( 1 ) THIS is an appeal filed by Andhra Bank against the judgment and decree dated 16. 4. 1984 passed by the i-Additional Subordinate Judge, Vijayawada dismissing the suit being O. S. No. 497 of 1981 for recovery of Rs. 1,14,274/ -. The parties shall be referred to as they are arrayed in the suit.

( 2 ) DETAILED facts are not necessary to be mentioned as the controversy is in a short compass. Defendants were running business in Abkari and the bank had sanctioned a loan facility of Rs. 69,000/- in their favour. Defendants 2, 6 and 8 had deposited title deeds on 3. 10. 1978 with huzurnagar s Branch of the Bank. By this, an equitable mortgage was created in favour of the bank. Defendants 1 to 7 also executed a pronote on 29. 9. 1978 in favour of the bank. Certain other documents were also executed, but the loan was not repaid and the bank filed the suit. Execution of the documents was admitted, but it was denied that the amounts were received. The main defence which was taken by the defendants was that they had formed themselves into a partnership firm for doing arrack business and this fact was known to the plaintiff-bank. The arrack business was not permissible, so the amounts advanced to the defendants were for an illegal purpose and the purpose was opposed to the public policy. Therefore deposit of title deeds by defendants 2, 6 and 8 would not create any right in the plaintiff-bank as the contract itself was void.

( 3 ) THE first issue framed by the Trial court was, "whether the suit pronote is void and illegal as the amount lent under it is for partnership in Abkari business and is opposed to public policy and statute?" This issue was decided in favour of the defendants and against the plaintiff-bank. Evidence was led by plaintiff-bank and defendants did not lead any evidence. According to P. W. I, Abkari loan of rs. 69,000/- was sanctioned to Defendants 1 to 4 on 29. 9. 1978 by the bank, Defendants 5 to 7 were the co-obligants of Defendants 1 to 4 and Defendants 2, 6 and 8 had deposited their title deeds on 3. 10. 1978. He marked exs. Al to B23. It is pertinent to note that the plaintiff-bank in the plaint itself in para-2 submitted. "the Andhra Bank Ltd. has sanctioned a loan facility of Rs. 69,000/- (Rupees sixty nine thousands only) to the defendants one to four for doing business in Abkari, on the co-obligation of defendants five to seven and in this connection the defendants two and six and one Ponakala Subbarao who is the 8th defendant herein have deposited the title deed on 3. 10. 1978. . . . . . . . "so the fact was known to the plaintiff- bank that the defendants were doing business in Abkari. In cross-examination p. W. I further admitted that the suit amount was lent for Abkari business and he had no record to show that the Defendant no. l and other defendants had licence and he could not say whether at any point of time the defendants were having abkari licence or not. On facts as such there is no dispute and it is accepted by both the sides that the Abkari business could not be run without a licence and it is also nobody s case that the defendants had a licence on the day the loan was advanced.

( 4 ) NOW the contention of the defendants is that the contract itself was void and hit by Section 23 of the Contract act. He relies on a Full Bench s judgment of Kerala High Court reported in Krishna menon v. Narayana Ayyar, AIR 1962 ker. 21 which, according to them, covers the controversy. Before coming to this judgment, it may be relevant to note that section 23 of the Contract Act lays down as to what considerations and objects are lawful and what are unlawful. It lays down that 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. It is also unlawful if it is opposed to public policy. In the present case we are concerned only with these three objects of an agreement because it is conte