ii. Chhanga Lal and others -Vs.- M.C.D. [149
(2008) DLT 460];
d) Judgment of the Gujarat High Court in Maganlal
Rambhai Gandhi -Vs.- Ambica Mills Ltd. [1963
SCC OnLine Guj 27];
e) Judgment of the National Consumer Disputes
Redressal Commission, New Delhi in Himanshu
Aneja -Vs.- Ansal Properties and
Infrastructures Ltd. and another [Revision
Petition No.568/2013, decided on 21.04.2015];
f) Judgment of the Court of Sh. Prashant Kumar
CCJ/ARC Rohini Courts Delhi in Sh. Braj Mohan
Gupta -Vs.- Sh. Sanjay Nagore [Suit
No.340/2009, decided on 21.04.2010];
7. On the other hand, the learned Counsel for the
Respondent Mr. Vishnu Hegde has justified the
Exhibits including the Assignment Agreement. He
they were getting funds. He stated that it is the
and void. He stated that the present appeal filed by the
8. Having heard the learned counsel for the
(Rupees three crores only), in a staggered
manner as detailed here. below subject to
mutual satisfaction of the progress of the
Assignment.
1. Rs.60,00,000.00 Rupees sixty lakhs only by crossed cheque
No.659604 dated
August 4th 2008
Drawn on ABN
AMRO Bank N.V,
Bangalore Branch,
Bangalore-560
2. Rs.40,00,000.00 Rupees forty lakhs only To insert a letter
supporting
3. Rs.50,00,000.00 Rupees fifty lakhs only To insert a letter
4. Rs.50,00,000.00 Rupees fifty lakhs only To insert a letter
supporting
5. Rs.50,00,000.00 Rupees fifty lakhs only To insert a letter
supporting
6. Rs.50,00,000.00 Rupees fifty lakhs only To insert a letter
supporting
2. That the assignee has agreed to make
the above said film in accordance with the
desire and expectations of the producer of said
film by taking sole and absolute responsibility
in execution of the Assignment until the film is
certified, distributed and released for public
viewing in Cinema Theaters.
3. Whereas the assignee has agreed to
pay back a guaranteed repayment in a sum of
Rs.3,50,00,000/-(Rupees three crore and fifty
lakh only), to the Assignor/ producer,
immediately before the release of the above
said film to the public viewing in Cinema
Theatres, failing which the Assignor/producer
is entitled to claim the same along with
interest at the rate of 15% per annum from
the date of demand.
4. The assignee/agent hereby agrees
that he shall meet all expenses towards the
cost of production of the above said film
including making payments of the
remuneration to the artists/actors, technicians,
skilled and unskilled workmen, labourers,
Government departments to obtain. necessary
permissions, licenses, suppliers of various
materials, furniture, studio equipment, location
charges, hotel expenses including boarding and
lodging, Transportation costs, etc. and meet
the expenses towards insurance premiums,
compensation to the injured in case of
unforeseen accidents to the people involved in
such accidents during the production of the
above said film, the assignee hereby agrees to
ensure all payments are made promptly to the
concerned and further indemnifies the assignor
totally and absolutely against any monetary
demand from anyone who is involved in the
production of the above said film.
5. The assignors/producer hereby agrees
to bear all the expenses incurred towards the
publicity (Both pre-release and post Release)
of the above picture
6. Both parties herein hereby agree that
the above picture shall be made/produced for
and on behalf of the assignor/producer by the
assignee. agent exclusively and solely for the
benefit of the producer, and the entire world
rights, distribution, exhibition and exploitation
rights, audio & video rights, TV & satellite
rights of the said film etc. shall solely belong to
the producer of the said film only. Whatever
the subsidies or tax exemptions granted by the
Government of Karnataka, in respect of the
said film shall belong to the assignor/producer
only.
7. The assignee/agent shall complete the
entire film in all respects and deliver the first
copy censored and certified, fit for public
viewing, within 120 days form the first day of
commencement of the shooting of the film and
release the film in December 2008.
8. Both parties herein do hereby agree
that the film shot by the assignee in respect of
the above assignment shall be entrusted to
M/S prasad Film Laboratories, Yeshwanthpur
industrial Area, Bangalore, where the negative
of the said picture will be stored in favour of
the assignor/producer. The assignor hereby
authorizes the assignee to deal with the said
laboratory directly in respect of the above
mentioned picture, and in case any specific
letter is needed for that purpose, the assignor
shall issue the same to the assignee and the
laboratory on request. The assignor shall also
issue any letter of authorization that my be
required by the assignee the execute the
production work of the film without any delay,
so as to assist to assignee to complete the
assignment on time, i.e., within 120 days from
the date of muhurat which is tentatively
scheduled on the Ninth Day of August Two
Thousand and Eight Only (09-08-2008).
9. Both parties agree that this agreement
is subject to all rules, regulations and
resolution made or are in force for the time
being and to those that may be amended,
passed, or incorporated in future by the
Karnataka film chamber of Commerce,
Bangalore.
10. xxx xxx xxx xxx xxx
11. Any party committing any default of
the terms and conditions of this agreement
shall indemnify the other party who is not in
default against all losses, costs and damages
the other party may suffer without prejudice to
the rights of the other party to seek other
relief/s and remedies available top it/him in
law or equity.
9. From reading of the aforesaid clauses and the
- 28 -
ii) It was the case of the respondent that, Appellant
No.1 requested the respondent for financial
assistance for making the said Film;
iii) The respondent paid a total sum of
Rs.2,46,08,184/-;
iv) The appellants promised to pay Rs.3.50 Crores
before the release of the Film, which the appellants
failed to pay;
v) The respondent through the statement of Ex.P2
reflects the payments made by the respondent to
the appellants;
vi) The case of the appellants was that, the said
amount was for production of the Film, the owner
of which is the respondent;
10. It is the finding of the learned Sessions Judge
that the appellants released the Film on 03.04.2009
without paying the agreed amount. Whereas the case of
the appellants was, it is the respondent, who released
the Film on 03.04.2009. In this regard, the appellants
have relied upon Exs. D-9, D-10 and D-11 to state that,
it was the respondent, who was actively involved in the
- 29 -
release of the Film. The appellants have also relied on
Ex.D-2, which is a letter to the CBFC requesting to
provide Censor Certificate dated 18.03.2009. This
Exhibit has been interpreted by the learned Sessions
Judge to hold that, since the appellants have produced
the Film, the same was released with the active
involvement of the appellants. The appellants have also
relied upon Ex.D4, which is a letter dated 31.03.2009 to
the UFO Movies India Limited, authorizing the release of
the Film. So, the Film was released on the joint efforts
of the parties. The issue is, whether the respondent is
entitled to the recovery of the amount as per the plaint?.
The learned Sessions Judge has also noted the letter
dated 05.11.2009 of the Respondent requesting for the
payment of Rs.3.50 Crores (Rupees Three Crores and
Fifty Lakhs only) as agreed under Ex.P1/D1. It has
come on record that the letter dated 05.11.2009 has not
been answered by the appellants. According to the
learned Sessions Judge, the non-issuance of reply itself
proves that the appellants have admitted the amount
- 30 -
payable. In fact, the appellants have paid a sum of
Rs.40,000/- to the respondent.
11. Suffice to state, the issue of recovery of the
money has to be decided primarily on the basis of the
Assignment Agreement of 04.08.2008 (Ex.P1/D1). There
is no dispute between the parties, on the contents of
the Assignment Agreement. In fact both the parties
have relied on the same.
12. In so far as the plea of Mr. Prakash by relying
on the judgments referred to above, primarily attacking
the assignment agreement to contend that it is void and
un-implementable is concerned, the same is a mis-
placed argument. This we say so because, the
appellants having acted on the agreement and made the
Film, they now cannot contend the very same
assignment agreement on the basis of which they have
made the Film is void/unimplementable agreement.
Further the appellants have not filed any counter-claim
seeking such a declaration against the respondent. In
the absence of any counter-claim in that regard, no
- 31 -
declaration as sought to be contended by the appellants
can be granted. In fact we note, no such case was set up
by the appellant in the written statement. Rightly no
issue in that regard was framed. So the plea that,
contract is unconscionable or void, was a non-issue.
13. One of the plea of Mr.Prakash is that the
agreement does not stipulate consideration in favour of
the appellants, as such it is unconscionable, violative of
Section 23 of the Indian Contract Act. The answer to this
submission is also the same, as has been stated above
that is; no such declaration has been sought by the
appellants by filing the counter-claim and also making a
claim for recovery of consideration. Having acted on the
agreement, the submission is un-merited;
14. So in view of the findings above, we are of the
view, no illegality can be noted in the Judgment/decree
dated 23.10.2020, as the same has granted against the
appellants for the performance of the assignment
agreement.
- 32 -
15. Now coming to the judgments relied upon by
Mr. Prakash are concerned, in Lachoo Mal -Vs.- Radhey
Shyam (supra), the Hon'ble Supreme Court was
concerned with facts, wherein the appellant was the
tenant of the respondent's shop. As some construction
was to be made by the land-lord, he was to vacate the
shop, but to re-occupy it on the same rent as soon as the
construction was completed. The issue in the said case
was primarily that Section 1A of the U.P (Temporary)
Rent Control and Eviction Act,1947 was merely in the
nature of exemption in favour of the Land-lords with
regard to the building constructed after 01.01.1951. It
conferred a benefit on them which they could give up or
waived by agreement or contractual arrangement. The
issue was also whether consideration or object of such an
agreement would not be lawful within the meaning of
Section 23 of the Indian Contract Act. The Hon'ble
Supreme Court was of the view that, Section-1A does not
employ language containing a prohibition against or
impose any restriction on a landlord and a tenant
entering into an agreement that, they would not be
- 33 -
governed by that Section. The Hon'ble Supreme Court
relied upon its judgment in the case of Neminath
Appayya Hanumannavar Vs. Jamboorao Sateppa
Kochteri [AIR (1966) Mys. 154] wherein it is held
that, the words 'if permitted, it would defeat the
provisions of any law" in Section 23 of the Indian
Contract Act refer to performance of an agreement which
entails the transgression of any provisions of law.
According to the Hon'ble Supreme Court, what makes
the agreement, which is otherwise legal, void is that its
performance is impermissible except by disobedience of
law. The Hon'ble Supreme Court held, clearly no
question of illegality can arise unless the performance of
the unlawful act was necessarily the effect of an
agreement. The judgment has no applicability to the
issue in hand and also in view of our findings in the
aforesaid paragraphs. Further it is not the case of the
appellants that the agreement entails an act which is
barred by law.
- 34 -
16. In so far as the judgment in the case of Union
of India Vs. Col. L.S.N. Murthy and Another (supra)
is concerned, the argument primarily was that, as the
agreement between the appellant and the Respondent
No.2 defeated a provision of law, the agreement is void
under Section 23 of the Indian Contract Act. The said
argument was in the context that the Respondent No.2
made a claim for Rs.12,23,732/- before the Arbitrator
and the appellant made a claim of Rs.5,89,130.72 for
purchase of Fruits during the period 07.06.2000 to
30.09.2000. The learned Arbitrator framed 04 issues and
answered the 04 issues in his award on 06.06.2001 and
awarded a sum of Rs.38,173/- towards the prices of fresh
fruits supplied by the respondents to the appellant with
interest @18% p.a. till the payment and also directed the
appellant to hand over the FD Certificates retained as
Security Deposit to Respondent No.2. The learned
Arbitrator has on Issue No.4, held that the contract was
void-abinitio and not enforceable and therefore, no right
accrued to any of the parties for breach of contract. The
Arbitrator found that the Government of India, the
- 35 -
Ministry of Defence in its letter dated 31.08.1990 has
issued an instruction that, if the rate quoted by a
tenderor was lower than 20% of the reasonable rates,
the rate should be treated as fictitious and the tender
should be rejected by a panel of Officers. The Arbitrator
also held that, as the rates quoted by Respondent No.2
were below 20% of the reasonable rates, the agreement
entered into with the Respondent No.2 for supply of fruits
at the tendered rates was hit by the letter dated
31.08.1990 of the Government of India, Ministry of
Defence. The Arbitrator has further held that, under
Article 13(3)(a) of the Constitution of India, law includes
a notification of the Government and therefore, the letter
dated 30.08.1990 of the Government of India, Ministry of
Defence was law and as the consideration or object of the
agreement between the appellant and the Respondent
No.2 defeated a provision of law, the agreement was
void under Section 23 of the Indian Contract Act.
17. The Hon'ble Supreme Court after referring to
the judgment in Lachoo Mal (supra) has held that, the
- 36 -
Arbitrator was not right in coming to the conclusion that
the agreement between the appellant and Respondent
No.2 was void and not enforceable as the consideration
or object of the agreement was hit by letter dated
31.08.1990 of the Government of India, Ministry of
Defence. This letter may be an instruction to the officers
of the Defence Department to reject a tender where rates
quoted by the tenderor are more than 20% below the
reasonable rates, but the letter was not an Act of the
Legislature declaring that any supply made at a rate
below 20% of the reasonable rates was unlawful.
Accordingly, the Hon'ble Supreme Court has set aside the
award of the learned Arbitrator.
18. The issue before the Hon'ble Supreme Court in
this case was, whether the instructions issued by the
Government of India would have the effect of law. The
Hon'ble Supreme Court held it in the negative. Such is
not the issue in the case in hand and as such, the
judgment has no applicability.
- 37 -
19. In so far as the judgment in the case of
Seetharama Shetty Vs. Monappa Shetty (supra) is
concerned, the Hon'ble Supreme Court in the said
judgment was concerned with an issue under the
Karnataka Stamp Act, 1957. Specifically concerning the
procedures and penalties associated with insufficiently
stamped documents. Noting the submissions made by
Mr.Prakash and also the contents of the written
statement, the judgment has no applicability to the issue
which arises for consideration in this appeal.
20. In so far as the judgment in the case of
Kamal Kumar Vs. Premalata Joshi and Others
(supra), the same was in the context of whether the
finding against the plaintiff holding that the plaintiff
was neither ready and willing to perform his part of the
contract. It was held, he is not entitled to the relief of
Specific Performance on the ground he was not willing to
perform the contract. No such finding has been arrived at
by the Court below.
- 38 -
21. In so far as the judgment in the case of
Neyveli Lignite Corporation Limited and Another
(supra) is concerned, the reliance has been placed on the
same by Mr. Prakash to contend that, if the consideration
or object of an agreement is said to be unlawful, such
agreement is void. Suffice to state that, no such case
has been set-up by the appellants in their written
statement. The case has been set-up for the first time
before this Court and hence, the reliance placed on this
judgment is clearly untenable.
22. Similarly, the reliance placed on the judgment
of the Madras High Court in the case of
N.Jayamurugan (Supra) concerned the same relates to
an appeal filed under Section-37 of the Act of 1996. The
plea is relatable to Section 25(3) of the Indian Contract
Act and the same was in the context whether a promise
in writing to pay in whole or in part a time barred debt is
void or not. Such an issue does not arise in the case in
hand, for the reason that the issue is not of revival of the
cause of action to claim a debt, but whether the
- 39 -
Assignment Agreement is unimplementable as it is
without any consideration, as such void. So, the
judgment has no applicability.
23. In the case of State Bank of India Vs.
Kanahiya Lal (supra) also on a similar proposition of law
as arose in the judgment in the case of N.
Jayamurugan (supra). For the same reasons, this
judgment is also not applicable to the facts of this case
and also for an issue which arises for consideration and
also because of our findings above.
24. In the case of Chhanga Lal Vs. M.C.D
(supra) the issue is whether the appellants are entitled to
refund of 50% or 100% of the amount deposited by
them towards the purchase of the Flats. The Court held
that the Respondent-MCD is not entitled to retain the
entire sale consideration paid by the petitioners as
Section-64 of the Indian Contract Act shall be applicable,
which inter alia stipulates that, a person resending the
contract is bound to return the benefit he had received
under the contract and is entitled to set off the damages
- 40 -
suffered at the hands of defaulting party. In view of the
facts and the issue which arises for consideration in the
said case, this judgment has no applicability to the case
in hand.
25. In so far the judgment relied upon by Mr.
Prakash in the case of Maganlal Rambhai Gandhi Vs.
Ambica Mills Ltd., is concerned, the plea was that the
agreement between the parties is hit by Sections-23 and
27 of the Indian Contract Act. As stated above, no such
plea was canvassed before the Trial Court nor any
declaration in that regard was sought for by the appellant
to canvass the case at the appellate stage.
26. Similarly, the judgment in the case of
Himanshu Aneja Vs. Ansal Properties and Braj
Mohan Gupta. (supra), having seen by us, has no
applicability. In sofar as the plea of Mr. Prakash that the
contract being without any consideration, the same is
void, similar would be the answer to this plea, as has
been stated by us while considering the judgment in the
case of Maganlal Rambhai Gandhi (Supra).
- 41 -
27. The claim that has been allowed by the Trial
Court is in terms of the Assignment Agreement. It is not
the case of the appellants that, what has been granted
by the Trial Court is not contemplated under the
agreement.
28. In view of the discussion above, we do not see
any merit in the appeal and the same is dismissed.
Sd/-
(V KAMESWAR RAO)
JUDGE
Sd/-
(S RACHAIAH)
JUDGE
PA/KGR*
