Chacko Mathai vs Aippu Yojakku

Subramania Iyer, J.—The only question arising in this revision petition which is filed by the Defendant against the decree in a Small Cause Suit for prize money in a chitty is whether his default in obtaining a licence to conduct the chitty u/s 7, Travancore Chitties Act, 26 of 1120 will secure him immunity from liability to pay.

There are two Sections, Nos. 6 and 7 in the said Act relating to the conduct of chitties. They read as follows:

(1) No chitty shall, after the commencement of this Act, be conducted unless it is registered in accordance with the provisions of this Act.

(2) Whoever contravenes the provisions of Sub-section (1) shall be liable to a fine which may extend to five hundred rupees.

(1) Notwithstanding anything contained in Section 6, the provisions of this Act shall not apply to a chitty if the chitty amount or the value thereof is less than one hundred rupees.

Provided, however, that no person shall conduct such a chitty, without taking a license in such manner and subject to such conditions as may be prescribed by our Government.

(2) Whoever conducts a chitty of the class specified in Sub-section (1) without taking a license as provided therein or violates any of the conditions of the license shall be liable to a fine which may extend to fifty rupees.

Section 6 by Clause (1) prohibits the conduct of chitties and by Clause (2) penalises the contravention of Clause (1). The next section by Clause (1) saves chitties of less than one hundred rupees in value from the operation of the earlier section, but provides for a license being taken by the foreman for their conduct and by Clause (2) imposes a penalty upon the foreman if he conducts a chitty without a license or violates the conditions of a license if taken.

Act 26 of 1120 repealed the Travancore Chitties Act, 3 of 1094 and the subsequent Acts amending it. Act 3 of 1094, by Section 5, provided that

Prohibition of chitty not registered under this Regulation.-

No chitty shall after the commencement of this Regulation, be conducted unless it is registered in accordance with the provisions of the Regulation.

This Section prohibited the conduct of all chitties whatever be their value, that is to say, the saving of chitties of less than one hundred rupees in value that is made by Section 7 of Act 26 of 1120 did not obtain under the earlier Act. The Legislature must have found it undesirable to prohibit the conduct of chitties altogether and evidently wanted only to have some control over the foreman in respect of chitties of less than one hundred rupees in value. The distinction between Sections 6 and 7 (Act 26 of 1120) is obvious. Whereas a chitty transaction to which Section 6 applies would be void and cannot form the foundation of any right or liability but would even expose any participant in it, be he the foreman or subscriber, to the penalty provided in Clause (2), u/s 7 in so far as chitties of less than one hundred rupees in value are concerned, the transactions themselves are not declared or rendered void, but an obligation is enjoined upon the foreman to take out a license for the conduct of a chitty and to comply with the terms of that licence and the penalty provided in Clause (2) is only on the foreman for neglect to take out a license or for the violation of the terms of a licence taken. In other words, whereas chitty transactions to which Section 6 applies are forbidden by law, those u/s 7 are not.

Section 23, Contract Act which provides that "the consideration or object of an agreement is lawful unless it is forbidden by law ... " relied upon by Petitioner is inapplicable to a chitty whose value is less than one hundred rupees, as such transactions are not, as already stated, forbidden by law.

In the 7th edition of Pollock and Mullah''s Indian Contract Act, edited by Sir Maurice Gwyer, occurs the following passage at page 138, under the heading "Forbidden by law u/s 23":

The decision may turn on the construction of the agreement itself or on the terms of the Act or other authoritative document in question or on both. In particular it may have to be considered whether the intention of the Legislature was to prevent certain things from being done or only to lay down terms and conditions on which they might be done.

In the former class of cases the transactions would be forbidden by law but not in the latter class of cases. The present case falls under the latter category as obviously the intention of the Legislature is only to make license a condition for conducting the chitty.

The decree passed by the learned Munsiff in favour of the Plaintiff-Respondent is therefore right and the petition for its revision should be dismissed with costs.