The engagement agreement for loan recovery was found to be unenforceable under the Indian Contract Act due to its opposition to public policy.

The defeated plaintiff in a suit for relisation of money is the appellant in this appeal.

2. The plaintiff is a firm engaged in detective investigation. The Managing Partner of the plaintiff firm is an Assistant Commissioner of Police retired from the service of the State Government. The defendant Bank, hereinafter referred to as 'the Bank' for short, has engaged the plaintiff as their agent to recover the dues of the loan disbursed to one of its borrowers. According to the plaintiff, pursuant to the said engagement, they have pressurized the borrower and on account of the pressure exerted by them, the borrower has settled the loan dues. It is the case of the plaintiff that as per the terms of the engagement, 5% of the amounts recovered by the Bank pursuant to the efforts taken by the plaintiff is to be paid to the plaintiff towards their commission and that the Bank has refused to pay the commission agreed upon after the recovery. The suit, in the circumstances, was filed for realization of a sum of Rs.72,050/- being 5% of the amount of Rs.16,41,000/- recovered by the Bank from its borrower. The Bank contested the claim of the plaintiff. According to the Bank, on the very same day on which the plaintiff was engaged by them as their agent, the borrower approached the Bank and offered to settle the dues by selling the property mortgaged by him to the Bank towards the security of the loan. It was also contended by the Bank that thereafter, as agreed, the borrower has liquidated the loan outstanding in two instalments, on 2.1.2006 and on 25.1.2006. Thus, according to the Bank, since the borrower had remitted the loan dues voluntarily, the plaintiff is not entitled to claim any amount by way of commission.

3. The trial court, on a consideration of the materials on record, found that the Bank could recover the dues of the loan from the borrower only on account of the efforts taken by the plaintiff and consequently, decreed the suit as prayed for. The Bank took up the matter in appeal. The appellate court, however, took the view that the materials on record are not sufficient to hold that the Bank could recover the loan dues from the borrower on account of the efforts taken by the plaintiff and consequently, dismissed the suit reversing the decision of the trial court. Hence this second appeal by the plaintiff.

4. Heard Senior Counsel Sri. K. Ramakumar for the appellant and Sri. S. Easwaran for the Bank.

5. The fact that the Bank had engaged the plaintiff as their agent to recover the loan dues of their borrower, namely, Anilkumar is not in dispute. Likewise, the fact that the borrower had remitted the loan dues in two instalments, on 2.1.2006 and 25.1.2006 is also not in dispute. The only dispute is as to whether the settlement of the loan liability by the borrower is on account of the efforts taken by the plaintiff. While the plaintiff contends that it is due to the pressure exerted by them on the borrower that he remitted the dues to the Bank, the Bank contends that the borrower has voluntarily settled the dues. Ext.A1 is the document by which the Bank had engaged the plaintiff as their agent to recover the dues from their borrower, namely, Anilkumar. Ext.A1 authorises the plaintiff, among others, to follow up with the borrower for the purpose of recovery of the dues to the Bank, follow up the legal/Revenue Recovery/Lok Adalat cases, arrange for buyers for assets/properties pledged/hypothecated/mortgaged/ or otherwise charged to the Bank, collect details of the personal properties of the borrowers/guarantors and explore the possibility of bringing them to sale and arrange for marketing Bank's scheme for compromises/ One Time Settlement with the borrowers/guarantors. Ext.A1 clarifies that the means/procedure as stated above for recovery are indicative and the plaintiff is free to adopt any other means/procedure for effecting the recovery. The relevant terms of Ext.A1 read thus :

2. "For the purpose of recovery you may assist