Madras High Court
T.Vijaya Raghavan vs Sethu Ramapandiyan(Died) .. 1St on 13 October, 2022
A.S(MD)No.30 of 2007
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED : 13.10.2022
CORAM :
THE HONOURABLE MRS.JUSTICE J. NISHA BANU
and
THE HONOURABLE MR.JUSTICE N. ANAND VENKATESH
A.S(MD)No.30 of 2007
and
M.P(MD)Nos.1 and 2 of 2007
T.Vijaya Raghavan ... Appellant / 1st Defendant
-Vs-
1.Sethu Ramapandiyan(died) .. 1st Respondent/ Plaintiff
2.Syndicate Bank,
malakpettai Branch,
Through its Branch Manager,
Malakpettai, Hydrabad.
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3.Syndicate Bank,
Basheer Bagh Branch,
Hydrabad,
Through its Branch Manager,
Through its Branch Manager,
Basheer Bagh, Hydrabad.
4.Syndicate Bank,
Tirunelveli Town Branch,
Through its Branch Manager,
Tirunelveli Town.
5.Indian Bank,
Veeraraghavarpuram Branch,
Through its Branch Manager,
Office, Tirunelveli Junction,
Tirunelveli. .. Respondents 2 to5 / Defendants 2 to 5
6.Chandra
7.Shanthi
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8.Revathi
9.Subha
10.Pankajam .. Respondents
[R6 to R10 are brought on records
as LRs of the deceased R1 vide
Court order dated 08.11.2017 made
in CMP(MD)Nos.1476 to 1478 of
2017 in A.S.(MD)No.30/2007 by
MKKSJ & VBSJ]
PRAYER: Appeal is filed under Section 96 of the Civil Procedure Code,
against the judgement and decree dated 19.09.2006 made in O.S.No.45
of 2006, on the file of the Additional District Court (Fast Track Court
No.II), Tirunelveli.
For Appellant : Ms.N.Krishnaveni
Senior Counsel
for Mr.M.P.Senthil
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For Respondents : Mr.K.R.Laxman
for R2 to R4
R1-died
R5 to R10-No appearance
JUDGMENT
J.NISHA BANU,J.
and
N.ANAND VENKATESH, J.
The first defendant is the appellant in this Appeal Suit. This
appeal has been filed against the Judgment and Decree passed by the
learned Additional District Judge (Fast Track Court No.II), Tirunelveli,
made in O.S.No.45 of 2006.
2. The 1st respondent/plaintiff filed the suit seeking for the
relief of recovery of a sum of Rs.25,00,000/- with interest @ 12% per
annum against the appellant. The case of the plaintiff is that he is well
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known to the appellant and the appellant was running a Medical College
at Secunderabad, Andhra Pradesh. The further case of the plaintiff is that
the appellant promised to get medical seats to nearly 13 persons, who
were introduced to the appellant by the plaintiff. In the guise of getting
medical seats, the appellant received a sum of Rs.25,00,000/- in total
from all the persons introduced by the plaintiff. It is stated that the
appellant went back on the promise and he did not return back the money
immediately. Hence, the plaintiff settled the entire amount and the
appellant promised that the entire amount will be settled in favour of the
plaintiff within a month.
3. The appellant, pursuant to the promise given to the
plaintiff, gave four demand drafts totalling a sum of Rs.25,00,000/-. The
plaintiff deposited three of the demand drafts totalling a sum of
Rs.20,00,000/- before the 5th defendant bank. When the same was sent
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for collection to the 4th defendant bank, the demand drafts were returned
with an endorsement “demand draft reported lost”. The plaintiff
attempted to get in touch with the appellant, but the appellant was not
reachable and hence left with no other option, the suit was filed seeking
for the recovery of money along with interest.
4. The case of the appellant is that he is a resident of Andhra
Pradesh and he is a Chartered Accountant by profession. He used to be
the captain of the Indian basketball team and was also an Arjuna Award
recipient in the year 1978. The appellant was the chairman of a Medical
College. The further case of the appellant is that the Government of
Andhra Pradesh wanted to develop a wind farm to generate electricity
through windmills near a place that was available adjacent to the college
and hospital. The college took interest in this venture and hence, to start
with, they wanted to invest in an existing windmill company located at
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Kanyakumari District and Tirunelveli District. Pursuant to the same, the
appellant was introduced by one Loganathan from Chennai to the
plaintiff and one Balu Devar. The appellant was taken to Tirunelveli and
a site inspection was made and the appellant was informed that an initial
investment around Rs. 25,00,000/- has to be made. The appellant
therefore took four demand drafts in Hyderabad and came to
Kanyakumari. Two or three sites were shown to the appellant and it was
not to his satisfaction. Hence, the appellant was returning back to the
Syndicate bank, Tirunelveli to deposit the demand drafts. During the
travel, the pouch in which the demand drafts and all important
certificates were kept, went missing. Inspite of the best efforts of the
appellant, the demand drafts and other important documents were not
able to be traced. Hence, the appellant gave a stop payment instruction
on 28.08.2003 at the Syndicate bank, Tirunelveli branch.
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5. In view of the above facts, the appellant has taken a stand
that the plaintiff has misused the demand drafts and has concocted a
story and there was no liability on the part of the appellant on the cause
of action as pleaded by the plaintiff. Accordingly, the appellant had
sought for the dismissal of the suit.
6. The Trial Court, based on the pleadings, framed the
following issues:
1.kUj;Jtf; fy;Yhhpapy; ,lk; th';fpj; jUtjhf
1tJ gpujpthjp brhy;yp mjd; nghpy; ,e;j gz
tiunthiyfs; bfhLf;fg;gl;lbjd;gJ cz;ikah>
2/thjp nkw;fz;lj; bjhifia
rk;ge;jg;gl;lth;fSf;Fj; jpUg;gpf; bfhLj;J cs;shuh>
3.mt;thW gzk; bfhLj;jth;fisj; jug;gpduhf
nrh;f;fhjJ tHf;fpw;F ghjfkh>
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4/1tJ gpujpthjp mth; TWtJ nghd;W
tiunthiyfis bjhiyj;J tpl;ljhff; TWtJ
cz;ikah>
5/ 1tJ gpujpthjp. thjpf;F bjhif vJt[k;
bfhLf;f ntz;Lk; vd;gJ cz;ikah>
6/ thjpf;Ff; fpilf;ff; Toa ,jug; ghpfhu';fs;
vd;bdd;d>”
7. The appellant had also sought for the framing of an
additional issue on the ground that the very basis of the claim made by
the plaintiff is hit by Section 23 of the Indian Contract Act, since it is
opposed to the principles of public policy. However, the Court below
refused to frame the additional issue on the ground that the same did not
arise on the pleadings available on record.
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8. The plaintiff examined himself as P.W-1 and two more
witnesses were examined on the side of the plaintiff. Exhibits A1 to A5
were marked on the side of the plaintiff. The defendant examined himself
as D.W-1 and one more witness was examined on the side of the
defendant. Exhibits B1 to B6 were marked on the side of the defendant.
9. The Trial Court, on consideration of the facts and
circumstances of the case and on appreciation of evidence, decreed the
suit as prayed for and aggrieved by the same, the 1st defendant has filed
this appeal.
10. Heard Ms.N.Krishnaveni, learned Senior Counsel for
Mr.M.P.Senthil, learned counsel appearing for the appellant and
Mr.K.R.Laxman, learned counsel appearing for the respondents 2 to 4.
The first respondent/plaintiff died during the pendency of this appeal and
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the respondents 6 to 10 were added as legal representatives of
R1/plaintiff. All of them were served notice and their names were also
printed in the cause list and they neither appeared in person or through
their counsel.
11. This Court has carefully considered the submissions
made on either side and the materials available on record.
12. The following points arise for consideration in this
appeal:
I. Whether the plaintiff has established the liability
and has discharged his burden of proof under Section
101 of the Indian Evidence Act ?
II. Whether the claim made by the plaintiff is hit by
Section 23 of the Indian Contract Act since the claim
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is opposed to public policy?
III. Whether the Court below properly appreciated the
evidence available on record and whether the
findings rendered suffer from infirmity warranting the
interference of this Court ?
13. The specific case of the plaintiff is that the appellant
received a sum of Rs.25,00,000/- from nearly 13 persons introduced by
the plaintiff for securing a medical seat in a college at Secunderabad,
Andhra Pradesh. The plaintiff has given a list of 13 names at paragraph
no.3 of the plaint. A careful reading of paragraph 3 of the plaint shows
that there are absolutely no details as to when the amount was given by
those persons to the appellant, how and in what mode it was given and
where this amount was given to the appellant. Order VI Rule 2 of CPC
makes it very clear that pleadings shall contain a statement in a concise
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form of material facts on which the party pleading relies for his claim.
The material facts are those upon which the plaintiff’s cause of action
depends and those facts must necessarily be proved in order to establish
the existence of a cause of action.
14. The pleadings are completely bereft of the material facts
which forms the basis of the claim made by the plaintiff. Even insofar as
the evidence tendered on the side of the plaintiff, P.W-1 was not able to
produce before the Court or satisfactorily answer before the Court as to
whether the particulars of the Medical College was obtained or to which
University the College is affiliated or any document that was collected
from the appellant to show that a discussion actually took place for
securing admission for nearly 13 students. P.W-1 was not even able to
tell before the Court as to when and where this amount was given and
what are the particulars of the educational qualifications of the 13
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students, whose names are mentioned at paragraph 3 of the plaint. The
only evidence that was tendered before the Court was the returned
demand drafts marked as Exhibits A1 to A3, the challans presented
before the collection of the demand drafts marked as Ex.A4 and the
return memos marked as Ex.A5. There was nothing more than these
documents to establish the actual liability towards which these demand
drafts were made ready by the appellant.
15. The plaintiff also examined P.W-2, who claimed that he
is the relative of one of the girl Damayanthi, who had given the money
and the name of this girl is not even found at paragraph 3 of the plaint.
Similarly, PW-3 talks about the name of a girl Jamuna and the name of
this girl is also not found at paragraph no.3 of the plaint. Both these
witnesses were not able to provide details on the educational
qualifications of these two girls and they never had any direct contact
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with the appellant. Hence, PW-2 and PW-3 do not in any way help the
plaintiff in proving his case.
16. Section 101 of the Evidence Act is based on the principle
“he who affirms must prove”. This provision requires that whoever
wants a judgment in his favour, must prove his case and it is a legal
burden from which there is no escape.
17. Since demand drafts have been drawn in the name of the
plaintiff, this Court wants to ascertain as to whether the appellant has
given a proper reason as to why these demand drafts went into the hands
of the plaintiff. The appellant in the written statement has given a
detailed explanation as to why demand drafts were drawn in the name of
the plaintiff. The case of the appellant is that their organisation was
looking for investment in the existing windmill company and was shown
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certain sites and was also asked to pay an initial investment of Rs.
25,00,000/-. The dealing was not completed and in the meantime, the
demand drafts were lost by the appellant. Hence, police complaint was
given before the Crime branch, Tirunelveli on 28.08.2003 and the said
complaint has been marked as Ex.B1. Ex.B2 was the CSR given by the
concerned police after receiving the complaint. Ex.B3 is the telegram
that was sent to the Inspector of Police, Central Crime branch, informing
the police about the deposit of the four demand drafts and for taking
necessary action. Ex.B4 and Ex.B5 are the correspondence with the
Syndicate bank and the stop payment made by the bank.
18. A combined reading of the pleadings and the evidence
available on record probabilizes the defence taken by the appellant as to
how the demand drafts came to be drawn in the name of the plaintiff. To
that extent, the burden shifted on the plaintiff and the plaintiff has not
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come up with any explanation nor has been able to prove the material
facts to justify the cause of action, to make the claim against the
appellant in the suit.
19. In view of the above discussion, this Court holds that the
plaintiff has not established the liability and has not discharged his
burden of proof under Section 101 of the Evidence Act.
20. The plaintiff while being examined as P.W-1 has
categorically made the following statement:
“me;j U:/2.00.000-? buhf;fkhfj;jhd;
bfhLf;fg;gl;lJ/ ehd; mt;thW 13 khzth;fsplk;
th';fpf;bfhLj;njd;/ xU khztid nrh;g;gjw;F y";rk;
bfhLf;fntz;Lk; vd;w tifapy; me;j gzj;ij
th';fpdhnu xHpa mjw;F urPJ vJt[k; bfhLf;ftpy;iy/”
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21. The very basis of claim made by the plaintiff is opposed
to public policy. The plaintiff in no uncertain terms states that what was
given to the appellant was a bribe and that is the reason why there was no
receipt given. The instant case clearly falls under the maxim in pari
delicto potior est conditio defendentis. If really the money was paid as a
bribe to the appellant, the plaintiff ought to have realised that the
payment was made for an illegal object or an object opposed to public
policy. Section 23 of the Indian Contract Act makes it very clear that an
agreement which is forbidden by law or is opposed to public policy, the
very agreement is unlawful and void, which can never be enforced.
22. It will be beneficial to take note of the judgment of this
Court in N.V.P. Pandian v. M.M. Roy reported in (1978) 91LW490: AIR
1979 Mad 42. This case pertained to similar set of facts where money
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was paid for getting a seat in a medical college. While considering the
said claim, this Court held as follows :
“9.The next question for consideration is
whether in such circumstances the respondent
would be entitled to maintain an action to
refund of the money. The learned trial Judge
has granted a decree for refund of the money in
favour of the respondent on the ground that she
was a less guilty party. There is absolutely no
evidence at all available in the case for this
finding of the lower court. There is no evidence
except the ipse dixit of P. W. 1 that the appellant
volunteered to procure a seat for the
respondent's son in the Madras Medical
College provided the latter would pay him Rs.
15,000/-. It is the specific case of the respondent
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that she was trying for a seat for her son in the
Madras Medical College and that it was in that
connection that she paid Rs. 15,000/- to the
appellant on the latter promising to get a seat.
In the circumstances, it could only be concluded
that only the respondent must have approached
the appellant for necessary help in the matter of
securing the seat for her son in the Medical
College. Therefore, both the appellant and the
respondent must be considered to be in pari
delicto. Where each party is equally in fault the
law favours him who is actually in possession.
The maxim in pari delicto potior est conditio
possidentis is founded on the principles of
public policy, which will not assist a plaintiff
who has paid over money or handed over
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property in pursuance of an illegal or immoral
contract, to recover it back, for the Courts will
not assist an illegal transaction in any respect.
In Sita Ram v. Radha Bai
MANU/SC/0012/1967 : [1968]1SCR805 it has
been held thus : (at p. 537)
"The principle that the courts will refuse to
enforce an illegal agreement at the instance of a
person who is himself a party to an illegality or
fraud is expressed in the maxim 'in pari delicto
potior est conditio possidentis'... But there are
exceptional cases in which a man will be
relieved of the consequences of an illegal
contract into which he has entered-cases to
which the maxim does not apply. They fall into
three classes : (a) where the illegal purpose has
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not yet been substantially carried into effect
before it is sought to recover money paid or
goods delivered in furtherance of it; (b) where
the plaintiff is not in pari delicto with the
defendant; (c) where the plaintiff does not have
to rely on the illegality to make out his claim...
Where the parities are not in pari delicto, the
less guilty party may be able to recover money
paid or property transferred, under the
contract. This possibility may arise in three
situations:Firstly, the contract may be of a kind
made illegal by statute in the interests of a
particular class of persons of whom the plaintiff
is one. Secondly, the plaintiff must have been
induced to enter into the contract by fraud or
strong pressure. Thirdly, a person who is under
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a fiduciary duty to the plaintiff will not be
allowed to retain property, or to refuse to
account for moneys received, on the ground that
the property or the moneys have come into his
hands as the proceeds of an illegal
transaction."
The present case does not fall in any of the
exceptional cases referred to above.
10. In Kuju Collieries v. Jharkhand Mines
MANU/SC/0030/1974 : [1975]1SCR703 a
mining lease was given in favour of the plaintiff
contrary to the provisions of Mines and
Minerals (Regulation and Development) Act,
1948 and the Mineral Concession Rules, 1949.
There was proof to shoe that the plaintiff could
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not have been in ignorance of the legal position.
On the basis of the lease, the plaintiff did not
get possession of the leased property and,
therefore the plaintiff instituted the suit for
recovery of possession of the leased property
along with mesne profits or in the alternative
for refund of the sum of Rs. 80,000/- and certain
other sums. After the institution of the suit the
relief in respect of possession of the mines
became unenforceable in view of the Bihar
Land Reforms Act. Therefore, the only relief
which was pressed by the plaintiff was his claim
for the refund of Rs. 80,000/-. Alagiriswami, J.,
on behalf of the court held that the lease in
favour of the plaintiff was contrary to the
provisions of the Mines and Minerals
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(Regulation and Development) Act, 1948 and
the Mineral Concession Rules, 1949 and as
such void from its inception. Consequently,
payment of the sum of Rs. 80,000/- was not
made lawfully, nor was it done under a mistake
or under coercion and it could not be recovered.
An attempt was made before the Supreme Court
to bring the case within Section 65, 70, or 72 of
the Contract Act. In dealing with this contention
it was observed that S. 65 makes a distinction
between an agreement and a contract.
According to S. 2 of the Contract Act an
agreement which is enforceable by law is a
contract and an agreement which is not
enforceable by law is said to be void. Therefore,
when the earlier part of the section speaks of an
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agreement being discovered to be void it means
that the agreement is not enforceable and is
therefore not a contract. It means that it was
void. It may be that the parties or one of the
parties to the agreement, knows that agreement
was in law not enforceable. They might have
come to know later that the agreement was not
enforceable. The second part of the section
refers to a contract becoming void. That refers
to a case where an agreement which was
originally enforceable and was therefore a
contract becomes void due to subsequent
happenings. In both these cases any person who
has received any advantage under such
agreement or contract is bound to restore such
advantage, or to make compensation for it to
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the person from whom he received it. But where
even at the time when the agreement is entered
into both the parties knew that it was not lawful
and, therefore, void, there was no contract but
only an agreement and it is not a case where it
is discovered to be void subsequently. Nor is it a
case of the contract becoming void due to
subsequent happenings. Therefore, S. 65 of the
Contract Act did not apply." It also ruled out
the applicability of Sections 70 and 72 of the
Contract Act on the ground that the payment of
the money was not made lawfully, nor was it
done under a mistake or under coercion. In
coming to this conclusion, the Supreme Court
approved the decision of the Hyderabad High
Court in Budhulal v. Deccan Banking Co. AIR
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1955 Hyd. 69.
11. Following these decisions, it has to be held
that the instant case falls clearly under the
maxim pari delicto potior est conditio
possidentis. The respondent must have known
when she paid Rs. 15,000, that she was paying
the money for an illegal object or an object
opposed to public policy. She cannot in any way
be considered to be less guilty party as none of
the situations contemplated in Sitaram v. Radha
Bai MANU/SC/0012/1967 : [1968]1SCR805 is
present. I therefore follow the decisions in
Kunju Collieries v. Jharkhand Mines
MANU/SC/0030/1974 : [1975]1SCR703 and in
Ratanchand v. Askar MANU/AP/0125/1976 :
AIR1976AP112 , and hold that the respondent is
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not entitled to a refund of the money from the
appellant. The respondent herself could not get
the relief she wanted without setting up and
proving the illegal object for which she had
paid the money. I therefore set aside the
judgment and decree of the trial court, dismiss
the suit and allow the appeal with costs.”
23. A recent judgment of the Apex Court in G.T.Girish v. Y.
Subba Raju (D) by Lrs and Another reported in 2022 SCC Online 60,
also dealt with a case where the agreement was found to be unlawful and
opposed to public policy and the Apex Court considered the scope of
Section 23 of the Indian Contract Act and it was held as follows:
“48. The principle of in pari delicto potior est conditio
defendentis is a maxim which we must bear in mind. We
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need only notice the following discussion by this Court.
The decision of this Court in Kedar Nath
Motani (supra) comes to mind:
“9. … Where both parties do not show that there was
any conspiracy to defraud a third person ought to
commit any other illegal act, the maxim,
in paridelito etc., can hardly be made applicable. …”
49. This Court in Kedar Nath Motani (supra) also
referred to the following statement by Lord Mansfield
in Holman v. Johnson3, wherein it was held as follows:
“12. The law was stated as far back as 1775 by Lord
Mansfield in Holman v. Johnson [(1775) 1 Cowp 341 :
98 ER 1120, 1121] in the following words:
“The principle of public policy is this; ex dolomalo non
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orituractio. 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 plaintiff's 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, potiorestconditiodefendentis.”
There are, however, some exceptions or “supposed
exceptions” to the rule of turpi causa. In Salmond and
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William on Contracts, four such exceptions have been
mentioned, and the fourth of these exceptions is based
on the right of restitutio in integrum, where the
relationship of trustee and beneficiary is involved.
Salmond stated the law in these words at p. 352 of his
Book (2nd Edn.):
“So if A employs B to commit a robbery, A cannot sue B
for the proceeds. And the position would be the same if
A were to vest property in B upon trust to carry out
some fraudulent scheme : A could not sue B for an
account of the profits. But if B, who is A's agent or
trustee, receives on A's account money paid by C
pursuant to an illegal contract between A and C the
position is otherwise and A can recover the property
from B, although he could not have claimed it from C.
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In such cases public policy requires that the rule
of turpis causa shall be excluded by the more important
and imperative rule that agents and trustees must
faithfully perform the duties of their office.”
Williston in his Book on Contracts (Revised Edn.), Vol.
VI, has discussed this matter at p. 5069, para 1785 and
in paras 1771 to 1774, he has noted certain exceptional
cases, and has observed as follows:
“If recovery is to be allowed by either partner or
principal in any case, it must be where the illegality is
of so light or venial a character that it is deemed more
opposed to public policy to allow the defendant to
violate his fiduciary relation with the plaintiff than to
allow the plaintiff to gain the benefit of an illegal
transaction.”
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Even in India, certain exceptions to the rule of turpi
causa have been accepted. Examples of those cases are
found
in PalaniyappaChettiar v. ChockalingamChettiar[ILR
(1920) 44 Mad 334] and Bhola Nath v. Mul
Chand [ILR (1903) 25 All 639].”
50. We may also notice the following statement by this
Court in Kedar Nath Motani(supra):
“15. The correct position in law, in our opinion, is that
what one has to see is whether the illegality goes so
much to the root of the matter that the plaintiff cannot
bring his action without relying upon the illegal
transaction into which he had entered. If the illegality
be trivial or venial, as stated by Williston and the
plaintiff is not required to rest his case upon that
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illegality, then public policy demands that the
defendant should not be allowed to take advantage of
the position. A strict view, of course, must be taken of
the plaintiff's conduct, and he should not be allowed to
circumvent the illegality by resorting to some
subterfuge or by mis-stating the facts. If, however, the
matter is clear and the illegality is not required to be
pleaded or proved as part of the cause of action and the
plaintiff recanted before the illegal purpose was
achieved, then, unless it be of such a gross nature as to
outrage the conscience of the Court, the plea of the
defendant should not prevail.”
51. In Sita Ram v. Radhabai4, this Court observed as
follows:
“11. The principle that the Courts will refuse to enforce
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an illegal agreement at the instance of a person who is
himself a party to an illegality or fraud is expressed in
the maxim in parideuctoportiorestconditiodefendentis.
But as stated in Anson's Principles of the English Law
of Contracts, 22nd Edn., p. 343 : there are exceptional
cases in which a man will be relieved of the
consequences of an illegal contract into which he has
entered — cases to which the maxim does not apply.
They fall into three classes : (a) where the illegal
purpose has not yet been substantially carried into
effect before it is sought to recover money paid or
goods delivered in furtherance of it; (b) where the
plaintiff is not in pari delicto with the defendant; (c)
where the plaintiff does not have to rely on the illegality
to make out his claim’.
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52. In Narayanamma (supra), this Court was
considering a Suit for specific performance, which was
resisted on the ground that the agreement to sell was
contrary to the provisions of the Statute. Section 61 of
the Karnataka Land Reforms Act, 1961 provided that
no land for which occupancy was granted, shall within
15 years of the order of the Tribunal, be transferred by
sale, inter alia. A partition was permitted. Equally, a
mortgage could be effected to secure a loan. Drawing
support from Judgment of this Court in Kedar
Nath (supra), this Court, inter alia, as follows:
“15. The three-Judge Bench of this Court, after
referring to the aforesaid judgments, speaking through
M. Hidayatullah, J. (as his Lordship then was),
observes thus : (Kedar Nath Motani case [Kedar Nath
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Motani v. Prahlad Rai, (1960) 1 SCR 861 : AIR 1960
SC 213], AIR pp. 218-19, para 15)
“15. The correct position in law, in our opinion, is that
what one has to see is whether the illegality goes so
much to the root of the matter that the plaintiff cannot
bring his action without relying upon the illegal
transaction into which he had entered. If the illegality
be trivial or venial, as stated by Williston and the
plaintiff is not required to rest his case upon that
illegality, then public policy demands that the
defendant should not be allowed to take advantage of
the position. A strict view, of course, must be taken of
the plaintiff's conduct, and he should not be allowed to
circumvent the illegality by resorting to some
subterfuge or by misstating the facts. If, however, the
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matter is clear and the illegality is not required to be
pleaded or proved as part of the cause of action and the
plaintiff recanted before the illegal purpose was
achieved, then, unless it be of such a gross nature as to
outrage the conscience of the Court, the plea of the
defendant should not prevail.”
16. It could thus be seen, that this Court has held that
the correct position of law is that, what one has to see
is whether the illegality goes so much to the root of the
matter that the plaintiff cannot bring his action without
relying upon the illegal transaction into which he had
entered. This Court further held, that if the illegality is
trivial or venial and the plaintiff is not required to rest
his case upon that illegality, then public policy
demands that the defendant should not be allowed to
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take advantage of the position. It has further been held,
that a strict view must be taken of the plaintiff's conduct
and he should not be allowed to circumvent the
illegality by resorting to some subterfuge or by
misstating the facts. However, if the matter is clear and
the illegality is not required to be pleaded or proved as
part of the cause of action and the plaintiff recanted
before the illegal purpose is achieved, then, unless it be
of such a gross nature as to outrage the conscience of
the Court, the plea of the defendant should not
prevail.”
53. In Narayanamma (supra), this Court further held as
follows:
“24. The transaction between the late Bale
Venkataramanappa and the plaintiff is not disputed.
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Initially the said Bale Venkataramanappa had executed
a registered mortgage deed in favour of the plaintiff.
Within a month, he entered into an agreement to sell
wherein, the entire consideration for the transfer as
well as handing over of the possession was
acknowledged. It could thus be seen, that the
transaction was nothing short of a transfer of property.
Under Section 61 of the Reforms Act, there is a
complete prohibition on such mortgage or transfer for
a period of 15 years from the date of grant. Sub-section
(1) of Section 61 of the Reforms Act begins with a non-
obstante clause. It is thus clear that, the unambiguous
legislative intent is that no such mortgage, transfer,
sale, etc. would be permitted for a period of 15 years
from the date of grant. Undisputedly, even according to
the plaintiff, the grant is of the year 1983, as such, the
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transfer in question in the year 1990 is beyond any
doubt within the prohibited period of 15 years. Sub-
section (3) of Section 61 of the Reforms Act makes the
legislative intent very clear. It provides, that any
transfer in violation of sub-section (1) shall be invalid
and it also provides for the consequence for such
invalid transaction.
25. Undisputedly, both, the predecessor-in-title of the
defendant(s) as well as the plaintiff, are confederates in
this illegality. Both, the plaintiff and the predecessor-
in-title of the defendant(s) can be said to be equally
responsible for violation of law.
26. However, the ticklish question that arises in such a
situation is:“the decision of this Court would weigh in
side of which party”? As held by Hidayatullah, J.
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in Kedar Nath Motani [Kedar Nath Motani v. Prahlad
Rai, (1960) 1 SCR 861 : AIR 1960 SC 213], the
question that would arise for consideration is as to
whether the plaintiff can rest his claim without relying
upon the illegal transaction or as to whether the
plaintiff can rest his claim on something else without
relying on the illegal transaction. Undisputedly, in the
present case, the claim of the plaintiff is entirely based
upon the agreement to sell dated 15-5-1990, which is
clearly hit by Section 61 of the Reforms Act. There is no
other foundation for the claim of the plaintiff except the
one based on the agreement to sell, which is hit by
Section 61 of the Act. In such a case, as observed by
Taylor, in his “Law of Evidence” which has been
approved by Gajendragadkar, J. in Immani Appa Rao
[ImmaniAppa Rao v. Gollapalli
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Ramalingamurthi, (1962) 3 SCR 739 : AIR 1962 SC
370], although illegality is not pleaded by the
defendant nor sought to be relied upon him by way of
defence, yet the Court itself, upon the illegality
appearing upon the evidence, will take notice of it, and
will dismiss the action ex turpi causa non orituractio
i.e. no polluted hand shall touch the pure fountain of
justice. Equally, as observed in Story's Equity
Jurisprudence, which again is approved
in ImmaniAppa Rao [Immani Appa Rao v. Gollapalli
Ramalingamurthi, (1962) 3 SCR 739 : AIR 1962 SC
370], where the parties are concerned with illegal
agreements or other transactions, courts of equity
following the rule of law as to participators in a
common crime will not interpose to grant any relief,
acting upon the maxim in pari delicto potior est
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conditio defendentis et possidentis.”
54. This Court in Narayanamma (supra) finally found
as follows:
“28. Now, let us apply the other test laid down
in ImmaniAppa Rao [Immani Appa Rao v. Gollapalli
Ramalingamurthi, (1962) 3 SCR 739 : AIR 1962 SC
370]. At the cost of repetition, both the parties are
common participator in the illegality. In such a
situation, the balance of justice would tilt in whose
favour is the question. As held in ImmaniAppa Rao
[ImmaniAppa Rao v. GollapalliRamalingamurthi,
(1962) 3 SCR 739 : AIR 1962 SC 370], if the decree is
granted in favour of the plaintiff on the basis of an
illegal agreement which is hit by a statute, it will be
rendering an active assistance of the court in enforcing
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an agreement which is contrary to law. As against this,
if the balance is tilted towards the defendants, no doubt
that they would stand benefited even in spite of their
predecessor-in-title committing an illegality. However,
what the court would be doing is only rendering an
assistance which is purely of a passive character. As
held by Gajendragadkar, J. in ImmaniAppa
Rao [ImmaniAppa Rao v. Gollapalli
Ramalingamurthi, (1962) 3 SCR 739 : AIR 1962 SC
370], the first course would be clearly and patently
inconsistent with the public interest whereas, the latter
course is lesser injurious to public interest than the
former.”
24. The ratio in the above judgments makes it abundantly
clear that where there is an illegality which goes to the root of the matter
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and an agreement is opposed to public policy, the Court will not come to
the aid to enforce such an illegal agreement particularly when the person
who is knocking the doors of the Court was himself a party to the
illegality.
25. In view of the above discussion, this Court holds that the
claim made by the plaintiff is hit by Section 23 of the Indian Contract Act
since the claim is opposed to public policy.
26. The Court below went wrong in not framing an
additional issue on the scope of Section 23 of the Indian Contract Act
and in a way, the Court below has allowed an unlawful agreement to be
enforced. The Court below has gone on a tangent by taking into
consideration capitation fees collected by Medical Colleges and has
justified the claim made by the plaintiff,who specifically states that the
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amount was given as a bribe.
27. The Court below did not take into consideration the fact
that the plaintiff did not plead the material facts and did not discharge the
burden of proof and inspite of the same, a finding has been given as if
the plaintiff has proved his case. Such a finding is based on mere
assumption and it is unsustainable.
28. The Court below has virtually shifted the burden on the
1st defendant/appellant to prove the defence and such an approach goes
against the fundamental principles of the rules of burden of proof under
the Evidence Act. In view of the same, this Court holds that the Court
below did not properly appreciate the evidence available on record and
the findings rendered suffers from infirmity and illegality warranting the
interference of this Court.
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29. The upshot of the above discussion leads to the only
conclusion that the judgment and decree passed by the Court below in
O.S.No.45 of 2006 is liable to be set aside by this Court and accordingly,
the same is set aside and consequently, the suit stands dismissed.
30. It is brought to the notice of this Court that at the time of
granting interim order in favour of the appellant, this Court imposed a
condition to the appellant to deposit 25% of the decretal amount pending
disposal of the appeal through Order dated 20.10.2016. Accordingly, the
amount was also deposited by the appellant. In view of setting aside the
Judgement and Decree of the Trial Court and allowing this appeal, the
appellant is entitled to withdraw the amount deposited along with
accrued interest, if any.
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31. In the result, this appeal suit stands allowed and
considering the facts and circumstances of the case, there shall be no
order as to costs. Consequently, connected miscellaneous petitions are
closed.
[J.N.B, J.] & [N.A.V., J.]
13.10.2022
Index : Yes/No
Internet : Yes/No
PJL
To
The Additional District Judge,
(Fast Track Court No.II),
Tirunelveli.
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J.NISHA BANU, J
AND
N.ANAND VENKATESH, J
PJL
Judgment made in
A.S(MD)No.30 of 2007
13.10.2022
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