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2003 DIGILAW 256 (KER)

Balachandran v. Sundara Gounder

2003-03-28

K.PADMANABHAN NAIR, K.S.RADHAKRISHNAN

body2003
Judgment :- Radhakrishnan, J. Plaintiff is the appellant. This appear arises out of the judgment in AS.120 of 1981 of this Court. Learned single Judge reversed the judgment and decree in OS.155/78 whereby plaintiff-appellant’s suit was dismissed. Suit was for recovery of an amount of Rs.22080/- from the defendant with interest at the rate of 6% per annum from 1.3.19977 till realization. Plaintiff and defendant were abkari contractors. Plaintiff was the licencse of toddy shops in Chittur Range in the abkari auctions conducted from 1973 onwards. Plaintiff during the abkari year 1977-78 wanted to bid various shops including shop Nos.17, 19 and 20. Plaintiff could not participate in the auction since certain amounts were due from him to the Toddy Workers’ Welfare Fund. Defendant is a close friend of the plaintiff and the plaintiff wanted to continue the functioning of the three toddy shops. Consequently he requested the defendant to bid in auction on behalf of the plaintiff as well. Plaintiff agreed to pay the amount remitted by defendant for those shops. Defendant and his brother bid in auction 28 shops including the three shops mentioned above. Since auction was over plaintiff paid Rs.22080/- to the defendant on 1.3.19977 at the Town Hall, Palghat where the abkari auction was conducted. Defendant received the amount and undertook to entrust the shops to the plaintiff with the approval of the authorities. Defendant however, failed to entrust those shops and also refused to pay back the amount received from the plaintiff. Lawyer notice was issued by the plaintiff to the defendant. Since there was no response he initiated proceedings for recovery of the amount. 2. Defendant resisted the suit. According to the defendant there was no agreement to entrust those shops to plaintiff nor has a sum of Rs.22080/been paid to the defendant by the plaintiff being the security amount for shop Nos.17,19 and 20. In any view defendant contended plaintiff cannot enforce illegal contract. In order to establish his case plaintiff got himself examined as PW1. PWs.2 to 7 were also examined on the side of the plaintiff. Exts.A1 to A4 documents were also produced. On the side of the defendant B1 to B4 documents were produced and DWs.1 to 3 were examined. X1 to X16 are the documents produced by witnesses. In order to establish his case plaintiff got himself examined as PW1. PWs.2 to 7 were also examined on the side of the plaintiff. Exts.A1 to A4 documents were also produced. On the side of the defendant B1 to B4 documents were produced and DWs.1 to 3 were examined. X1 to X16 are the documents produced by witnesses. Trial court after considering the oral and documentary evidence came to the conclusion that the plaintiff has succeeded in establishing that there was payment of the amount claimed by the plaintiff and declared that the plaintiff is entitled to get a decree for realization of the said amount. Court below also found that the defendant has not permitted the plaintiff to run shop Nos.17, 19 and 20 for financial year 1977-78 and as such the defendant cannot be permitted to retain any sum received by him from the plaintiff by way of security amounts deposited by the defendant on the date of auction. In appeal learned single Judge of this Court found there is no evidence to show that money has been paid to the defendant. Further it was also found that the agreement cannot be enforced since the alleged amount was paid in order to enforce an illegal contract. Such agreement cannot be enforced by a court of law. Judgment and decree of the trial court was accordingly reversed. Aggrieved by the same this appeal has been preferred. 3. We heard counsel on either side at length and have also gone through the oral and documentary evidence adduced by the parties. Entrustment of money with the defendant was proved by the plaintiff relying on Ext.A1 original slip supported by oral evidence of PW1, PW2 and PW3 on the one hand and PWs.4 to 6 on the other. Since defendant has denied the transaction, we have to first examine whether plaintiff has succeeded in establishing that he had paid an amount of Rs.22080/- to the defendant on the basis of A1. PW1’s case is that he had entrusted the amount to PW2 for paying to the defendant. PW2 stated that a bag containing a sum of Rs.30000/- was entrusted to him by PW1 and at that time PWs.3 and 6 were present. PW1 has also stated that the amount was received by the defendant after counting and Ext.A1 is the document which was handed over by the defendant to PW2. PW2 stated that a bag containing a sum of Rs.30000/- was entrusted to him by PW1 and at that time PWs.3 and 6 were present. PW1 has also stated that the amount was received by the defendant after counting and Ext.A1 is the document which was handed over by the defendant to PW2. Figures and letters in A1 were all written by the defendant in the presence of PW2. PWs.2 and 3 are also present in the auction hall and payment of amount by PW1 to defendant was witnessed by PWs.2 and 3. Presence of PWs.2 and 3 in the auction hall was not denied by the defendant who was also in the auction hall. PW4 is one of the persons admitted to have been present on the date of auction. Version of PW4 is to the effect that in the abkari auction for 1977-78 the defendant was the successful bidder for all the toddy shops in the Chittur Range and that the defendant had been authorized to do so for and on behalf of the plaintiff and some others such as the witness, one Muthu, Sukumaran, Narayanan and Parameswaran Pillai. Regarding the actual payment of the amount to the defendant PW4 stated that plaintiff entrusted a bag to PW2 stating that it contains a sum of Rs.80,000/- and whatever amount is necessary may be paid to the defendant. PW4 also deposed that he had seen PW2 paying the amount to the defendant. PW4 has also deposed that he saw some scribbling being made in A1 and money was received from PW2. PW6 is the preventive Officer of the Excise Department. PW6 also stated that he had seen the plaintiff paying the amount to PW2 and later handing over the amount to defendant. Evidence of PW5 also support the case of plaintiff. Considering the entire oral and documentary evidence we are in agreement with the reasoning of the trial court that the plaintiff had entrusted the amount to plaintiff. In our view learned single Judge was not justified in disturbing that finding of fact. 4. The next question to be considered is whether the agreement entered into between the plaintiff and defendant is vitiated by any illegality. The entire case of the plaintiff is rest upon the agreement entered into between the plaintiff and defendant. In our view learned single Judge was not justified in disturbing that finding of fact. 4. The next question to be considered is whether the agreement entered into between the plaintiff and defendant is vitiated by any illegality. The entire case of the plaintiff is rest upon the agreement entered into between the plaintiff and defendant. As per the agreement as we have already pointed out the idea was to conduct the shop by the plaintiff but the defendant would be the licencse. The entire responsibility for repaying the kist and other statutory liabilities were undertaken by the plaintiff and not by the defendant. State is not bound or governed by the agreement between the plaintiff and defendant which in our view is an independent contract. That contract has nothing to do with the auction conducted with regard to the shops bid in auction by the defendant. The general rule is that if the plaintiff is in pari dellicto with the defendant, he will not be legally entitled to recover what he has given to the other under the illegal contract and in particular if to substantiate his claim he is driven to rely upon the illegal transaction. Legal principle is well settled by a catena of decisions of English as well as Indian. We need not reiterate all those decisions for disposal of this case. However, it is profitable to refer to a decision of the Apex Court in B.O.I.Finance Ltd. v. Custodian, (1997) 10 SCC 488. That was a case where the Apex Court was dealing with the Banking Regulation Act 1949. In that case the Apex Court held neither the object nor the consideration of the ready leg is illegal, unlawful or prohibited under Section 23 of the Contract Act. After examining the said issue Apex Court held that the appellant was not seeking to enforce an illegal contract. On the other hand, it was the custodian who was referring to the illegality of the contract with a view to recover possession of the securities, the title of which already stand transferred in favour of the appellant. Appellant in that case was basing the claim by relying not on the terms of the ready forward contract but on the payment of marker price against delivery of the securities. Court found that the claim to title was independent of the ready forward agreement. 5. Appellant in that case was basing the claim by relying not on the terms of the ready forward contract but on the payment of marker price against delivery of the securities. Court found that the claim to title was independent of the ready forward agreement. 5. We are of the view in this case the plaintiff is not trying to enforce any illegal contract as against the State. He is not claiming rights over shop Nos.17, 19 and 20 against the State. What he is claiming is return of money advanced by him which in our view is an independent contract. In that view of the matter we are of the view the suit is perfectly maintainable. In the facts and circumstances of the case as we have already held that the learned single Judge was not justified in reversing the finding of the trial court. Under such circumstance we are inclined to reverse the judgment of the learned single Judge and restore the judgment of the trial court. All the same we feel in this case the award of interest from 1.3.1977 cannot be sustained. We therefore hold that the plaintiff is entitled to get interest at the rate of 6% per annum only from the date of the trial court judgment till realization. Judgment of the trial court is modified accordingly. Appeal is disposed of as above.