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Shripad Vs. Sanikatta Co-operative Salt Sale Society - Court Judgment

LegalCrystal Citation
SubjectContract
CourtMumbai
Decided On
Case NumberSecond Appeal No. 68 of 1942
Judge
Reported inAIR1945Bom82; (1944)46BOMLR745
AppellantShripad
RespondentSanikatta Co-operative Salt Sale Society
DispositionAppeal allowed
Excerpt:
.....enjoy itfor her life on condition that she should not contest the defendant's appeal against his conviction either in person or through a pleader. it was a part of the consideration of the promissory note in suit, this suit to recover the amount due under it must fail......december 28, 1933, defendant no. 2 deposited rs. 400 with mr. divgi pleader and also handed over vishnu's promissory note for rs, 300, with a letter requesting him to keep the amount and the promissory1 note with him until the matter was compromised. thereafter on january 3, 1934, defendant no. 1 and the secretary met in karwar at the house of the latter's father-in-law mr. murdeshwar. they all then went to another pleader mr. mavinkurve. there defendant no. 1 requested the secretary to withdraw the case against his brother vishnu, but the secretary refused to do so. on the next day the secretary was again persuaded to go to mr. mavinlcurve's house and there he agreed to give a letter to the district superintendent of police stating that the society had no objection to withdraw the.....
Judgment:

Lokur, J.

1. This appeal arises out of a suit to recover Rs. 663-8-0 due on a promissory note of Rs. 620 passed by the defendants to plaintiff No. 1 on January 3, 1934. The defendants contended that the promissory note was void as a part of its consideration was the withdrawal of a non-compoundable criminal case then pending against their brother Vishnu. The trial Court held that it was so and dismissed the suit. In appeal the learned District Judge took a different view and awarded the plaintiffs' claim with costs.

2. The facts of this case which are either admitted or held proved may be briefly stated. Plaintiff No. 2 is the Sanikatta Co-operative Salt Sale Society, Ltd.,Sanikatta, and plaintiff No. 1 is its secretary. In July, 1933, the defendants' brother Vishnu entered into1 a contract with the Society to transport the Society's salt to the salt depots at different places and he was entriftted with seventeen consignments for delivery between July and October, 1933. In October, 1933, Vishnu disappeared and it was discovered that he had misappropriated five of those consignments. Vishnu could not be traced and the secretary of the Society filed a complaint against one of Vishnu's motor drivers before the Police Sub-Inspector of Haveri. The secretary then went to Kumta and explained the situation to Mr. Divgi pleader. Defendant No. 1 was then a clerk in the Subordinate Judge's Court at Kumta. He was invited by Mr. Divgi on December 8, 1933, and there was some discussion between them about the. complaint intended to be lodged before the Police Sub-Inspector at Gokarn, in whose jurisdiction that misappropriation was believed to have taken place. Eventually the secretary did lodge a' complaint against Vishnu and his motor driver. Although Vishnu's whereabouts were not known to the secretary, it appears that the defendants were in touch with him and managed to obtain from him a promissory note for Rs. 300 in favour of the Society on December 15, 1933. On the same day Vishnu transferred two Government securities, each of Rs. 1,000 to defendant No. 1. Thereafter on December 28, 1933, defendant No. 2 deposited Rs. 400 with Mr. Divgi pleader and also handed over Vishnu's promissory note for Rs, 300, with a letter requesting him to keep the amount and the promissory1 note with him until the matter was compromised. Thereafter on January 3, 1934, defendant No. 1 and the secretary met in Karwar at the house of the latter's father-in-law Mr. Murdeshwar. They all then went to another pleader Mr. Mavinkurve. There defendant No. 1 requested the secretary to withdraw the case against his brother Vishnu, but the secretary refused to do so. On the next day the secretary was again persuaded to go to Mr. Mavinlcurve's house and there he agreed to give a letter to the District Superintendent of Police stating that the Society had no objection to withdraw the case against Vishnu. He accordingly signed exhibit 70 addressed to the District Superintendent of Police to the following effect :-

If your honour is pleased to permit withdrawal of the case, my Society does not wish to object.

3. The defendants' then passed the promissory note in suit in favour of the Society and also gave a letter to Mr. Divgi pleader requesting him to hand over the deposit of Rs. 400 to him. Mr. Mavinkurve had prepared one application to the District Superintendent of Police and another to the District Magistrate in the name of Vishnu requesting that the case against him should be withdrawn. The defendants had already procured a vakalatnama signed by Vishnu for being presented with those applications. fhe applications stated that the case was of a civil nature and that the complainant had no objection to its withdrawal. The secretary, however, did not sign those applications. Mr. Mavinkurve presented them to the District Superintendent of Police and the District Magistrate respectively. The District Magistrate, however, did not allow the withdrawal and the complaint was proceeded with and Vishnu was eventually convicted and sentenced to six months' rigorous imprisonment and a fine of Rs. 300 in April, 1934. As the defendants did not pay the#amount of the promissory note to the Society, the plaintiffs filed this suit to recover it and the question is whether the promissory note is void under Section 23 of the Indian Contract Act on the ground that its consideration or a part of it was a promise to stifle prosecution and, therefore, opposed to public policy.

4. Section 23 lays down in effect that the consideration or object of an agreement is unlawful if the Court regards it as immoral, or opposed to public policy, and Section 24 says that if any part of a single consideration for one or more objects, or any one or any part of any one of several considerations for a single object, is unlawful, the agreement is void. Illustration (h) to Section 23 says:-

A promises B to drop a prosecution which he has instituted against B for robbery, and B promises to restore the value of the flings taken. The agreement is void, as its object is unlawful.

5. These two sections and this illustration have been considered in several reported cases, and it is well settled that where an offence is non-compoundable, an agreement, the purpose of which is to compound that offence, is illegal as opposed to public policy, but that where an offence is compoundable, an agreement aimed at compounding it is not invalid as it is not opposed to public policy [Kamini Kumar Basu v. Birendra Nath Basu Bhowanipur Banking Corporation, Ld. v. Shreemati Durgesh NandiniDasi In the present case the defendants' brother Vishnu was accused of a non-compoundable offence, and a criminal case against him started on the secretary's complaint was already pending before a Magistrate. The motive of the defendants for executing the promissory note in suit was certainly to have that case withdrawn; but it is urged for the plaintiffs that the secretary did not agree to withdraw his complaint and the consideration of the promissory note was the amount that had been misappropriated by Vishnu. There is undoubtedly a distinction between the motive to a transaction and its object or consideration, and to avoid an agreement as being against public policy it is not enough that the motive which impelled the party who undertook the liability under the agreement was that a pending criminal case should be withdrawn. As observed by DerbyshireC.J. in Sudhindra Jiumor v. Ganesh Chandra : AIR1938Cal840 the test, to be applied in all such cases is whether it was an express or implied term of the bargain between the parties that a non-compoundable criminal case should not be proceeded with. It is true that the) promissory note in suit makes no reference to the criminal case against Vishnu. As Lord Atkin remarked inBhowanipur Banking Corporation, Ltd. v. Shreemati Durgesh Nandini Dasi, agreements to stifle prosecution are from their very nature seldom set out on paper. Like many other contracts they have to be inferred from the conduct of the parties after a survey of the whole circumstances. Such a survey has been made in this case by the learned District Judge and he has come to the conclusion that there was a mutual understanding between the plaintiff and the defendants that on the execution of the promissory,note in suit the plaintiff should give a letter to the District Superintendent of Police that the society had no objection to the withdrawal of the case against Vishnu, and that such a letter was to be a part of the consideration of the promissory note. I agree with that finding. I have no doubt that the defendants were not concerned with the repayment of the .amount misappropriated by their brother Vishnu, but were anxious to persuade the plaintiffs to drop the criminal proceedings against him. They would not have executed the promissory note in suit had the secretary not agreed to give the letter exhibit 70. Hence I exhibit 70 must be deemed to be a part of the consideration of the promissory note in, suit.

6. In spite of a clear finding to this effect, the learned District Judge says that such consideration was not improper or against public policy, since exhibit 70 could not, in his opinion, have the effect of stifling the prosecution, inasmuch as the secretary was powerless to withdraw his complaint in respect of a non-compoundable offence.

7. It is true that it was not within the power of the plaintiffs to withdraw the complaint. It is so in the case of all cognizable offences which are non-compoundable. It is only in such cases that an agreement not to prosecute or not to proceed with the prosecution is regarded as opposed to public policy, and is, therefore, unlawful. If the offence is compoundable, the complainant has a right to withdraw his complaint, and such withdrawal is not, under any circumstances,opposed to public policy. But in the case of a non compoundable offence, once the case is taken cognizance of, the complainant is powerless to withdraw! it, but even an agreement to do anything directed towards, its withdrawal js against public policy and cannot be! countenanced. As Lord Atkin observed in Bhowanipur Banking Corporation, Ltd. v. Shreemati Durgesh Nandini Dasi the citizen who proposes to vindicate the criminal law must do so wholeheartedly in the interests of justice and must not seek his own advantage. Where there is an existing debt or obligation, a creditor is not precluded from taking any security therefor by threat of a criminal prosecution, and the security is not vitiated by the fact that he was induced to abstain from prosecuting the debtor. Otherwise it would be a public mischief if the mercy shown by the creditor on 'his dues being secured should be used by the debtor as a pretext for avoiding the security. On the other hand, if the security is a part of the bargain that the creditor should not prosecute, or should abandon criminal proceedings if already commenced, the agreement will be invalid and the security cannot be enforced. The learned District Judge is of opinion that an agreement by the secretary1 not to object to the withdrawal of the complaint does not amount to stifling the prosecution. Even such an agreement is against public policy since, in the words of Lord Atkin, it was the duty of the secretary to wholeheartedly proceed with the prosecution in the interests of justice. It makes no difference if, in spite of his agreement, the society subsequently resolved to proceed with the case and Vishnu was ultimately convicted. What matters is the consideration or object of the agreement, and not what transpired subsequently. Thus in Jones v. Merionethshire Permanent Benefit Building Society (1892) 1 Ch. 173 the society threatened to prosecute its secretary for defalcation, and the plaintiffs gave a written undertaking to the society to make good the greater part of the amount taken by the secretary, the expressed consideration being the forbearance of the society to sue the secretary for the amount for which the plaintiffs had given the. undertaking and passed two promissory notes and some deeds of collateral security to the society. Tha plaintiffs in giving the undertaking were actuated by the desire to prevent the prosecution of thesecretary and that was known to the directors of the society, but no promise was made that there should be no prosecution. The plaintiffs brought a suit in the Chancery Division to set (aside the promissory notes and the collateral securities on the ground that they had been passed for illegal consideration. It was held by the Court of Appeal that there was an implied term of the agreement that there should be no prosecution and that though it was not so expressed, the agreement was founded on illegal considerations and 'void. This was approved of and relied upon by the Privy Council in Kamini Kumar Basu v. Birendra Nath Basu. These cases show that even if the creditor does not expressly agree to drop the prosecution, yet if the agreement is the outcome of an implied understanding that he should consent to the withdrawal of the prosecution, it is against public policy, although it may not be in his power to withdraw the prosecution himself.

8. The case of Jaggilodu v. Byramma : AIR1941Pat349 is an instance in point. There on a complaint made by the plaintiff, the defendant was convicted of theft. On appeal the conviction was pet aside. But during the pendency of the; appeal, there was an, agreement between the parties that the plaintiff was to retain certain property and enjoy itfor her life on condition that she should not contest the defendant's appeal against his conviction either in person or through a pleader. It was urged for the plaintiff that the agreement not to appear and contest the appeal did not amount to stifling a prosecution, since she had no voice in the matter once a iconviction had been secured in the trial Court. Verma J. held the agreement to be void, and pointed out that even before the trial Court, after the law was first put into motion, the plaintiff had no voice in the matter on the question of withdrawal or otherwise.

9. The test in, all such cases is whether any part of the consideration of the agreement sued upon consisted of a promise to do some act directed towards the stifling of criminal proceedings in respect of a jnon-compoundable offence. If so, the agreement is against public policy, and is void and unenforceable in a Court of law. In view of the findings that |the giving of the letter, exhibit 70, to the defendants was such an act, and that! it was a part of the consideration of the promissory note in suit, this suit to recover the amount due under it must fail.

10. The appeal is, therefore, allowed and the plaintiffs' suit is dismissed. But in view of the circumstances of the case, theparties should bear their own costs throughout.


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