Chatterji, J.:— The plaintiff obtained a license from the Government for two excise shops from the 1st April, 1936, to 31st March, 1937, for which he was liable to pay a monthly fee of Rs. 320. According to the rules he had to pay in advance Rs. 640 for two months' fees. He also purchased ganja, opium and bhang worth Rs. 462-4-0 for the two shops. He then entered into an arrangement with the defendants who are father and sons under which they were put in charge of the two shops on the conditions that they would pay to the plaintiff the sum of Rs. 640, paid by him in advance for two months' fees, Rs. 462-4-0 the value of the stock of opium, ganja and bhang and would further pay him profit at the rate of Rs. 35 per month. The defendants were also put in charge of the furniture of the shops which it was agreed they would hand over to the plaintiff at the end of the year. The defendants conducted the business of the shops till the end of March 1937, but in spite of repeated demands did not pay his dues. The plaintiff thereupon brought the present suit on the 12th July, 1937, for recovery of Rs. 640 the license-fees for two months, Rs. 462-4-0 the price of the stock, Rs. 420 profits for one year and Rs. 37 price of the articles of furniture together with Rs. 39 as interest, total Rs. 1,598-4-0. In the alternative he asked for accounts from the defendants.
The defendants denied the alleged agreement and asserted that they were mere salesmen on the monthly pay of Rs. 15 and that they had paid the sale proceeds to the plaintiff from month to month.
The Munsif accepted the plaintiff's story and decreed the suit for recovery of the amount claimed. On appeal, his decision was set aside by the District Judge who held that the agreement pleaded by the plaintiff was illegal, being in contravention of the rules framed under section 89 of the Bihar and Orissa Excise Act, and therefore the plaintiff was not entitled to recover anything on the basis of the agreement. Accordingly he dismissed the plaintiff's suit. Hence this second appeal by the plaintiff.
The first contention of Mr. Subba Rao, for the appellant, is that the agreement does not offend the provisions of the rules made under the Bihar and Orissa Excise Act. Rule 143 provides that
“No transfer or sub-lease (whether entire or partial) of a license shall be made except with the previous permission of the Collector”.
Section 57(c) of the Bihar and Orissa Excise Act enacts that
“If any holder of a license, permit or pass granted under this Act, or any person in his employ and acting on his behalf wilfully does any act in breach of any of the conditions of the license, permit or pass, for which it penalty is not prescribed elsewhere in this Act, he shall be liable to line which may extend to five hundred rupees”.
The District Judge has found that the agreement alleged by the plaintiff amounts to a sub-lease. This finding is seriously challenged by Mr. Rao. His contention is that the defendants were actually liable as salesmen on the conditions set forth above. It is clear from the terms of the agreement that the defendants were given entire charge of the shops and the only interest which the plaintiff retained was to get a profit of Rs. 35 a month. Under the terms of the agreement the defendants were liable to repay the plaintiff the sum of Rs. 640 which he had paid as advance fees to the Government. The defendants were also to pay him the price of the stock which was made over to them at the time they were put in charge of the shops. In short, the plaintiff assigned his interest in the shops to the defendants reserving to himself the right to receive from them Rs. 35 as profit per month. Obviously this amounted to a transfer and perhaps also to a sub-lease. The conditions are wholly inconsistent with the defendants being servants of the plaintiff.
Mr. Rao has referred to the cases of Radhey Shiyam v. Mewa Lal Shiam Bihari Lal v. Malhi and Rangaswami Pillai v. Narayanaswami Naicken. In all these cases the question was whether an agreement between a liquor contractor and a third person whereby, in consideration of the money contributed by the latter, the former agreed to give him certain benefits in the share of the profits arising from the business amounted to a transfer or sub-lease of the liquor contract. It was held that such an agreement did not amount to a transfer or sub-lease. The facts of those cases are clearly distinguishable from those of the present in that here the plaintiff assigned his entire interest in the shops to the defendants, reserving to himself only a profit of Rs. 35 a month. Those cases, therefore, are of no assistance to the appellant. I agree with the learned District Judge in holding that the agreement alleged by the plaintiff is void.
It is next argued that even if the agreement is void, the plaintiff is entitled to recover by virtue of the provision of section 65 of the Contract Act the sum of Rs. 640 which he had paid as advance-fees to the Government and also Rs. 462-4-0 the price of the stock which he had made over to the defendants at the time they were put in charge of the shops.
section 65 of the Contract Act runs as follows:—
“When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it, to the person from whom he received it.”
Reliance is placed on the expression
“When an agreement is discovered to he void”.
A distinction must be drawn between the class of cases where the contract is void, though it may not involve any criminality, and the class of cases where the contract involves criminality. This distinction was pointed out by this Court in the case of Raghubar Das Mahant v. Raja Natabar Singh in which Dawson Miller, C.J, who delivered the leading judgment (Roe, J. agreeing) stated “In this case [i.e Leda Coachman v. Hiralal Bose], the principle is clearly laid down that the Courts of this Country will not assist a party even though the contract has not been performed to recover back his money paid in respect of a contract which is tainted with criminality or immorality”. In Bindeshari Prasad v. Lekhraj Sahu Atkinson, J. who gave the leading judgment stated the law as follows: “If any part of the consideration supporting a contract is void, it taints the whole contract with illegality; and even though a part of the consideration may be legal yet you cannot sever the legal from the illegal; the taint of illegality vitiates the entire contract”. He then proceeded to state “The rule of law with regard to illegal contracts is that a Court of Law will not aid persons in enforcing the performance of an illegal contract or assist them to recover back property which they have given under such an illegal contract, when the persons and parties to the contract are themselves in pari delicto in procuring this illegality.” In the present case the transfer of the licence is a crime punishable under section 57 of the Bihar and Orissa Excise Act. Both the parties who entered into the agreement must have known at the time that they were entering into a void agreement, because everybody must be supposed to know the law. It is, therefore, clear that in the present case section 65 of the Contract Act will not be of any avail to the plaintiff.
Mr. Rao relied upon the decision of the Privy Council in Harnath Kunwar v. Indra Bahadur Singh where the facts were quite different. In that case there was a transfer by a presumptive reversioner of a mere expectancy. The question arose whether such transfer was valid. Their Lordships of the Privy Council held that it was not, but that the plaintiff who paid the consideration under the transfer was entitled to recover it on the principle of section 65 of the Contract Act. That case, therefore, has no application here.
In the result the appeal must fail and is dismissed, but in the circumstances, without costs.
Agarwala, J.:— I agree.
Appeal dismissed.
K.D