Decided on June 30,1955



- (1.) S.A. No. 404 of 1952 is filed by the plaintiff and S.A. No. 424 of 1952 by the defendant in O.S. No. 590 of 1123 of the Cochin Munsiff's Court. The suit is for money due as per accounts. Plaintiff is a concern known as the United Industries (Cochin) Limited, engaged in the business of exporting and selling prawns. The defendant is a trader in prawns. The defendant entered into a contract with the plaintiff for exporting prawns to Rangoon and selling them there. Plaintiff used to advance money to the defendant and the latter supplied prawns for being exported to Rangoon and sold there. From out of the sale proceeds plaintiff used to appropriate the amounts advanced to the defendant, the expenses of export and sale besides their commission. Plaintiff advanced Rs. 2,500 to the defendant on 16.11.1122 as per Ext. A letter. On a settlement of accounts Rs. 1292-11-1 was found due to the plaintiff on 13.12.1947 and the suit is for this amount and interest thereon at 12 per cent per annum.
(2.) THE defendant admitted the dealings with the plaintiff but contended that the plaintiff's accounts were not correct and that the amount claimed in the plaint was not due from him. After the plaintiff was examined in part the defendant filed an additional written statement with the leave of the court in which he contended that the prawns that were entrusted by him with the plaintiff for sale at Rangoon were exported under permits obtained from the Travancore Government, that such export was in violation of the law and that the contract relating to the export and sale was, therefore, void. The trial court repelled these contentions and gave the plaintiff a decree in terms of the plaint. In appeal filed by the defendant the District Court held that the agreement relating to export of prawns was not illegal but that the plaintiff was not entitled to get the amount claimed towards payment of procurement commission to the holder of the export licence. S.A. No. 404 of 1952 is filed by the plaintiff from the portion of the decree of the District Court that is against him. In S.A. No. 424 of 1952 the defendant impeaches the finding of the lower appellate court that the contract relating to the export and sale of prawns is not illegal. S.A. No. 424 of 1952 may be considered first. The argument advanced on behalf of the defendant is that the contract which is the basis of the suit offends S. 23 of the Indian Contract Act in that the object of the contract was to export prawns from Cochin in violation of the Rules then force in Cochin. This contention was not raised by the defendant in the original written statement. In the additional written statement also it was not contended that the object of the contract was to export prawns in violation of the Rules and Regulations that were in force in Cochin at the time. This is what is stated in the additional written statement:- "{]Xn A\ymbmcs\ G?n Ncv Snbm Khsv \nban\pw It{Sm BUdpI?pw apw hncpamb \nebn FS]mSpsNbvXnpXmbn AdnbpXn\m Sn FS]mSp{]Imcw h XpIbpw A\ymbmc\v {]Xnbm sNphm\psp ImWppsnXs Sn FS]mSv \nbahncphpw (illegal) Akm[phpw (vv void) BbXn\m {]Xnbn\nv bmsXmcp XpIbpw A\ymbmc\v hkqsNphm \nbaXSapXpamIpp". The contention of the defendant was not that the object of the contract was to export prawns in violation of law but that the plaintiff exported prawns in violation of the Rules and Regulations then in force. But even if the contention regarding the illegality of the contract is not raised by the defendant, if the illegality appears from the evidence adduced in the case or is otherwise brought to the notice of the court, the court will not grant the plaintiff relief on the basis of the illegal contract.
(3.) IN Scott v. Brown, Doreing, Monab & Co. (1892 (2) Q.B. 724) Lindley, L.J. observed: "Ex turpi causa non oritur actio. This old and well known legal maxim is founded in good sense, and expresses a clear and well recognised legal principle, which is not confined to indictable offences. No Court ought to enforce and illegal contract or allow itself to be made the instrument of enforcing obligations alleged to arise out of a contract or transaction which is illegal, if the illegality is duly brought to the notice of the court, and if the person invoking the aid of the court is himsel implicated in the illegality. It matters not whether the defendant gas pleaded the illegality or whether he has not. If the evidence adduced by the plaintiff proves illegality the court ought not to assist him". The same view was expressed by Kennedy, J., in George v. Royal Exchange Assurance Corporation (1900 (2) QB 214). IN Connolly v. Consumers' Cordage (1904 (89) L.T. 347), Lord Halsbury laid down the law thus:- "It is the right and duty of the court at any stage of the cause to consider, and, if it is sufficiently proved, to act upon, an illegality which may turn upon to be fatal to the claims of either of the parties to the litigation". His Lordship further observed:- "Their Lordships, however, do not doubt that the learned Judges had a right and that it was their duty, if they thought the facts were established, to take care that the processes of the court should not be used for the purpose of establishing claim that ought not to be permitted to be enforced in a court of justice". This principle was followed by Mukherjee, J. in Atikulla v. Abibulla (1920 Cal. 704) Mitter, J. in Kali Kumari v. Mano Mohini (1935 Cal. 748) and Madhavan Nayar, J. in Narayana Murthi v. Ramalingom (1933 Mad. 187). The question, therefore, for consideration is whether the evidence in the case discloses that the contract which is the basis of the suit comes within the ambit of S.23 of the Indian Contract Act. S.23 provides:- "The consideration or object of an agreement is lawful, unless it is forbidden by law; or is of such a nature that, if permitted, it will defeat the provisions of any law; or is fraudulent; or involves or implies injury to the person or property of another; or the court regards it as immoral, or opposed to public policy. In each of these cases the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void". It is argued for the defendant that the object of the agreement entered into between him and the plaintiff was to export prawns from Cochin without a licence issued by the Government of Cochin and that it was, therefore, unlawful within the meaning of S. 23 of the Contract Act. Reference was made to the Notification of the Government of Cochin dated 27th March 1943 (14th Meenom 1118) which is to following effect: "In exercise of the powers conferred on them by Sub-r. (2) of R. 81 of the Defence of India Rules as made applicable to Cochin by Proclamation VIII of 1115, Government are pleased to prohibit the export of fish of all varieties including raw, dry, salted, or unsalted fish and prawns from Cochin State to any place outside the State except under and in accordance with the terms and conditions of a permit issued by the Director of Food Supplies or by any officer duly authorised by him in this behalf: Provided that the above prohibition shall not apply to the export of fish from Cochin State to British Cochin". ;

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