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High Court Of Orissa
B. K. BEHERA, P. C. MISRA
FAKIR CHAND SETH - Appellant
Versus
DAMBARUDHAR BANIA - Respondent
First Appeal 183 Of 1975
Decided On : 03/25/1986
CONTRACT - VOID AGREEMENT - RESTITUTION OF MONEY ADVANCED - SECTIONS 65 AND 70 OF THE INDIAN CONTRACT ACT, 1872 - INTERPRETATION AND APPLICATION - VOID AGREEMENT FOR PROCUREMENT OF PADDY WITHOUT VALID LICENCE - PLAINTIFF ENTITLED TO REFUND OF MONEY ADVANCED UNDER VOID AGREEMENT.
Fact of the Case:
Plaintiff advanced Rs. 15,000/- to the defendant for supply of paddy under an agreement (Ext. 2) which was void as it violated the Orissa Rice and Paddy Control Order, 1965. The defendant failed to supply the paddy or refund the money. Plaintiff filed a suit for recovery of the amount advanced and interest.
Finding of the Court:
The court held that Ext. 2 was a void agreement as it was hit by the provisions of the Orissa Rice and Paddy Control Order, 1965, which prohibited any person from acting as a dealer without a valid license. The court further held that the plaintiff was entitled to refund of the money advanced under the void agreement under Sections 65 and 70 of the Indian Contract Act, 1872.
Issues: Whether the plaintiff was entitled to refund of the money advanced under the void agreement under Sections 65 and 70 of the Indian Contract Act, 1872.
Ratio Decidendi: The court held that Section 65 of the Indian Contract Act, 1872 applies to agreements which are void ab initio, if it was not known to the parties that it was void at the time when it was entered into. In this case, the plaintiff was not aware that the agreement was in violation of law and, therefore, he was entitled to restitution of the money advanced under the void agreement. The court also held that Section 70 of the Indian Contract Act, 1872 can be invoked to prevent unjust enrichment or unjust benefit. In this case, the defendant had accepted the money advanced by the plaintiff and had not performed the stipulated work due to the prohibition by law. Therefore, the plaintiff was entitled to refund of the money advanced under the void agreement.
Final Decision: The court allowed the appeal, set aside the judgment and decree of the trial court, and decreed the suit in full with costs throughout.
P. C. MISRA, J.
( 1 ) THE plaintiff is in appeal against the judgement of the Subordinate Judge, Bhawanipatna in Money Suit No. 33/73 wherein he had prayed for recovery of Rs. 17,815/- including interest due on an agreement executed by the defendant on 19-1-1972.
( 2 ) THE plaintiff's case is that on 19-1-72 he advanced a sum of Rs. 15,000/- to the defendant for supply of paddy in evidence whereof the defendant executed a document (Ext. 2) incorporating the terms agreed to between the parties. It was stipulated therein that the defendant is to supply 350 bags of paddy at the rate of Rs. 43/- per bag of fine paddy and at the rate of Rs. 45/- per bag of superfine paddy by 28-2-72 and after the said supply the defendant was to take return of the document executed by him. The plaintiffs case is that the defendant neither supplied the paddy nor refunded the advance money to the plaintiff in spite of several demands though the defendant had sent two letters to him requesting for time to settle up the matter. The plaintiff has alleged that he is not a regular money-lender and the aforesaid transaction was a solitary one in which he had advanced money for purchase of paddy as aforesaid. The suit has been filed for recovery of the aforesaid amount of Rs. 15,000/- which the plaintiff had advanced to the defendant and also for interest at the rate of 12 per cent per annum.
( 3 ) THE defendant in his written statement denied the plaint allegations denying the execution of any document on 19-1-72 in favour of the plaintiff and also denying to have received any amount whatsoever as advance. He also denied to have sent any letter acknowledging the receipt of the aforesaid amount nor did he ever undertake to repay the same as alleged in the plaint. A plea has been taken by the defendant that the plaintiff not being a licensed dealer, he could not legally purchase huge amounts of paddy as per the stipulations of Ext. 2. It is, therefore, contended that Ext. 2 being a contract for sale and purchase of paddy, the same was illegal and void being opposed to law as it would amount to procurement of paddy without a valid licence for which the said document is unenforceable in law and the amount said to have been advanced by him is not legally recoverable. The defendant also takes the plea that the plaintiff is a regular money lender and he having no money lending licence, the principal as well as interest thereof cannot be recovered by him in the suit.
( 4 ) THE learned Subordinate Judge having framed necessary issues which arise out of the pleadings recorded the following findings : (I) The document (Ext. 2) is genuine under which the plaintiff had advanced a sum of Rs. 15,000/- to the defendant. (ii) Ext. 2 is an agreement for procurement of paddy for which the plaintiff had no valid licence. It, therefore, follows that Ext. 2 is not a lawful agreement as it defeats the provisions of Orissa Rice and Paddy Control Order, 1965. (iii) The consideration for such a void agreement being also illegal, neither the contract is enforceable in law nor the amount advanced thereunder is recoverable through court. (iv) The plaintiff is not entitled to any relief under Ss. 65 or 70 of the Indian Contract Act. (v) The plaintiff is not a money-lender in regular course of business and the suit is not hit by the provision of the Orissa Money Lenders Act. (vi) Ext. 2 being void in law the suit for recovery of the amount advanced thereunder is not maintainable and hence the same is liable to be dismissed.
( 5 ) THOUGH in the grounds of appeal the plaintiff-appellant had challenged the findings of the learned trial court and urged that Ext. 2 is not a void contract, during the course of argument the said ground was abandoned and the learned counsel for the appellant proceeded assuming the said finding to be correct in law and contended that the plaintiff is entitled to the relief claimed in the suit under Ss. 65 and 70 of the Contract Act (hereinafter referred to
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