Radhakisan Jaikisan Ginning And Pressing Factory v. Jamnadas Nursery Ginning And Pressing Co. Ltd.

1. These are appeals by two groups of persons against an order holding that the suit brought by the respondent-plaintiff was maintainable and the preliminary objection failed. The preliminary objection was founded on the view that a certain combination constituted the members thereof a partnership, and accordingly the parties to the arrangements were partners, that partnership was not registered and that therefore under Section 69 of the Partnership Act, the suit was not maintainable. The learned Judge came to the conclusion that the arrangement hereinafter to be mentioned did not constitute the members thereof partners, that it was not a case of partnership and that accordingly the obstacle created by Section 69 of the Partnership Act, did not exist. In the course of the arguments before us, it appeared to one of us that although this combination was not a partnership, it fell within the definition of “Trade Union” contained in the Trade Unions Act. That definition brings into the meaning of the term any combination “for imposing restrictive conditions on the conduct of any trade or business.” The proviso excludes arrangements between partners, and if this combination were a partnership it would probably not be a trade union for that reason. On the other hand, if it were not a partnership it might be a trade union, and if it were a trade union it becomes necessary to consider that it is not an obstacle in the plaintiff's way although that point has never been taken or pleaded.

2. So far as the partnership argument is concerned, it appears to us that the learned Judge was correct in his appreciation of the nature of this arrangement.

3. The arrangement can be broadly described as one come to by a number of persons engaged in the business of ginning having for its purpose the greater enrichment of those various persons by preventing the cutting of prices for the ginning of cotton. They called this arrangement a combination and the broad idea was that each constituent should charge or be deemed to charge the same amount for the ginning of cotton which amount is stated and that out of the total charge which was Rs. 6-8-0 per boja of 392 lbs. not each constituent has to pay Rs. 1-12-0 into a common pool called the General Fund. The constituent kept the balance Rs. 4-12-0, but each constituent assured against had debts because although the Rs. 6-8-0 was not in fact paid it was deemed to be paid and although it was not in fact paid, the Rs. 1-12-0 in respect of the boja in question had to be paid over to the pool. Each party was required to keep proper books of accounts so that the number of bojas could be ascertained. As we have said the calculations proceed on the basis that there were no had debts. The power was conferred upon one of the members, the present plaintiff, to sue if the requisite contributions of Rs. 1-120 per boja were not in fact paid by the constituent members.

4. A lot of provisions were made designed to prevent difficulties in the case of a breakdown of machinery, the expansion of the constituent ginning factories and so forth. Provision was also made which enabled any constituent to stop work for a certain time and still be able to take the particular share allocated to that constituent out of the General Fund and so forth. But it was made quite clear that the business of each particular constituent, subject to these various checks and restrictions, was to be carried on by the constituent itself. That is to say, the combination has nothing to do with the conducting of the respective businesses which had entered into the combination. Having so provided for the General Fund, the amount to be paid into that fund, the restrictions on the charges to be made, the restrictions on the development of businesses and so forth, there is the 10th clause which deals with the sharing out of the General Fund and that is based on a ratio. The ratio varies presumably with the assets of the constituent in question. The largest ratio is that allocated to the plaintiff constituent, Messrs Jamnadas Nursey G. & P. Co. Ltd. who get 84/248 share. The smallest is that allocated to Messrs Rupram Madan Gopal who get 26/248 share. It is said that constitutes these people partners, that the whole idea of this is the earning of profits, that there is here the doing of a business because the business of each member is to some extent controlled and directed by the agreement and by the clause in that agreement which gives certain powers to Messrs Jamnadas Nursey G. & P. Co. Ltd. who are empowered to sue a member and so forth, and that we have here all the marks to be found in a partnership. In our opinion this is not so. This is simply a case of a combination of various businesses inter se to keep up prices and as a consequence to benefit the members. There is throughout no sign that anything has to be done other than the observance of the restrictive clauses contained in this agreement, the payment over into the pool of a particular amount of money and the payment out of the pool of a particular share of the accumulated proceeds. It is true that there are clauses which provide for what would happen if there is breach of this contract including the arbitration clause and that there are all kinds of detailed restrictions to guard against such difficulties as might arise owing to the breakdown of the machinery. But looking at the matter broadly it is, in our opinion, quite clear that this is a case of a combination and not a case of partnership.

5. Being a combination we are equally clear that it falls within the definition of “Trade Union,” and it might have been thought that also was a fatal objection to this suit, but the objection has not been put on that ground and even after the adjournment it has only been very faintly argued. So far as the argument goes it is founded entirely on Section 2(h) prov. (i) and Sections 13 and 14 of the Trade Unions Act. It is said that S. 14 does not exclude the Partnership Act, that the proviso to S. 2(h) excludes any agreement between partners and that accordingly both those provisions make it clear that if this be a partnership the fact that it is also a trade union does not make any difference. With that we agree. But as we have seen that it is not a partnership it next becomes necessary to inquire whether the fact that it is a trade union is an obstacle in the plaintiff's way because although this has not been pleaded and although the point was taken only by the Bench, still there has been an adjournment and the Privy Council has said over and over again that if there is any question of statutory requirement which compels the doing of a thing the Courts must take note of that fact even though it is not pleaded. Accordingly we go to Section 13 of the Trade Unions Act, which it is said is the Section which says to every Court that it shall not entertain a suit by or against a trade union unless it is registered. We have read S. 13 and we do not think that it has any such effect. What that Section says is that if a trade onion is registered it can sue and be sued. Then the question arises, what about an unregistered trade union?

6. In (1928) 43 TLR 7091 it was decided that in the case of an unregistered trade union it could not be sued in tort by suing a member thereof in a representative capacity, but it was indicated that the proper course to take was to sue a member for any cause of action that lay against that member and it was not indicated anywhere that such a suit would in any way be improper although the English Trade Unions Act is much more stringent than the Trade Unions Act in India so far as the suing and being sued is concerned. Here the two suits are by one member against another not in a representative capacity but as a contracting party to this combination and it seems to us that sort of suit is maintainable under the ruling in the above mentioned English case and generally. In our opinion therefore the learned Judge was right on the partnership point and there was nothing in the Trade Union point. The appeals accordingly fail and must be dismissed with costs.

D.S/R.K

7. Appeals dismissed.