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Jai Ram and Son Vs. Kahna Ram Hans Raj - Court Judgment

LegalCrystal Citation
SubjectContract
CourtHimachal Pradesh High Court
Decided On
Case NumberFirst Appeal No. 7 of 1960
Judge
Reported inAIR1963HP3
ActsContract Act, 1872 - Section 23
AppellantJai Ram and Son
RespondentKahna Ram Hans Raj
Appellant Advocate D.R. Manchanda and; Kailash Chand, Advs.
Respondent Advocate Ramji Das, Adv.
DispositionAppeal dismissed
Cases ReferredAmbika Prasad Singh v. R. H. Whitwell
Excerpt:
- c.b. capoor, j.c.1. this first appeal by the defendants is directed against a judgment and decree of shri tara chand rewal, the then learned senior subordinate judge mahasu, whereby the suit filed by the respondents for recovery of a sum of rs. 16,500/- was decreed for recovery of a sum of rs. 15,000/- and proportionate costs.2. in order to appreciate the contentions advanced on behalf of the parties the following facts had better be narrated : -the appellant and the respondent firms are timber contractors. the partners of the appellant firm are jai ram and his son jagannath and the partners of the respondent firm are kahna ram and his son hans raj. the upper bushahr forest division of the himachal pradesh forest department invited tenders for the floating of timber in river sutlej during.....
Judgment:

C.B. Capoor, J.C.

1. This first appeal by the defendants is directed against a judgment and decree of Shri Tara Chand Rewal, the then learned Senior Subordinate Judge Mahasu, whereby the suit filed by the respondents for recovery of a sum of Rs. 16,500/- was decreed for recovery of a sum of Rs. 15,000/- and proportionate costs.

2. In order to appreciate the contentions advanced on behalf of the parties the following facts had better be narrated : -

The appellant and the respondent firms are timber contractors. The partners of the appellant firm are Jai Ram and his son Jagannath and the partners of the respondent firm are Kahna Ram and his son Hans Raj. The Upper Bushahr Forest Division of the Himachal Pradesh Forest Department invited tenders for the floating of timber in river Sutlej during the year 1957-58. The last date for the submission of the tenders was 22-4-1957. On that date the partners of the respondent firm and Jagannath, one of the partners of the appellant firm, were at Rampur and an arrangement was arrived at between them. Shorn of the points of difference between the parties the arrangement arrived at between them was that though both the firms will submit tenders the tender which the respondent firm will submit will be for a higher amount and the appellant firm would draw a post-dated cheque for Rs. 15,000/-in favour of the respondent firm for not competing with it. The cheque will be encashed ii the tender to be submitted by the appellant firm is accepted but if it is not accepted the cheque will not be encashed and will be returned.

In order to evidence the aforesaid arrangement a letter Ex. P.1 was written by Jagannath in favour of the respondent firm and a cheque Ex. P.2 for Rs. 15,000/- dated 1-8-1957 was drawn by Jagannath on behalf of the appellant firm in favour of the respondent firm and both were handed over to the respondent firm and a letter Ex. d.1 was written by the respondent firm in favour of the appellant firm and was handed over to Jagannath.

3. In pursuance of the aforesaid arrangement tenders were submitted by the parties. No other tender was submitted by any other contractor. The tender submitted by the appellant firm was ultimately accepted and thereafter the said firm intimated to the drawee Bank that the cheque should not be honoured. The Bank therefore refused to honour the cheque and the respondent firm filed the present suit.

4. The suit was resisted by the appellant firm on a variety of grounds all of which need not be detailed for the purposes of this appeal. The main grounds of objection were that the agreement between the parties was that the respondent firm will quote higher rates in respect of each and every item and as the rates quoted by it were not higher in respect of each item it was not entitled to the performance of the promise on the part of the appellant firm, that the agreement was fraudulent and opposed to public policy and as such was void and not enforceable and that Jagannath was not competent to enter into the aforesaid agreement on behalf of the appellant firm. Those pleas did not find favour with the learned Senior Subordinate Judge and he passed a decree for a sum of Rs. 15,000/- as indicated above.

5. On behalf of the appellant firm the following two questions have been raised :-

1. That the appellant firm was not liable to fulfil its part of the promise as the respondent firm failed to perform its part of the promise.

2. That the agreement arrived at between the respondent firm and Jagannath was void under Section 23 of the Contract Act.

FINDINGS

6. Question No. 1 : A reference to Ex. p.1 and D.1 will indicate that the arrangement arrived at between the parties was that the respondent firm will submit a tender for a higher amount. It was not stated in any of the aforesaid letters that the respondent firm was to quote in the tender higher rates for each and every item. The agreement was that if the tender submitted by the appellant firm is accepted by the department the respondent firm will be entitled to a sum of Rs. 15,000/- and will encash the cheque but if the said tender is not accepted the cheque will not be presented to the bank but will be returned to the drawer. It is not disputed that the tender submitted by the respondent firm was for an amount which was about Rs. 150/- more than the amount for which tender was submitted by the appellant firm. There was thus no breach of promise on the part of the respondent firm in the submission of the tender. The question is answered against the appellant.

7. Question No. 2 : Section 23 of the Indian Contract Act and illustration (e) to that section read as below :-

'The consideration or object of an agreement is lawful, unless-

it is forbidden by law; or is of such a nature that, if permitted, it would defeat the provisions of any law; or

is fraudulent; or

involves or implies injury to the person or property of another; or

the Court regards it as immoral, or opposed to public policy.

In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void.'

'(e) A, B and C enter into an agreement for the division among them of gains acquired, or to be acquired, by them by fraud. The agreement is void, as its object is unlawful.'

8. The first question that arises for decision is as to whether the consideration or object of the agreement arrived at between the parties was fraudulent. The consideration of the agreement was that the respondent firm will not compete with the appellant firm and it has been conceded by the learned counsel for the appellant that an agreement between prospective bidders at an auction sale not to compete with one another known in common parlance as a 'knock out agreement' is neither fraudulent nor opposed to public policy. What has been urged on behalf of the appellant is that the object of the agreement was to deceive the Forest Department inasmuch as there was to be a pretence or show of competition. The word 'object' as used in the aforesaid section means purpose or design vide Jafier Meher Ali v. Budge-Budge Jute Mills Co., 33 Cal 702 confirmed on appeal in Jafier Meher AH v. Budge-Budge Jute Mills Co., ILR 34 Cal 289.

9. A reference to the letters Exs. P. 1 and D. 1 the main terms of which have been set forth in the earlier portion of this judgment will indicate that the object of the agreement between the parties was (1) that the tender which the appellant firm was to submit should be accepted, (2) that the appellant firm will pay a sum of Rs. 15,000/- to the respondent firm for not competing with the former, (3) that the respondent firm will also submit a tender but it will be for an amount higher than the one for which the appellant firm would submit tender and (4) that if the tender submitted by the appellant firm is not accepted the post-dated cheque for Rs. 15,000/- which the said firm was to deliver to the respondent firm will be returned and not presented for being cashed. The dominant object of the aforesaid arrangement, to my mind, was that the contract by the Forest Department be given to the appellant firm. It was not the aim or objective of the agreement to defraud the Forest Department.

10. One of the conditions subject to which tenders were invited was that the Forest Department will not be bound to accept the lowest tender or for the matter of that any tender. Paragraph 9 of the notice ran as below :

'The competent authority reserves to himself the right to reject any or all the tenders without assigning any reason for doing so and is not bound to accept the lowest or any tender.'

It was not a condition of the notice inviting the tenders that a tender will not be taken into consideration unless two tenders were submitted. The Forest Department was thus at liberty toaccept any one of the tenders submitted or not to accept any one of them. If it was open to the Forest Department to accept or not to accept the tenders which the parties were to submit it could not be said that the submission of the tender by the respondent firm was intended to deceive the Forest Department or that that department could be or was deceived thereby. It appears that the Divisional Forest Officer had recommended to the higher authorities for the acceptance of the tender submitted by the respondent and it was therefore not without a consideration of all the pros and cons that the tender submitted by the appellant firm was accepted.

11. 'Fraud' according to Section 17 of the Contract Act means and includes any of the following acts committed by a party to the contract, or with his connivance, or by his agent, with intent to deceive another party thereto or his agent or to induce him to enter into the contract :

(1) the suggestion, as to a fact, of that which is not true by one who does not believe it to be true;

(2) the active concealment of a fact by one having knowledge or belief of the fact;

(3) a promise made without any intention of performing it;

(4) any other act fitted to deceive;

(5) any such act or omission as the law specially declares to be fraudulent.

Explanation : Mere silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud, unless the circumstances of the case are such that, regard being had to them, it is the duty of the person keeping silence to speak, or unless his silence is, in itself, equivalent to speech.

12. The respondent firm did not commit any of the acts set forth in Clauses (1) to (5) of the aforesaid section. It did not make any suggestion as to a fact of that which was not true nor did it actively conceal a fact nor did it make any promise without any intention of performing it.

13. There is nothing to show that the amount for which contract was given to the appellant firm was not adequate. Even if for the sake of argument it be held that the contract money was inadequate that by itself cannot lead to the conclusion that the object of the agreement between the appellant and the respondent firm was fraudulent. Since the agreement between the parties was that the cheque for Rs. 15,000/- will be returned if the tender to be submitted by the appellant firm will not be accepted it cannot be said that the tender to be submitted by the respondent firm was for show only but even if for the sake of argument it be held that its submission was a mere pretence it would not constitute fraud. To acquire gains by fraud is an essential condition for the application of illustration (e) and as in the instant case no fraud was committed by the respondent firm that illustration has no application.

14. On behalf of the appellant reliance has been placed upon the case of Ram Lal Misra v.Rajendra Nath Sanyal, AIR 1933 Oudh 124. The main facts of that case were as below :

15. Plaintiff Ram Lal held a simple money decree against one Jwala Prasad for Rs. 1300/-and in execution of the decree he attached a property known as Harsamalka Bagh belonging to the judgment debtor. That property was subject to certain mortgages in favour of one Mahabir Prasad and the property was ordered to be sold subject to Rs. 9642/- due in respect of those mortgages. One Pearey Lal also held a decree against the same judgment debtor for more than double the amount of the plaintiff's decree. The execution Court made an order allowing Pearey Lal to share rateably in the sale proceeds of the property. The auction sale started on 12-9-1927 and was ultimately closed on 20-9-1927 in favour of the defendant on his final bid of Rs. 1360/-. There were only two bidders on this date, plaintiff who bid Rs. 1355/- and the defendant who bid Rs. 1360/-. After the sale had been confirmed the defendant tendered the sum of Rs. 10,573/4/8 to Mahabir Prasad the mortgagee. The latter refused to accept the amount and brought a suit to enforce the mortgages.

It was held by the Court that Mahabir Prasad was not entitled to anything more than Rs. 9642/-plus interest on it. While the case was pending in the Privy Council the defendant came to terms with Mahabir Prasad and paid him Rs. 7,000/-more. The plaintiff filed a suit on the allegation that on 20-9-1,927 the defendant approached him and asked him not to raise bids against him and that as a consideration for this he offered to pay off the prior mortgages and also to make good the whole amount due to the plaintiff under his decree. As a result of the rateable distribution which had been ordered by the executing Court the plaintiff received only Rs. 383-4-9 out of the sale proceeds. He, therefore, claimed from the defendant the difference between this amount and the amount due to him under the decree. The defendant pleaded in his defence that the plaintiff had himself approached him to purchase the property, that it was agreed between him and the plaintiff that if he would not have to pay more than Rs. 9642/- to the mortgagee he would pay the plaintiff the difference between the amount due to him under his decree and the amount which he might receive in rateable distribution.

16. It does not appear that the defendant) had either directly or indirectly dissuaded the rival decree-holder from bidding at the auction sale and the finding recorded by the learned Judges of the Oudh Chief Court that the object of the agreement between the plaintiff and the defendant was fraudulent is, if I may say so with greatest of respect, open to criticism. There is, however, no doubt that if once it is found that the object of the agreement between the plaintiff and the defendant was to defraud the rival decree-holder the agreement must be held to be void.

17. The next question that arises for consideration is as to whether the agreement between the parties was opposed to public policy. The question whether a particular agreement is contrary to public policy is a question of law. Thisbranch of the law should not, however, be extended for Judges are more to be trusted as interpreters of law than as expounders of what is called as public policy. The determination of what is contrary to the so-called policy of the law necessarily varies from time to time. Many transactions are upheld now which in a former generation would have been avoided as contrary to the supposed policy of the law. The rule remains, but its application varies with the principles which for the time being guide public opinion.

18. In the case of Gherulal Parakh v. Mahadeodas Maiya, AIR 1959 SC 781 the doctrine of public policy has been summarized as below:

'Public policy or the policy of the law is an illusive concept. It has been described as 'untrustworthy guide', 'variable quality', 'uncertain one', 'unruly horse' etc; the primary duty of a Court of law is to enforce a promise which the parties have made and to uphold the sanctity of contracts which form the basis of the society, but in certain cases, the Court may relieve them of their duty on a rule founded on what is called the public policy; for want of better words Lord Atkin describes that something done contrary to public policy is a harmful thing, but the doctrine is extended not only to harmful cases but also to harmful tendencies; this doctrine of public policy is only a branch of common law, and, just like any other branch of common law, it is governed by precedents; the principles have been crystallized under different heads and though it is permissible for Courts to expound and apply them to different situations, it should only be invoked in clear and incontestable cases of harm to the public; though the heads are not closed and though theoretically it may be permissible to evolve a new head under exceptional circumstances of a changing world, it is advisable in the interest of stability of society not to make any attempt to discover new heads in these days.'

19. It would thus appear that both under the English law and the Indian law a new head of agreements being injurious to public policy is not to be evolved unless there are exceptional circumstances justifying the extension.

20. In Galton v. Emuss, (1844) 13 LJ Ch 388, Knight Bruce V. C. remarked as follows :

'Two men being desirous of buying an estate of a third are acquainted with each other and with a view of obtaining the estate in the most beneficial manner, one agrees to retire from the contest and leaves the purchase open to the other. No intention or intimation of fraud is suggested as between these two parties. There is no authority to show that an agreement to retire from being a competitor for an estate is illegal.'

21. In re, Carew's Estate Act, (1859) 28 LJ Ch. 218 the facts were that a piece of land was advertized for sale. Two adjoining land owners were desirous of purchasing it. They agreed that one alone should attend the sale and purchase if it should be sold for a sum not exceeding a sum named. If the land was purchased terms were arranged and it was to be divided between them. It was held that the agreement bet-ween the purchasers was not contrary to equity and that it did not vitiate the contract.

22. In the case of Heffer v. Martyn, (1867) 36 LJ Ch 372 the facts were that 'A' paid 'B' a sum of money not to bid at a public auction. 'B' attended the sale and did not bid. 'A' bought the property. It was held that 'A' was entitled to a decree for specific performance.

23. In the case of Mogul Steamship Co. Ltd. v. McGregor, 1892 AC 25, the facts were that owners of ships in order to secure a carrying trade exclusively for themselves and at profitable rates, formed an association and agreed that the number of ships to be sent by members of the association to the leading port, the division of cargoes and freights to be demanded should be! the subject of regulation, that a rebate of 5 per cent on the freights should be allowed to all shippers who shipped only with members, that agents arid members should be prohibited on pain of dismissal from acting in the interest of competing ship owners, any member to be at liberty to withdraw on giving certain notices. The plaintiffs, who were ship owners excluded from the association, sent ships to the leading ports to endeavour to obtain cargoes.

The associated owners thereupon sent more ships to the port, underbid the plaintiffs and reduced freights so low that the plaintiffs were obliged to carry at an unremunerative rates. They also threatened to dismiss certain agents if they loaded the plaintiffs' ships and circulated a notice that the rebate of 5 per cent will not be allowed to any person who shipped cargoes on the plaintiffs' vessels. The plaintiffs having brought an action for damages against the associated owners alleging a conspiracy to injure the plaintiffs, it was held by the House of Lords affirming the decision of the Court of Appeal that since the acts of the defendants were done with the lawful object of protecting and extending their trade and increasing their profits and since they had not employed any unlawful means the plaintiffs had no cause of action.

24. In the case of Levi v. Levi, (1833) 6 Car and P 239 it was held that if brokers agree together before a sale by auction that only one of them shall bid for each article sold and that all articles thus bought by any of them shall be sold again amongst themselves at a fair price and the difference between the auction price and the fair price divided among them. Such an agreement was a conspiracy for which the brokers who were parties to the agreement were indictable. The aforesaid dicta was disapproved by their Lordships of the Judicial Committee in the case of Doolubdass Pettamber .Dass v. Ramloll Thackoorsey Dass, 5 Moo Ind App 109 corresponding to 7 Moo PC 239 (PC).

25. In the case of Fuller v. Abrahams, (1821) 23 RR 626 the plaintiff dissuaded other intending purchasers by openly enlisting their sympathies on his behalf. He was left alone to bid and when the auctioneer for that reason refused to knock down the property to him a friend raised the last bid by a nominal sum and plaintiff made a final bid thus securing for . 52/- property worth. 150/-. The Court held that this was a fraud invalidating the sale.

26. The latest leading English case in which the question as to whether a knock out arrangement is opposed to public policy has been considered is Rawlings v. General Trading Co., (1921) 1 KB 635. The facts of that case were as below :

27. At a sale by public auction of surplus property belonging to the Ministry of Munitions the plaintiff and the defendant agreed, in order to avoid competition that the defendant alone should bid for certain goods, and that the goods, if purchased, should be divided equally between them. In pursuance of that agreement the plaintiff abstained from bidding and the goods were knocked down to the defendant. The defendant subsequently repudiated the agreement. In an action by the plaintiff to recover one moiety of the goods purchased or the value thereof over and above the price paid at the auction Shearman J. held that at any rate where the goods sold were the property of the public, it was against public policy that persons should combine at an auction to procure the goods to be sold at a price considerably below the fair value with the necessary result that the public were defrauded. He accordingly held that the agreement was unenforceable.

The matter was taken up in appeal and it was held by Bankes and Atkin L. JJ. (Scrutton LJ dissenting) that the agreement was note illegal and judgment should be entered for the plaintiff. The case of (1844) 13 LJ Ch. 388 supra was followed and the dictum of Gurney B. in (1833) 6 Car and P 239 ante was disapproved. The case of (1821) 23 RR 626 does not appear to have been considered either in the majority or in--the minority judgments. But in view of the majority decision it cannot be held to have laid down a correct proposition of law. Scrutton L. J., however, held that the agreement, though reasonable between the parties, was contrary to public policy as in restraint of trade, contrary to the interests of the public and was unenforceable. The majority decision in Rawling's case, (1921)) I KB 635 was followed in the case of Cohen v. Roche, (1927) 1 KB 169.

28. I now advert to the Indian case law.

29. In the case of Nanda Singh v. Sunder Singh, 37 Pun Re 1901 P hi, the facts were as below :

Plaintiffs sued for possession of 3/11th share of certain plots of land sold at an auction by Government on the allegation that the plaintiffs and defendants before the auction had entered into an agreement to buy the land in partnership and thereafter to divide it and that they had paid their quotas of the portion of the purchase money deposited on the day of the sale and were willing to pay the balance and had been wrongfully refused their share by the defendants. The suit was decreed by the first Court but was dismissed by the Divisional Judge inter alia on the ground that the alleged agreement was void as opposed to public policy inasmuch as the party had agreed to purchase the property at the auction jointlyand not to bid against each other. It was held on appeal that under the circumstances of the case the agreement was perfectly lawful and one that should be enforced being more in furtherance of public policy than against it.

30. In the case of Bhagwant Genuji v. Gangabishan Ramgopal, AIR 1940 Bom 369, a partnership was formed solely with a view to take toll contracts at a public auction and a question arose as to whether such a partnership was illegal as opposed to public policy and it was held that the principle of public policy cannot be made to apply in its result to a combination of persons who agreed not to bid against one another at a public sale held for farming out public revenue. The combination is not rendered illegal merely because the Government is a party to the sale or that the proceeds of the sale would be credited to public revenues or that it might result in possible loss to Government. Nor can the combination to be regarded as other than innocent merely because it discouraged competition amongst the partners themselves.

31. In the case of Mohammad Isack v. D. Sreeramalu, AIR 1946 Mad 289, the facts were that 'A' and 'B' made tenders to postal authorities to secure a licence to carry mails between certain places. There was an agreement between 'A' and 'B' by which 'A' was to withdraw his tender and in consideration of the withdrawal B agreed to pay A a certain monthly sum. 'A' withdrew his tender and the licence was given to 'B'. In a suit by 'A' to recover the sum on the basis of the agreement it was held that the agreement for the withdrawal of the tender which was in the nature of an offer or bid was like an agreement between intending bidders that one should keep off from bidding and was not unlawful or opposed to public policy under Section 23 of the Contract Act. It was further held that it was not possible to treat the obtaining of a licence from Government as in the nature of the trade or calling and the agreement was not invalid under Section 27 of the Contract Act.

32. In the case of P. Ranialingaiah v. N. Subbariam Reddi, AIR 1951 Mad 390, it was held that an agreement not to bid against each other in an auction is not illegal under the common law. In England it would appear that there had been an enactment of a statute to remedy the evil of the knock out combination like this. There is no similar statute in India and such an agreement is not invalid on the ground of public policy and does not invalidate the auction sale.

33. On behalf of the appellant reliance has been placed upon the following rulings : Chattamal Jethmal v. Rewachand, AIR 1914 Sind 165, Parduman Chand v. Kashmira Singh, AIR 1943 Lah 100; AIR 1933 Oudh 124, Abdulla Saheb v. Guruvappa and Co., AIR 1944 Mad 387, Hutchegowda v. H. M. Basaviah, AIR 1954 Mys 29.

34. In the first case the facts were that the plaintiffs had entered into an agreement with the defendant and some others that in case of any one of them becoming the purchaser at an auction to be held by the Executive Engineer of the rightto collect lac that right was to be disposed of among all the partners by sale to the highest bidder and that they would not only not bid against each other but that there was to be a show of bidding upto a certain limit in order to make the Executive Engineer believe that there was no combination between them and that there was keen competition among the bidders. The right was sold by the Executive Engineer to two of the partners. The plaintiffs bought it from them paying a certain sum over and above the auction, price and divided the surplus among all the partners, the defendant receiving his share. The plaintiffs then applied to the Executive Engineer for a transfer of the right in their name and on the application being refused they sued the defendant for recovery of the amount paid to him. It was held that the agreement being fraudulent and opposed to public policy was void and the plaintiffs could not recover the amount paid under it.

35. In the aforesaid case it was found as a fact that the right to collect lac was worth fully Rs. 21,200/- and as such loss to the tune of Rs. 8,200/- was caused to the public purse as a result of the arrangement among the parties. It has already been noticed that in the instant case there was no proof of any loss having been occasioned to the Forest Department.

36. It further appears that the learned Judges of the Sind Judicial Commissioner's Court relied upon the observations made by Scrutton L. J. in the case of 1921-1 KB 635 and the dictum in the case of (1833) 6 Car and P 239 (supra) and (1821) 23 RR 626 and upon the case of Ambika Prasad Singh v. R. H. Whitwell, 6 Cal LJ 111. Since Scrutton L. J. was in a minority the observations made by him cannot form correct guide for determining the question under consideration. The dictum laid down in the case of (1833) 6 Car and P 239 was disapproved by their Lordships of the Judicial Committee in the case of Doolubdass 5 Moo Ind App 109 : 7 Moo PC 239 (PC) (supra). The case of 6 Cal LJ in was not considered to have been correctly decided and the case of (1821) 23 RR 626 (supra) was considered to be a case having special facts and as such not laying down a principle of general application in AIR 1933 Oudh 124 (supra) relied upon on behalf of the appellant. It was held in that case that an agreement between two persons not to bid against each other at an auction sale is perfectly lawful and cannot be considered to be opposed to public policy.

37. In the second case there was an agreement by the intending bidders at an auction forming a ring to share the profits resulting from the knock out was held to be against public policy. It is respectfully submitted that if an agreement between intending purchasers at an auction sale not to compete against each other is not unlawful or opposed to public policy it is not understood as to how can such an agreement be held to be unlawful where the intending bidders had formed a ring. If the auctioneer has reserved a right not to knock the hammer at the highest bid no question can arise of any fraudhaving been practised upon him. It is upto him to refuse or to accept the highest bid.

38. The third case has already been discussed.

39. The fourth case was under the Defence of India Rules 1939. In that case the defendants were licensed to deal in yarn at Kamalapuram. A contract was entered into between the defendants and the plaintiff at Madras whereby the former agreed to sell to the latter yarn which was not in Kamalapuram. It was found that the aforesaid contract was in contravention of Rule 81 (2) of the Defence of India Rules and as such was illegal from its inception and was void. The aforesaid case is distinguishable from the facts of the instant case inasmuch as the agreement which was entered into between the parties has not been found to be illegal under a statute.

40. In the Mysore case two persons had entered into an agreement not to raise bids in revenue sales but to divide the property purchased between themselves, the effect of which was to prevent the land from being sold for its real valuer and it was observed that such an agreement was void as its object was fraudulent and unlawful. A perusal of the judgment in the aforesaid case indicates that the main ground on which the decision of the case rested was that the suit was filed after the expiry of the prescribed period of limitation and the observations made with regard to the agreement being void were more in the natureof obiter dicta.

41. I am, therefore, of the opinion that the agreement in question was not opposed to public policy.

42. It has also been urged on behalf of the appellant that the agreement between the parties involved or implied injury to the person or property of another. The word 'injury' as used in the fourth clause of Section 23 means criminal or wrongful harm. Loss which ensues to a trader as a result of competition by a rival trader is not injury within the meaning of the fourth clause, referred to above. It has already been noticed that the evidence on record did not indicate that the contract price was inadequate and that the Forest Department did not labour under the duty of accepting any one of the tenders submitted. No injury to the property of the Forest Department was thus involved in the agreement arrived at between the parties.

43. In fine, I hold that the agreement between the parties was not void under Section 23 of the Indian Contract Act.

44. The appeal accordingly fails and is hereby dismissed with costs.


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