The central legal point established in the judgment is the refusal to enforce illegal contracts based on the principle of public policy, as highlighted in the Defence of India Act, 1939, and the Yarn Control Order.

Bell, J.

1. The learned advocate for the plaintiff has conducted the case of his client with great ability and has said everything that could possibly be said in circumstances which, as I have already said in Appln. No. 2346 of 1943, were made extremely difficult for him by the way in which the defence was altered from time to time. I am afraid, however, that I have no alternative but to accept the submission of the defendants a submission of which little more than a hint was given to the plaintiff up to within a week of the trial. The point taken is that the contract on which the plaintiff sues was illegal ab initio, that therefore the -plaintiff cannot succeed and that his suit must be dismissed with costs. The words of Lord Mansfield in Holman v. Johnson (1775) 1 Cowp. 343, cited at p. 602 in Harry Parker Ltd. v. Mason (1940)2 K.B. 590, apply to this case:

The objection that a contract is immoral or illegal as between plaintiff and defendant sounds at all times very ill in the mouth of the defendant. It is not for his sake, however, that the objection is ever allowed; but it is founded on general principles of policy, which the defendant has the advantage of contrary to the real justice, as between him and the plaintm, by accident, it 1 may say so. The principle of public policy is this: ex dolo malo non oritur actio. No Court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act. If, from the plaintiffs own stating or otherwise, the cause of action appears to arise ex turpi causa or the transgression of a positive law of this country, there the Court says he has no right to be assisted. It is upon that ground the Court goes; not for the sake of the defendant, but because they will not lend their aid to such a plaintiff. So if the plaintiff and defendant were to change sides, and the defendant was to bring his action against the plaintiff, the latter would then have the advantage of it; for where both are equally in fault, potior est conditio defendentis.

2. In In Re: Mahmoud (1921) 2 K. B. 716 Scrutton L.J. says:

In my view the Court is bound, once it knows that the contract is illegal, to take the objection and refuse to enforce the contract, whether its knowledge comes from the statement of the party who was/guilty of the illegality, or whether its knowledge comes from outside sources. The Court does not sit to enforce illegal contracts. There is no question of estoppel; it is for the protection of the public that the Court refuses to enforce such a contract.

3. In the present case, on 19th September 1942, by a contract in writing the plaintiff agreed to buy, and the defendants agreed to sell certain bales of yarn at an agreed price, delivery to be as soon as possible. The defendants found difficulty in giving delivery, and in a long series of letters the plaintiff continually pressed for and the defendants agreed to give delivery as soon as yarn was available. Later, the defendants offered another and different yarn, but the plaintiff did not accept this because of various difficulties as to price. Finally, the plaintiff set a limit of time for delivery, namely, 31st March 1943, and the defendants were not able to deliver. Ordinarily, therefore, the plaintiff would have a clear action for breach of contract and he would be able to recover the difference between the contract price and the market price on the date of the breach. The contract was made in Madras where the defendants have an office. As I have said in Appln. No. 2346 of 1943, the defendants in their written statement raise two defences, (a) no contract, and (b) novation. Not until the case was opened practically did they raise the point that under rules made under the Defence of India. Act, 1939, the contract was illegal from its inception because the defendants had no right to sell yarn in Madras. Under Section 2 (1) (a), Defence of India Act, the Government is empowered to make rules. Under Rule 81 (2) the Yarn Contr