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1920 Supreme(Mad) 220

IN THE HIGH COURT OF MARAS
A Rahim
Pl.Pl. Palaniyappa Chettiar
Versus
N.S.P. Chockalingam Chettiar
Decided On : 2 August, 1920

The main legal point established is that the contract by which the parties were associated, in this case, one of agency, was not in itself unlawful and did not make the whole transaction unlawful.

Headnote:

Contract Act - Illegal Agreement - Order 21 Rule 16, Civil Procedure Code - Section 23 of the Contract Act - Sykes v. Beadon (1879) 11 Ch. D. 170 - Bridget v. Savage (1885) 15 Q.B.D. 363 - Bhola Nath v. Mulchund (1903) I.L.R. 25 All. 639 - Nagendrabala Dasi v. Gurudayal Mukherji (1903) I.L.R. 30 Cal. 1011 - Goswamishri Purushottanj Maharaj v. Robb (1884) I.L.R. 8 Bom. 398

Fact of the Case:

The plaintiff's suit has been dismissed on the ground that the agreement on which the suit is based is illegal according to Section 23 of the Contract Act.

Finding of the Court:

The Court found that the defendant's agency to execute a decree was innocent and not in violation of Order 21 Rule 16, and the contract between the parties was not unlawful in itself.

Issues: The issues revolved around the legality of the agreement, the defendant's agency, and the application of Section 23 of the Contract Act.

Ratio Decidendi: The Court held that the contract by which the parties were associated, in this case, one of agency, was not in itself unlawful and did not make the whole transaction unlawful.

Final Decision: The judgments of the lower Court were reversed, and the case was remanded to the court of first instance for disposal on other issues. Costs will abide the result.

JUDGMENT

Abdur Rahim, J.

1. The plaintiffs suit has been dismissed on the ground that according to Section 23 of the Contract Act, the agreement on which the suit is based as contained in Ex. A is illegal and that therefore the plaintiff cannot recover the money which the defendant had collected under certain decrees. The plaintiff himself is the judgment-debtor under those decrees and he apparently asked the defendant to take an assignment of the decree on his behalf and to execute the decree against the other judgment-debtors and the defendant realized in execution certain assets. By Ex. A, it is provided that the defendant will submit accounts to the plaintiff of the amount spent in collecting the money and of the amount realized and after deducting commission of 20 per cent, to pay over the balance to the plaintiff.

2. Order 21 Rule 16 says that "where a decree for the payment of money againsttwo or more persons has been transferred to one of them, it shall not be executed against the others." It is not contended that on such transfer, the liability under the decree becomes altogether discharged but that the decree shall not be enforced in execution. It is open to the judgment-debtor who has obtained a transfer of the decree to sue his co-debtor upon it for contribution as held in Anant Vinayak v. Nagappa (1907) I.L.R. 32 Bom. 195. In this case the judgment debtors did not raise any objection to execution on the strength of Order 21 Rule 16. The defendant must be taken to be an agent of the plaintiff for the actual realization of the money. But it is argued on behalf of the respondent that it was the duty of the Court to refuse execution and the Court would have done so, if it was brought to its notice that the defendant was merely an agent or benamidar of the plaintiff who was one of the judgment-debtors. Having regard to the language of Order 21, Rule 16 of the Civil Procedure Code we may proceed on the assumption that if the facts were known to the executing Court, it would have been bound to reject the application for execution.

3. Then it is contended that if the Court were now to help the plaintiffs in recovering the moneys realized by the defendant by means of the execution of the decree in spite of the prohibition of the law, that would be a violation of the rule laid down in Section 23 of the Contract Act. Mr. Bhashyam Aiyangar in support of the judgment of the lower Court has referred us to a number of rulings of the English Courts. The English authority on which much emphasis was laid was the case bf Sykes v. Beadon (1879) 11 Ch. D. 170. There Jessell M. R. upheld the proposition that the Court of Law or equity will not lend its assistance in any way towards carrying out an illegal contract ; therefore such a contract cannot be enforced by one party to it against the other, either directly by asking the Court to carry it into effect, or indirectly by claiming damages or compensation for breach of it. The case before us does not fall within the proposition laid down in Sykes v. Beadon." In the first place the purchase of a decree by one of the judgment-debtors is not illegal and nextly this case comes within the class of cases mentioned in the judgment of the Master of Rolls "But in cases where the contract is actually at an end, or is put an end to, the Court will interfere to prevent those, who have, under the illegal contract, obtained money belonging to other persons on the representation that the contract was legal, from keeping that money." If the plaintiff in the present suit were suing the defendant to enforce the contract and to compel him to execute the decree against the co-judgment debtors or to recover damages for having failed to do so, in that case, it would be asking the Court, to carry out an illegal contract. But that is not the case here. The same answer is to be given to the cases in Booth v. Hodgson (1795) 6 T.R. 405=101 E.R. 619 and Battersby v. Smith (1818) 56 E.R. 45 S.C. 3 Madd. 110. On the o




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