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Amresh Chandra Pandey Vs. Firm Kalyan Mal Dharam NaraIn Saraf - Court Judgment

LegalCrystal Citation
SubjectContract
CourtAllahabad High Court
Decided On
Case NumberSecond Appeal No. 4245 of 1964
Judge
Reported inAIR1972All130
ActsContract Act, 1872 - Sections 23
AppellantAmresh Chandra Pandey
RespondentFirm Kalyan Mal Dharam NaraIn Saraf
Appellant AdvocateK.C. Agarwal, Adv.
Respondent AdvocateK.C. Saxena, Adv.
DispositionAppeal dismissed
Excerpt:
.....intention was not to return the amount to the plaintiff. it is now well settled that a party to an illegal contract cannot invoke the aid of a court to have such a contract carried into effect as law will not tolerate any party to violate any moral or illegal duties. there can be no doubt about it that getting an agency through the good office of a member of the legislative assembly by putting influence through him on the officers concerned, was certainly against public policy. 1500/- from him fraudulently and on false representation, when the defendant-appellant knew full well that he had no influence over the officers of the churk cement factory and even if he had any such influence it was illegal and immoral for him as a member of the legislative assembly to take money from a..........was that the agreement under which rs. 1500/- was paid to the defendant-appellant was against public policy and was opposed to the provisions of section 23 of the indian contract act, and, therefore, the plaintiff was not entitled to recover the amount from the defendant. he contended that the very object of the agreement was illegal in so far as the plaintiff wanted the defendant to exercise undue influence on the officers of the churk government cement factory in illegally procuring the agency for the plaintiff, and as this amount of rupees 1500/- was passed on for the above illegal object, therefore, the plaintiff was not entitled to the return of that amount. 9. there is no dispute about the fact that the plaintiffs approached the defendant to exercise influence over the.....
Judgment:

K.N. Srivastava, J.

1. This is an appeal by the unsuccessful defendant arising out of the following facts.:--

2. The plaintiff respondent is a registered partnership firm doing business at Farrukhabad. The plaintiff was anxious to get the agency of Churk Government Cement Factory, Mirzapur. The defendant was then a sitting M. L. A. from Mirzapur. Somehow or the other, Bhaskar Datt, a partner of the plaintiff firm, got information that Amresh Chandra Pandey, the defendant-appellant, being a sitting M. L. A. would be able to influence the officers of the factory in getting the agency for the plaintiff firm. Bhaskar Datt then approached the defendant-appellant who informed Bhaskar Datt that he had acquaintance with the officers of the Cement Factory, and that he would be able to procure the agency for the plaintiff firm. Accordingly, the defendant-appellant handed over a letter to Bhaskar Datt for Shri T. L. Mahindru. Director of the Factory, to help the plaintiff. This letter did not achieve the desired effect.

3. In June 1962, the defendant sent a telegram to Bhaskar Datt to see him at Mirzapur. Bhaskar Datt went to Mirzapur and then the defendant told him that he would have to spend Rs. 1500/- for getting the agency. Bhaskar Datt gave the aforesaid amount to the defendant, who promised to procure the agency for the plaintiff. After waiting for some time the plaintiff came to know that Amresh Chandra Pandey, the defendant, had fraudulently obtained the aforesaid amount from the plaintiff and had not done anything to help the plaintiff in getting the agency.

4. Thereupon, Bhaskar Datt went to the defendant and demanded back the money. The defendant told Bhaskar Datt that within a very short period he would be able to get the agency for the plaintiff. Thereafter, the defendant served a notice on the plaintiff with false allegations. This notice clearly indicated that the defendant's intention was not to return the amount to the plaintiff. The plaintiff then filed a suit against the defendant for the recovery of Rs. 1509.37 paise, as detailed at the foot of the plaint.

5. The defendant contested the suit. A number of pleas were taken by him and, inter alia, it was pleaded that Section 23 of the Indian Contract Act was a bar to the suit, and that the plaintiff was not entitled to recover any amount from the defendant.

6. The learned Munsif believed the plaintiff's evidence and decreed the suit, with costs. The lower appellate Court dismissed the appeal filed by the plaintiff with the modification that the suit was decreed for the recovery of Rs. 1500/-, instead of Rs. 1509.37 paise as decreed by the trial court.

7. Being dissatisfied, the defendant has filed this Second Appeal.

8. The first point which was argued in this appeal by the learned counsel for the appellant was that the agreement under which Rs. 1500/- was paid to the defendant-appellant was against public policy and was opposed to the provisions of Section 23 of the Indian Contract Act, and, therefore, the plaintiff was not entitled to recover the amount from the defendant. He contended that the very object of the agreement was illegal in so far as the plaintiff wanted the defendant to exercise undue influence on the officers of the Churk Government Cement Factory in illegally procuring the agency for the plaintiff, and as this amount of Rupees 1500/- was passed on for the above illegal object, therefore, the plaintiff was not entitled to the return of that amount.

9. There is no dispute about the fact that the plaintiffs approached the defendant to exercise influence over the officers and the Director of the Churk Cement Factory in procuring the agency for the plaintiff and that it was illegal and against public policy. But, the question is as to whether the defendant can successfully take this plea in resisting the plaintiff's claim for the recovery of Rs. 1500/- which the plaintiff paid to the defendant.

10. In support of their respective claims, a number of decisions of Supreme Court and other High Courts were cited by both the parties. I propose to deal with these decisions to find out as to how far the defendant can resist the claim of the plaintiff on the plea that the agreement was illegal and opposed to public policy.

11. The first decision which was cited on behalf of the appellant was Montefiore v. Mendav Motor Components Co. Ltd., 1918-2 KB 241. In this case it was held that the contract on which the suit was based was illegal and void and contrary to public policy. While dealing with this matter it was observed:

'A contract may be against public policy either from the nature of the acts to be performed or from the nature of the consideration. In my judgment it is contrary to public policy that a person should be hired for money or valuable consideration when he has access to persons of influence to use his position and interest to procure a benefit from the Government.'

12. In this view of the matter, there can be no doubt nor was it disputed by the parties that the agreement for procuring an agency for the plaintiff by putting undue and illegal influence on the officers of the Churk Cement Factory was void and illegal, and it was an agreement against public policy,

13. The next case cited on behalf of the appellant was Puttu Lal v. Raj Narain : AIR1931All428 . In this case a suit was filed for the recovery of Rs. 28/- as principal and interest from the defendant. It was held as below:

'Any traffic or bargain relating to public office is opposed to public policy upon the obvious principle that any agreement relating to such traffic or bargain is calculated to prejudice the interest of the public by obstructing or interfering with the selection in office of the most competent person. The agreement which is sought to be enforced in this case obviously infringes this principle.'

14. In this case, the agreement was that Raj Narain would pay to Puttu Lal Rs. 8/- annually during the continuance of Raj Narain as Lambardar in consideration of Puttu Lal's withdrawing his application for lambardarship. In the aforesaid case, the illegal act had been committed and completed. It was, therefore, held that under that illegal contract which had been completed, a suit for the recovery of any amount due under that agreement could not be maintained.

15. The third case cited on behalf of the appellant was Nand Kishore v. Kunj Behari Lal : AIR1933All303 . In this case there was an agreement to carry out the litigation with the object of delaying a certain execution case. The object of the agreement had been fulfilled and, therefore, it was held that the agreement being contrary to the provisions of Section 23 of the Contract Act, the suit was not maintainable.

16. A number of other decisions of different High Courts were also cited on behalf of the appellant, but they laid down the same principle which has been laid down in the cases discussed above. Therefore. I do not think it necessary to discuss these cases.

17. On behalf of the respondent, reliance was placed on a Privy Council case in Petherpermal Chetty v. Muniandy Servai. ILR 35 Cal 551 (PC). In this case it was held as below;

'Very often the overt act is but one of the many steps necessary to the accomplishment of the illegal purpose, and may, in itself, be comparatively insignificant and harmless; but to enable a fraudulent confederate to retain property transferred to him, in order to effect a fraud, the contemplated fraud must, according to the authorities, be effected. Then and then alone, does the fraudulent grantor, or giver, lose the right to claim the aid of the law to recover the property he has parted with.'

18. The Andhra Pradesh High Court in Peddi Virayya v. Doppalapudi Subba Rao : AIR1959AP647 . It was held as below:

'On this premises the contract entered into between the 1st defendant and the plaintiff for making purchases of tobacco is illegal, being prohibited by the relevant sections of the Act, the true legal position has to be appreciated. It is now well settled that a party to an illegal contract cannot invoke the aid of a Court to have such a contract carried into effect as law will not tolerate any party to violate any moral or illegal duties. As a corollary from this principle, if money is advanced for a purpose which is either opposed to morals or law or in furtherance of an illegal transaction such advance is not recoverable having regard to the maxim ex turpi causa non oritur actio. But this is subject to an exception. The law allows locus poenitentiae. So before fraud or an illegal purpose is carried out, the money may be recovered from the person to whom it was advanced. But the Court will not render any assistance in the recovery of the money if there is even a part performance of the illegal contract.'

19. The same law was laid down by the Supreme Court in Kedar Nath Motani v. Prahlad Rai : [1960]1SCR861 . It was observed in this case as below:--

'The correct position in law, in our opinion, is that what one has to see is whether, the illegality goes so much to the root of the matter that the plaintiff cannot bring his action without, relying upon the illegal transaction into which he had entered. If the illegality be trivial or venial, as stated by Williston and the plaintiff is not required to rest his case upon that illegality then public policy demands that the defendant should not be allowed to take advantage of the position. A strict view, of course, must be taken of the plaintiff's conduct, and he should not be allowed to circumvent the illegality by resorting to some subterfuge or by misstating the facts. If, however, the matter is clear and the illegality is not required to be pleaded or proved as part of the cause of action and the plaintiff recanted before the illegal purpose was achieved, then, unless it be of such a gross nature as to outrage the conscience of the Court, the plea of the defendant should not prevail.'

20. Similar view was taken by the Supreme Court in Sita Ram v. Radha Bai. : [1968]1SCR805 .

21. Thus from the perusal of the above decisions, a clear picture which emerges is that a contract which is opposed to law or is against public policy cannot be enforced, and that as a corollary for the same any benefit derived by one of the parties to the contract cannot be enforced on the principle of 'pari delicto.'

22. But, there are certain exceptions to this view. The first exception is that if under an illegal contract a party has received benefit it should not be allowed to retain it, provided fraud has not been completed or the illegal contract has not been partly performed. If the illegal contract has been completed or has been partly performed, the principle of 'pari delicto' would apply. But, if the illegal contract has not been implemented or partly performed, the court will look at disfavour a person retaining the benefit out of that contract which has not been completed or partly performed.

23. In the instant case, the contract was certainly illegal. There can be no doubt about it that getting an agency through the good office of a Member of the Legislative Assembly by putting influence through him on the officers concerned, was certainly against public policy. But, as this illegal contract had not been completed or partly performed, therefore, in the interests of justice the defendant appellant cannot be permitted to retain the benefit which he unlawfully and illegally derived by extending false hopes to the plaintiff that he would succeed in getting the agency for the plaintiff.

24. The defendant holding a very responsible public office should have thought twice before duping the plaintiff or obtaining Rs. 1500/- from him fraudulently and on false representation, when the defendant-appellant knew full well that he had no influence over the officers of the Churk Cement Factory and even if he had any such influence it was illegal and immoral for him as a Member of the Legislative Assembly to take money from a person and to bring pressure on the officers in doing something which was not legal. Not only this, when the plaintiff came to know that the defendant had duped him of the money by making false promises, he approached the defendant, but the defendant put the matter by extending another false hope to the plaintiff that the plaintiff would get the agency within ten days. This time was gained by the defendant only to concoct some false story so that he might not be able to part with the amount of Rs. 1500/- which he had illegally obtained from the plaintiff. With this end in view, the defendant-appellant sent a false notice to the plaintiff hoping that on receipt of the notice, the plaintiff might become silent. But, this notice did not have its desired effect and the plaintiff brought the suit,

25. After going through the entire evidence, I have not the least hesitation in saying that the entire conduct of the defendant-appellant as a Member of the Legislative Assembly was highly reprehensive and not befitting the position which the defendant-appellant was then holding. As a representative of the public, it was expected of the defendant to have conducted himself in a manner befitting his position and not to become overnight rich by indulging in activities like the one of which the present appears to be an instance. In this view of the matter, I am definitely of the opinion that the law cannot help the defendant in retaining the benefit out of the illegal contract by raising the plea that the contract was illegal. The plaintiff was entitled to the refund of the amount which he paid to the defendant.

26. In the result, the appeal fails. It is hereby dismissed with costs.


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