Laxmanlal K. Pandit v. Mulshankar Pitambardas

1. This was a suit for rent claimed by the plaintiff for a period of two years with interest. The claim was met by a denial that the property belonged to the plaintiff and the defendant explained that, while a criminal prosecution was hanging over his head his pleader Laxmishankar stood bail for his appearance in Criminal Court; and that to indemnify Laxmishankar against any loss which he as bail might suffer, a nominal sale deed and a nominal rent note were passed to Laxmishankar.

2. Various issues were raised and decided and ultimately in July 1907, the case came before a Divisional Bench of this Court and an interlocutory judgment was delivered remanding the case back for a trial of certain issues which had arisen. The District Judge's findings upon these issues have now been returned to us, and for present purposes it will be sufficient to notice three of these findings ; they are :-

(1). That the defendant executed the sale deed Exhibit 49 and the rent note to ensure the safety of Laxmishankar against any loss which he might suffer tinder his bail bond and for further advances.

(2). That the defendant executed the sale deed and the rent note in the name of the plaintiff at Laxmishankar's request, and the plaintiff took the deed in his name with knowledge of the said consideration and purpose.

(3). That both the sale deed and the rent no|e are void and illegal.

3. Now it will be seen that the first two findings from which the third finding is merely an inference, are findings of fact which neither can be nor have been questioned before us. We must assume the correctness of these findings of fact, and upon that assumption it appears to us clear that the legal consequence follows that the sale deed and the rent note upon which this suit is based are void. The Hon'ble Mr. Gokuldas in endeavouring to avoid this conclusion has suggested that the English law as laid down in Herman v. Jeuchner (1885) 15 Q.B.D. 561 is not the law in India, inasmuch as under Section 513 of the Criminal Procedure Code, when a person is required to execute a bond with or without sureties, the Court may in most cases permit him to deposit a sum of money in lieu of executing such bond ; and this provision, Mr. Gokuldas suggests indicates that the policy of the English law as expounded in Herman v. Jeuchner. has been abandoned by the legislature in India. But it appears to us that no such inference can properly be drawn from Section 513, for, the deposit there allowed is allowed in substitution only of the bond which the principal himself would otherwise execute, not in substitution of any bond which his surety executes.

4. Moreover the fact here is that Laxmishankar, the surety, bound himself by a bond to answer for the defendant's appearance, and then endeavoured by obtaining this indemnity to deprive the public of the security afforded by the bond. Although, no doubt, public policy as Lord Davey has observed is always an unsafe and treacherous ground for legal decision (Janson v. Driefontein Consolidated Mines Limited, [1902] A.C. 500 yet, here this definite principle of public policy has been admitted in England and depends upon considerations affecting the administration of public justice, which have certainly not less force in India than they have in England. We think, therefore, that under Section 23 of the Contract Act we are bound to regard the consideration of this agreement as opposed to public policy and to hold that the agreement is in consequence void.

5. Then it was said, that whatever illegality might attach to the sale deed, yet the rent note was a separate transaction and the suit under the rent note ought not therefore to suffer. But the sale deed and rent note were part and parcel of one single transaction, and though indeed the document is spoken of as a rent note, yet it appears that its real object was to secure interest on the principal sum. We have no doubt, therefore, that the rent note is tainted with the same illegality which affects the sale deed, and cannot stand on any separate footing.

6. Next it was urged that the defendant was estopped under Section 116 of the Evidence Act from pleading the true facts, inasmuch as he was a tenant of the plaintiff. But this, it seems to us, begs the whole question which is simply whether there was a valid tenancy or not.

7. Finally, it was urged that even if part of the consideration for the rent note failed, yet part of it should be held not to fail, and to the extent of the part held good relief should be allowed to the plaintiff in this suit. It is, however, clear to us that the agreement was an indivisible agreement. Part of a single consideration for one object was unlawful, and therefore the whole agreement is void under Section 24 of the Contract Act. As was said by Mr. Justice Chitty in Baker v. Hedgecock (1888) 39 Ch. D. 520 it is not possible for the Court to

" create or carve out a new covenant for the sake of validating an instrument which would otherwise be void."

8. It follows that the suit must be dismissed and no relief can be awarded to the plaintiff. As to whether the defendant, if the plaintiff seeks to enforce the sale deed, should be put upon any, and if so what terms, that is a matter which does not arise before us now, but which will be considered at the proper time and place if the question is agitated. The result is that the District Judge's decree must be reversed and the decree of the Court of first instance must be restored. Costs throughout on the plaintiff except as to the defendant's costs in the Court of first instance which he himself will bear.