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Unlawful Objects.---By S. 10 an agreement is a contract (i.e. enforceable) only if it is made for a lawful consideration and with a lawful object. The present section declares what kinds of consideration and object are not lawful. Its phraseology is not happy. Property we speak of the consideration for a promise, not the consideration of an agreement. If I agree to sell you a piece of land for Rs. 20,000, my promise to convey the land is the consideration for your promise to pay the price, and your promise to pay the price is the consideration for my promise to convey the land. There is nothing that can be called the consideration of the agreement between us as a whole. If we read "promise" for "agreement" the text becomes clearer; and S. 2 (e), though that sub-section is itself not as clear as might be desired, appears to warrant us in doing this. See also illustration (a) to the present section.

The word "object" in this section was not used in the same sense as "consideration", but was used as distinguished from "consideration", and meant "purpose" or "design". It was so observed in a case where A had agreed to sell goods to B, and B while in insolvent circumstances assigned the benefit of the contract to his brother-in-law C for a consideration of Rs. 100, the object both the B and C being to defraud B's creditors. It was said that the consideration for the assignment, namely, the sum of Rs. 100, was lawful, but the object was unlawful, as it was to defeat the provisions of the Insolvency Act.

With regard to a consideration being forbidden by law, it is to be observed that, where the consideration is a promise, it may be forbidden in one of two distinct senses. The promise may be of something which it would be unlawful to perform; and here it is perhaps simpler to say that the object of the agreement, namely, the unlawful performance, is forbidden. Sometimes, on the other hand, although there is nothing unlawful in performing the promise, a positive rule of law, founded on reasons of general expediency, will not suffer any legal obligation to arise from a promise of that kind. So it is in the cases of wagers, and of agreements in restraint of trade outside the limited sanction given to them. In such cases we shall say that the object of the agreement is not unlawful if by "object" we mean the actual performance; but we shall say that it is unlawful if by "object" we mean the creation of an obligation to perform the things promised. This ambiguity is not cleared up by anything in the language of the Act. It does not, however, seem material for any practical purpose.

There is another possible reason however, for the use of the word "consideration". A man may enter into a contract lawful in itself, and perform it in such a manner or by such means as to violate some distinct requirement or prohibition of law. By so doing he may deprive himself of any claim to recover on the other party's promise to pay for his work, and this whether the other party knew any thing beforehand of his unlawful action or not. Now in an agreement by mutual promises each of the promises is, properly speaking, the consideration, and the only consideration, for the other; but in discussing the subsequent duties of the parties as to performance the word "consideration" is sometimes applied, in a loose and extended sense, to those cases where the duty of performance on the one part is, according to the original intent of the agreement, conditional on previous or simultaneous performance on the other. In this inaccurate but not uncommon sense it may be said that, when a promisor who might have performed his promise lawfully performs it unlawfully, the consideration for the reciprocal promise becomes unlawful; and the language of the Act may have been designed to cover such cases.

Unlawful intention, like negligence, is not presumed by the law, nor is any man expected to presume it without evidence. Therefore, if a contract can on the face of it be lawfully performed, the existence of an undisclosed intention by one party to perform it unlawfully, or use it as part of an unlawful scheme, will not disable the other party from enforcing it, at any rate by way of damages; and if the construction is doubtful, that construction which admits of a lawful performance is to be preferred. Again, if there exists or arises a legal impediment, unknown to the parties at the time of the contracting, to the performance of a contract in the manner which otherwise would have been the most obvious, this will not of itself avoid the contract if it can still be substantially performed without breaking the law. But if both parties in fact contemplate an unlawful manner of performance, the case falls within the rule "that a contract lawful in itself is illegal if it be entered into with the object that the law should be violated. A contemplated unlawful or immoral use of property (including money) to be obtained under a contract is an unlawful object within the meaning of this rule, and this whether such use is part of the bargain or not, and whether the party supplying the property is to be paid out of the profits of its unlawful use or not. If both parties know of the wrongful or immoral intention, the agreement is void; if the party who is to furnish the property does not know of it, the contract is voidable at his option when he discoveries the other party's intent.

An agreement may be rendered unlawful by its connection with a past as well as with a future unlawful transaction. Thus the giving of security for money purporting to be payable under an agreement whose purpose was unlawful is itself an unlawful object, even though it was not stipulated for by the original agreement. In a Calcutta case property was leased for the purpose of carrying on organized prostitution. The lessee deposited a sum of money with the lessor for which the lessor subsequently passed a promissory note. The suit on the promissory note was dismissed on the ground that a bond or other instrument connected with an illegal agreement could not be enforced.

With regard to the tendency of an agreement to "defeat the provisions of any law," these words must be taken as limited to defeating the intention which the Legislature has expressed, or which is necessarily implied from the express terms of an Act. It is unlawful to contract to do that which it is unlawful to do; but an agreement will not be void merely because it tends to defeat some purpose ascribed to the Legislature by conjecture, or even appearing, as matter of history, from extraneous evidence, such as legislative debates or preliminary memoranda not forming part of the enactment. It is not defeating the provisions of a law to take advantage of the lack of any provision for some particular case. If the enactment as it stands is intelligible, the Court cannot assume that the omission was not intended.

An agreement entered into with a fraudulent object is a particular species of the genus of agreements contemplating or involving injury to the person or property of another. The general term "injury" means criminal or wrongful harm. Evidently there is nothing unlawful in agreeing to carry tin a business lawful in itself, though the property of rivals in that business may, in a wide sense, be injured by the consequent and intended competition.

There is no department of the law in which the Courts have exercised larger powers of restraining individual freedom on grounds of general utility, and it is impossible to provide in terms for this discretion without laying down that all objects arc unlawful which the Court regards as immoral or opposed to public policy. The epithet "immoral" points, in legal usage, to conduct or purposes which the State, though disapproving them, is unable, or not advised, to visit with direct punishment. "Public policy" points to political, economical, or social grounds of objection, outside the common topics of morality, either to an act being done or to a promise to do it being enforced. Agreements or other acts may be contrary to the policy of the law without being morally disgraceful or exposed to any obvious moral censure.

"Forbidden by law."---An act or undertaking is equally forbidden by law whether it violates a prohibitory enactment of the Legislature or a principle of unwritten law. But in India, where the criminal law is codified, acts forbidden by law seem practically to consist of acts punishable under the Penal Code and of acts prohibited by special legislation, or by regulations or orders made under authority derived from the Legislature. Parties are not, as a rule, so foolish as to commit themselves to agreements to do anything obviously illegal, or at any rate to bring them into Court; so the kind of question which arises in practice under this head is whether an act, or some part of a series of acts, agreed upon between parties, does or does not contravene some legislative enactment or regulation made by lawful authority. The decision may turn on the construction (If the agreement itself, or of the term of the Act or other authoritative document in question, or on both. In particular it may have to be considered whether the intention of the legislator was to prevent certain things from being done, or only to lay down terms and conditions on which they might be done. It is easy to say that properly drawn Acts or Regulations ought to leave no doubt on the point, but experience has shown that such doubts are possible and have not been uncommon. Broadly speaking, that which has been forbidden in the public interest cannot be made lawful by paying the penalty for it; but an act which is in itself harmless dries not become unlawful merely because some collateral requirement imposed for reasons of administrative convenience has been omitted. There was a time when the English Courts almost regarded it as meritorious to evade statutory regulations, and encouraged evasions of them by free distinction; but that attitude is long out of date, and examples of it cannot now be taken as precedents.

Cases under this head have arisen principally in connection with Excise Acts, and they have almost all been decided with reference to English law. The principles may be stated thus; "When conditions are prescribed by statute for the conduct of any particular business or profession, and such conditions are not observed, agreements made in the course of such business or profession are void if it appears by the context that the object of the Legislature in imposing the condition was the maintenance of public order or safety or the protection of the persons dealing with those on whom the condition is imposed; [but they] are valid if no specific penalty is attached to the specific transaction, and it appears that the condition was imposed for merely administrative purposes, e.g., the convenient collection of the revenue".

The High Court of Bombay acted on these principles, where the question arose whether an agreement by a lessee of tolls from Government under the Bombay Tolls Act, 1875, to sublet the tolls was valid and binding between the lessee and sub-lessee. S. 10 of the Act empowered the Government to lease the levy of tolls on such terms and conditions as the Government deemed desirable. One of the conditions of the lease was that the lessee should not sublet the tolls without the permission of the Collector previously obtained, and another condition empowered the Collector to impose a fine of Rs. 200 for a breach of the condition. The lessee sublet the tolls to the defendant without the permission of the Collector, and then sued him to recover the amount which he had promised to pay for the sublease. It was contended on behalf of the defendant that the sublease was unlawful, as it was made without the permission of the Collector, and that the lessee was not therefore entitled to recover the amount claimed by him. But this contention was overruled. Parsons J., after citing the passage set forth above, said: "In our opinion this case falls within the latter class, because the statute itself does not forbid or attach a penalty to the transaction of subletting, but merely gives power to impose a condition under which it can be forbidden should the Collector see fit to do so far what can be only purely administration purposes. The Act imposing tolls in an Act passed for the benefit of the revenue and not an Act for the protection of public morals." Ranade J. said: "As a general rule, the law does not forbid things in express terms, but imposes penalties for doing them, and the imposition of such penalties implies prohibition, and an agreement to do a thing so prohibited is unlawful under section 23 of the Contract Act. As no penalties are prescribed under the [Tolls] Act, the agreement does not prima facie fall under the 1st clause of section 23." Similarly where the lessee of a ferry under the Madras Ferries Act, 1890, transferred the ferry to the defendant without the permission of the Collector as required by the terms of the lease, it was held that the transfer was not for that reason unlawful, as neither the Act nor any rule framed under the Act prohibited such transfer. In such a case, though the transfer may be invalid against Government, it is valid as between the transferor and transferee. The above Acts, which are intended solely for the protection of revenue, must be distinguished from Abkari and Opium Acts, which have for their object the protection of the public as well as the revenue. Similarly, a partnership agreement entered into in violation of the terms of a license granted under the Bombay Abkari Act, 1878, which prohibited the licensee from admitting any partner in the business, the violation being punishable under the Act, is void as forbidden by law; and if a person, being aware of this prohibition, does join as a partner, and advances capital for that purpose, he cannot recover back the amount advanced.

A distincution is, however, made between a case in which the partner merely shares in the profits and takes no active part in the sale of liquor, and a case in which the Partnership deed entitles the other partners to take part in the business of the licensee. The Privy Council held that an agreement to share the profits of the licensee's business did not amount to subletting or alienation of the license. Accordingly it has been held that where a license has been granted to partners, and one of the partners enters into a sub-partnership, such a sub-partnership does not amount to a subletting or transfer of the license, as the sub-partner cannot interfere in the business of the licensees. A license under the Abkari Act cannot be obtained benami, as that would defeat the purpose of the Act, and therefore no suit can be filed against the benamidar to recover any sum of money from him.

A contract to obtain a license and do a thing in accordance with law is not illegal but initially valid, and even though the agreement subsequently becomes illegal because no licence is obtained, S. 65 will apply and any advantage received under the contract must be restored.

In a Madras case an agreement by a Madras District Municipality by which it farmed out its right to collect fees on the slaughter of animals was held void as being ultra vires, so that the Municipality could not sue on it. The Court said "The powers of a Corporation must be strictly construed and it is hardly too much to say that what is not permitted to such a body is forbidden." But this, according to current English authorities, is not accurately expressed. There is no such rule of construction as supposed, and acts ultra vires are not forbidden; the attempt to do such an act is a nullity. Cases on the doctrine of ultra vires are not realy relevant to S. 23.

"Defeat the provisions of any law."---The term "law" in this expression would seem to include any enactment or rule of law for the time being in force in India. This branch of the subject may thus be considered under three heads according as the object or consideration of an agreement is such as would defeat (1) the provisions of any legislative enactment, or (2) the rules of Hindu or Muhammadan law, or (3) other rules of law for the time being in force in India.

Rules of Hindu and Muhammadan law.---The rules must of course be such as are recognized and enforceable by Courts of law; they do not include rules of an exclusively religious character which operate in foro conscientiae only.

An agreement entered into before marriage between a Muhammadan wife and husband by which it is provided that the wife shall be at liberty to live with her parents after marriage is void, and does not afford an answer to a suit for restitution of conjugal rights. And so is an agreement entered into after marriage between a Muhammadan wife and husband who were for some time prior to the agreement living separate from each other, providing that they should resume cohabitation, but that if the wife should be unable to agree with the husband she should be free to leave him. Upon the same principle, an agreement between a Muhammadan husband and wife for a future separation is void, and the wife cannot on separation recover the maintenance allowance provided by the agreement. But an agreement made between a Muhammadan wife and husband entered into before marriage by which it is provided that the wife shall be at liberty to divorce herself from her husband under certain specified conditions is valid, if the conditions are of a reasonable nature and are not opposed to the policy of the Muhammadan law. When such an agreement is made, the wife may, at any time after the happening of the contingencies, repudiate herself, in the exercise of the power, and a divorce will then take effect as if the talaq had been pronouncedm by the husband. This is known in Muhammadan law as talaq (divorce by the husband) by tafwiz (delegation), the wife being as it were, the delegate of the husband to pronounce the talaq. An agreement contemporary with the marriage whereby the husband undertook not to ill-treat his wife and also agreed that the wife would be entitled to claim the customary maintenance allowance if relations between husband and wife became strained is not void.

Other rules of law in force in India.---It is now a settled principle of law that where a decree is silent as to subsequent interest on the amount decreed, interest cannot be recovered by proceedings in execution of the decree. But an agreement in the nature of a compromise between a decree-holder and a judgment-debtor, which proceeds upon ignorance common to both parties thereto, as to the above principle, is not illegal as defeating the provisions of that law. Again, it is a well-established rule of law that, unless a will is proved in some form, no grant of probate can be made merely on the consent of parties. Hence an agreement or compromise as regards the genuineness and due execution of a will, if its effect is to exclude evidence in proof of the will, is not lawful so as to be enforceable under the provisions of O. 23, r. 3. Similarly, a receiver being an officer of the Court, the Court alone is to determine his remuneration, and the parties cannot by any act of theirs add to, or derogate from, the functions of the Court without its authority. A promise, therefore, to pay the salary of a receiver without leave from the Court, even if unconditional, being in contravention of the law, is not binding on the promisor. But an agreement providing for remuneration to be paid to an executor not out of the assets of the testator, but from the pocket of a third person, is neither forbidden by the Administrator-General's Act, 1874, S. 56, nor is it one which if permitted would defeat the provisions of that Act, nor is it against public policy.

"Fraudulent."---- A sale of immovable property pending a suit against the vendors to recover a debt is not invalid merely because the motive of the vendors may have been to prevent the land from being attached and sold in execution. In such a case the only question is whether the sale was a real transfer of the title to the land for a fair money consideration. The motive of the vendors to defeat the execution of any decree that may be passed against them is immaterial. In this connection may be noted the provisions of S. 53 of the Transfer of Property Act, 1882. That section provides inter alia that "every transfer of immovable property made with intent to defeat or delay the creditors of the transferor is voidable at the option of any person so defeated or delayed," but that "nothing in this section contained shall impair the rights of any transferee in good faith and for consideration." Such a transfer is not illegal, for the section merely declares that it shall be voidable at the option of the party affected by the transfer. Where the object of an agreement between A and B was to obtain a contract from the Commissariat Department for the benefit of both, which could not be obtained for both of them without practising fraud on the Department, it was held that the object of the agreement was fraudulent, and that the agreement was therefore void. But an agreement between A and B to purchase property at an auction sale jointly, and not to bid against each other, is perfectly lawful.

"Injury to the person or property of another."----The consideration or object of an agreement is unlawful when it involves or implies injury to the person or properly of another. A mortgage-bond, whereby a person who is entitled to a moiety only of certain property mortgages the whole of that property, is not void under this section as to the moiety belonging to him, merely because he purports to mortgage the other moiety also not belonging to him. A bond which compels the executant to daily attendance and manual labour until a certain sum is repaid in a certain month and penalizes default with overwhelming interest is unlawful and void, "such a condition," the Court said, "is indistinguishable from slavery, and such a contract is, in our opinion, opposed to public policy and not enforeceable."

"Immoral."---This means "immoral" according to the standards of morality approved by the Courts and accordingly a settlement in consideration of concubinage was held to be void, notwithstanding that it was made by a member of a community among whom concubinage carried no stigma.

A landlord cannot recover the rent of lodgings knowingly let to a prostitute who carries on her vocation there. Otherwise, if the landlord did not know that the lodgings were required for prostitution. Similarly, money lent to a prostitute expressly to enable her to carry on her trade cannot be receivered.

Trading with enemy.----Agreement alleged to amount to trading with an enemy or otherwise to operate in the enemy's favour in time of war do not appear to have come before the Courts of British India before the war of 1914. It is long settled law that all trade with public enemies without licence of the Crown is unlawful. "The King's subjects cannot trade with an alien enemy, i.e., a person owing allegiance to a Government at war with the King, without the King's licence". This includes shipping a cargo from an enemy's port even in a neutral vessel. As a consequence of this, "no action can be maintained against an insurer of an enemy's goods or ships against capture by the British Government. If the performance of a contract made in time of peace is rendered unlawful by the outbreak of war, the obligation of the contract is suspended or dissolved according as the intention of the parties can or cannot be substantially carried out by postponing the performance till the end of the hostilities. In such a case a contracting party is not bound to perform a part of his undertaking which remains possible and lawful in itself, but would be useless without the rest. The recent development of cases of this class if dealt with under S. 56 below. The rules under this head become applicable only when an actual state of war exists. They cannot be made to relate back to a time before the war, though war may have been apprehended. A contract of insurance made before war cannot be vitiated, as regards a loss by seizure also before any act of public hostility, by the fact that war did break out shortly afterwards.

During the first and second Great Wars these principles have been confirmed and in some directions developed; and the matter has been the subject of special legislation, always growing more drastic, passed after the outbreak of hostilities. One question found to need further definition was who is an enemy for the purpose of the rule, and especially how the friendly or hostile character of an incorporated company is to be tested. The seat of a man’s business is of more importance than his domicile in the technical sense or even nationality (for an enemy subject allowed to remain here under the protection of the State is not a commercial enemy, and enemy subjects residing in friendly countries need not be); and in the case of a corporation the jurisdiction in which it is registered does not conclusively determine its character, nor yet the nationality of its individual shareholders, and it must be considered by whom and in what interest its affairs are in fact controlled.

Stifling prosecution.---Agreements for stifling prosecutions are a well-known class of those which the Courts refuse to enforce on this ground. The principle is "that you shall not make a trade of a felony"; or, as it was expressed in a Calcutta case, "no Court of law can countenance or give effect to an agreement which attempts to take the administration of law out of the hands of the judges and put it in the hands of private individuals."

A compromise of proceedings which are criminal only in form, and involve only private rights, may be lawful. This perhaps is of no importance in Indian practice, where we have a statutory list of compoundable offences. "The criminal law of this country makes a difference between various classes of offences. With regard to some, it allows the parties 10 come to an agreement and either not to take proceedings or to drop the proceedings after institution in a few instances even without the leave of the Court, and, in other instance, with the leave of the Court. But there are other instances which cannot be compounded or arranged between the parties. If the offence [is] compoundable and [can] be settled in or out of Court without the leave of the Court, there seems no reason why [a compromise] should be regarded as forbidden by law or as against public policy, the policy of the criminal procedure being to allow such a compromise in such cases". Thus where A agreed to execute a kabala of certain lands in favour of B in consideration of B's abstaining from taking criminal proceedings against A with respect to an offence of simple assault which is compoundable, it was held that the contract was not against public policy and that the same could be enforced. Where the offence is compoundable with leave of the Court, and such leave is obtained, the composition cannot fall within the mischief of the section. But where the offence is non-compoundable, an agreement made for the purpose of compounding it or stifling a prosecution in respect of it is unenforceable and cannot be sued on. Even if the prosecution is proceeded with by the authorities, in spite of the agreement to withdraw it, the agreement is void.

There is no rule of law to forbid the purchase of property of which the title is or may be disputed, but the law does not, therefore, sanction mere speculative traffic in rights of action. To which class a given transaction belongs, in a case where doubt is at first sight possible, seems to be a question of fact rather than of law.

In a suit to recover money for financing litigation the burden is on the plaintiff to prove that the litigation is just and the agreement to finance it just and equitable.

Agreements between legal practitioners subject to the Legal Practitioners Act, and their clients making the remuneration of the legal practitioner dependent to any extent whatever on the result of the case in which he is retained arc illegal as being opposed to public policy.

Interference with course of justice.---It needs no authority to show that any agreement for the purpose or to the effect of using improper influence of any kind with judges or officers of justice is void. Various agreements not open to objection on the ground of champerty, nor always obviously wrong in themselves, have been held void as attempting to interfere with the powers and discretion of the regular Courts in administering justice. Thus an agreement whereby one person agreed to assist another in carrying out litigation for the purpose of delaying execution of a decree was held to be unenforceable. So much of this doctrine as it was thought proper to preserve in India will be found in S. 28.

Marriage brocage contracts.---Agreements to procure marriages for reward are undoubtedly void by the common law, on the ground that marriage ought to proceed, if not from mutual affection, at least from the free and deliberate decision of the parties with an unbiassed view to their welfare.

It has been held in the Punjab that a family arrangement of inter-marriages of sons and daughters of various families known as bil mawaza amongst persons of the same class, by which the family A gives a girl to be taken as a wife on equal terms into a family B, and a girl of the family B is at the same time given as a wife into family A, stands on a totally different footing from what is really a sale of the girl, and is not therefore void as opposed to public policy. Where a girl, therefore, of a family A is given as a wife in family B in virtue of such an arrangement, but family B refuses to give a boy of the family as a husband in family A, a suit will lie for damages for breach of the contract. But since such arrangements are not held in very high repute, the Court will not award heavy damages.

Agreements tending to create interest against duty.---One of the reasons suggested for not enforcing agreements to reward parents for giving their children in marriage is that such agreements tend to a conflict of interest with duty. The same principle is applied by the Common Law to dealings of agents and other persons in similar fiduciary positions with third persons. An agent must not deal in the matter of the agency on his own account without his principal's knowledge. In the present Act the rules on this head are embodied in the chapter on Agency, and will accordingly be considered in that place. Certain rules which we shall find in the chapter on Indemnity and Guarantee rest on similar grounds of equity. There are conflicting opinions as to the legality of an agreement by a Patwari or Kanungo in Government service for the purchase of land situated within his circle or for the acquisition of any other interest therein. Allahabad decisions that such an agreement created an interest which would conflict with his duty have been overruled by the Bench of the same Court but the Lahore High Court does not follow this, at any rate as to agricultural land.

Agreements tending to create monopolies.---Agreements having for their object the creation of monopolies are void as opposed to public policy.

Agreement by client to remunerate his pleader's clerk.---An agreement by which a litigant binds himself to pay a sum of money to his pleader's clerk for giving special attention to his legal business which the pleader is bound to see to in consideration of his fee is opposed to public policy, and consequently cannot be enforced.

Agreement not to bid.---An agreement between persons not to bid against one another at an auction sale is not necessarily unlawful, but it may be so if the purpose is to defraud a third party.

Agreement---Consideration of agreement was a compromise of a criminal case involving non-compoundable offence---Such agreement being void and against public policy, held, was clearly hit by S. 23, Contract Act. 1872.

Provision of section not attracted to an agreement to sell land surrendered under M.L.R. No. 64 as such agreement not prohibited by law.

Sale by transferee under Settlement Scheme No. 1---Sale made contingent upon grant of proprietary rights---Held, terms of agreement make it clear that parties never intended to violate restriction under Settlement Scheme No. 1 and, therefore, contract was neither void nor against public policy.

S. 23 Read with S. 73-A, Sind Land Revenue Code (V of 1879)---Agreement forbidden by law---Grantee of Government land on temporary basis later granted land on permanent basis on condition that he may not without permission in writing of Revenue Officer, lease, mortgage, sell or encumber land before paying full price---Parties during tenure of grant on temporary basis executing agreement whereby grantee agreed to give half of land to appellant upon certain conditions---Agreement challenged as void being in breach of conditions of grant---Agreement executed long before land granted to grantee on permanent basis and grantee rescinding contract alleging failure of appellant to perform his part of contract---Held, grantee not party to any illegal contract nor took advantage of his own wrong.

Contract limiting period of limitation for reference to arbitration---Not void---Contracts extending period of limitation are void. A plain reading of section 3 of the Limitation Act and section 23 of the Contract Act will show that an agreement to enhance the period of limitation or a promise by the defendant not to raise the plea of limitation is in effect a covenant to defeat the provisions of the Limitation Act. It will be contracting oneself out of the statute of limitation and such agreement will be void. There is, however, a marked distinction between a condition which shortens or limits the time within which a suit may be brought. There is nothing in the above provisions to justify the inference that a stipulation allowing curtailment of period of limitation in an agreement is void.

Illegality or invalidity of contract---How to be determined by courts?---Where an action is brought on contract which is ex-facie illegal, court will decline to enforce the contract irrespective of whether illegality is pleaded or not but where question of illegality depends upon surrounding circumstances, as a general rule, court will not entertain the question unless it is raised in pleadings.

Agreement to sell land---Mentioning of deflated price of defraud Government---Validity of agreement---Contention that in order to save taxes deflated sale price of Rs. 50,000 instead of Rs. 68,000 agreed upon by parties, has been shown in agreement which means to defraud Government, and as such entire agreement is void, held, not correct---Portion of agreement mentioning lesser amount can be severed from main agreement to carry out sale of Rs. 68,000 which being legal can be enforced.

Poor litigants financed by another person---Suit is not champertous. The mere fact that plaintiffs were poor people who were being financed by others would not prove that the suit is champertous.

Transaction evading bye-laws of Co-operative Society---No contravention of law---Transaction is not unlawful. Where a person was not entitled to have a plot of land under a Co-operative Housing Scheme but his wife was so entitled and he obtained the plot of land benami in her name. This was challenged as an unlawful and void transaction.

Held: Where rules arc merely domestic matters, a transaction which has the object of evading such rules, cannot be treated as unlawful or fraudulent. Therefore the allotment was not void.

Contract of printing subject to authentication of declaration of printer---Declaration not authenticated---Contract is illegal---No suit lies for damages for breach of contract. Where the contract to print and bind, etc. certain books was subject to the condition that the printer would obtain a declaration as a printer before performing the contract but no such declaration could be obtained by him. Held: The contract became illegal on the refusal of declaration to the printer, therefore, no suit for damages for breach of contract was competent.

Contract contravening Foreign Exchange Regulation Act---'Ex post facto' permission to perform contract possible---Contract is not illegal. Where a contract when entered into was in contravention of the Foreign Exchange Regulation Act, 1947 but ex post facto permission could be granted in the matter of made contrary to its provisions cannot be said to defeat the law by reason of that inconsistency only.

Contract void at inception as contravening statute---Statute subsequently repealed---Contract does not become valid. Where the transaction under the contract took place without prior sanction as required by law, and was therefore void. Subsequently the law requiring the sanction was repealed and sanction was not required to be obtained from Collector. Held: The change in law does not give retrospective validity to the contract and the contract remains void.

Contract legal at inception may become illegal at time of performance.

Statutory prohibition of contract and contract opposed to public policy---Distinction between. After a legal prohibition is discovered, its application to a given case is comparatively simple because a prohibited contract is illegal and there is no need to see what acts as distinguished from contracts,. the statute prohibits, nor is it necessary to see the intention of the parties. As against this the problem in respect of illegally at common law on the ground of public policy is the discovery of injuriousness to society. On the one hand a contract may be bad on the face of it and on the other hand it may be unobjectionable as it is formed, yet it may enjoin the doing of acts which may be injurious or illegal. Thus common law relating 1o prohibited contracts deal with the prohibition of acts and statutory law relating to prohibited contract deals with the prohibition of contracts only.

Compromise based on fraud and misrepresentation---Unlawful and void. Held: The orders passed by consent on the ejectment application in the course of proceedings before the Rent Controller resulting in compromise between the parties was due to fraud and misrepresentation on the part of the appellant upon the respondent as well as the Court, the result being that the compromise was not a lawful compromise and could not have been acted upon in any manner.

Fraud---May be inferred from circumstances---Nature of proof required. Fraud can be proved by direct evidence and it may also be inferred from circumstances. It is well settled that where fraud is to be inferred from the circumstances and is not directly proved, those circumstances must be such as to exclude any other reasonable possibility. Where the evidence is direct, the finding of fraud may be a pure finding of fact but where there is no direct evidence but only an inference, then the finding involves the legal question as to whether the circumstances are such that the necessary inference can legally be derived. The criterion applicable to circumstantial evidence in order to draw an inference of fraud is that the circumstances must exclude every reasonable possibility except that of fraud.

Limitation for suit on branch of contract---Shorter than statutory period prescribed by contract---Term void---Statutory limitation applies. Where it was provided in the contract that a suit for its breach on rescission must be brought within three months of such date. Held: The clause in contract making such provision was void and a suit could be brought within the statutory period of three years from the date of rescission of the contract.

S. 23----Agreement by husband to pay Rs. 2,000 as damages to wife if he violated terms of marriage agreement---Terms violated---Damages decreed. Where at the time of marriage the husband entered into an agreement with the wife to say that if he violated any of the terms stated in the agreement he would pay Rs. 2,000 as damages. Held: That at least some of the conditions laid down in the agreement were enforceable in law and as such the plaintiff was entitled to claim a reasonable compensation for breach of those conditions of the agreement. Damages of Rs. 2,000 were rightly decreed.

Agent exercising personal influence to get contract from Government---Contract not void in the absence of proof of illegality of contract. The mere fact that an agent is influential is not enough to prove the illegality of performance unless some other facts to prove that his conduct was illegal are also established.

Contract for payment of consideration for winning favour of Government officers---Contract is void being opposed to public policy. Where a person entered into a contract with a business firm whereunder he was to receive money for securing a contract for them to export rice to a foreign country by the use of his influence with Government officers. On his seeking to enforce the contract. Held: It has been the rule that any contract is illegal which tends to corruption in the administration of the affairs of the nation. A familiar example of a transaction offensive to this principle is a contract for the buying, selling or procuring of favour from public officers. It is obvious that all such contracts must have a material influence to diminish the respectability, responsibility and purity of public officers and to introduce a system of official patronage, corruption and deceit wholly at war with the public interest.

Public policy---Question of law and facts---How question may be decided. The question whether a contract or its performance is or is not against public policy is a mixed question of law and fact. Moreover, the Courts may deduce pleas when they have to decide pure questions of law but they are not free to make deductions which may be mere surmises, logically disputable, unwarranted or imaginary allegations of fact against any party.

Compromise in maintenance suit---Admission by woman to be not legally wedded wife of defendant---Status of son of woman and his rights injured by compromise---Compromise is void. Where a suit for maintenance by a woman against her defendant husband was compromised, and in the compromise petition she admitted that she was not legally married wife of the defendant. The unvoidable consequence of this admission in the compromise petition which formed part of the decree was that the son would be reduced to the status of an illegitimate son. It clearly involved injury to his status and right to maintenance and also future inheritance. That being so, the terms of the contract would come within the ambit of section 23, for they involve or imply injury to the person and property of the minor boy. Such an agreement is unlawful and it is clearly laid down that every agreement of which the object is unlawful is void.

Agreement of sale made in the course of criminal prosecution---Prosecution not continued after agreement---Agreement is void. Held: There were two cases already pending and were fixed for hearing. So, the very fact that a case was initiated by the plaintiff under section 406, P.P.C. goes to show that the defendant was in a very difficult position when the Magistrate was dealing with the three cases and was suggesting for a compromise and as it appears that terms of agreement were settled on the same day and the case under section 406, P.P.C. remained pending till 5 days thereafter when it was dismissed for non-prosecution. This is sufficient to hold that this contract is hit by section 23 of the Contract Act as the consideration or object of the agreement is unlawful.

Contract debarring person from instituting criminal proceedings---Other legal remedies not barred---Contract is not void for being opposed to public policy. Held: If a party considering himself aggrieved, is deprived of seeking his remedy in a Court of justice, such agreement whether express or implied must be considered as being against public policy. But an agreement express or implied which does not absolutely deprive an aggrieved person of seeking redress from a Court of justice but only debars him from launching criminal proceedings cannot be considered as being necessarily against public policy.

Criminal proceeding pending---Accused executing document in favour of complainant---How validity of document is determined---Document is valid if it does not result in compromising the criminal prosecution. Held: The most important question in this behalf is ;has the criminal case been settled as a result of and because of the impugned document? If it is so, it would be hit by the provisions of section 23, if not, it would not come within the mischief of the said section, notwithstanding the fact that it came into existence during the pendency of the criminal proceeding. The execution of the document at a time when the suit was pending may amount to a strong piece of circumstantial evidence tending to show that the criminal proceeding was compromised as a result thereof, but it is no more than a piece of evidence which may be rebutted. The Court would look to the other evidence and attending circumstances in order to arrive at a finding whether the execution of the document was the consideration for a compromise of the said criminal proceeding. If the document is merely executed during the pendency of such a criminal proceeding and if it is not the basis of compounding the criminal proceeding, it would not be hit by section 23 of the said Act.

Agreement partly void---Cannot be enforced by changing part of it---May be held void as a whole if void part cannot be separated from good parts. Held: When you cannot sever the illegal from the legal part of a covenant, this contract is altogether void, but when you can sever them, whether the illegality be created by statute or common law, you may reject the bad part and retain the good. Where in reality there is only one covenant the Court will not rewrite it, to separate it into two covenants. Thus where grantee of State land entered into an agreement with another person stipulating to transfer his tenancy rights in State land to him and also to transfer proprietary rights afire acquisition of the same Stipulation with regard to transfer of proprietary rights was not separately enforceable. Such agreement as a whole, was bad being in violation of S. 19, Colonization of Government Lands (Punjab) Act.

Contract requiring services of plaintiff to be utilized for bringing undue personal influence to bear upon authorities competent to accept tender and also for payment of bribe and commission---Hit by S. 23---Such contract is likely to be struck off as opposed to public policy---No Court can help in performance of such a contract.

Burden of proof---Person alleging illegal consideration must prove the assertion---When question must be raised. Section 23 of the Contract Act declares the consideration in each of the cases mentioned in it to be unlawful and enacts that every agreement of which the consideration is unlawful is void. It is quite clear from the wording of section 23 of Contract Act, that there is a presumption of legality about every consideration. The law presumes against illegality and the burden of establishing illegality is on the person who asserts it. Therefore where the defendant does not assert the illegality in the written statement and does not lead any evidence on the point, he can at the late stage of appeal before the High Court raise the question for the first time.

Bond obtained on consideration of dropping criminal prosecution---Complaint had been filed at the time---Agreement illegal. Where a bond was obtained from the defendant in consideration of dropping a criminal complaint against him, when complaint had been lodged though no process had been issued against the defendant.

Held: When a complaint is lodged, criminal proceedings against the accused may start only when process is issued against him, yet it could not be said that what a complainant had done by lodging a criminal complaint was not an initiation of criminal proceedings. The consideration for the bond, in the case, was, therefore, unlawful and void.

Contract becoming unenforceable by amendment in law---Contract is void. Held: The plaintiff's contract of lease, though lawful at the time when it was made, has been rendered impossible for performance by the operation of section 75-A of the Act over which the parties to the contract have no control. The said contract cannot be performed or specifically enforced except in violation of the absolute prohibition contained in section 75-A; the performance of that contract has, therefore, been rendered unlawful by the said section. Thus, the doctrine of frustration coming within the purview of the second paragraph of section 56 of the Contract Act comes into play in this case with the result that the plaintiffs contract of leave has become void and unenforceable.

Contract in contravention of statute---Void and unenforceable. Where a condition is attached to a licence granted under the Act or an order passed thereunder and its contravention is made punishable, it becomes clear that any agreement in violation of the condition would be void and unenforceable.

Contract acted upon in illegal manner though it could be performed in a legal manner---S. 23 is not attracted. Where a contract was performed in such a way as to contravene the provisions of section 4 (2) (5) (1) (a) (c) and 21 of the Foreign Exchange Regulation Act, and it was contended that the contract had become void on that ground.

Held: The Foreign Exchange Regulation Act does not forbid the making of a contract which may contemplate doing a thing which is contrary to the provisions of the Foreign Exchange Regulation Act, for that thing can still be done by ex post facto permission of the State Bank of Pakistan. The scheme of the Foreign Exchange Regulation Act, therefore, is not to forbid the making of a contract but merely to insist that the contract shall be performed in a particular manner, namely, by taking the necessary permission of the competent authority. It cannot, therefore, in the circumstances be said that a contract which violates any of the terms of the Foreign Exchange Regulation Act is ex facie or ab initio void or comes within the mischief of a contract prohibited by section 23 of the Contract Act. Moreover, there is nothing in the contract itself to show that the contract had of necessity to be performed in an illegal manner or in a manner which offended the provisions of the Foreign Exchange Regulation Act. The contract was to be performed in partnership business upon the basis of a permit obtained from Government for the export of rice at a particular price and to import foreign goods of equivalent value into Pakistan. The price fixed by Government was, no doubt, high but it might well have been anticipated that under the barter scheme the foreign buyer would be able to adjust this loss against the price of the imported goods and the local trader would be more than reimbursed by the huge profit that he would make by the sale of the imported commodity. In such a transaction no illegality of any kind would have been involved. The mere fact, therefore, that the partners in performing the contract entered into, adopted a method, which was not according to the provisions of the Foreign Exchange Regulation Act, would not determine the validity or invalidity of the contract itself.

Criminal proceeding pending---Accused executing document in favour of complainant---flow validity of document is determined---Document is valid if it does not result in compromising the criminal prosecution. Held: The most important question in this behalf is; has the criminal case been settled as a result of and because of the impugned document? If it is so, it would be hit by the provisions of section 23, if not, it would not come within the mischief of the said section, notwithstanding the fact that it came into existence during the pendency of the criminal proceeding. The execution of the document at a time when the suit was pending may amount to a strong piece of circumstantial evidence tending to show that the criminal proceedings was compromised as a result thereof, but it is no more than a piece of evidence which may be rebutted. The Court would look to the other evidence and attending circumstances in order to arrive at a finding whether the execution of the document was the consideration for a compromise of the said criminal proceeding. If the document is merely executed during the pendency of such a criminal proceeding and if it is not the basis of compounding the criminal proceeding, it would not be hit by section 23 of the said Act.

Dropping of non-compoundable case---Consideration for contract---contract illegal. A contract the consideration for which is the dropping of a criminal case about an offence which is not compoundable is unlawful and, therefore, hit by section 23 of the Contract Act, 1872.

Illegal contract---Made basis of arbitration---When legality of contract may be challenged. In those cases where ex facie the contract between the parties is illegal and void it is open to a party to raise this objection at any stage of the arbitration proceedings, and particularly before the Court when an award is sought to be made the rule of the Court for setting it aside on the ground that it was based on an illegal contract. But in a case where the question involves the consideration of evidence led by the parties and then to decide whether the case of one party is correct or the case of other party is correct the position is entirely different.

Mortgage bond obtained by creditor under threat of criminal prosecution---Object of agreement is not to stiffle prosecution---Bond is valid. Held; stiffling of prosecution is distinguishable from the lawful compounding of a compoundable offence. If the offence is not compoundable, compounding of it must be held to be illegal and opposed to public policy. On the other hand there is nothing to prevent a creditor from taking a security from his debtor for the payment of a debt due to him, even if the debtor is induced to give the security by a threat of criminal case, so long as there is no agreement not to prosecute. In the case, neither the recital of the mortgage bond nor the evidence led in the case showed that non-prosecution or stiffling of the prosecution case was the consideration or object of the bond. The motive for execution of the bond might have been withdrawal or non-prosecution of criminal case, but there is a good deal of difference between the motive for the said consideration and the object of the agreement. It is absolutely necessary to keep this distinction in view and it is all the more necessary in a case where there is a civil liability already existing which is discharged or remitted by the agreement.

Offence compoundable with permission of Court---Compounded without such permission---Agreement amounts to stifling prosecution and is not enforceable. If a criminal offence is compoundable and can be settled in or out of the Court without the leave of the Court, a compromise entered in such cases would not be regarded as forbidden by law or against public policy, the policy of the criminal procedure being to allow compromise in such cases. But if the offence is compoundable with the leave of the Court and such leave has not been obtained, the compromise entered in such circumstance will fall within the mischief of section 23 of the Contract Act, and is therefore void. It cannot be enforced.

Stifling prosecution and lawful compounding of offences---Distinction between---Security for debt obtained under threat of criminal prosecution---Agreement not void: Stifling of prosecution is distinguishable from the lawful compounding of a compoundable offence. If the offence is not compoundable, compounding of it must be held to be illegal and opposed to public policy. On the other hand there is nothing to prevent a creditor from taking a security from his debtor for the payment of a debt due to him, even if the debtor is induced to give the security by a threat of criminal case, so long as there is no agreement not to prosecute. In the case, neither the recital of the mortgage bond nor the evidence led in the case showed that non-prosecution or stifling of the prosecution case was the consideration or object of the bond. The motive for execution of the bond might have been withdrawal or non-prosecution of criminal case, but there is a good deal of difference between the motive for the said consideration and the object of the agreement. It is absolutely necessary to keep this distinction in view and it is all the more necessary in a case where there is a civil liability already existing which is discharged or remitted by the agreement.

Stolen goods---Contract with regard to---Illegal and void. Where a bond was executed in favour of the owner admitted the sale of stolen gold and it was promised that if the thief who had sold the gold to the executant did not appear by a certain date, he would return the gold to the owner. It was held that such an agreement or writing being opposed to public policy would be hit by illustration (h) Of section 23 of the Contract Act inasmuch as it would have the effect of stifling prosecution of a person accused of a theft which is an offence against society as a whole.

Sanction by Government made condition precedent to sale---Agreement of sale is not within the mischief of S. 23. If under the law there is some condition precedent attached to the validity of a transfer it is open to the parties to enter into an agreement subject to compliance with the condition precedent. The attack on the agreement for sale on the ground of public policy could only succeed if it was shown that the intention of the agreement was to defeat a law. If the parties that enter into an agreement for sale contemplate, only a sale with the requisite sanction they are not making any effort to defeat the law.

Agreement to recover property---It may be enforced under Specific Relief Act, S. 23 against representative-in-interest of a party to the agreement. Since an agreement which is enforceable in law is a contract, and an agreement to reconvey property is enforceable by law, it is clearly a contract within the meaning of section 23 of the Specific Relief Act. So that its specific performance may be obtained against a representative-in-interest.

Application of---Should not be used to restrict freedom of contracts. Public policy does not comprehend, as often popularly imagined, all the political policies from time to time of the Government, nor does it render void agreements merely because they tend to defeat some purpose ascribed to the law which is neither apparently nor necessarily implied in the language of the enactment.

Defence based on illegal transaction---It should be refused to be considered in all eases. The plaintiff sued the defendant for a sum of Rs. 1500 which we allege had been paid to him by cheque as a loan. The defendant alleged that he was a Meat Inspector in the Municipal Committee, and having been served with a notice that his services were to be be terminated had purchased gram, Khal, etc., for the purpose of running a shop. The Municipal Committee ultimately decided not to terminate his services and he was left with the gram, etc., that he had purchased. He approached his officers in the committee and they advised him to sell the goods to the committee on a nominal profit. The committee did stand in need of purchasing the commodities that were with him. Tenders were invited by the committee and he also submitted a tender in the name of the plaintiff, as he being a servant of the committee, could not do so in his own name. The tender was accepted, the goods were supplied and the plaintiff received a sum of Rs. 1632 from the committee in connection with the contract. Rupees 132 had been received by the defendant in cash and for the balance the plaintiff had given the cheque which he had made the basis of the suit.

It was contended that as the defence was based on an illegal transaction the Court should not consider it.

Held: This is no more than a statement of the principle contained in the well known maxim, "manum ex turpi causa non oritur actio." Which means that no Court will "allow itself to be made the instrument of enforcing an obligation arising out of a contract or transaction that is illegal." If a party "requires from the illegal transaction to establish his case" the Court will not entertain the claim.

With respect to such maxims it should be understood in the first place that they are not rules of law and Courts are not bound by them. They represent consideration of justice and public policy which may in the circumstances of a case be over ridden by other similar considerations and their applicability is always subject to what appears to the Court to be the equities of a case.

Divorce---Divorce granted and other arrangements made with the party including withdrawal of criminal case---Contract invalid but divorce would be effective. The husband made a complaint against his wife under section 380 and 317 P.P.C. A compromise was affected by the parties according to which the husband granted divorce to his wife and withdrew the case against her for some consideration. He later on brought a suit for restitution of conjugal rights on the plea that the divorce being based on an unlawful agreement was ineffective.

Held:·When the parties to a contract are themselves in pari delicto neither of them is entitled to ask relief from a Court of law. The Court will not come to the aid of either party to retrieve his position.

Jurisdiction---Contract ousting jurisdiction of one of the two Courts---Not against public policy. An agreement between parties to the contract to the effect that a suit concerning disputes arising between them on the basis of that contract should be instituted in one only out of two competent Courts having territorial jurisdiction over the subject-matter of that suit is valid and enforceable and is not void under S. 28.

Forfeiture clause---Contract between District Board and building contractor---Clause that if contractor tries to bribe the Engineer of the Board the price of work done will be forfeited-allegation of bribery without loss to Board---Forfeiture clause void. There was a contract between the District Board and a building Contractor according to which the building Contractor was to forfeit the amount due to him if he offered any bribe to the District Board Engineer. It was alleged that he offered such a bribe but the Engineer did not accept it and reported the matter to the Chairman of the Board. The Board suffered no loss.

Held: The clause under which the impugned order has been made is void being violative of section 73 of the Contract Act and opposed to public policy. Section 73 lays doen that when a contract has been broken, the party who suffers by such breach is entitled to receive compensation for any loss or damage caused to him thereby. Under clause 20 whether any loss has been suffered by the appellant or not, the contractor is to be penalised presumably to eliminate corruption among the officials of the appellant and to secure better quality of work, for instance, in the present case there is no allegation of any loss or damage suffered by the appellant, for the District Engineer did not accept the bribe and reported the matter to the Vice-Chairman the moment he saw the envelope containing notes of Rs. 300 lying on his table left there by plaintiff. The bribe having been refused, there was no question of District Engineer showing undue indulgence to the plaintiff at the expenses of the appellant. What then is the justification in law for confiscating the amount admittedly due to the respondent.

Stiffling prosecution---Consideration for contract illegal---Contract prohibited under S. 23. In order to determine whether the consideration of a document is prohibited by the section 23 of the Contract Act is to be seen whether the facts are that the contract came into existence, when a criminal prosecution was hanging on the head of the executant or the contract was entered into with the purpose of taking away the prosecution for a non-compoundable offence from the hands of the Crown Prosecution in their own hands. It would be legitimate to infer that in these circumstances, the consideration would be a consideration which is prohibited by section 23.

Public policy and morality---Nature of---Explained. Public policy and morality, referred to in S. 23 of the Contract Act, are by their very nature variable things and always an unsafe and treacherous ground for legal decision. The determination of what is or is not contrary to public policy or morality must necessarily depend upon the merits in each case and upon the stage of development of public opinion and morality of the community concerned as a whole. The Courts are, as such, very cautious in deciding this question and normally reluctant to invent new heads of public policy or to extend it beyond the classes of cases already covered by it.

Public policy does not comprehend, as is often popularly imagined, all the political policies from time to time of the Government, nor does it render void agreements merely because they tend to defeat some purpose ascribed to the law which is neither apparent nor necessarily implied in the language of the enactment.

Liability bond executed in return for suppression of criminal prosecution---Consideration unlawful---Bond void. When an accused undertakes to execute a liability bond in favour of the complainant in consideration of the latter withdrawing a criminal case against the former the bond so executed will be unlawful and the person in whose favour the bond has been executed will derive no benefit from it.

Lease of factory---Municipal Corporation holding that licence should be obtained for the factory---No proof that licence was required prior to the lease---Contract not void. The plaintiff took a factory on lease. It was later on held by the Municipal Corporation that a licence was necessary for running the factory. The plaintiffs contended that as the running of the factory was a continuing offence the lease of it was a void contract. But they did not prove that the taking out of licence was necessary before the lease was granted to them.

Held: that merely because after the lease the corporation authority held the operation of the factory as falling under section 218 (1) (f) City of Lahore Corporation Act (XV of 1941), rendering it necessary to take out a license, did not make the lease in its inception opposed to public policy.

Stiffling prosecution--Contract void---When an agreement is said to amount to stiffling of prosecution. It is against public policy to make a trade of felony or attempt to secure benefit by stiffling a prosecution or compromising an offence which is not compoundable in law and an agreement to that effect is wholly void. It will, therefor, e be an error of law to jump to the conclusion that the agreement is not hit by Section 23 of the Contract Act simply because it makes no mention of the criminal proceedings. To decide the question, the Court should not confine itself purely to the terms of the agreement, but will endeavour to draw its inference from the evidence, both oral and circumstantial.

If however, there is a bona fide civil dispute which the parties have decided to settle and there happended to be subsidiary proceedings in a Criminal Court, it would be contrary to public policy and to justice and equity to allow any person to escape his proper legal liabilities on the mere technical ground that there was some understanding that those criminal proceedings too would not be pressed to conclusion.

Agreement to sell old evacuee grant situate in Cantonment area---Agreement executed without prior sanction/permission of Central Government or of Cantonment Board---Documents and evidence on record making it absolutely clear that sanction/permission could be obtained by transferee even after sale---Contention that agreement was violative of S. 23 inasmuch as land vested in Central Government and sanction/permission was necessary before execution of agreement to sell---Contention repelled---High court upholding decretal of suit for specific performance of such agreement to sell and dismissing second appeal against judgments and decrees of two Courts below---Civil Procedure Code (V of 1908); S. 100, Specific Performance Act (I of 1877), Cantonments Act (II of 1924), S. 73 and Cantonment Lands Administration Rules, 1937, rule 27.

Agreement subject to compliance of law---Previous sanction of Collector required for sale---Sale, in violation/contravention of any provision of law, held, void but agreement to sell, subject to compliance of relevant law, legal and enforceable, provided legal requirement can be complied with.

Consideration of object of agreement is lawful unless Court regards same as immoral or opposed to public policy---Presumption of law in favour of legality of contract but public policy requires that Court should not ignore illegality brought to its attention and refuse to allow party to enforce agreement---Contract ex facie illegal, Court will not enforce same whether illegality is pleaded or not---Question of illegality depending upon surrounding circumstances will not be entertained unless raised by pleadings---Rule of evidence that governs proof of illegality whether contract illegal by statute or at common law.

Ss. 23 & 28 read with Carriers Act (III of 1865), Ss. 6, 8 & 10---Agreement Between parties---Validity of---Respondent firm consigned one bale of yarn under a Way Bill---Condition 15 of Way Bill provided, "no suit shall be against the firm in respect of any consignment without a claim made in writing in that behalf and preferred within 30 days from dale of booking or from date of arrival at destination by party concerned---Appellant carriers failed to deliver the goods to respondent according to appellant, though goods had arrived on next day, same were not taken delivery of and were found to be damaged as a result of cyclone when opened on May 20, 1969 in appellant's godown---Respondent gave a notice of claim to appellant on June 20, 1969 and thereafter instituted suits for recovery of various sums of money---Trial Court held that suits were barred by virtue of Condition 15----High Court held that Condition 15 of Way Bill was void in view of Section 10 of Carriers Act and section 34 of Contract Act---Held: Condition 15 of Way Bills is void in section 23 of Contract Act because its object was to defeat provisions of section 10 of Carriers Act---If under a particular bargain the rights of parties were extinguished that would not hit provisions of section 28 of Contract Act and as such would not be violative of section 23 of said Act---But as rights are not extinguished but only remedies are barred different consideration would apply---Carriers Act was passed, not only to limit liability of carriers, but also to declare liability of carriers---Any contract or bargain which seeks to defeat liability of carriers as enacted by law, would defeat provision of that Act---Under Condition 15 there was neither any extinguishment of liability nor contracting out of liability but a only special period of limitation of notice was provided other than section 10 of Carriers Act---If Condition 15 be permitted then it will defeat provisions of section 10 of Carriers Act---Even in a case where plaintiff was unaware of arrival of goods at destination or was unaware of a loss or damage plaintiff would not have any right to institute a suit if no claim was made and could not have been made within 30 days as stipulated in Condition 15 of Way Bill---In essence Condition 15 was to impose additional obligation upon owner or consignee because it stipulated giving of notice either from date of arrival of goods at destination which more oftener than not is not known to owner of goods, or from date of booking which again is useless because unless loss or damage occurs no liability arises.

Entrie or divisible agreements.---This section is an obvious consequence of the general principle of S. 23. A promise made for an unlawful consideration cannot be enforced, and there is not any promise for a lawful consideration if there is anything illegal in a consideration which must be taken as a whole. On the other hand, it is well settled that if several distinct promises are made for one and the same lawful consideration, and one or more of them be such as the law will not enforce, that will not of itself prevent the rest from being enforceable. The test is whether a distinct consideration which is wholly lawful can be found for the promise called in question. The general rule is that, where you cannot sever the illegal from the legal part of a covenant, the contract is altogether void; but where you can sever them, whether the illegality be created by statute or by the common law, you may reject the bad part and retain the good. Further specific reference to English cases where the rule has been recognised would be of no practical use for Indian purposes.

Where a part of a consideration for an agreement was the withdrawal of a pending criminal charge of trespass and theft, it was held that the whole agreement was void. Upon the same principle a suit will not lie upon a promissory note for an amount which included an item in respect of lotteries prohibited by law, or an amount in respect of gambling losses. Where A promised to pay Rs. 50 per month to a married woman B, in consideration of B. living in adultery with A and acting as his house-keeper, it was held that the whole agreement was void, and B could not recover anything even for services rendered o A as house-keeper.

Similarly, a suit will not lie to recover money advanced as capital for the purposes of a partnership which is partly illegal: A holds a licence for the sale of opium and ganja. The ganja licence contains a condition prohibiting A from admitting partners into the ganja business without the permission of the Collector. No such condition is embodied in the opium licence. B, who is aware of the prohibition, enters into a partnership agreement with A, both in the opium and ganja business without the leave of the Collector and pays A, Rs, 500 as his share if the capital. Dispute arise between A and B, and B sues A for dissolution of partnership and for a refund of his Rs. 500. B is not entitled to recover Rs. 500 or any part thereof, one of the objects of the agreement being to carry on ganja business in partnership. In such a case "it is impossible to separate the contract or to say how much capital was advanced for the opium and how much for the ganja.

Different consequences, however, may follow when a part of the consideration or "object" of an agreement is not illegal, but merely void in the sense that it is not enforceable in law. In such a case actual performance of such part may be a good consideration, though a promise to perform it would not have been. Thus a bond passed by a judgment debtor to the holder of a decree against him in consideration of the latter refraining from execution of the decree is void under S. 257-A of the Civil Procedure Code, 1882, but not illegal. The decree-holder, therefore, on performing his part of the agreement, was held entitled to recover on the executed consideration, being in itself a voluntary lawful forbearance, though not upon the executory agreement. If the promise to postpone execution of the decree were illegal the whole bond would be tainted with illegality, and the judgment creditor would then have no right to enforce payment of the bond. But when the parties themselves treat debts void as well as valid as a lump sum, the Court will regard the contract as an integral one, and wholly void. Thus where a judgment debtor agreed to pay in a lump sum interest not awarded by decree in addition to the sum decreed, without the sanction of the Court, it was held that, the promise to pay such interest being void under S. 257-A of the Civil Procedure Code, 1882, the whole agreement was void. In a Bombay case the Municipal Corporation agreed to give for a lump sum a contract for recovering tax from pilgrims and levying a toll on vehicles and animals. It was beyond the powers of the Municipality to grant the right to collect fee from pilgrims. The Court held that as the transaction was void and tainted with illegality, it could not be enforced. In a Nagpur case a share in a village was sold and the ex-proprietary rights in sir lands appertaining to that share were surrendered. Although the surrender of ex-proprietary rights was invalid, the sale of the share in the village was upheld as the transactions were separable. In a such for partnership accounts it was held that no part of the partnership agreement was separable for the rest and it was therefore void. In the case of a mortgage of a occupancy holding, the High Court at Allahabad, taking the view that the mortgage was illegal under the Agra Tenancy Act, 1901, refused to enforce the personal covenant to repay; but this decision seems open to question, the personal covenant being clearly separable. In a later case in the same Court it was held that the Act made the mortgage only inoperative and not illegal, and that no objection could be taken in any case to the enforcement of the personal covenant.

The provisions of this section must be distinguished from those of S. 52 below. In a Bengal case a Muhammandan husband agreed by a registered document that he would pay over to his wife whatever money he might earn, and that he would do nothing without her permission, and that if he did so she would be at liberty to divorce him. In a suit by the wife to recover from him his earnings it was held that though the latter part of the agreement might be unlawful, the suit was one to enforce the legal part, and the Court gave-a decree to the plaintiff for her maintenance at Rs. 12 per month, stating that the fair construction of the agreement was not that the husband was to pay every rupee he earned, but that he was entitled to a reasonable deduction for expenses which he must necessarily incure.

Transfer of property.---When a document transferring immovable property has been once executed and registered, the transaction "passes out of the domain of a mere contract into one of conveyance". It then becomes governed by the Transfer of Property Act, and S. 24 of the Contract Act has no application.

Trusts Act, 1882---S. 4 of the Act provides that where a trust is created for two purposes of which one is lawful, and the other unlawful, and the two purposes cannot be separated, the whole trust is void.

25. Agreement without consideration void, unless it is in writing and registered. An agreement made without consideration is void, unless:---

(1) It is expressed in writing and registered under the law for the time being in force for the registration of documents, and is made on account of natural love and affection between parties standing in a near relation to each other; or unless;

(2) or is a promis to compensate for something done; it is a promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor, or something which the promisor was legally compellable to do, or unless.

(3) or is a promise to pay a debt barred by limitation law; it is a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorised in that behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits.

In any of these cases, such an agreement is a contract.

Explanation 1.---Nothing in this section shah affect the validity, as between the donor and donee, of any gift actually made.

Explanation 2.--- An agreement to which the consent of the promisor is freely even is not void merely because the consideration is inadequate; but the inadequacy of the consideration may be taken into account by the Court in determining the question whether the consent of the promisor was freely given.

Consideration.---This section declares long after consideration has been defined [S. 2, sub-s. (d)], that (subject to strictly limited exceptions) it is necessary element of a binding contract. This has already been assumed in S. 10. The present section goes on to state the exceptional cases in which consideration may be dispensed with. It is curious that the Act nowhere explicitly states that mutual promises are sufficient consideration for one another, though it is assumed throughout the, Act, and seems to be involved in the definitions of "agreement" and "reciprocal promises" in S. 2, sub-ss. (e) and (f).

The most obvious examples of an agreement without consideration is a purely gratuitous promise given and accepted. Such a promise has no legal force unless it comes within the first class mentioned in the present section. But there are other less obvious cases; and they must be all the more carefully noted because neither the text nor tile illustrations of this section throw any light on them. It is not enough that something, whether act or promise, appears on the face of the transaction, to be given in exchange for the promise. That which is given need not be of any particular value; it need not be in appearance or in fact of approximately equal value with the promise for which it is exchanged (see commentary on Explanation 2, below); but it must be something which the law can regard as having some value, so that the giving of it effects a real though it may be a very small change in the promisee's position; and this is what English writers mean when they speak of consideration as good, sufficient, or valuable. And apparent consideration which has no legal value is no consideration at all. The section, however, can only apply where the transaction is contractual in nature. Where a document is in form and substance a gift no consideration is necessary.

Forbearance and compromise as consideration.---Compromise is a very common transaction, and so is agreement to forbear prosecuting a claim, or actual forbearance at the other party's request, for a definite or for a reasonable time. It may seem at first sight that in all these casks the validity of the promise is doubtful. For the giving up, or forbearing to exercise, an actually existing and enforceable right is certainly a good consideration; but what if the claim is not well founded? Can a cause of action to which there is a complete defence be of any value in the eye of the law? If a man bargains for reward in consideration of his abandonment of such a cause of action, does he not really get something for nothing, even if he believes he has a good case? The answer is that abstaining or promising to abstain from doing anything which one would otherwise be lawfully free to do or not to do is a good consideration, and every man who honestly thinks he has a claim deserving to be examined is free to bring it before the proper Court, and have the judgement of the Court on its merits, without which judgment it cannot be certainly known whether the claim is well founded or not; for the maxim that every man is presumed to know the law, not a very safe one at best, is clearly inapplicable here. That which is abandoned or suspended in a compromise is not the ultimate right or claim of the party, but his right of having the assistance of the Court of determine and, if admitted or held good, to enforce, it. "If an intending litigant bona fide forbears a right to litigate a question of law or fact which it is not vexatious or frivolous to litigate, he does give up something of value. It is a mistake to suppose it is not an advantage, which a suitor is capable of appreciating, to be able to litigate his claim, even if he turns out to be wrong. Forbearance to sue for or demand a merely honorary or customary debt may be a good consideration. But the abandonment of an obviously groundless claim will not make a good consideration "any more than a promise to pay a sovereign in satisfaction of a debt of a guinea is supportable by the consideration that it saves the creditor the trouble of bringing an undefended action for the larger sum."

The principle thus slated is followed by the Indian Courts. Thus where after the expiration of the time fixed for completion of a mortgage the mortgagee declined to advance the money unless the mortgagor consented to pay interest from the date fixed for the completion, and the mortgagor agreed to do so, it was held that there case was a good consideration for the agreement though time was probably not of the essence of the original contract. The mortgagee believed in good faith that he was entitled to rescind at once, and the abandonment of his claim to do so was consideration enough for the mortgagor's agreement to his terms. An agreement in the nature of a compromise of a bona fide dispute as to the right of succession to a priestly office is not without consideration; nor is a mutual agreement to avoid further litigation invalid on this ground.

In the case of family arrangements, the Court will not look too closely into the quantum of consideration, and an arrangement designed to promote peace and good will among members of a family has been held to be based on good consideration, even in the absence of a dispute or of a claim to property.

A compromise relating to title to land, at a time when it was doubtful, is valid, although subsequently it may be found by judicial decision in another case, that one of the parties to the corn. promise had a wholly valid title, and the other had not title at all. An agreement by client to pay to his vakil after the latter had accepted the vakalatnama certain sum in addition to his fee if the suit was successful is without consideration.

But if a man, being already under a legal duty to do something, undertakes to do something more than is contained therein, or to perform the duty in some one of several admissible ways, in other words, to forgo the choice Which the law allows him, this is a good consideration for a promise of special reward.

Negotiable Instruments.---The law merchant has almost---but, as it is held by something very near a fiction, not quite---made an exception to the rule of consideration in the case of negotiable instruments, or rather established another and independent rule. The Negotiable Instruments Act, 1881, S. 118, affirming the well-settled general law, enacts that until the contrary is proved the presumption shall be made that every negotiable instrument was made or drawn for consideration; and that every such instrument, when it has been accepted, endorsed, negotiated, or transferred, was accested, endorsed, negotiated, or transferred for consideration. The second branch of the above rule stands as illustration (c) to S. 114 of the Evidence Act, 1872.

Registered writing.---The English doctrine that the "solemnity of a deed" is of itself sufficient to make a promise expressed in a sealed writing valid has never been received in India. The Act does not allow any form alone to dispense with consideration, but only writing and registration coupled with the motive of natural love and affection between nearly related parties. The words "near relation" have not been judicially construed. The Courts would, it need hardly be said, have to construe them uniformly without regard to variations in the reckoning of degrees of kindred, for the purposes of inheritance or the like, in different personal laws or customs. A registered agreement between a Muhammadan husband and his wife to pay his earnings to her is within the provisions of cl. 1 of the section. So is a registered agreement whereby A on account of natural love and affection for his brother. B, undertakes to discharge a debt due by B to C. In such a case, if A. does not discharge the debt, B may discharge it, and sue A to recover the amount. It is not to be supposed that the nearness of relationship necessarily imports natural love and affection.

Compensation for voluntary services.---The second sub-section considerably extends the real or supposed exceptions (for their authority is by no means clear) allowed in the Common Law to the principle that past consideration is no consideration at all, since the consideration and the promise have to be simultaneous. The language of the Act is quite dear, and must be taken as expressing a deliberate policy.

The act voluntarily done must have been done for the promisor. If it is done for any other person, the promise does not come within the provisions of this clause. In an Allahabad case the defendants by a written agreement promised to pay to the plaintiff a commission on articles sold by them in a market established by the plaintiff at his expense. The market was not established at the desire of the defendants, nor was it erected for them, but this was done at the request of the Collector of the place. The only ground for making the promise was the expense incurred by the plaintiff in establishing the ganj. The Court held that the promise could not be supported under the present sub-section. Further, the act voluntarily done must have been done for a promisor who was in existence at the time when the act was done. Hence work done by a promoter of a company before its formation cannot be said to have been done for the company. Again, the act done must have been done for a promisor who is competent to contract at the time when the act was done. Hence a promise by a person on attaining majority to repay money lent and advanced to him during his minority does not come within the exception, the promisor not being competent to contract when the loan was made to him. It has been so held by the High Courts of Madras and Allahabad. A different view has been taken by the High Court of Calcutta, and in the Punjab, but it does not appear to be sound law.

The intention of the promisor must have been to compensate the promises. In Abdullah Khan case a son had sent money to his father from time to time, not intending to make a loan. Later at a time when the father was heavily indebted, he transferred some immovable property to his son. The transaction was held not to fall within the sub-section, as the real intention was not to compensate the son but to defraud the creditors of the father.

It is clear that a case cannot come within this exception unless the act has been done voluntarily. In a Privy Council case, B agreed to give his son in adoption, if A agreed to advance money to defray the expense of defending any suit challenging the adoption. There was litigation, and A advanced money towards the cost. Thereafter A died, and A's son advanced money to the adopted son. While the adoption suit was pending before the Privy Council, the adopted son passed a promissory note in favour of A's son, who agreed that if the adopted son was unsuccessful before the Privy Council, the promissory note would not be enforced. The adopted son was successful, and A's son filed a suit on the promissory note. It was held that S. 25 (2) was not applicable, because to invoke the aid of that provision, it had to be proved that the payment had been made voluntarily, and this had not been established, it being held that the money was advanced to give effect to the undertaking originally made by A, not purely on the request of the adopted son. There must also be a promise in the first instance. A clause in a memorandum of articles of association of a company providing for , payment to a promoter of the company does not constitute a promise by the company to the promotor. Hence a claim against the company for remuneration by a promoter of the company cannot be supported under this section, where such a claim is based merely on tile provisions of file memorandum and articles of association of the company.

Promise to pay a barred debt.---Sub-s. (3) reproduced modern English law. The reason for upholding these promises was thus stated soon after the Act came into force by Westropp C.J. "The general rule of law, no doubt, is that a consideration merely moral is not a valuable consideration such as would support a promise; but there are some instances of promise which it was formerly usual to refer to the now exploded principle of previous moral obligation, and which are still held to be binding, although that principle has been rejected. Amongst those instances is a promise after full age to pay a debt contracted during infancy, and a promise (in writing) in renewal of a debt barred by the Statute of Limitations. The efficacy of such promises is now referred to the principle that a person may renounce the benefit of a law made for his own protection." Accordingly this exception applies only where the promisor is a person who would be liable for the debt if not time-barred, and does not cover promises to pay time-barred debts of third persons.

To create a "promise" it is not necessary that there should be an accepted proposal reduced to writing. All that is necessary is that there should be a written proposal by the promisor accepted before action, for a written proposal becomes a promise when accepted. Sinha J, has dissented from this view, holding that the record in writing must come into existence after a proposal has been made and accepted. It is submitted that this decision is erroneous, and that on the facts of the case, where there was a written notice by the defendant to the plaintiff that a pay order had been issued to him, which was accepted by the plaintiff by calling at the specified place for payment, there had been a promise in writing, which, subject to the question of the signature, fell within the ambit of S. 25 (3), and could be sued upon despite subsequent repudiation by the defendant.

The distinction between an acknowledgment under S. 19 of the Limitation Act and a "promise" within the meaning of this section is of great importance. Both an acknowledgment and a promise are required to be in writing signed by the party or his agent authorised in that behalf; and both have the effect of creating a fresh starting point of limitation. But while an acknowledgment under the Limitation Act is required to be made before the expiration of the period of limitation, a promise under this section to pay a debt may be made after the limitation period. After the period of limitation expires, nothing short of an express promise will provide a fresh period of limitation; an implied promise is not sufficient. The question occasionally arises whether a writing relating to a barred debt amounts to an acknowledgment or to a promise. Here the Court must consider the language of the particular document before it in every case. If it amounts to an acknowledgment, the writing could not avail the plaintiff under this section; but it is otherwise where it amounts to a promise. Thus khata, or an account stated has been held to be a mere acknowledgment as distinguished from a promise under this section. Similarly a bare statement of an account is not a promise within the meaning of this section. In the same way the word baki deva (balance due) at the foot of a Gujarati account were held not to amount to a promise. An agreement to execute a mortgage to pay off a time-barred debt does not amount to a promise to pay the debt. On the other hand, where a tenant wrote to his landlord in respect of rent barred by limitation, "I shall send by the end of Veyshak month," it was held that the words constituted a promise under this section. It has been held that an intimation that a pay order has been issued in favour of the plaintiff, coupled with a request to call for payment is not a promise to pay, on the ground that the authorities say that an implied promise is not sufficient. The learned judge does not specify the authorities he has in mind, and it is submitted that such an intimation is a clear promise to pay. A Full Bench of the Lahore High Court has held that whenever a balance is struck and over and above that interest is fixed, there is a promise to pay.

An agreement between a creditor and a debtor entered into before the expiry of the period of limitation, whereby the date of payment is extended beyond the period of limitation, is valid, though verbal, if there is a consideration for the agreement, e.g. payment of interest up to the extended date. Such an agreement is not an acknowledgment within the meaning of S. 19 of the Limitation Act, nor is it a promise to pay a barred debt; it may be enforced at any time within three years from the date on which it was made. "A promise to pay may be absolute or conditional. If it is absolute, if there is no 'but' or 'if', it will support a suit without anything else; if it is conditional, the condition must be performed before a suit upon it can be decreed.

Similarly, if the promise be to pay a barred debt "within a month," the promisee must wait for a month before he can sue on the promise. If the debtor promises to pay a barred debt out of his share of the profits of the business started by him in partnership with his creditor, the latter cannot recover the debt except in the manner provided in the agreement.

Agent generally or specially authorised in that behalf. A Collector, as agent to the Court of Wards, is not an agent "generally or specially authorised in that behalf" so as to bind a ward of the Court of Wards by a promise to pay a barred debt. A pleader cannot bind his client unless he is specially authorised in that behalf; nor a minor's guardian the minor.

Debt.---The expression "debt" here means an ascertained sum of money. A promise, therefore, to pay the amount that may be found due by an arbitrator on taking accounts between the parties is not a promise to pay a "debt" within this section. The expression "debt" in this clause includes a judgment debt. A promise, therefore, to pay the amount of a decree barred by limitation does not require any consideration to support it.

It is not necessary to the operation of this clause that the promise should in terms refer to the barred debt. Thus where A passed a promissory note for Rs. 325 to B, and after the debt was time-barred, passed another note promising "to pay Rs. 325 for value received in cash," it was held that it was open to B to show that the amount, though not paid in cash, referred to the debt due under the first note.

An insolvent who has obtained his final discharge is under no legal obligation to pay any debt included therein, and any promise to pay it is accordingly without consideration. Such a debt is said to be barred by insolvency, and the Contract Act contains no exception in favour of a promise to pay it. It is not clear, however, whether the same principle would apply to a promise without new consideration to pay a debt in respect of which the insolvent has obtained only his personal, and not his final discharge, and which is included in the judgment entered up against him in favour of the official assignee. In such a case it will be observed that the creditor's remedy is not, stricly speaking, barred, but is transferred to the official assignee, who alone can recover the debt in the manner and subject to the conditions provided by the relevant Insolvency Act. The defendant filed his petition and schedule in the Insolvent Debtor's Court, and subsequently obtained his personal discharge. On the same day judgment was entered up against him in the name of the official assignee for the full amount of debts stated in the schedule. After this was done the plaintiff, who was a scheduled creditor for Rs. 5,000, entered into an agreement with the insolvent whereby, in satisfaction of his claim for Rs. 5,000, he agreed to accept from the insolvent a present cash payment of Rs. 800, and either the execution of a conveyance to him of a certain property or the payment of a further sum of Rs. 1,600 in cash. The creditor sued the insolvent on the agreement and one of the defences was that there was no consideration. It was held that the defendant's promise was not without consideration, for the plaintiff by the agreement impliedly gave up his right to share in any future rateable distribution under S. 86 of the Insolvent Debtors' Act (the Act which at the time regulated the legal position) and also the right accessory thereto, namely, of opposing the final discharge of the insolvent. The agreement, however, was held to be void as being against public policy within the provisions of S. 23.

Explanation I needs no comment. It may be taken as a statement made by way of abundant caution.

Explanation 2 declares familiar principle of equity. First, the Court leaves parties to make their own bargains; it will not set up its own standard Of exchangeable values. There must be some consideration which the law can regard as valuable; but the fact that a promise is given for a certain consideration, great or small, shows that the promisor thought the consideration worth having at the price of his promise. Hobbes, though not a lawyer and having no. love for the Common Law, correctly expressed its doctrine when he said in his "Leviathan": "The value of all things contracted for is measured by the appetite of the contractors and therefore the just value is that which they be contended to give." One or two English examples Will suffice. Parting with the possession of goods, even for a very short time, and' though it does not appear what advantage the promisor was to have from it, is consideration enough for a promise to return them in the same condition. An agreement to continue, though not for any defined time, an existing service, determinable at will, is a sufficient consideration. If the owner of a newspaper offers the financial editor's advice to readers who will send their queries to a given address, the trouble of sending an inquiry is a sufficient consideration for an undertaking that reasonable case shall be used to give sound advice in answer thereto. It would seem that a contract is concluded as soon as the reader has sent in his inquiry, the general offer being not merely an invitation, but the proposal of a contract (see notes on S. 8, "general offers" above); though it would also seem that only nominal damages would be recoverable if the editor did not answer at all.

Secondly, the fact that a consideration is grossly inadequate may nevertheless be material as evidence of coercion, fraud, or undue influence. The leading modern dictum on this subject will immediately be given as cited in an Indian case by the Privy Council. It must be remembered that inadequacy of consideration may be evidence that the promisor's consent was not free, but is no more; it is not of itself conclusive. Standing alone, inadequacy, as such, is not a bar even to specific performance.

Agreement to pay time-barred debt---Cannot be avoided u/s. 25.

Consideration---Inadequacy of---Effect of-