(1.) THIS is an appeal by the defendants directed against a decree of the Vth Additional District Judge, Jabalpur, reversing that of the 1st Civil Judge, Class II, Jabalpur.
(2.) THE dispute is over a flour mill. THE parties are rival flour mill owners. THE flour mill of one was situated opposite the floor mill of other. THE plaintiff purchased the flour mill of the defendants on condition that they would not run any hour mill from their premises or let out the premises for running that kind of business. THE sale with these conditions was for a price of Rs. 1,001. In terms of the sale, the defendants applied for disconnection of the power-metre and power-line fitted to their premises and also handed over a key of the room where the flour mill was installed. THE plaintiff alleges, that where she was awaiting the disconnection to remove the flour mill, the defendants effected a forcible entry into room and wrongfully started running the mill. THE defendants have admittedly received the entire consideration. On these facts, the plaintiff claimed possession of the flour mill and damages, or in the alternative, refund of the price together with interest thereon. THE defendants deny the claim. THEy say that the transaction was one of exchange. THE first Court upheld the defence. THE appeal Court held that there was a sale. THE plaintiff, accordingly, was given a decree for possession and for damages.
While accepting all the findings against him Shri Ram Kumar Verma, learned counsel for the appellants, urges an entirely new point which was never taken before, namely, the contract between the parties was in restraint of trade, and, by reason of section 27 of the Contract Act, void and, legally unenforcable. In the alternative, he urges that in awarding damages for detention, the Court below applied the wrong principle,
In reply, Shri S. L. Jain, learned counsel for the respondent contended that the question whether contract was in restraint of trade involves a pure question of fact which cannot be decided on abstract principles unless we know what was the intention of the parties in entering into the transaction. On the merits of the question, he contended that the restraint was on the running of the particular chattel sold which the plaintiff by virtue of her ownership was entitled to place as a condition of the sale. He further urged that the terms are severable from the rest of the contract. As regards ascertainment of damages, he said that that basis adopted was the proper basis.
(3.) THE objection that the question cannot be raised, cannot be countenanced. THE question depends on a construction of the terms of the deed. THE parties are in accord as to the terms. No further investigation into facts is necessary. When a question of law is raised for the first time in a Court of last resort upon the construction of a document or upon facts either admitted or proved beyond controversy, it is not only competent but expedient in the interests of justice that the question should be allowed to be taken [see, M. E. Moolla Sons, Ltd. v. Burjorjee ( AIR 1932 P.C. 118(1932) 59 Indian Appeals l6l) This would particularly be so, when the contract sought to be enforced, is said to be illegal in the strict sense of the term. I can do no better than refer to a passage from Cheshire's Law of Contract, 3rd Edition, p. 323, which reads:
"If the illegality of a contract is pleaded by the defendant, it follows, of course, that the issue must be determined by the Court. Where there is no such plea, but the contract is on the face of it illegal, or if all the relevant facts have been presented and they clearly disclose the illegality, the Court is entitled, indeed bound, to refuse to entertain the action. But where there is no apparent illegality, the Court is not entitled to pronounce upon the legality of the transaction, unless the issue has been raised on the pleadings."
I would assume, at the moment, the contract is on the face of it illegal. It then becomes my duty to take notice of it, although not raised in the pleadings. THE view of the Court is well settled. [See, per Sen J., in Mohanlal Jagannath v. Kashiram (1950 NLJ 297=1 L R 1950 Nag. 105=A I R 1950 Nag. 71.) and Kaushalendra Rao J., in Haji Habib v. Bhikamchand (1955 NLJ 198=A I R 1954 Nag. 306=1 L R 1954 Nag. 514.) Following these authorities, I allow the point to be taken in this appeal.
The intention of the parties must be ascertained from the document itself. The words of the parties are clear and unequivocal. The offensive words in the covenant are:
The covenant ought to receive that construction which its language will admit, which will best effectuate the intention of the parties. The words literally read together, intended restraint in trade, and speak of an absolute restraint, and not a partial one.