Mahommad Isack Alias Papa Saheb v. Doddapaneni Sreeramulu

1. The only question that falls for decision in this second appeal is whether the agreement on 'which' the suit has been brought by the respondent is opposed to public policy and therefore unenforceable. The facts in so far as they are relevant for disposal of this issue are these: The plaintiff and the defendant are owners of motor buses. Both the plaintiff and the defendant made tenders to the postal authorities to secure the licence for carrying mails between Ellore and Chintalapudi. The defendant who desired to secure the licence himself entered into the agreement now in suit, Ex. p-1. Under the agreement the defendant was to secure the licence and the plaintiff, was to withdraw his tender. In consideration of the withdrawal by the plaintiff the defendant had to pay to the plaintiff, Rs. 15 per month for a certain period and Rs. 20 per month in a certain contingency. It is not necessary to go into more detail as to the other terms, as they are not material for the second appeal. The defendant after the withdrawal by the plaintiff of his tender obtained a licence from the postal authorities but failed to pay the amount according to the agreement. The plaintiff was, therefore, compelled to file the suit out of which this second appeal has arisen.

2. There were two main defences, one on the ground that the contract was unenforceable being opposed to public policy and the other, that the contract was not supported by consideration. The learned District Munsif of Ellore dismissed the suit holding that the contract was opposed to public policy. He, however, held that the agreement was supported by consideration, the consideration being the withdrawal by the plaintiff of the tender submitted by him to the postal authorities. The learned Subordinate Judge on appeal disagreed with the finding of the learned District Munsif that the contract was opposed to public policy and apparently, as the plea of absence of consideration was not pressed before him, he did not consider it and proceeded to grant a decree in favour of the plaintiff as prayed for. In the second appeal the learned advocate for the appellant desired to raise the question of consideration, but I do not think that he should be allowed to do so. Not only was this point evidently not pressed before the learned Subordinate Judge in appeal but the point was not even taken in the memorandum of grounds of second appeal. The only question, therefore, is whether the agreement is opposed to public policy or is otherwise void and unenforceable. The appellant's counsel sought to bring the agreement within the mischief of Section 27, Contract Act, which is in these terms:

Every agreement by which anyone is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void.

3. The other section which might possibly be pressed into service is Section 23 of the Act which inter alia declares:

The consideration or object of an agreement is lawful, unless... the Court regards it as immoral, or opposed to public policy.

4. He strongly relied on the decision of Wallis J, sitting on the original side reported in Thangavelu Chetti v. Mukunda Naidu ('14) 1 A.I.R. 1914 Mad. 673. In that case the agreement was between two landing, contractors. Their profession was to supply labour for unloading cargo from steamers. The agreement in that case provided that-the plaintiff should refrain from supplying coolies to one Chockalinga Naicker so long. as they carried on business of landing agents for coal steamers at Madras and in consideration of the plaintiff so abstaining from-supplying coolies, the defendant should pay to the plaintiff a sum of Rs. 50 for every coal steamer for which they become landing contractors. The learned Judge held that the agreement was void under Section 27, Contract Act, as being in restraint of the exercise of a lawful possession. At page 111 he says:

This, it seems to me, is clearly an agreement by which the plaintiff is restrained from exercising. a lawful trade or business,

5. In my opinion this decision has no bearing on the facts of the present case. What the plaintiff and the defendant here were seeking to do was to obtain the benefit of a contract from the Government. Ex hypothesi only one of them could get it. The analogy completely breaks down because under no circumstances could more than one person have licence from the Government to carry the mails from a specified place to another specified place. It is impossible to treat the obtaining of the licence from Government as in the nature of a trade or calling. The decision of the Nagpur High Court in Bhurmal Ramkaran v. Goduram Mangalchand ('43) 1 A.I.R. 1943 Nag. 260 appears to have been relied onin the lower Courts for the defendant. On an examination of the facts of that case it will appear that the decision in that case could not possibly govern the present case. There one D had obtained a contract from the Government to carry postal articles and there was a provision in that contract that no part or interest in the contract should be transferred to any other person without the consent of the postal authorities. D, however, entered into a contract with P under which the lorries were to be transferred to p who was to become their owner and D should try to procure a transfer of the contract to P. If for any reason D failed to have the contract transferred to the name of p, nevertheless D was to run the service only in name but P was to be virtually the proprietor of the service. The learned Judges held that such an agreement, which contemplated the contingency of the contract standing in the name of one person while another was virtually to be in control owing to his ownership of the transport vehicles, was likely to lead to a condition of affairs which would seriously interfere with the proper maintenance of a service vital to the public. They also held that such an arrangement would involve deceiving the Government into thinking that the person to whom they had granted the contract was the per-son actually conducting the service. The contract was, therefore, declared to be void as opposed to public policy under Section 28, Contract Act. In this case it is not suggested that the person to whom the licence was to be granted, namely, the defendant, was not the person who was to have the control of the service.

6. The decision of a single Judge of the Allahabad High Court in Puttulal v. Raj Narain ('31) 18 A.I.R. 1931 All. 428 was also cited before me. In that case Sen J. held that an agreement by one cosharer in a mahal to pay a certain sum of money annually to another cosharer in the same mahal in consideration of the latter withdrawing his candidature for lambardarship in favour of the former amounted to an agreement to bargain or traffic relating to a particular office and therefore was opposed to public policy. Obviously, the ratio decidendi of that case was that the office of lambardar was a public office and any private arrangement in regard to the appointment for that office should not be upheld. The ground on which the learned Judge thought that the contract was opposed to public policy was that it savoured of traffic relating to a public office. In the present case there is no such public office involved. I agree with the learned Subordinate Judge in thinking that the nearest approach to the present case is the case where there is an agreement between intending bidders that one should keep off from bidding. Such an agreement was considered as not being opposed to public policy by the Bombay High Court in Hari Balkrishna v. Naro Moreshwar ('94) 18 Bom. 342. Sargent C.J. said:

But there is nothing necessarily unlawful in two or more persons agreeing not to bid against one another at an auction sale.

7. The Judicial Committee in Mohmed Mira Rowther v. Savvaasi Vijaya Raghunadha (1900) 23 Mad. 227 apparently did not consider the practice of dissuading intending bidders from actually bidding at an auction as fraudulent. If an agreement to refrain from bidding at an auction is not opposed to public policy, I fail to see how an agreement for the withdrawal of a tender, which is also in the nature of an offer or a bid, should be declared unlawful. I hold that the agreement in suit is not invalid under Section 23 or under Section 27, Contract Act. The second appeal is, therefore, dismissed with costs. Leave refused.