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The National Chamber of Commerce Ltd., Kanpur Vs. Nitya Nandan Deoki Nandan - Court Judgment

LegalCrystal Citation
SubjectContract
CourtAllahabad High Court
Decided On
Case NumberFirst Appeal No. 114 of 1951
Judge
Reported inAIR1963All294
ActsContract Act, 1872 - Sections 65, 126, 127 and 128
AppellantThe National Chamber of Commerce Ltd., Kanpur
RespondentNitya Nandan Deoki Nandan
Appellant AdvocateD. Sanyal, Adv.
Respondent AdvocateH.N. Seth, ;Hari Swaroop, ;Ambika Prasad and ;Jagdish Swarup, Advs.
DispositionAppeal dismissed
Excerpt:
contract - legality of contract - sections 126, 127, 128 and 65 of contract act, 1872 - margin money deposited with national chamber of commerce for registering forward contracts - government control orders prohibiting contracts - chamber's position analogous to stakeholder - contract not ancillary part of illegal forward transactions - parties unaware of control orders - no justification on ground of public policy for retention of money by chamber - contract not taintable or illegal - benefit of law under section 65 - chamber bound to restore money to plaintiffs- held, parties not in pari delico. - - jagdish swarup that the money was paid not in pursuance of an illegal contract, assuming that the contracts into which the plaintiffs entered with the other constituents of the chamber in.....b. mukerji, j.1. this is an appeal on behalf of a defendant-company, namely, the national chamber of commerce limited, kanpur, against a decree made by the learned civil judge, kanpur, on the 16th february, 1951, decreeing a sum of rs. 63,200/- as principal along with interest at 6 per cent, per annum recoverable from the 28th july, 1947, to the date of the suit: pendente lite and future interest were also awarded by the learned judge at the rate of 3 per cent, per annum simple. the defendants were also ordered to pay the costs of the plaintiffs.2. the plaintiffs sued for the recovery of the aforementioned amount with interest on the ground that the plaintiffs had deposited with the defendant-chamber of commerce a sum of rs. 70,600/- between dates in april and june, 1947, because the.....
Judgment:

B. Mukerji, J.

1. This is an appeal on behalf of a defendant-company, namely, the National Chamber of Commerce Limited, Kanpur, against a decree made by the learned Civil Judge, Kanpur, on the 16th February, 1951, decreeing a sum of Rs. 63,200/- as principal along with interest at 6 per cent, per annum recoverable from the 28th July, 1947, to the date of the suit: pendente lite and future interest were also awarded by the learned Judge at the rate of 3 per cent, per annum simple. The defendants were also ordered to pay the costs of the plaintiffs.

2. The plaintiffs sued for the recovery of the aforementioned amount with interest on the ground that the plaintiffs had deposited with the defendant-Chamber of Commerce a sum of Rs. 70,600/- between dates in April and June, 1947, because the defendants had assured the plaintiffs that they could deal in forward transactions in respect of oil seeds and that the Chamber would hold the money for the plaintiffs as 'margin money' in respect of the forward contracts which the plaintiffs may enter into with other registered members of the Chamber. The plaintiffs further allege that out of the sum of Rs. 70,600/- they withdrew a sum of Rs. 7,400/-on the 18th June, 1947, with the result that a sumof Rs. 63,200/- was left in deposit with the defendant-Chamber. The plaintiffs went on to allege that sometime after they had made the various deposits, which totalled up to the sum mentioned above, the plaintiffs came to know that there were control orders both of the Provincial as also the Central Governments in force prohibiting transactions in 'futures' in respect of oil seeds, and as such the transactions into which the plaintiffs, without knowing of the prohibition, had on the assurance of the Chamber entered into with other registered members of the Chamber were illegal and unenforceable at law and therefore the plaintiffs claimed that they were entitled to get back the deposit from the defendant-Chamber. The plaintiffs further allege that they would not have made the deposits if tile defendants had not given them wrong information assuring them that the transactions into which they intended entering with third parties and for which they deposited the margin money with the defendant-Chamber were not prohibited. On the aforementioned broad allegations, the plaintiffs claimed the relief which we have already indicated above.

3. The defendants contested the suit. They denied that there was any misrepresentation by them in regard to the control orders controlling deals in oil seeds. Further, they contended that the defendants themselves were not aware that there was any subsisting control order which prohibited forward contracts in oil seeds and therefore they said that the money had not been taken on any misrepresentation. They further alleged that on the publication of a pressnote dated the 9th June, 1947, issued under the signature of Mr. G. A. Haig, Secretary to the United Provinces Government, the plaintiffs came to know that there was a prohibition in regard to dealing in forward contracts in oil seeds, etc., and that they, therefore, settled the transactions, as they said they were entitled to, at the market rate, and on this ground they contended that the plaintiffs were not entitled to recover the money. The defendants raised the contention that the money having been paid under the bylaws of the Chamber and the plaintiffs having been a member of the Chamber, they could not get backthe money. The defendants raised several other defences to the plaintiffs' claim.

4. On the pleadings of the parties the trial Judge struck several issues -- as many as 9. We in the appeal, however, are concerned with the following issues only :

'(2) Has the plaintiff entered into any valid contract or contracts with the defendant and are these contracts binding on the defendant?

(3) Have the contracts, referred to above, become ineffective on account of Government Orders dated 20th April, 1943, and 29th May, 1943, as alleged by the plaintiff? If so, to what effect?

(5) Is the defendant simply a guarantor in respect of the contracts in suit and not the principal contracting party as alleged by him? If so, to what effect?

(6) Whether the contracts in suit were capeble of performance in view of Government Orders dated 20th April, 1943, and 29th May, 1943?

(7) Is the defendant liable to rated Rs. 63,200/- or any other amount which has been deposited by the plaintiff with him?''

On the aforementioned issues the question that really call for determination in this appeal am portions of law only, for all questions at fact which may have needed determination, were resolved on the agreement of counsel in this Court. On the following questions of fact there was complete agreement between learned counsel, and indeed counsel for both the parties projected their respective arguments on questions of law on the basis of the findings which we shall presently mention :

(1) That there was a deposit with the defendant Chamber made by the plaintiffs of a son of Rs. 63,200/- outstanding.

(2) That the contracts which had been entered into by the plaintiffs with other members off the Chamber, whom we shall hereafter refer to as constituents, were forward transactions dealing with 'Bhadon Sudi 15 Deliveries' of mustard seed.

(3) That no deliveries as contemplated under the contracts had been actually made.

(4) That on the date on which the plaintiffs contracted to purchase and sell quantities of mustard seed there was in force an order, or may be more than one order, promulgated by competent authority, regulating the contracts in respect of oil seeds.

(5) That at the time when the plaintiff claimed refund of their money the subsisting order in respect of transactions in oil seeds was the Government of India Order called the 'Oilseeds (Forward Contract Prohibition) Order, 1943'.

(6) That in view of the aforementioned control order it was not possible for the plaintiffs or other constituents of the Chamber to seek performance or give performance of the contracts. The nature of the holding of the money by the defendant-Chamber was a matter which was in some little controversy between counsel for the parties and, therefore, it becomes neeessaay anr in at this stage to mention what exactly was the nature of that controversy.

5. Mr. D. Sanyal, who appeared on behalf of the Chamber of Commerce, contended that the money was paid and held by the Chamber in pursuance of the forward contracts. He contendesthat it was held as and on the strength of the contracts, while Mr. Jagdish Swamp, appearing on behalf of the plaintiffs, contended that the money which was in the hands of the defendant-Chamber was money held by them as a guarantor or, as he put it, a stakeholder. It was contended by Mr. Jagdish Swarup that the money was paid not in pursuance of an illegal contract, assuming that the contracts into which the plaintiffs entered with the other constituents of the Chamber in respect of forward transactions in mustard seed were illegal transactions, but that the money was paid and held by the Chamber as money which was to be paid to the party who was entitled to gain under the forward contracts in the event of failure on the part of the plaintiffs to honour the contract. Therefore, the money was held as money held by a guarantor or a stakeholder. Mr. Jagdish Swarup contended that the Chamber had nothing whatsoever to do with the contracts, nor were the amounts which had totalled up to Rs. 63,200/- paid on the basis of those contracts or in pursuance of those contracts. It was also contended that the Chamber of Commerce, which we have referred to as the Chamber and shall henceforth refer to as the Chamber, was not a party to any of the contracts which were affected by the control order.

6 . On the issues which we have noticed above the following other questions also, apart from the question which we have just referred to above, namely, what was the nature of the deposit which was with the Chamber and which the plaintiffs claim back, will have to be determined: -

(1) What was the effect of the control order on the contracts, and if the effect of the control, order on the contracts was that the contracts were illegal, then how was that illegality going to affect the plaintiffs' right to claim back the deposit?

(2) Would the fact, even if it be assumed that the prohibitory order, namely, the Control Order of 1943, referred to above, in some manner touched the legality of the contract between the Chamber and the plaintiffs, be a sufficient circumstance in law to defeat the plaintiffs' claim for the refund?

7. Before we go on to tackle the above mentioned two questions, we wish to determine first the nature of the deposit that was made by the plaintiffs and held by the Chamber. As we have mentioned earlier, it was not denied that the Chamber had in their hands a sum of Rs. 63,200/-which the plaintiffs gave them. The money was taken or deposited under the rules which had been framed by the Chamber of which the plaintiffs were constituents. Under Rule 26 of the Chamber, there had to be a certain amount of deposit, the amount was to be calculated on certain basis which was provided for in the rule, and that this deposit had to be made as 'margin money'. This was also obvious from the succeeding rules, particularly Rule 30. There was no rule to which our attention was drawn which necessitated that the Chamber should be a party to any of the forward contracts of either sale or purchase that were entered into between the various constituents of the Chamber. All that the rules of the Chamber required was that these transactions were to be registered with the Chamber and that in respect ofthe transactions so registered the Chamber was to issue a kind of receipt for which the rules provided a form. It may here be clearly pointed out that it was nowhere contended by any of the parties that there could be no contracts for forward sales or forward purchases unless and until those transactions were registered with the Chamber. The rules indicated that the Chamber had nothing to do with either the purchaser or the seller prior to the stage of the contract or at any other stage except when there had been a failure of delivery and damages in respect of that failure had to be paid by the Chamber which had a certain amount of money in their hands to meet that contingency.

The transactions which were entered into or were to be entered into were either entered into with the parties direct or through recognised brokers of the Chamber. The fact that recognised brokers figured in bringing about the constituents 'together for purposes of making their forward contracts could not in any event make the Chamber a party directly or indirectly to those contracts. There was in the evidence nothing to indicate that the Chamber had any contractual obligation in respect of the forward transactions to either of the two parties: the obligation which the Chamber took was to pay to the party who might make a just claim for which there was in their hands margin money, and this the Chamber undertook to do for a consideration, namely, a commission which they charged. The position, as we see it, of the Chamber qua the constituents was that they entered into a kind of separate contract with the constituents to do something for them in the event of a contingency. This contract of the Chamber had nothing to do with the contracts of forward delivery which under the law were prohibited.

The Indian Contract Act recognises a contract of guarantee, for Section 126 of the Contract Act is in these words:

'A 'contract of guarantee' is a contract to perform the promise, or discharge the liability, of a third person in case of his default. The person who gives the guarantee is called the 'surety': the person in respect of whose default the guarantee is given is called the 'principal debtor', and the person to whom the guarantee is given is called the 'creditor'. A guarantee may be either oral or written.''

Section 127 indicates what is to be treated as consideration for a guarantee for it says that -

'Anything done, or any promise made, for the benefit of the principal debtor may be a sufficient consideration to the surety for giving a guarantee.'

In this particular case the Chamber over and above the consideration indicated in Section 127 obtained a certain commission for the guarantee. Under the Indian Contract Act the liability of the surety is co-extensive with that of the principal debtor unless it was otherwise provided for by the contract of guarantee. This is so provided by Section 128 of the Indian Contract Act. Even if the liability of the surety was co-extensive with that of the principal debtor, unless otherwise provided for, the mere fact that the contract between the principal debtor and the creditor is voidable at the option of the former and that it had actuallybeen avoided fay the former did not discharge the surety. Further, it is clear that where, as in this country, a contract of a minor was void from its inception a surety to such a contract did not automatically get rid of his obligation as a surety, for in such a contingency the law treated the surety as the principal debtor. ( See Tikki Lal v. Komal-chand ). It has also been held that the discharge of a principal debtor by operation of law did not discharge the surety, (See Jagannath v. Shivnarayan, ILR (1940) Bom 387 : (AIR 1940 Bom 247) and Bank of India Ltd. v. R. F. Cowasjee, (S) AIR 1955 Bom 419).

8. The position of the Chamber in respect of the deposit was, in our view, not quite that of a surety contemplated under the Indian Contract Act under Section 126, for although the Chamber in this particular case in a sense guaranteed the due performance of a promise yet it did not actually do so because the Chamber was not, as we have indicated, a party to the contracts. A surety is a party to the contract between the creditorand the principal debtor. In the instant case, however, the Chamber never figured in the contracts, nor did the Chamber guarantee as such the performance of those contracts. Therefore, the po-sition of the Chamber in this particular case wassomething analogous to that of a surety but not quite that of a surety. The position of the Chamber was, in our view, that of a stake-holder as indicated in some English cases like Cotton v. Thurland, (1793) 5 TR 405 : 101 ER 227; Smith v. Bickmore, (1812) 4 Taunt 474; Bate v. Cartwright, (1819) 7 Price 540. In Hastelow v. Jackson, (1828) 8 B and C 221 this case also concerned itself with the case of a stake-holder. We shall have occasion to return to this case again at a later stage: here suffice it to say that, in our opinion, on the cases indicated above, the. position of the Chamber pro-ximated more to that of a stake-holder as Understood by English lawyers and should be understood by us as such also since we have found no difference in regard to the understanding of the position of one who could be designated as 'stakeholder' in England and the nomenclature to begiven to such a man in this country in respect of his position.

9. We shall now consider the nature of the contract which was entered into between the plaintiffs and the defendant-Chamber. We have already indicated the scope of the liability undertaken by the Chamber under that contract. We have also indicated above that the deposit which was made by the plaintiffs with the Chamber was in pursuance of the rules framed by the Chamberand which rules the plaintiffs as a constituent of the Chamber agreed to abide by. We have also noticed earlier that the deposit was not in pursuance of any of the forward contracts for it was never contended that one of the conditions of thecontracts or the reason for entering into the forward contracts was that the deposit either had to be made or was made for the performance of those contracts as guarantee money. The contract,therefore, between the plaintiffs and the defendant- Chamber could not in any way be touched by the doubtful legality of the forward contracts. It wascontended by Mr. Sanyal, for the Chamber, thatthe deposit which was made by the plaintiffs of the money with the Chamber was in pursuance of an illegal contract, the illegality of which was, according to Mr. Sanyal's contention, either fully known to the parties or, in his submission, should under the law be presumed to have been known to the parties, for it was contended by Mr. Sanyal that ignorance of law could not be countenanced by a Court. On the circumstances that we have already indicated it could not, in our opinion, be contended that the contract between the plaintiffs and the defendant-Chamber, on the strength of which the money was held by the Chamber, was in any sense either ancillary or part of the illegal forward transactions: in short the two transactions were entirely separate transactions and the illegality of the one could not contaminate the other.

The question that was further posed in this connection by Mr. Sanyal was that if the parties with knowledge that the transactions into which they were entering were illegal transactions, and if such parties deposited money in a sense to guarantee performance of such contracts, then the deposit money would be tainted money for it carried the taint of illegality which the contracts carried. In order to determine this question properly we have first to see whether Mr. Sanyal's contention that the parties knowingly entered into illegal forward transactions was in fact substantiated. The contention of the plaintiffs clearly was that they did not know at the time when they entered into the forward transactions with the other constituents of the Chamber that forward dealings in mustard seeds were banned by a duly promulgated order. The plaintiffs further contended that they had been assured by the Chamber, through their Secretary, that there was no control order in force which banned forward transactions and, therefore the plaintiffs said, they entered into the various forward transactions and in pursuance of the rules of the Chamber they deposited the margin money with the Chamber, The defendant-Chamber nowhere contended that they knew that there were control orders in force which made the transactions illegal and that the plaintiffs were aware of such control orders. Indeed, the defendant-Chamber themselves filed a document Ex. A-64, which was an office memorandum issued from the Food and Civil Supplies Department of the Government of United Provinces, Lucknow, on the 31st March, 1947, to the following effect: -

'With reference to their application dated 18th March, 1947, the undersigned has the honour to inform the National Chamber of Commerce Ltd., that there is no control whatsoever over edible oilseeds and oils. ............'

The aforequoted communication emanated from the office of the Deputy Commissioner (Sugar) arid was sent to the National Chamber of Commerce, Ltd., Kanpur (the present defendants) and as we have said above, was filed by them and exhibited against the plaintiffs. We have further another document Ex. A-62 which, again, was filed by the defendant-Chamber and which was a Pressnote issued under the signature of a Secretary of the United Provinces Government dated the 9th June, 1947. The Pressnote was id those words:

'From the enquiries which had recently been received by Government it appears that there issome doubt as to whether the Government of India Oil Seeds (Forward Contract Prohibition) Order, 1943, is operative after the decontrol of edible oilseeds and oil. The correspondence on the subject which took place recently with, the Government of India, reveals that the Oilseeds (Forward Contract Prohibition) Order, 1943, and the Vegetable Oils and Oilcakes (Forward Contract Prohibition) Order, 1944, promulgated by them are still operative. It is, therefore, notified for public information that forward transactions in oilseeds and their products are still prohibited under the above orders of the Government of India and that any contravention of these orders will be punishable in accordance with the provisions laid down in them.'

From the above-quoted exhibits it is manifest that there was in the public mind, as also in the mind of Government officials, officials who were directly dealing with controls and the effects of such controls on commodities essential to the life of the community, a doubt in regard to the prevalence or otherwise of controls in respect of edible oils and oilseeds, Had that not been so, we could not imagine that Ex. A-64 could have emanated under the signature of a Deputy Commissioner of Government on the 3ist March, 1947, nor could we otherwise imagine the issue of the Pressnote quoted above. We have further in this connection to notice that a copy of the Pressnote was forwarded to the Chamber of Commerce by the Deputy Commissioner (Sugar) who had sent to the Chamber Ex. A-64, and while forwarding the copy of the Press-note the Deputy Commissioner stated this:

'Copy of the above press note forwarded to the National Chamber of Commerce Ltd., Collectorganj, Kanpur, with the remark that the information conveyed to them in this department Memo No. 0-2053/XXIX-A dated 31st March, 1947, should be deemed to have been cancelled.'

The question that now pointedly falls for our determination is, could it be, on the situation noticed above, said that the parties to this suit could be presumed to have known that there was a subsisting control order which prohibited forward transactions in oilseeds. There can, in our view, be no two opinions on the question, for it cannot be said that either the plaintiffs or the defendant-Chamber were aware that there was a subsisting control order in respect of forward transactions in oilseeds including mustard seed. On this finding it could not possibly be contended that the plaintiffs were deliberately misled by the defendant-Chamber and on that deliberate misleading they were persuaded to make the deposit of margin money with the Chamber.

10. The argument of Mr. Sanyal that every man is presumed to know the law cannot be extended in our view, to cover a case like the one in hand. 'Ignorance of law is no excuse' is a well known maxim and there can be no doubt as to the wisdom of such a maxim, for if this were not so it would become often impossible to get enforcement of the law against the delinquent, but the maxim does not extend to beyond making it impossible for the delinquent to plead ignorance of the law as a justification for his breach and thereby escaping either the penal consequences or otherconsequences visited by that law: It does no more than that.

11. A similar view was expressed by LordDenning in Kiriri Cotton Co., Ltd. v. RanchhoddasKeshavji Dewani, 1960 AC 192 at p. 204, whereLord Denning said this:

'It is not correct to say that everyone is presumed to know the law. The true position is that no man can excuse himself from doing his duty by saying that he did not know the law on, the matter, Ignorantia juris neminem excusat.'

12. On the view that we have taken of the knowledge of the parties in regard to the validity or otherwise of the transactions it could not be said that the parties in this particular case were, what has been called, in pari delicto. The scope of the maxim 'in pari delicto potior est conditio defendantis' was indicated by their Lordships of the Supreme Court in the recent case of Kedar Nath, Motani v. Prahlad Rai : [1960]1SCR861 . Their Lordships pointed' out' that the correct position of law was that one had to see whether the illegality which was being relied upon went so much to the root of the matter that the plaintiff would get nonsuited if he did not rely upon the illegal transaction into which he had entered in order to get relief. Their Lordships went on to point out that if the illegality was trivial or venial, as stated by Williston, and the plaintiff was not required to rest his case upon that illegality, then public policy demanded that the defendant should not be allowed to take advantage of the position. As we pointed out much earlier, the plaintiffs in this case had not to rely on the contracts which were illegal or which could not be enforced for the purposes of getting back their money from the defendant-Chamber. Therefore, the latin maxim quoted above could in no manner assist the defendants for defeating the plaintiffs' claim.

13. In this context the other question that was raised by Mr. Sanyal was that whatever may have been the strict legal position in regard to the contract into which the parties to this appeal entered into, the contract certainly, in a sense, related to the forward transactions which had to be adjudged illegal in view of the provisions contained in the control order of 1943 and, therefore, the money which was deposited by the plaintiffs and was in the hands of the defendants-Chamber was tainted money. This argument is based on two assumptions, first, that one could legitimately hold that the forward transactions and the deposit made with the defendant-Chamber were inter-dependent or were parts of a single transaction, and secondly, that the taint which may appear on the first assumption was a taint which could vitiate, the plaintiffs' right to claim back the money. In order to non-suit a plaintiff in respect of a claim made by him for the refund of money which the defendant held, on the facts, without any justification or right it has to be affirmatively found that if relief was granted to the plaintiff then there would be a violation of one of the well-established principles in regard to giving effect to, what is known as, public policy or some specific prohibition contained in the law. We can straightway say that there was no I specific prohibition in the law on which the plaintiffs' suit for the refund of the money could bedefeated. Reliance on the principle of doing something in order to sustain public policy cannot, in our opinion, be made in this case with any proper justification. It is settled law that the heads of public policy are not enlarged by Courts to suit particular circumstances of a case or to sub-serve any particular view entertained by any particular Court: public policy has per necessity to be in respect of methods sufficiently well known so that there was certainty in regard to them and that the very certainty of them could make for vigilance in the public mind to guard against any breaches. Public policy cannot, in our opinion, justify the retention of money belonging to another by a person who came to hold that money for a particular purpose not directly arising out of the illegal contract but a separate contract, which separate contract could not be affected by any legal disability or a legal prohibition.

14. There is yet another way of looking at the matter and it is this: Parties were uncertain in regard to the legal position qua the forward contracts. The money was deposited under the rules of the Chamber and the rules which were framed for forward transactions and oilseeds were not illegal. So that, it could not be said that the parties were in any sense trying to enter into an illegal bargain or into a bargain which had an illegal objective known to them. Therefore, in the circumstances of this case to refuse relief to the plaintiffs would be not upholding the majesty of the law but soiling it in a sense.

15. From what we have said above it should be perfectly clear that even though the forward contracts were illegal and could not be enforced at law, the contract under which the money was deposited by the plaintiffs with the defendants was not in any sense tainted or illegal,

16. The above discussion will also dispose of the contention that even if the deposit was remotely touched by the illegal contract, that very very slender contract would not in law be sufficient to defeat the plaintiffs' claim.

17. On behalf of the respondents it was contended that the plaintiffs were entitled to receive their money back, particularly when the money had not been utilised for the purpose for which it had been deposited in view of the fact that it could not be so utilised because its utilisation would have been illegal for the utilization could only be in respect of those contracts which had been adjudged illegal on two broad principles of law, first, on the principle that was recognised by Section 65 of the Contract Act, and secondly, on the principle which was recognised by Section 84 of the Indian Trusts Act.

18. Section 65 of the Indian Contract Act is in these words:

'When an agreement is discovered to be void or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it, to the person from whom he received it.'

In order to understand the true scope of this section we have to notice what is contained in the interpretation Clause of the Contract Act in respectof agreements and contracts. Section 2, Clause (e) defines agreement thus:

' 'Every promise and every set of promises, forming the consideration for each other, is an agreement.'

Clause (h) says this:

'An agreement enforceable by law is a contract.'

Section 10 is in these words:

'All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void.

Nothing herein contained shall affect any law in force in India, and not hereby expressly repealed, by which any contract is required to be made in writing or in the presence of witnesses, or any law relating to the registration of documents.' From what we have quoted above from the interpretation Clause and Section 10 of the Indian Contract Act it would be manifest that all agreements which are proper in the sense of competence of parties, their will not having been affected in any manner and their action not being prohibited bylaw, would be contracts. Agreements which are not enforceable at law are said to be void in accordance with Clause (g) of Section 2 of the Contract Act.

19. Section 65 makes provision for restoring-the benefit accruing under an agreement or making compensation in cases where the agreement is discovered to be void or when the contract becomes void. The question that naturally arises, when one has to determine the import of Section 65, is what do the words 'discover' and 'becomes void' mean in Section 65. Does the word 'discover' mean that the discovery contemplated for the application of the section must be a discovery to be made by any one other than the parties to the contract, or can it mean a discovery which could be made by the parties from subsequent knowledge gained by them? Again, the question arises, has the word 'discover'' been used to denote a knowledge which could have been had by the parties concerned if they had taken due care, or the word 'discover' in the section does not concern itself with those subtle positions of difficulty but only concerns itself with the fact that the circumstance on which reliance-was placed for making the agreement void came to the knowledge of the parties, either of them, or both of them, subsequent to making the agreement. We are inclined to the view that the word 'discover' should not be given a restricted meaning which would make that word applicable only to cases where either the discovery is made by an outside agency other than the parties to the agreement, or it is a discovery made by the parties which they could not have made even if they had shown all the diligence which could have been expected from any one.

20. On the facts and circumstances of this case, therefore, it would appear that the parties did not know that an agreement in regard to forward transactions in oilseeds could not be made on the date on which the transactions, which came up for scrutiny in this appeal, were made. The knowledge came to the parties, as we have already noticed, on the publication of the Pressnote dated June 9, 1947, long after the contracts in forward dealings had been made. Therefore, at the time when deposit was made with the defendant-Chamber the parties honestly believed that, even if the deposit and the forward transactions could be treated as one transaction, which we have held could not be so treated, a deposit could be legally made. The discovery and the illegality of the forward transactions, therefore, came to the knowledge of the parties later. So, on this view, the defendant-Chamber was bound to restore the money to the plaintiffs. The agreement under which the deposit was held, if it had a relation with the forward contracts, had to be held under the provisions of Section 65 of the Indian Contract Act to be a contract of deposit which became void when the parties discovered that the agreements in respect of the forward transactions which had been entered into by the plaintiffs with third parties were discovered to be void. On this reading of the section we are of the view that the plaintiffs were entitled to claim the benefit of law indicated in Section 65 of the Indian Contract Act.

21. Section 84 of the Indian Trusts Act of 1882 is in these words:

'Where the owner of property transfers it to another for an illegal purpose, and such purpose is not carried into execution or the transferor is not as guilty as the transferee, or the effect of permitting the transferee to retain the property might be to defeat the provisions of any law, the transferee must hold the property for the benefit of the transferor.''

On the view that we have taken above it does not become really necessary for us to determine whether Section 84 of, the Indian Trusts Act, quoted above, could be pressed into service by the plaintiffs for getting their money back from the defendant-Chamber, and we do not propose, therefore, to unnecessarily encumber this judgment by what may at best be, on what we have said above, obiter.

22. Before we part with this case we wish to state that learned counsel appearing for either side argued their respective cases with considerable skill and a large number of authorities, even when they were very very remote in point, were cited. We have confined ourselves to only such of the authorities and legal propositions as were really material or determining the controversy between the parties. Mr. Sanyal laid great stress, we may again reiterate, on the maxim in pari delicto. Although we have dealt with that argument of Mr. Sanyal earlier, we in conclusion wish to quote a passage from the Law Quarterly Review, 1955, Vol. 71, at page 273. This is what Mr. G. K. Grodecki says:

'The maxim in pari delicto cannot be justified on moral grounds. Furthermore, whilst a good deterrent in some cases, it is not very effective in many others. The Courts cannot act as a moral agency and reach their decisions in accordance with the respective guilt of the parties. But they can and should act as a social agency and, instead of remaining merely passive, be free to choose such course as would, in practice, best serve the public interest.''

We have looked at the circumstances of this case with great care and we have had no hesitation in holding that by granting relief to the plaintiffs the Court was not actually enforcing any unlawful contract but that by giving relief to the plaintiffs the Court was serving the public interest best inasmuch it was upholding justice.

23. For the reasons given above we have seenno merits in this appeal which we accordingly dismiss with costs.


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