Skip to content


Sundrabai Sitaram Narangikar Vs. Manohar Dhondu Khandalgaonkar - Court Judgment

LegalCrystal Citation
SubjectProperty;Service
CourtMumbai
Decided On
Case NumberLetters Patent Appeal No. 24 of 1931
Judge
Reported inAIR1933Bom262; (1933)35BOMLR404
AppellantSundrabai Sitaram Narangikar
RespondentManohar Dhondu Khandalgaonkar
DispositionAppeal allowed
Excerpt:
.....can be based on suck contracts-benami transaction-effect of repeal of section 33 of the bombay district police act, 1890.;section 33 of the bombay district police act, 1890, before it was repealed in 1930, provided among other things that no police-officer should purchase land within the district where he was employed without the permission of the district magistrate or of government.;the plaintiff's father, who was a police load constable, purchased in 1901 land benami in the name of his mother, in the district where he was serving, without, the permission required by section 33 of the bombay district police act, 1890. after his death, the mother sold a portion of the property to her daughter. the plaintiff having sued to sat aside the sale :-;(1) that reading section 33 of the..........contract on which it was founded were void by reason of the provisions of section 33 of the bombay district police act, iv of 1890. this contention was negatived by the appellate court, relying on bhagwan dei v. murari lal i.l.r. (1910) all. 51 it may be pointed out, however, that in the allahabad case the transaction was prohibited by one of the government servants' conduct rules, and not, as here, by statute. the distinction between the two classes of cases is obvious and is pointed out in many decisions. i need refer to a decision of sir basil scott in ramkrishna trimbak v. narayan i.l.r. (1915) bom. 126 17 bom. l.r. 955 and also to the remarks of the allahabad high court itself in the same volume at pp. 60 and 61. the question, therefore, is whether the lower court's decision is.....
Judgment:

Rangnekar, J.

1. This appeal arises out of a suit brought by the plaintiff for setting aside a sale, dated April 22, 1925, executed by his grandmother in favour of the defendant and for possession of such part of the property as may be found in her possession. The defendant is the sister of the plaintiff's father, and she defended the suit on the ground that the property, the subject-matter of the sale-deed, belonged to her mother who had sold it to her. According to the plaintiff, the property was purchased by his father benami in the name of his mother, i. e., the plaintiff's grandmother, in 1901, as he was a Government servant. It appears that the plaintiff's father was a police constable, and whilst in service he purchased this property benami in the name of his mother. This was denied by the defendant, who contended that the property belonged to the mother and was purchased by her with her own moneys. The trial Court found that the property was purchased by the plaintiff's father benami in the name of the mother, and this finding was accepted by the learned appellate Judge. In appeal, however, the defendant raised a contention that the transaction of the purchase by the plaintiff's father and the contract on which it was founded were void by reason of the provisions of Section 33 of the Bombay District Police Act, IV of 1890. This contention was negatived by the appellate Court, relying on Bhagwan Dei v. Murari Lal I.L.R. (1910) All. 51 It may be pointed out, however, that in the Allahabad case the transaction was prohibited by one of the Government Servants' Conduct Rules, and not, as here, by statute. The distinction between the two classes of cases is obvious and is pointed out in many decisions. I need refer to a decision of Sir Basil Scott in Ramkrishna Trimbak v. Narayan I.L.R. (1915) Bom. 126 17 Bom. L.R. 955 and also to the remarks of the Allahabad High Court itself in the same volume at pp. 60 and 61. The question, therefore, is whether the lower Court's decision is right.

2. Section 33 of the Bombay District Police Act, before it was repealed by Bombay Act XXIV of 1930, ran as follows :-

33. (1) No police-officer shall engage in trade or be in any way concerned either as principal or agent, in the purchase or sale of land within the district wherein he is employed or in any commercial transaction whatever, without the permission of the Magistrate of the District or of Government.

3. The law on the subject is somewhat complex, but we think the principle is well put by Parke B. in Cope v. Rowlands (1836) 2 M. & W. 149 a case which is often followed and referred to with approval by eminent Judges in England, in these words at page 157:-

It is perfectly settled, that where the contract which the plaintiff seeks to enforce, be it express or implied, is expressly or by implication forbidden by the common or statute law, no court will lend its assistance to give it effect. It is equally clear that a contract is void if prohibited by a statute, though the statute inflicts a penalty only, because such a penalty implies a prohibition. Lord Holt, Bartlett v. Vinor (Carthew, 252). And it may be safely laid down, notwithstanding some dicta apparently to the contrary, that if the contract be rendered illegal, it can make no difference, in point of law, whether the statute which makes it so has in view the protection of the revenue, or any other object. The sole question is, whether the statute means to prohibit the contract ?

4. In Langton v. Hughes (1813) 1 M. & Sec 593 Lord Ellenborough C.J. said (p. 596):-.it may be taken as a received rule of law that what is done in contravention of the provisions of an Act of Parliament, cannot be made the subject-matter of an action.

5. Dealing with the same point in Anderson, Ld. v. Daniel [1924] 1 K.B. 138 Bankes L.J. quotes with approval a passage of Buckley J. in Victorian Daylesford Syndicate, Limited v. Dott [1905] 2 Ch. 624 which runs as follows (p. 629) :-

The next question is whether the Act is so expressed that the contract is prohibited so as to be rendered illegal. There is no question that a contract which is prohibited, whether expressly or by implication, by a statute is illegal and cannot be enforced. I have to see whether the contract is in this case prohibted expressly or by implication. For this purpose statutes may be grouped under two heads-those in which a penalty is imposed against doing an act for the purposes only of the protection of the revenue, and those in which a penalty is imposed upon an act not merely for revenue purposes, but also for the protection of the public. That distinction will be found commented upon in numerous cases, including those which have been cited of Cope v. Rowlands and Fergusson v. Norman (1838) 5 Bing. N.C. 76

I have referred to Section 33 of the Act. I will now refer to Section 23 of the Indian Contract Act. Reading these two sections together, in my opinion, the contract under which the plaintiff's father obtained the property was void as it was prohibited by the Bombay District Police Act.

6. But it is argued that the prohibition in Section 33 of the Bombay District Police Act was not absolute but only conditional, inasmuch as it was competent to a police-officer to purchase property subject to a condition that he obtained the permission of the District Magistrate or the Government, and that therefore the prohibition was qualified. It was further stated that the section occurs in a chapter dealing with the discipline of the force and that no penalty was imposed by the statute for the breach of the rule contained in the section. As I have pointed out, the object of the legislature in enacting a rule is irrelevant in such cases, and therefore the fact that the rule in this section was enacted in the interests of discipline, or, as I am inclined to think, in the interests of public service and public good, does not matter. I do not, however, agree that no penalty was enforced by the statute. In my opinion Section 36 (2) (c) clearly imposes a penalty on the police-officer guilty of any wilful breach or neglect of any provision of the law. Apart from that it is clear on the authorities that if the act be prohibited without any express penalty, it cannot be the subject of a valid contract. In Anderson, Ld. v. Daniel, referred to above, which was a case under the Fertilisers and Feeding Stuffs Act, 1906, (6 Edw. VII, c. 27), and which provided every person selling for use as a fertiliser of the soil any article which had been subjected to any artificial process in the United Kingdom or which had been imported from abroad to give to the purchaser an invoice stating what were the respective percentages of certain chemical substances contained in that article, and in default certain penalty was prescribed, it was held that as the object of the statute in requiring the vendor to give the statutory invoice and imposing on him a penalty in the event of his default was to protect the purchasers of fertilisers, the effect of non-compliance with the requirement was not merely to render the vendor liable to penalty, but also to make the sale illegal and preclude him from suing for the price. In many statutes relating to professions or trade restrictions and regulations affecting the contracts are imposed as to the qualification as to the conduct in business and the validity of contracts, etc., and the law is that if the qualification is not observed or the condition fulfilled, the contract would be illegal. Take for instance Section 20 of the Indian Companies Act which requires more than twenty persons forming a company to get it registered, and if a company or a partnership entered into in breach of the condition,') laid down in that section, it has been held, and there can be no doubt that the partnership or the company would be illegal. The case of Anderson, Ld. v. Daniel lays down the same principle. By the Medical Act, 1858, Section 32 :-

no person shall be entitled to recover any charge in any Court of law for any medical or surgical advice, attendance...etc., unless he shall prove...that he is registered under this Act

And it has been held that if this condition is not satisfied, he is not entitled to recover any charge: see Leman v. Houseley (1874) 44 L.J. 22. There are many instances of the application of this principle under the English Money-lenders Act, which prescribes certain conditions on a person doing the money-lending business, the principal among them being that he must register himself as a money-lender in accordance with the regulations of the Act. Thus, in Whiteman v. Sadler [1910] A.C. 614 Lord Macnaghten observed (p. 521):-

If, in volation of the plain words of the Act, a money-lender trades without being registered at all, or being registered trades in another name, he is very properly left to the mercy of any one who chooses to attack him, and his contracts are rightly avoided.

It is not necessary to multiply instances which will be found in the English reported decisions.

7. The effect of illegality in the matter or purpose of an agreement is to render it wholly void of legal effect, and no claim or defence can be maintained which requires to be supported by allegations or proof of illegal agreement. As Mansfield C.J. put it in Holman v. Johnson (1775) 1 Cowp. 341 the principle is as follows (p. 343):-

The objection, that a contract is immoral or illegal as between plaintiff and defendant, sounds at all time very ill in the mouth of the defendant. It is not for his sake, however, that the objection is ever allowed ; but it is founded in general principles of policy, which the defendant has the advantage of, contrary to the real justice, as between him and the plaintiff...If, from the plaintiffs own stating or otherwise, the cause of action appears to arise ex turpi causa, or the transgression of a positive law of this country, there the Court says he has no right to be assisted.'

8. If then, the contract was void, the plaintiff's father got no title. If so, it is difficult to see how the plaintiff who claims through him can establish any title to the property acquired by his father under these circumstances. It is clear that if the plaintiff's father had to bring a suit to recover possession of the property against the vendor, or the vendor had to bring a suit to recover the price of the property against the plaintiff's father, neither party would have been allowed to set up the contract, and the Court would have refused its aid to them. In my opinion, the plaintiff is in no better position than his father.

9. It is argued by Mr. Walavalkar that the section having been repealed in 1930 when this litigation had been pending and had not been concluded his client is not affected by the prohibition contained in Section 33 of the Bombay District Police Act. The answer to that is that the section was in force when the transaction was effected and any subsequent repeal of the section would not affect the merits, rights or liabilities of the parties as of the date of the transaction. I may refer in this connection to Section 6(c) of the General Clauses Act, 1.897, which runs as follows:-

(6) Where this Act, or any Act of the Governor General in Council or Regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall not-

(c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed ; or'.

Mr. Walavalkar has referred to some old English decisions in support of his contention, but I do not think they are applicable. Even in England the principle as to a subsequent repeal of a statute is the same as is laid down in our General Clauses Act. Thus the Interpretation Act, 1889, 52 & 53 Vic. c. 63, Section 38 (0) says :-

Where this Act or any Act passed after the commencement of this Act repeals any other enactment, then, unless the contrary intention appears, the repeal shall not-

(b) affect the previous operation of any enactment so repealed or any thing duly done or suffered under any enactment so repealed ;

(c) affect any right, privilege, obligation, or liability acquired, accrued, or incurred under any enactment so repealed ;.

10. There is another way of looking at the case. This was a benami transaction. Where a person buys a property with his own money but in the name of another person without any intention to benefit such other person, the transaction is called benami, and the person in whose name the transaction is effected is called benamidar. On the facts found in this case the transaction was benami, and the plaintiff's grand-mother was benamidar. The law is that where a transaction is once made out to be benami, effect would be given to the real and not to the nominal title, unless the result of doing so would be to violate the provision of a statute. This follows from the provisions of Sections 80, 81 and Section 4 of the Indian Trusts Act, and on the facts, to give effect to the transaction, and to hold that the plaintiff's title was established, would result in defeating the provisions of Section 83 of the Bombay District Police Act read with Section 23 of the Indian Contract Act.

11. The result is that the appeal must be allowed and the decree reversed, but considering the circumstances of this case, and in particular the fact that this contention was not raised in the original Court but was raised for the first time in appeal, we think each party should bear his own costs throughout.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //