Section 65 of the Contract Act is applicable to contracts that were void ab initio but were not known to be so by at least one of the parties at the time of entering into the contract.

R. N. MISRA, J.

( 1 ) THE plaintiffs are in appeal against the reversing decree of the learned District judge. Plaintiffs 1 and 2 are the partners of the firm, plaintiff No. 3. Similarly defendants 1 to 4 are partners of the Firm, defendant No. 4,

( 2 ) THE plaintiffs filed a suit on 17-6-1963 for recovery of Rs. 4068. 75 from the defendants on the allegation that pursuant to an agreement they had despatched by train 93 bass of broken rice to the defendants for effecting sale thereof at the rail-head, i. e. Shalimar Railway station. The defendants had quoted the prevailing market rate to be Rs. 17. 50 per-maund. As the defendants did not pay the price and raised false pleas to avoid the liability, the plaintiffs were obliged to come to the Court.

( 3 ) THE defendants in a joint written statement denied that the despatch of the consignment was not in the manner as pleaded by the plaintiffs; the defendant No. 2 had informed the second plaintiff that the defendants were not licensed dealers under the West Bengal Food Grains Licensing Order and thus it would be difficult for them to dispose of the consignment of broken rice at Calcutta; it was ultimately agreed that the plaintiffs would despatch, the consignment to Shalimar with their man and attempt would be made for disposal with the assistance of defendant No. 3 the plaintiffs representative accompanying the consignment not the stock transported to the premises of one Mohanlal and Co. with the help of defendant No. 3: the stock of broken rice was unfit for human consumption and the authorities of the Calcutta Corporation ceased and destroyed the same and even started a prosecution, against Mohanlal and Co. ; the claim was not tenable as the contract was illegal, the Bargarh Court had no jurisdiction: the suit suffered from defect of non-joinder of parties --Corporation of Calcutta and Mohanlal and Co. were necessary parties; the claim was barred by limitation, etc. ,

( 4 ) THE learned Trial Judge found that the suit as laid was maintainable; the defendants failed to establish that the stock of broken rice was unfit for human consumption or that it has been seized and destroyed by the Corporation of calcutta. He further found that the contract was valid and the plaintiffs were entitled to recover the price of the 93 bass of broken rice. Accordingly he decreed the suit with pendente lite and future interest.

( 5 ) UPON appeal by the dependants the learned District Judge sustained all the findings of the trial Court except the one relating to the legality of the deal forming the basis of the claim. He found that in 1960 when the rice was consigned, there were in vogue statutory control orders both in Orissa and West Bengal and neither the plaintiffs nor the defendants had the requisite license to possess and deal in rice. He assumed that the parties were aware of the position and, therefore, the contract was void ab initio and the provisions of Section 65 of the Contract Act was not applicable. He accordingly reversed the decree of the trial court and dismissed the suit In this second appeal the plaintiffs assail the reversing decree.

( 6 ) THE only question that has to be considered is whether the plaintiffs are entitled to rely upon the equitable provision in Section 65 of the Contract Act. That section provides:--"when an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it to the person from whom he received it. " the doctrine of 'restitution in integrum' is of general application and Section 65 incorporates that equitable provision. Both at common law in England and in this country courts have taken the view that the rule should be liberally construed in order to do equity and justice between parties.

( 7 ) SECTION 65 of the Contract Act does not apply to contracts which were ab initio void to the knowledge of the contracting p