The analysis unfolded in the following steps, closely following the terms used in the opinion:
- Statutory and regulatory background: The court examined the Madras Salt Act provisions (Sections 8, 9, 11 and 12 of the earlier Madras Salt Act) and, critically, the Central Act I (1) of 1944 and the rules made thereunder (notably Rules 102–105). It emphasised that under the Central Act rules licences are permitted to be transferred or relinquished, but such transfers have no effect against the Collector unless registered or accepted under the prescribed regulations. The rules also treat the licensee as the owner of the licence and salt works for many purposes, subject to protection for persons with interests or liens.
- Distinction from Abkari jurisprudence: The court accepted the appellant's reliance on Velu v. Sivasooriam as accurately stating the law in the Abkari (liquor) context, where public-policy concerns render certain partnerships and transfers illegal or void. However, the court held that the Abkari Act's public-policy reasons have "very little applicability" to the manufacture of salt. The objective and scope of the Salt Act (and the Central Act) is essentially fiscal and regulatory, not centred on the same public-policy prohibitions applicable to intoxicating liquors.
- Precedents specific to salt licences: The court relied on and followed prior decisions concerning salt licences (Sitaramamurti v. Guruswami; Soorampalli Reddi v. Motamarri Seetharamayya & Sons; Nagamma v. Secretary of State) which indicate that partnerships and transfers relating to salt licences are not, as a rule, illegal; that the statute contemplates transfers but protects the Collector's interest by requiring registration/acceptance; and that transfers may be valid as between parties even if not effective as against the Collector until accepted.
- Nature of Clause 12 of Ex. B-2: The court interpreted Clause 12 of the lease as reflecting and amplifying statutory rules (Rules 103 and 104) rather than creating an absolute statutory prohibition. Clause 12 operates as a contractual term requiring the lessor's (or Collector's) written consent, but it does not carry the force of a statute or the rules framed under the statute. Thus, Clause 12 primarily preserves the Collector's right not to recognise transfers absent permission; it does not render a transfer void ab initio between private parties.
- Receiver and assignment: The court accepted the practical point that appointing a receiver to take possession of the property (and holding the salt pans in custodia legis) need not be equated with an assignment or transfer for the purposes of statutory prohibition. The court observed it was unnecessary in this case to hold that placing the receiver in possession is tantamount to assignment.
- Rejection of the inam analogy: The court rejected the appellant's attempt to analogise the licence/lease to Crown grants or inam/jagir grants (where courts have held limited interests non-transferable) and held that the cases on inams and similar public-purpose grants do not assist the appellant. The lease here was a commercial agreement subject to statutory regulation and not akin to a grant conferring a limited perpetual public-interest tenure.
- Conclusion from the cumulative analysis: Because the Central Act and its rules expressly contemplate transfer (subject to registration/acceptance by the Collector), and because Clause 12 is contractual and cannot oust the statutory regime, the court concluded that an execution sale of the leasehold interest in the salt pans is not void ab initio and is not prohibited by the Salt Act or by the reasoning in the Abkari decisions when applied to salt licences.
Holding and Implications
Holding: APPEAL DISMISSED.
Implications and Effects:
- The direct effect on the parties: The court affirmed the Subordinate Judge's order permitting the sale in execution of the leasehold interest in the salt pans; the appeal was dismissed with costs and the execution sale process (proclamation and fixation of upset price) may proceed as directed by the Subordinate Judge.
- On legal principle: The court applied and relied on existing statutory provisions and precedents to hold that licences under the Salt Act / Central Act I (1) of 1944 are capable of transfer (subject to registration/acceptance by the Collector) and that a contractual clause requiring consent does not render such transfers void ab initio as between private parties. The opinion distinguished the public-policy prohibitions applicable under the Abkari Act and related cases concerning inams, and therefore did not extend Velu v. Sivasooriam to the salt licence facts before it.
- Scope of the ruling: The court's decision rests on an application of existing statutory rules and precedent; it does not purport to announce a novel legal principle beyond applying those authorities to the facts of this execution proceeding.
This summary is based exclusively on the content of the provided opinion and does not add facts or inferences beyond what is contained in that text.
1. Ex. B. 2 is an indenture between the Governor-General-in-Council and the appellant herein by which the appellant has been made the lessee of certain salt pans in Tirunelveli district. For the purpose of procuring the lease as well as the payment of the rents due, the appellant borrowed large sums of money from the respondent, as a result of which the respondent filed O. S. No. 42 of 1947 on the file, of the Subordinate Judge's Court of Tuticorin for the recovery of Rs. 1,08,229-8-8, with interest etc., from the appellant personally and by enforcement of a charge on ail the salt manufactured and gathered in the salt pans. On the 24th June 1949 a compromise decree was passed which provided the payment of the decree amount which was settled at Rs. 90,000, by various instalments. Paragraph 4 stated that if there be any default in respect of payment of even one instalment as described in paragraph 1 of the compromise decree, the plaintiff (respondent) shall automatically be the receiver of the salt pans for the purpose of realising the decree amount as per paragraph 2 of the compromise decree and that the plaintiff shall be entitled to enter into and be in possession of the pans till the decree amount Is. wiped off. Paragraph 5 provided that the plaintiff was also entitled to enforce the charge that he has on the pans and the salt therein by means of executing the decree according to law. As default was made in the payment of instalments, an application was made for execution of the decree and realisation of the amount by the appointment of a receiver as contemplated in paragraph 4 of the compromise decree as well as by the sale of the salt pans In pursuance of the charge created in the compromise decree. Various objections were raised lay the judgment-debtor appellant to the reliefs asked for but the learned Subordinate Judge overruled all of them. Against the automatic provision by which the respondent became receiver of the salt pans, C.M.A. No. 462 of 1950 was filed along with the present appeal but at the time of the hearing, Mr. V. Ramaswami Aiyar for the appellant did not seriously question the validity of the order and, therefore that appeal has been dismissed. The present appeal is against the order of the Subordinate Judge by which the salt pans were ordered to be sold in execution. The learned Judge held that though the rules under the Salt Act prevent the licensee from assigning, sub-letting, or alienating on pain of termination of the lease, the sale is not 'ab initio' void but if the Commissioner, subsequent to the sale, accepts the sale as valid, the purchaser gets a title. In the present case, since that contingency has not yet arisen, the learned Judge held that the sale is not prohibited and therefore overruling the objection of the appellant, directed a settlement of proclamation and for fixing the upset price.
2. The main argument of Mr. V. Ramaswami Aiyar for the appellant is founded upon the Full Bench decision to which one of us was a party reported in 'Velu v. Sivasooriam', ILR (1950) Mad 987. In that case it was held that a partnership entered into for the purpose of conducting a business in arrack or toddy on a licence granted, or to be granted, only to one of the persons is void 'ab initio', whether the contract of partnership was entered into before the licence was granted or afterwards. It was further held that such a partnership involves a transfer of the licence which is prohibited under Clause (a) of Rule 27 of the General Sales, Notification issued under the Madras Abkari Act (I (1) of 1886), and is punishable under Section 56 of the Act, or a breach of Section 15 of the Act, punishable under Section 55, and that such a partnership would be illegal, either because an offence would necessarily be committed in pursuance of it or because it would be against the general public policy underlying the enactment that only approved persons, specifically licensed, should be allowed to sell liquor. The prohibition against the transfer of a licence is contained in Rule 27, Clause (a) which is as follows:
"No privilege of supply or vend, shall be sold, transferred or sub-rented without the Collector's previous permission."
Therefore it is argued that the compulsory sale of the right to manufacture salt granted to the appellant under Ex. B-2, is against public policy and cannot be enforced in execution of the decree. Paragraph 12 of Ex. B. 2 is as follows:
"Except with the written consent of the lessor first had and obtained, the lessee shall not assign, underlet or part with the possession of the leased land or any portion thereof and shall not transfer by sale, or otherwise, the powers hereby granted to him, provided that nothing herein contained shall prevent the lessee at any time from taking any partners or partner into the business carried on by him under the present lease after obtaining prior approval of the Collector."
If the prohibition contained in paragraph 12 that the lessee shall not assign or part with possession of the leased land without the written consent of the lessor first had and obtained is in the interests of public policy, then it is argued that the sale in execution will also be void. In such circumstances the provisions of the Salt Act and the Abkari Act will have to be considered. In the Madras Abkari Act (I (1) of 1886), Sales 12 prohibits the manufacture of liquor or intoxcating drug except as provided by that Act. This section says that no liquor or intoxicating drug shall be manufactured ..... except under the authority and subject to the terms and conditions of a licence granted by the Collector in that behalf or under the provisions of Section 21. Section 13 relates to the prohibition of possession of liquor or intoxicating drugs in excess of the quantity prescribed by Government. Section 15 lays down that sale of liquor or intoxicating drug without license is prohibited. Section 55 provides penalties for illegal import, etc., of intoxicating liquor and other articles. Section 56 provides for the penalty for misconduct by licensees, etc. Before the Central Government passed Act I (1) of 1944 which consolidated and amended the law relating to Central duties of excise and salt, so far as the Madras State was concerned, the legislative enactment which regulated the sale and manufacture of salt was contained in the Madras Salt Act IV (4) of 1889. Section 8 of this Act provided that no person, not being a public servant manufacturing on behalf of the Government, shall manufacture salt unless duly licenced as therein after provided; and Section 9 stated that the Commissioner for salt may grant licences for the manufacture of salt and every licence so granted shall relate to specified salt works and shall contain such particulars and conditions as the Governor-General-in-Council may, from time to time, prescribe. There are further provisions regarding the power to call for and alter licences and tender new licenses and if new licenses are refused to cancellation, of previous licences, etc. Section 11 is in the following terms:
"Licenses shall be transferable and may be relinquished; provided that no transfer or relinquishment shall have any effect against the Commissioner unless and until it shall have been registered or accepted under such rules as the Governor in Council may from time to time prescribe."
Section 12 reads:
"For the purpose of the Act, the licensee shall be taken to be the owner of the license and of the salt works specified therein. Provided that nothing herein contained shall affect the liability of the licensee towards any person who may have an interest in, or lien upon such licence or salt works,"
Sections 6 and 7 of the Central Act I (1) of 1944 correspond in many respects to Sections 8 and 9 of the Madras Salt Act. There are no provisions in the statute resembling Sections 11 and 12 of the Madras Salt Act but in accordance with the provisions of Section 37 of Central Act I (1) of 1944 rules have been framed regulating the production and the manufacture of salt as well as the grant of licences, etc, Rules 102, 103 and 104 are important in this connection and may usefully be "quoted: "102. 'Manufacture, etc., of salt prohibited except under a licence'. No salt shall be manufactured and no natural salt and, except under the provisions of rule 108, no salt earth shall be excavated or collected or removed, otherwise than by the authority and subject to the terms and conditions of a licence to be granted by the Collector in this behalf. Provided that no such licence shall be necessary for any process of manufacture of salt on which duty has been paid. 103. 'Licences to be granted by the Collector'; (1) The Collector shall, on application, grant licences for the manufacture, excavation, collection or removal of salt, to any person entitled to the same under Chapter V of the Act, and may in his discretion grant licences for any of the said purposes or for the excavation, collection or removal or salt earth to any other persons. (2) Every such licence shall relate to specified salt works or factories and shall contain such particulars and conditions as the Collector, subject to the directions of the Central Government may from time to time prescribe. 104. "Transfer of and relinquishment of licence': Licences shall be transferable and may be relinquished. Provided that no transfer or relinquishment shall have any effect against the Collector, unless it has been registered or accepted under such regulations as it may from time to time make in this behalf." It will be seen therefore that Rule 104 allows the licences the liberty to transfer the licence or to relinquish it, the only prohibition being that the transfer or relinquishment shall not have any effect against the Collector unless it has been registered or accepted under such regulations as he may from time to time make in that behalf. Rule 105 is also important because it speaks of the licensee to be taken as the owner of the license and salt works or factories. It states that, for purposes of these rules, the licensee shall be taken to be the owner of the licence and of the salt works or factories specified therein provided that nothing contained in the rules shall affect the liability of the licensee towards any person who may have an interest in, or lien upon, such licence or salt works or factories On a perusal of the sections of the old Salt Act as well as of the sections and rules of Central Act I (I) of 1944, it will be seen that they are not in 'pari materia'; but still Mr. Ramaswami Aiyar contends that we must apply the Full Bench decision to the facts of the present case and hold that the compulsory sale in Court auction of the salt pans, the question was mooted as to therefore prohibited. As he has raised no objection to the respondent, as receiver, taking charge of the salt pans; the question was mooted as to whether the possession of the receiver is tantamount to a transfer of the right of the licencee. For this his answer is that the receiver represents only the party who is entitled to be in possession and since receiver's possession is 'custodla legis', he is not an assignee or representative of a party and that the property does not vest in him. For this a reference is made to the statement of the law contained in page 1140 of Mullah's Civil Procedure Code, latest edition. We may take it that for the purpose of the present case it is not necessary to hold that permuting the receiver to take possession of the property and having salt pans in 'custodia legis' is tantamount to any kind of assignment or transfer.
3. If the salt pans are sold in Court auction in execution of the compromise decree and are purchased by third parties, then certainly there is an assignment of the right of the lessee in favour of such purchaser. That would certainly be an alienation which if the decision of the Full Bench in 'Velu v. Sivasooriam', ILR (1950) Mad 987 is to be made applicable to the present case, would be void and would be opposed to public policy. That Abkari rules cannot be made applicable to licences under the Salt Act has been the subject of certain decisions in this Court. In 'Sitaramamurti v. Guruswami', ILR (1949) Mad 849, the question discussed related to an asset of a partnership in the case of a licence to manufacture salt. The learned Judges held that the earlier lease in question in that case should be deemed to be a partnership asset belonging to all the partners according to their shares. It is clear from this decision that unlike under the Abkari Act, the entering into a partnership under the Salt Act is not illegal. That is also evident from the provisions of Salt Act. In our opinion the Pull Bench decision in 'Velu v. Sivasooriam', ILR (1950) Mad 987, cannot be made applicable to the present case for the reason that here there is no question of any partnership being entered into, and moreover the questions of public policy which can be made applicable to intoxicating liquors can have very little applicability to a case of manufacture of salt. A similar question arose in 'Soorampalll Reddi v. Motamarri Seetharamayya & Sons', S. A. No. 1914 of 1944, before Chandrasekhara Aiyar, J. There the suit related to the dissolution of a partnership and for the taking of accounts relating to a business in the manufacture and sale of salt. It was sought to be argued in that case that such a partnership was illegal and was opposed to public policy? The learned Judge considered all the relevant sections of the Salt Act as well as the decision in 'Italia v. Cowasjee', 1944-1 Mad L J 97, which was approved by the Pull Bench in 'Velu v. Sivasooriam', ILR (1950) Mad 987, and came to the conclusion that there can be no analogy between cases of partnership arising under the Abkari Act and those under the Salt Act. The learned Judge found great difference in language between the two Acts and expressed the opinion that far from the provisions of the salt act being so wide in their scope as regards prohibition as the Akbari Act, they seem to recognise the interest of persons claiming by way of transfer or assignment from the licencee or the lessee. What is prohibited by the Salt Act is that the transfer shall have no effect against the Collector until it has been registered or accepted by him. But there is no prohibition against the transfer and no prohibition that the transferee will not acquire any rights. This decision was affirmed in 'Soorampalli Reddi v. Motamarri Seetharamayya & Sons', L. P. A. 3 of 1946, where the learned Chief Justice agreed with Chandrasekhara Aiyar, J., that there is a vast difference between the Abkari Act and the Salt Act. What we have to bear. In mind is that the lease which was the subject of consideration in S. A. No. 1914 of 1944 and was marked as Ex. D. 1 in that case contained a clause (Clause 12) which is very much similar to Clause 12 in Ex. B. 2. That clause provided as follows:
"The lessee shall not assign the site given for lease or any portion thereof, unless there is permission of the lessor in writing in the beginning and unless the same is obtained shall not sublease and shall not give up possession of the same."
On a comparison of this clause with Clause 12 of Ex. B-2 it is clear that according to both the documents the consent of the lessor is a necessary prerequisite before any assignment or transfer is made. In spite of the existence of such a clause in the lease which was the subject-matter of S. A. No. 1914 of 1944, the learned Judges held that the exisitence of a partnership was legal. in our opinion it is difficult to make out any distinction between the clause of the lease in S. A. Mo. 1914 of 1944 and Ex. B. 2. In addition to this in 'Nagamma v. Secy. of State', 42 Mad L J 318, it has been held that Section 11 of the Madras Salt Act is not confined in its operation to absolute transfers of the entire interest of the licensee but applies to transfers by way of mortgage and consequently a mortgage of a salt pan without leave of the Commissioner is of no effect against him. The learned Judges seem to imply that a mortgage or a transfer of a salt pan, though it may not be binding on the Collector, will be valid as between a transferor and transferee. They also refer to Section 12 which says that as between the licensee and iris transferee this section protects the interests of a person who may have an interest in, and lien upon, such licence or salt works. Further it has to be considered that the scope and object of the Atakari Act are entirely different from those of the Salt Act. The Madras Salt Act, which got repealed by central act i (1) of 1944, was only a tax collecting statute. So is the central act i (1) of 1944 which deals not only with salt but with various other articles on which excise duty has to be levied. It deals in the first schedule with Kerosene, matches, mechanical lighters, motor spirit, silver, tobacco and various other things in addition to salt. It is therefore clear that the Act we have to consider is nothing but a fiscal one intended for collecting taxes, whereas the madras abkari act had a public purpose and what is prohibited by the madras abkari act is against public policy.
4. As has been held in 'S. A. No. 1914 of 1944',' what Clause 12 of Ex. B. 2 contemplates is merelyj an amplification of Rules 103 and 104 under Central Act I (1) of 1944 and all that that clause is intended to lay down is that the Collector is not bound to recognise any transfer made without His permission. Moreover, Clause 12 is a term of the contract between the parties and has not the same force as a statute, or any rule framed thereunder having the same force as the Act.
5. The alternative contention put forward by Mr. Ramaswami Aiyar is that when there is a prohibition against alienation as is contemplated under Rule 12, there is no property capable of being transferred under Section 60 of the Transfer of property Act and hence no charge can be created, and any execution sale will be 'ab initio' void. He invited our attention to the observations contained in 'Sundararajulu v. Papiah', ILR (1938) Mad 767 at pp. 781 and 784. What happened in that case was the East India Company had granted an 'inam' on 'shrotriam' tenure to a 'poligar' and the object of the grant was to make a permanent prevision for the grantee and his heirs as compensation for the loss sustained by resumption of the emoluments attached to the office of 'poligar.' Venkataramana Rao, J., on a difference of opinion between Burn and Abdur Rahman, JJ., agreeing with the views expressed by Abdur Rahman, J., held that the intention of the East India Company in conferring the grant was not to make an absolute grant to the grantee but to confer on him a limited interest to enjoy the rents and profits of the village for his life and a similar interest on his heirs who would succeed him. In that view the learned Judge held that there was no property which could be alienated or transferred. This decision was considered and approved in 'Upendra Singh v. Meghnath Singh', 18 Pat 370', where the learned Judges held that the Crown grant in question in that case was a limited interest which was not transferable either by operation of law or by voluntary alienation and that the measure of liability to involuntary alienation was the power of voluntary transfer. The learned Judges referred to and approved various other cases in addition to 'Simdararajum v. Papiah', ILR (1938) Mad 767. We fail to understand how the principles governing Crown grants and such other gifts for services rendered on public grounds can be of any help to the decision of the present case. By no stretch or imagination can it be held that a commercial agreement entered into between the Government on the one side and a private citizen on the other, which is subject to all the rules and regulations in force in the country and the breach of which is liable to be sued for in a Court of law, can be equated to either an 'inam' or a 'jagir' granted on public grounds. We do not feel justified in holding that the principles of the aforesaid decisions can be attracted to the point for decision in the present case.
6. Mr. T. L. Venkatarama Aiyar for the respondent on the other hand drew a distinction regarding alienability and transferability of 'Inams' and grants which were conferred on public grounds as contra-distinguished to those conferred for private services rendered. He relied specially on 'Rajah of Vizianagaram v. Dantavada Chellia', 28 Mad 34, and 'Lakshmanaswami Naldu v. Rangamma', 23 Mad 31, for the argument that if the object of the grant was for a public purpose, then the grant cannot be transferred or alienated; but on the other hand, as held in 'Vaidhianatha Aiyar v. Yogambal Animal', 50 Mad 441, if the 'inam' was the grant of land and not of land revenue, a suit for partition of such 'inam' is maintainable. Eeliance was also placed on the observations at page 635 in 'Venkatarama Aiyar v. Chandrasekhara Aiyar', 44 Mad 632 at p. 635 to the effect that personal 'inams' can be alienated. It is not necessary for us to apply those principles here because in our opinion the case is governed by the rules made under central act i (1) of 1944 which specifically allow transfer and the attempt to curtail the force, of those rules by Clause 12 in Ex. B. 2 would not detract from the right of the lessee to transfer the rights which he has acquired under the lease deed. The learned Subordinate Judge has therefore taken the correct view in holding that the sale by Court of the leasehold interest in the salt pans is not void 'ab initio' or prohibited under the Salt Act,
7. The appeal is dismissed with costs.
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