TMI Blog2006 (11) TMI 636X X X X Extracts X X X X X X X X Extracts X X X X ..... present case are examined, it would be immediately clear that it does not fall in any of these three classes of cases. The first class of cases deals with situations or agreements where the object is unlawful. In the present case - securing a job in the Haryana Police for the nephew - is not an unlawful object. What is unlawful is the consideration paid for it. The consideration having already been paid, the illegality stood completed on the part of the respondent No.1. And, since the respondent No.1 would have to rely upon this illegality to make out his claim or enforce the same, this case does not also fall within the third class of cases mentioned above. This leaves us with the second class of cases where the parties are not in pari delicto. In the present case neither party is a victim of exploitation. Both had voluntarily and by their free will joined hands to flout the law. Therefore, in terms of the Supreme Court decisions in Sita Ram v. Radha Bai [ 1967 (10) TMI 70 - SUPREME COURT] , themselves, the parties being in pari delicto, the doctrine would apply and the sum of ₹ 80,000/- could not be recovered in a court of law. Meaning thereby that there did not exist a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioner and his father, who were arrayed as accused No. 1 and 2 respectively. The said sum of Rs. 80,000/- was allegedly paid by the complainant (respondent No. 1) to the accused for the purposes of securing a job for the complainant's nephew in Haryana Police. In essence, this money was paid by way of illegal gratification for the purposes of arranging the said job through purported high profile political leaders. However, the complainant after having paid the said sum of Rs. 80,000/- did not get the job for his nephew. Since the job was not made available to the complainant's nephew, the complainant requested the accused to return the amount of Rs. 80,000/- to the complainant. The said sum was not easily forthcoming. After great persuasion and intervention of elders, the petitioner admitted liability on behalf of his father and promised to pay the sum of Rs. 80,000/- to the complainant and in pursuance of this promise, issued a cheque of Rs. 80,000/- on 30.03.2000 drawn on Punjab National Bank, Najafgarh, Delhi. The cheque on presentation was dishonoured by virtue of the memo dated 07.04.2000 with the remarks no account . Thereafter, a statutory notice was served and si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice. Explanation:- For the purpose of this section, debt or other liability means a legally enforceable debt or other liability. 4. The submission made by the learned Counsel for the petitioner is that it was not enough for the cheque to have been issued and the same to have been dishonoured, it was also necessary to establish that the cheque was issued for the discharge, in whole or in part, of any debt or other liability. For this purpose, the Explanation to Section 138 of the said Act makes it clear that debt or liability had reference only to a legally enforceable debt or liability. He submitted that the payment made by the complainant to the accused did not result in a legally binding contract. As such, no legally enforceable debt or liability was created. Therefore, according to the learned Counsel, the cheque could not be regarded as being in discharge of any debt or other liability as contemplated under Section 138 of the said Act. 5. The learned Counsel for the petitioner placed reliance on the judgment of the High Court of Kerala in J. Daniel v. State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot legally enforceable. 11. 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 defendentis. 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 this claim. The learned Counsel for the respondent submitted that the transaction was not opposed to public policy and, Therefore, the doctrine of pari delicto was not applicable in the facts and circumstances of the present case. According to him, the debt or other liability was legally enforceable and, Therefore, fell within the meaning a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oyment in public service, does B have a remedy in law to seek restitution and return of the 1000 rupees that he has paid to A? What is the obligation of a person who has received an advantage under a void agreement? Is A bound to return the sum of 1,000/- rupees to B? 8. Apparently, these questions are answered by Section 65 of the Indian Contract Act, 1872 which reads as under: 65. When an agreement is discovered be void or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it, to the person from whom he received it. But, the provision applies to (1) an agreement which is discovered to be void or (2) a contract which becomes void . The expressions agreement and contract have distinct meanings under the Contract Act. As mentioned earlier, an agreement becomes a contract only if it is enforceable in law. Thus, the phrase a contract becomes void appearing in the said Section 65 would not have any application in the case where an agreement is void ab initio. It has already been indicated above that the agreement in the present case was void from the very begi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs. 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 the person from whom he received it. But where even at the time when the agreement is entered into both the parties knew that if was not lawful and, Therefore, void, there was not 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, Section 65 of the Contract Act did not apply. In Kuju Collieries Ltd (supra) a sum of Rs. 80,000/- (coincidentally) had been paid by one party as salami for a mining lease. The stipulation for payment of salami was illegal and the lease on the basis of that was also illegal. The question of the return of the said sum of Rs. 80,000/- arose in the context of the provisions of the said Section 65. The Supreme Court held that since the parties were aware of the illegality of the agreement at the time it was entered into, it was not a case of an agreement which was discovered to be void subsequent to its execution. Consequently, Section 65 was found not t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot apply to cases falling under Section 23. In other words, agreements which are void ab initio and their illegality is known to the parties at the time of execution would not fall within the purview of Section 65. An agreement of the kind mentioned in illustration (f) to Section 23 and the one at hand being void ab initio and to the knowledge of the parties would also not benefit from the equitable principle of restitution embedded in Section 65. So, neither the sum of 1,000 rupees mentioned in the said illustration (f) nor the sum of Rs. 80,000/- paid in the present case is recoverable in law. 10. In view of the clear position based on statutory provisions it is not open to set up the position in English law as crystallised in the maxim in pari delicto potior est conditio possidentis (defendentis) and then to urge that the present case falls in the category of exceptions to that rule and Therefore the money illegally paid can be recovered under law. But, as the learned Counsel for the respondent laid stress on this submission and placed reliance on two decisions of the Supreme Court in Sita Ram v. Radha Bai (supra) and Mohd. Salimuddin v. Misri Lal (supra), a discussion on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bservations of the Supreme Court in paragraph 11 of the decision of Sita Ram v. Radha Bai (supra), to submit that there are three exceptional circumstances to which the maxim does not apply and that the present case falls in one of those. The three classes of cases being: (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. If the facts of the present case are examined, it would be immediately clear that it does not fall in any of these three classes of cases. The first class of cases deals with situations or agreements where the object is unlawful. In the present case - securing a job in the Haryana Police for the nephew - is not an unlawful object. What is unlawful is the consideration paid for it. The consideration having already been paid, the illegality stood completed on the part of the respondent No. 1. And, since the respondent No. 1 would have to rely upon this illegality to make out his claim or enf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the lease. The relevant provision prohibiting the payment of rent in advance embodied in the Rent Act was enacted precisely to protect the tenant from such exploitation. Obviously, he had to succumb to such exploitation, the protective law notwithstanding, as he would have been obliged to remain roofless. The law extended the protection but did not guarantee the roof. To deny access justice to a tenant who is obliged to yield to the unlawful demands of the landlord in this scenario by invoking the doctrine of pari delicto is to add insult to injury, and to negate the very purpose of the provision designed for his protection. The doctrine of pari delicto is not designed to reward the wrongdoer or to penalize the wronged , by denying to the victim of exploitation access to justice. The doctrine is attracted only when none of the parties is a victim of such exploitation and both parties have voluntarily and by their free will joined hands to flout the law for their mutual gain. Such being the position the said doctrine embodying the rule that a party to a transaction prohibited by law cannot enforce his claim in a court of law is not attracted in a situation like the present. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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