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ICA, 1872: LEGALITY OF

OBJECT AND 6
CONSIDERATION

6.1 INTRODUCTION
According to Section 10 of the Act, all agreements are contracts if they are
made for lawful consideration and with a lawful object. The words 'object'
and 'consideration ' in Section 23 are not used interchangea bly. They are
different in meaning. Object is the purpose or design for which agreement
is entered into whereas the consideration is the act, abstinence or promise
made at the desire of the promisor. Thus, it is necessary that both the object
and the c·o nsideration of an agreement must be lawful.
, - · - - -·- -- .. ·::·~=·-:z~;:~;f;\.?li1_¥{(?f}f✓?; !~'~'%-:-:%.,: -~:t~:_:i~-s-<1TI·?:·~} ;K~\?·::"'~~?-:~•.'5:·•: -~¾ .;~y::-:~. -. ,.:. -~, -~.. '-~ .

6.2WHATCONSIDERATI
_
O,N,S\c{NtJ:i
..·: . . :--•·:'-,,:j,:.h?<::/h:
BJ:EGn:s ·AREUNLAWFUL?
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1: .·..;~.: <.::\.:(-:'.:-.:·.-:~-:::-~:- ❖·~~~--- ~ _.·... •

The consideration or the object of an agreement is unlawful in the

following cases :
1. If it is forbidden by law. According to Section 23 of the Act, if the
consideration or object of an agreement is such as is forbidden or prohi·
bited by law, the agreement is void.
The acts forbidden by law consist of :
(a) the acts which are punishable under the Indian Penal Code or
( b) the acts prohibited by special legislation or regulations made by ~
competent authority under powers derived fron1 the legislature.

116
►

117 CH. 6 : ICA, 1872 : LEGALITY OF OBJE CT AND CONSIDER

ATION Para 6.2

r EXAMPLES ·

1. A prom ises to obtai n for B an empl oyme nt in the publi

c service and B
promises to pay ~ 1,000 to A. The agree ment is void, as the
consideration
for it is unlaw ful
2. A prom ises to B to drop a prosecution, whic h he has instit
uted against B
for robbery and B prom ises to restore the value of the thing
s taken. The
agree ment is void, as its object is unlaw ful

CASE LAW: *K.M. Karn ath vs. K.R. Balig a & Co. (195 9)
Facts : A sold liquo r to B witho ut license. B did not pay the
price and A
filed a suit again st B for recov ery of price. Held, A could
not recov er the
price as the sale was unlaw ful. The sale of liquo r witho ut licen
se is forbid -
den by law, i.e., unde r the Excis e Act, 1944.

CASE LAW : *Bhi kan Bhai vs. Hira Lal ( 1900 )

Facts: A was a holde r of a licens e for collec ting the tolls unde
r the Bom bay
Tolls Act, 1875. One of the terms of the lease was that the
holde r of the
licens e (lesse e) shall not sub-l ease the toll witho ut the prior
pem1 ission of
the collec tor of Reve nues. A fine oft 200 was payab le for
the breac h of
term. A sub-l eased the Loll witho ut seeki ng the requi site perm
ission from
the collec tor. Colle ctor soug ht to decla re the sub-l~asc
void. Held , the
Bomb ay Toll Act, 1875 did not prohi bit sub-l ease but its main
objec t was
to regul ate it. Henc e sub-l ease was hcl<l valid but lessee was
liable to pay
fine of ~ 200 for the breac h of term.

2.If it is of such a. na.tu re tha.t, if penn itted , it woul d defe at

the prov ision s
of any law. Acco rding to this claus e, the objec t of an agre emen
t may not
be directly forbi dden by law but in<lirectly it may defe at the
obje ct of any
other law, statu tory law or any legislative enac tmen t like
Hind u Law or
Moh amm edan Law. Such an agre emen t woul d also be void.
r,

-~ EXAMPLES
1. An agree ment by a debto r not to raise the plea of limita
tion is void unde r
the Limit ation Act, 1963. [Ram a Murt hy vs. Gopayya (1917))
2. An agree ment betwe en husb and and wife to live separately
is invalid
unde r the Hind u Marriage Act, 1955 as it violates the provi sions
of the said
Act {A.E. Thim mal Nai.du vs. Raja mma l (1968))
3. A loan grant ed unde r a prom issor y note to the guard
ian of a mino r to
enabl e him to celebrate the mino r's marriage in contr avent ion
of the Child
Marriage Restr aint Act, 1929 :vas held illegal, and could not
_be reco~ere~,
smce the purpo se of borro wing was of such a natur e that zf perm
woul d defea t the provi sions of the sai,d Act [Chandra Sreenivasa itted ll
Rao vs.
lCorrapati Raja Rama Maha na Rao (1951)) .
 llNI I' t ~ 1NIHAN n>N Tl{A CT AC'J~ IR72 lta
l
Pnr u ft.2

~o_h~. Tlw Child l\tn n iHfH' Rc~trnl111 Ad,

I929 ltns hecn n .• pca lc~ by th'-!
ll'1 ' tlu.: Nt•w Ad Lh~ ma rna gc
ag~
~ ln~d l\tHTiH~<' l~<'strnint Ad, I ~7~ _; t11H
s u11d 21 yea rs fur boy s (W.c:.f.
~m11 has ht'l'I\ rnis l·d to I~ ,V l'nrs lor girl
... l 0.1 \l7 ~).
into l?t'l ~cc11 th e par. tics wh<J Hc
3 . .If it Is f,v,11,ll#lc•ttt. An nµ1 ·t'l'l l H'ltf t'III c. ·n·d s ~v•t hm the mea nin g of thi!s
ohj t'\'t \ll' t'\ll lsid t·rn th)t t i~ to dcf rnu d
ol her
dau st' ,)f S1..'t' tion 2] is w1l uwl 'ul und hen ce vo1J.

· EXAMPLES
fur the divi sion amo ng them of
1. A, B and (.' t•111,·r i11to ,111 a~rec'lltc!Hl
~ai11s an1 uin·d or to I><' <1C'(/llired1 hy them
hy fraud. The agr eem ent is void,
as its ohf< 'd ,:,· 1mla1\'f11l.
2. A. l><·i11~ agl'11t for a /a,ult!d proprieto
r, agre es for mon ey, wi~ hou t the
lease of land belo ngin g to his
knowlt'dgc• of his principal, tu uhlai11 for Ba void, as it imp lies a frau d by
p1i11cipal Thc a~n: emt!11t l>etwct!II A
and B is
cmu·ealmt•nf, l~v A, on !tis prin cipa l

son or pro per ty of another.

4. lf ft inv olv es or imp lies i11ju1y to the perobj ect or con side rati on of an
Al"l'Ording to this cfa use of s~c tion 23,
if the
or pro per ty of ano the r, it is void
agrt"(~mtmt is to cau se inju ry to the per son
and unl awf ul.
I

! EXAMPLES
a bom b at CTC Mal l
1. A agre es to pay ~ 20,0 00 to B for blas ting
of B on fire is unl awf ul and
2. An agr eem ent to put the 'Honda City ' car
hen ce void.

;-CASE'iAw ~. *Ra ma sru p vs. Ban sl Ma nda r (19 15)

Facts : B bor row ed f I 00 from R and exe
cute d a bon d by .wh ich he was
peri od of 2 yea rs. In case of
requ ired to wor k for R with out pay for a the prin cipa l sum at once.
defa ult B was to pay exo rbit ant inte rest and
for 2 yea rs wit hou t pay was
Held, the agre eme nt was void as the wor king invo lved inju ry to the per-
h it
indistinguishable from slav ery and as suc
son.

... .. -- . ~·· ~-·· .-· ....,...

.. , .,
_
nto n (19 09)
~ C.A8I LAW ;w.H. Sm ith & Son s vs. Cli
edit or of a new spa per, in consi-
Facu.: A p~oi:nised ~o ~ay f 1,000 to B, anarti cle aga inst C Held, the agree-
der atw n of his pub hsh mg a defa mat ory nd
lved inju ry to the pers on, Ca
men t betw een A and Bwa s void as it invoprom ist.~d amo unt . ___
B c.ou ld not sue A for the reco very of the
rd eem ent is ille gal and therefore
5. ~f t~e cou rt rega s 11s1,'!s Immoral. The agrect or con sid era tion of such
voi d 1f the . c~nmt con der s tha t the obj
agr eem ent 1s immoral.
119 CH. 6 : ICA, 1872 : LEGALITY OF OBJECT AND CONSIDE
RATION Para 6·2
!EXAMPLE \
A agre
'd, bes to let .her
. daua
. 0l11 er
, t o Iure
· to B fo r conc ·
ubinage. 'h ·
vo 7
ecadu~~e rs tm nwral, though the letting may not 1 e agre eme nt LS
11
1 111 ran Penal Code (45 of
der tie be punfahable un-
1860).
I

:· CASE LAW: *Ba ivijl y vs. Ham da Nagar (188 5)

Facts : A gave mon ey to B, a married woman, to obta
in a divorce from C,
he~ hus1?and A (the lender) promised to marry her subs
suit ~gamst B to recover the paid amount. Held, the equently. A filed a
was unmoral and the lender could not recover the monpurpose of lending
ey.

tCASE LAW : ,Pea rce vs. Bro oks (186 6)

Facts: A hired out a car to B (a prostitute) knowing
that it was to be used
by the latte r to attra ct men. Held, the agreement was
void
moral act and purpose and therefore, A could not recover , being for im-
the hire charges.
•What is imn1oral, dep end s upo n the standards of mor
ality app rove d by the
courts". [Pollock and Mulla]
6. lf the cou rt rega rds it as 'opposed to pub lic poli
cy'. An agre eme nt is
unla\\.rful if the cou rt rega rds it as opp osed to publ
ic policy.
The Criminal Law (Am end men t) Act, 2013
. It is an Indi an legislation
passed by the Lok Sab ha on 19 March 2013, and by
the Raj ya Sab ha on
21 March 201 3, whi ch prov ides for ame ndm ent of
Indi an Pen al Code,
Indian Evid ence Act, and Cod e of Criminal Proc
edur e, 1973 on laws
related to sexu al offe nces . The Bill rece ived Presiden
tial
2013 and dee med to com e into forc e from 3 Feb assent on 2 April
ruar y 2013. It was
originally an Ord inan ce prom ulga ted by the Pres
ident of India, Pranab
Mukherjee, on 3 Feb ruar y 2013 , in light of the prot
ests in the 2012 Delhi
gang rape case .
The Criminal Law (Am end men t) Act, 201 3 focuses on
women from sex rela ted offences, criminalizing acid prot ecti on of
~uman traff icki ng and diff eren t stag es of wo~ en traff attac ks, Penalises
ic~e
like, acid atta ck, sexu al hara ssm ent, voyeurism, stalk rs. New offences
mg and rape have
been inco rpor ated into the Indi an Pen al Code.
♦ Throwing acid or attempt to throw acid: The
Indian ~enal Code. h~s
been ame nde d and it now includes the act of throwmg
tering acid or an atte mpt to t~at effect. If somebo~ or admm1s-
and caus es perm anen t or part ial dam age or dc.form1 y th~·ows acid
lshed with Imprisonment of minimum less than ty will be pun-
can extend )lfe In Jail. If a person attempts to do the 10 years, which
term ls min imu m 5 years, which can extend to 7 yearsame, the jail
s.
• Sexual Har assm ent: A man com mits sexu al hara
indulges in the following: Physical cont act and adva ssm ent if he
nces involving
Para 6.2 lJNIT 1 - INDIAN CONTRACT ACT, 1872 120
unwckomc and explid t. sexual overt urcs Demand or request fc
sexual favuurs; or Showi ng pornography against the will of a worna;,
or Makin g sexually coloured rcrnarks The jail term for such me~
would be at least 3 years or fine or both .
♦ Voyeurism : Any man who watches, or captu res th e image of a
woman engaging in a private act in circumstances wh ere she would
usually have the expectation of not being observed. Minimum Jail
term is three years.
♦ Stalking: Following a women or trying to contact h er for pcrs<JnaJ
reasons, despite th e disinterest of a woman, f~llo~s h ~r or monit(Jr~
her on internet, email or any other such media, 1s gwlty of stalking
maximum jail term is 3 years. In such cases, man can prove himself
of innocence if he can prove that stalking was done for the purpose
of preventing or detecting crime or for any other reasonable reason.
♦ Rape: The law has described various conditions of rape and has
made provisions for various punishments. The word sexual assault
has been replaced back to rape. The offence is no longer gender-
neutral, only a man can commit the offence on a woman. Rape
criminal shall be punished with rigorous imprisonment of either
description for a term which shall not he less than seven years, but
which may extend to imprisonment for life, and shall also be liable
to fine.
New offences: The Ordinance introduces three new offences relate to rape
of minors, and increases the penalty for one:
New offences under the IPC, 1860
Age Group Offence Punishment
Below Rape Rigorous imprisonment of at least TTt 20 years
12 years extendable t? life imprisonment, along with fine
to meet medical expenses and rehabilitation cost
of the victim, or, death.
-
Gang Rape Life imprisonment, along with fine, to meet medi-
cal expenses and rehabilitation cost of the victim,
or, death.
Below Rape Previously, the punishment for rape was impris-
--
16 years onment of ten_ yea:s extendable to life imprison·
ment, along with fme. This has been enhanced to
a minimum rigorous Imprisonment of at least 20
Y~ars,. extendable to life imprisonment, alon~
wi~h fme, to meet medical expenses and rehabili·
tat1on cost of victim
Gang Rape . -----
L~fe Imprisonment, along with fine, to meet rnedi-
cal expenses and rehabilitation cost of victirn-
Sources: Indian Penal Code, 1860; The Criminal Law (A d d' a11ct'·
2018; PRS men ment) Or 1nw
tzl CH. 6 : ICA, l B72 : LEGALITY OF OBJECT AND CONSIDERATION Para 6.4
Appeal: The Ordinan~e states that any appeal against a sentence related to
rape cases must be disposed of within six months .

. 6.3 DOCTRINE OF PUBLIC POLICY

The definition of the term 'public policy' does not find any place in the Act.
Sec. 23 of the ICA permits the court to decide whether the consideration or
object of an agreement is against the public interest and public policy.
Lord Truro has defined public policy in Egerton vs. Brownton ( 1853) as
follows:
"Public policy is that principle of law which holds that no subject can
lawfully do that which has a tendency to be injurious to the public,
or against the public good which may be termed the policy of the law,
or public policy in relation to the law." ·
Public policy is not capable of exact definition. It has been described as
'untrustworthy guide', 'unruly horse' etc. It is governed by precedents. The
Supreme Court has held in Central Inland Water Transport Corporation
Ltd. vs. Brojo Nath Ganjuli (1986) that new heads of public policy can be
evolved in the light of fundamental rights and directive principles of the
constitution of India.
----- __ ..... _____ ""r'_._
., .
------.....-•

6.4 AGREEMENTS OPPOSED TO PUBLIC POLICY

An agreement is said to be opposed to public policy when it is injurious to
public interest. The following agreements have been held to be opposed to
public policy and hence void :
(1) Trading with an alien enemy.
(ii) Agreements interfering with the course of justice.
(iii) Agreements for stifling criminal prosecution.
(iv) Maintenance and champerty.
(v) Trafficking in public offices and titles.
(vq Agreement creating an interest opposed to duty.
(viz) Agreements unduly restraining personal liberty.
(viii) Agreements interfering with parental duties.
(ix) Marriage brokerage agreements.
(x) Miscellaneous cases.
(-0 Trading with an alien enemy. Alien friend can contract but alien
enemy cannot. It is so because these agreements tend to aid the economy
of enemy country. Such agreements are therefore illegal unless made with
the permission of the Central Government. Contract made before the out-
break of hostilities are either suspended or become frustrated.
 122
Para 6.4 UNIT l . JNOIAN CONTRACT ACT, 1872

(ii)_ Agreements Interfering with the course of Justice. An agreei:ien~ the

obrct or which is lo in terfere in any manner with t he course of JUSllce is
void._ Howl'vcr, an ngrccmcn l lo refer present or future <.hsputes to arb1tra.
hon is a vnliJ agreement.

-=::..:....:.:.:::..-==-=-------------~-------
EXAMPLES
1. An agreement to bribe witnesses to give evidence. fals e
2. An agreement to give money to the judge or officer of the court for sec,,r.
~i1~1g:..:1'..::.·u~d~g~111=e~n~t~in~fa:=..:v-=o.:_u__r_:_o:._f _li·_1i~ga_n_t_t_·n_a_su_i_t._ _ _ _ _ _ _ _ __ __

( iii) Agreements for stifling criminal pros~cution. An ?'gn:'ement not to

prosecute the offender or to withdraw pendmg prosecut1on 1s known as an
agreement to stifle prosecution and is void Lord Westbury in \Villiams vs.
Bayley ( I 866) has stated that, "You shall not make a trade of a felony (major
crime). If you are aware that a crime has been committed, you shall nut
convert that crime into a source of profit or benefit to yourself.• It is in the
public interest that criminals should be prosecuted and punished An
agreement compromising a non-compoundable offence is void. But there
are certain offences under the Indian Criminal Procedure Code, 'Which are
compoundable ( e.g., assault) on which compromises can be arrived at
between the parties. The agreements for the compromise of such offences
are valid.
,-
1 EXAMPLE
A,. being aware that .B has ~omm~tted a murder, obtains a promise to pav
hz_m_ (A) ~ 5,00,0~0 in consideration of not exposing B. This is a case ~f
stzflzng prosecution and the agreement is illegal and void.
Where a compromise agreement . t d . b
plaint it would not constitut t ·tt zs en ere z~to efore filing of the com-
after filing of a complaint wt~
zh z;1g, pbrosecutzon, e1;en if it is implememcd
zc zs su sequently withdrawn.

CASE. . LAW .· *Ouseph p ouIe vs. Catholic Union Bank (1964)

Facts . 0 borrowed certain sum f h
as security. Subsequently, the ba:tf t e bank_ and pledged certain goods
the pledged goods had either been ound that, m collusion with bank staff,
~ake up for the deficienc b h overv~ued or_ \~ithdrawn. 0 agreed to
Smee the said hypothecat~ y ypothecatmg additional o·oods as securitv.
. h ion was delay d th b e -
~gamst t e borrower. But the com .' e .' . e_ ank lodged a complaint
t10~ was compJctcd. Held, the -~I.amt was withdrawn after hvpoth~ca-
vahd. agt cement to make up the deficiencv was

(iv) Maintenance and champert 11 ,.. · --

ment • 1.viaintenance 'M · _ an agree- ,
. . .whe.re bY a person
- . Yanothe
assists · . aintenance' 1s
lit1gat10n m which the third person h r perlson financially or otherwise in i
as no egal interest of his o,vn. '
l
123 CH. 6: ICA. IS72: LEGALITY OF OUJECT AND CONSll>ERATION Para 6.4
cJ,ampe.rty: '~ha_mp~rty' is an agreemen t whereby a person agrees to assist
another m ht1gation m n'turn for a share in the proccc<ls of the action.
Thus in both the ca~es _f~na1~cial or profcssional assistanc e is provided to
hclP an?~herpcrson m httgatton , but in case of champcr ty the party helping
in the ht1gat 10n also shares the proceeds of the litigation in addition to
interest on money advanced or fees for professional services.
t1nder the English Law, both these types of agreemen ts are illegal and void.
Under Indian Law, agreeme nts to share the proceeds of the litigation are
not regarded as opposed to public policy unless they are extortion ate and
unconscionable. For example, an agreeme nt by a client to pay his lawyer
according to the result of the case is opposed to public policy and void
[Kothi Jairam vs. Vishvana th (1925)]
,r .

! CASE LAW : Nuthaki Venkataswami vs. Kattanegi Reddy ( 1962)

Facts: There was an agreemen t between financier and client to transfer
75 paise in a rupee as the share of the financier in the property, if recov-
ered. Held, the agreemen t was unreasona ble and hence void.

(v) Trafficking in public offices and titles. Agreeme nt for the sale or
transfer of public offices or the procurem ent of public title (like Bharat
Ratna or Param Veer Chakra) in considera tion of money are illegal being
opposed to public policy. Such agreemen ts, if enforced , would encourag e
inefficiency and corruptio n in public life.
r •., , -··-· .•-·• ... - •· .,
i CASE LAW: *N.V.P. Pandian vs. M.M. Roy AIR (1979)
~- .
Facts : N paid a certain sum of money to M who agreed to arrange a seat
for Ns son in a Medical College. On Ms failure to get the seat, Nfiled a suit
for refund of the paid sum. Held, the agreemen t was against public policy
and therefore, N could not get refund of the paid sum.

(V◊ Agreement creating an interest opposed to duty. An agreeme nt which

tends to create a conflict between interest and duty is illegal and void on the
ground of public policy.

[EXAMPLE f
P gives directions to his agent, A to buy certain flat for him in Dwarka. A
tells P that no flat is available for sale in that area cmd buys tlze flat for
himself. ff the same is discovere d subse9uen t~v by P, h e ma_v ,·ompel A to
sell it to him (P) at the pru:e which A paul for tt;

(Vir) Agreements unduly restraining personal liberty, Agreeme nts which

Unduly restrict personal liberty of an individua l are void as being opposed
to Public policy.
Pa ra 6.4 \ lN\ r \ . \Nl )\,\ N \'U N\' l{t\ l'T
At'T, I W/2

CASE LAW : Ram ·,·s. llnnku Mu

l ( 1930)
Facts : For monl'tnrv l'On:--ilkr
nt ion, A (p\ninl iff) ag l'l'l'S lo p\a
h."r at tlw cfo,po~al o·r B(d1..•fl'n c.:c his c.h.\ugh-
danl) lo hl' rntn-rkd acl'.Ol't~iug
ofB. Held, this agrl'l'rHl'nl is void l(}
the ~1shl'.s
pan.·ntal dutil's to sd l'd a husba and ilkg~,\ as _it would t~,t~rkrc w1Lh A's
nd in tht: hl'sl mtl'rcst ol his da
u gh k r.
(ix) Marriage brokerage ag
reements. An ag rcl 'm cn t to pr oc ur e the mar-
riage of a p~rson for mo ne tar y co ns ide
ag:1:-ee ment. Su ch agreements are rat ion is ca lle d ma rri ag e br ok e rag~
illegal an d void as be ing op po
policy. Similarly an agreement se d to public
to give mon~y or pro pe rty , i.e.
pa ren ts of a bri de or the bri
de gro om for the ir co ns en t to
, do wr y to the
n1 arr iag e is also illegal an d no the co nt rac t of
t en for ce ab le un de r the Do wr
Act. Ho we ve r, su ch an ag re~ y Pr oh ibi tion
me nt is illegal in res pe ct of pa
validity of the ma n;a ge is no t aff ym en t on ly, the
ec ted . W he re the ma rri ag e is
mo ne y if actually paid ca nn so lem nized,
ot be rec ov ere d an d if no t pa
be filed for the claim, as the id, a su it ca nn ot
ag ree me nt to pa y is illegal.
pr op ert y or or na me nts or the Bu t the mo ne y,
ir va lue ca n be rec ov ere d if the
pe rfo rm ed . nrnrriage is not

'CASE LAW: Pitamber vs.

Jagjlwan (1949)
Fa cts : A pu roh it was pro mi sed
~ 200 in co nsi de rat ion of pro
for the defendant. Held, the ag cu rin g a wi.k
no t be recovered. rrc me nt was invalid an d the mo
ne y could
·

t EXAMPLE ~
A (father of the hridt') promises
m_ents worth r 5,00,0UO to B
to give cash worth r 2 OU 000 au
(/~tlw d onu;
hrs daughter. The agreement ts ~ of the bridegroom) ~n tile ,narriagl! vi
vu,d and cannot be eu/orct'd, crn
. (1) In case A lzas given rnuncy d
cannot recover the m /rum B. «m i orn am en ts at the time of marriage, he
(rl) In case A has no given (lw sta
cannot be recovered tfro ~~d amount
nt h,m by /tlmg a suit. ,m d ornaments, the .san11;
 JZ5 CH. 6: ICA, 1872 : LEGALITY OF OBJECT AND CONSIDERATION Para 6.5
(iii) Ho1-vever, in case A has given amoun t and umament5, the same
or
their value can be recuver<!d if marria ge is noL perfor med

(X) Miscellaneo11:s cas~s. The following agreem ents are also void as being
osed to pu bhc pohcy :
opP d.
(a) Agreements ten mg to create monopolies.
(b) Agreements to defrau d reven ue author ities. .
(c) Agreements where by person s are induc ed to give eviden ces m a
Civil Court for a mone tary consideration.
(d) Agreements to influe nce election to public offices.
(e) Agreements not to bid agains t each other.
' - - - . - -

. 6.5 OBJECT OR CONSIDERATION UNLAWFUL IN PART

I

Sections 24, 57 and 58 of the Contr act Act deal with cases if the same
agreement contai ns both legal and illegal terms, i..e., object or consid eratio n
is partially legal and partia lly illegal. These are discussed as follows :
1. Agreements void if consid eratio ns and object s unlaw ful in part
(Sec. 24). Wher e an agreem ent contains several distin ct promi ses
to do some acts legal and other acts illegal, and the legal act is not
severable from the illegal one ( i..e., the consid eratio n for legal and
illegal act is a single sum of money), the whole agree ment is illegal
and void.
( .
I EXAMPLE
A promis es to superi ntend, on behalf of B, a legal manuf acture r of indigo
,
and an illegal traffic in other articles. B promis es to pay to A a salary of
r 10,000 a year. The agreem ent is void, the object of As promis e, andcase,
tlze
s
consideration for B promise, being in part unla\lvful In the given
there is single sum of ~ 10,000 for the legal and illegal act, therefo re, the
whole agreem ent is illegal and void

2. Reciprocal prom ise to do things legal and also other things ille-
gal (Sec. 57). Wher e there is a recipr ocal promi se to do things legal
and also other things illegal, an the legal act is severa ble fron1 the
illegal one (i..e., the consid eratio n for legal act and illegal act is dif-
ferent), the legal act is a contra ct and the illegal act is a void agree-
ment.

A andB agree t'1at A shall sellB a house for r 10,000, bw tluu. i/B uses itas
r
a gambling house, he shall pay A 50,000 for it. The first set of n:ciproca/
Promises, namely to sell the house and to pay r 10,000 /or it, is a commc c.
The second set is for an uni.aw/ul object, namely, that B may use thtJ house
as a gambling house, and is a void agreement.
 1
r ara ~.6 \ ~It I . l~tHr\S c. ON1 RM T Al T. 1872
. _ ..... ~ bninch l,rh11( IIIPgnl (S'ec. 58). In th e c d '---
3. 41tr,wn tn•r P''"'" 1·"•-, ~•n
:-.fan nltc111n1h <' 1womi"t', om~ hram: h o f \\ ti<.
,l1 . .~t=-'l. the kf!n1 l,randl alone can he c nf orcc .
J•~
l· l · I 1 d th
<·ga an e '>thtr
'P:

EXAMPLE _
: d. B · ti1ar A 5 f1all f7a\' B t' J 000. for wllic/z B .~hall a/te rwor,J.~
-~ 0 ,, ocrre ., ' . ' . • . l'd ·•
dcli, •cr 10 Aeither rice or smuggled op1w1L _Tlus LS a va , contract tr, de.
Tin., , rice. and a ,·oid agr·eemen t as to tl1e opwm.

6.6 EFFECTS OF ILLEGAL AGREEMENTS

J. According to Section 23 of the Act, eye~" ag~eeme nt of which the object
or considera tion is unlawful is void ab-1nztw. It 1s not enforcea ble at a coun
of Jaw. The genera) rule of law is that •no action is allowed on an illegal
agreemen t."
2. The collateral transacti ons to an illegal agreeme nt are also tainted with
illegality and therefore , are not enforcea ble provided the parties to the
collateral transacti on were aware of the illegal purpose of the main
transactio n. But the collatera l transacti ons in case of void agreeme nt are
\'alid, e.g., wagering agreeme nt
3. The principle of restitutio n is not applicabl e in case of illegal agreemen t
Thus money paid or goods delivered cannot be recovere d back. Similarly
no action will arise for the breach of an illegal agreeme nt. Thus law will not
help any of the parties in case of illegal agreeme nt.
4. Where the parties are in pari delicto (equally guilty), the defendan t is in
a better position than that of plaintiff.

EXAMPLES
I . Agrees 10 p<J)' I' 10,000 to B _to_ purchase smuggled laptop from hinL The
a1?·c<mt'11t between A and B LS illegal and void because of illegal considr:r·
OllU'7.

2. A agrees to pay I' 50,000 to B, if B kidnaps C. A borroivs monev from D i,i

urder W pay tu B. (i) D _can nut recover the money lent if D was a ,A·art! of 1/zr!
purpult! lk-<--a." se k~1dmg of money was a collateral transactio n to"" il!t·~1..zl
J?
tJ~rt"emem. (h) B14t 1/ w a~ nut aware of th e p11rpose of the lendin~ tn<.>11('•·
Ii~ t :ut1 re<-"U_v~r eVt!t~ 1/ A had used the nwne_y for cm i/leg<ll pwrl(~'it!. .
J. A ~ntt-_rb mftJ bellmg tl#:re~mt 11/ with B 011 a ,·rickt!l nu.udt b<!tH't!t!ll buhJ
1

tJ1ld ~~ulw,t"" '!"'J borrowr,· I' 1,000 /rom C. C nm aln·m•s fc.-'<'<>i·er th(! mo,it!:,;
knt lfr~l pei·11 ve o/ ti,,: fuel that ht! WWi tl\\l<lrt' of ilw imrpose or ,wt, cl:i Ju.,
l~mlmg 0 / num~y wu~ c:ul/"teru/ lo u \ oid ""n•em,•111, i.e. \\,•,v•erin,,_, a~r't!c!·
1
nrenl J o ~

4. A tJgrees to pay t' 50,UIJO to U if H ~'lwot.'i c. If B .-;hoots C, he ca1111vl

re<,~ve~ !he '!:"'~1mt fn:m A. llut if Ile {A) h"s ulre(u/_v paid and B dves riot
/ul/,l .h_l$ u!,h~~,1w11, A '-"~mut r~cover the cmwum from B because the rul~
of reMt1u11un ~ not app/1,.:ab/e m case of illegal agreemen t and position of
B (defendant) is belier than thut of A (plt1intif/). ~
t27 CH. 6 : ICA, 1872 : LEGAUTY OF OBJ ECT AND CONS JD J-1.RATJO N

1. Discuss those cases t11_1dcr whkh object. an<l consideration of an agreement is

considered to be unlawl ul. (Rd. Para 6.2)
2. E~plain. t.hc c!octrine of "Publ~c Policy". Discuss Lhe agreements contrary of
pubhc pohcy. (Scm. I, 2011) (Rd. Paras 6.3, 6.4)
3. Define the tcnn 'ilJega] agreement'. Exp]ain its effcct with suitable exam.pies.
(Rt.f. Para 6.6)
4, Comment on the following :
(1) Consideration and object of an agreement must be lawful to be enforced
in the court. (Ref. Para 6.2) . ,
(it) No action is allowed on an illegal agreement. {Ref. Para 6.6)
(iii) An agreement is illegal and shall not be enforced if the court regards it as
immoral (Ref. Para 6.2) , , ,: ·
5. Wdte notes on the following : , , :;, , ; ~ ~ ,',,
(a) Maintenance and champerty [Ref. F~int ffv): of P~~ ,..4 ,
/,/, ;/'/' W✓,/,,,,•,',?;f;,,/ J,;.,,
1 •,,'
(b) Agreements with object or conside /, • /r:";, · "1 : ,,

(c) Marriage brokerage agreementf :

. , Wi:c
• ,, h / , , ·' /~

PRACTICAL PROBLEMS ... ~,,...,..,

t-,,-

1. Apromises to pay , 50,000 to·

for him. A pays the amountJ ~ti
force this agreement ~,;//:t:~:;
[Hint. No, an agreenf~J tir;;;,,
of money is illegal on the ; . :
this agreement.] ';,,,,?,;
2. A, a citizen of Indf
agreement valid ,.?~Cf
(Hint. No, the,agr,;{ ·cy. Alien friend
can contract butM ..
~ , 1 ,,, - ,, ,,, p qctlre'suitable employment for B
t
3. A, a man~ieif~ "\ ¼

in the said B,ank i:ri,, . . . '"tion?o ;lf~ prom1se to pay him, 1,00,000. A pro-
cures the saidjbg ,jp( B;but fB fails,to' pay the promised amount to A. Can A
recover,this ~Qunf frb,n B,?,:, ~ •1 · , ,. ·
[Hint. No~ A,:ca~~6f recover because the agreement for the procurement of
emplo~ent in 'consideration of money is illegal being opposed to public policy
and the p~ciple of restitution is not applicable in case of illegal agreement.]
· 4• A gives money to B, a manied woman, to obtain a divorce from C: her hus-
, ~and. A,. (the lender) promised to marry her subsequently. Can A recover the
.,atnount? ,.·: .·
~ ! Nd, the - p ~se of lending is immoral in .t~~ given case and A, therefore,
.- ',,, _,,,., \,~e¢9ver the3mount. Refer to case: Ba1v1J1 vs. Hamda Nagar (1885)]
. ;,-J'*~-·f-~Jf:,.:,'.</,:/:<-0:, i:' .. ' , .
 NI>IA N CC >N.I.RACT ACT, 1872
128
.
. f f J 00, 000 . A
--- -- -~ --=:;;:i--;,: i0 ;:;;;~f/i~: ·
ll N11 I • I ° '
I •ra I I0ning money. Cf ~ rl cs
.
,gkd J!<trn ~
1 I . from II in rp,1.
,·oris 1< (f. l<'nd I?
I, II ht·
i'if.' ,, suc n·c, . •
5, A ai:n·,·s 1o huv ,m '. I •\dw know s I 1, pu
, ., tran sact ion hctw ccn A
hon o\1, lhi~ 111111111111 \' 0'.n ,\·rv or lhi~ n111ou111. W
A t 11r Iht Hu . usc 1111·n·· is. coll
\ lwca ·gala le'
agrc ,1 Icrnc·n Is· arc al~o lam tccJ
. ii nw1i
11 ~u , • ·
n,1 . . .. .,,tf .
IHint. No, 1w ,, ,ll no~ -~m ~\s ad ions in case o1,11(
an,\ n,m d 1lw n1Hat{, .,l 11 ·• -- -- -- -- -- -. J
" ith iHqrnlit\l

statements are true or false:

TRUE OR FALSE STATEMENTS
_:: :~:: -
..:_-1-:-b l
-r~e;f~w:;:h~ether foll owin
the ion' g dm . Sec tion 23 inte rcha nge-
~Stat~~: e with reasons n, -1 and cons1 c 'd "'t·at are use .
• . 'O1 .
. . . ains t pub lic poli cy.
(r) The wmds 'Jee I is valid .
ahly. . . . to ublic inte rest, if it JS a~
JS unJawfu ,
(
nt is mJu nous p 'd t1·on of whi ch
. :'I An aare l'mc 1 el a
th e Ob'~ec tor cons
3.

,,, e•
.. :'I An agreement
. y 1·s valid.
. h ahen enem . t · ]'t'
(m, eme nt mad e WJt an h b one part y hav ing no mte res m l 1-
(il') An agre . agre eme nt w ere y ation.
( ,•) Champcrty es is an . t anot her .in.litig . ·
gation, agre to assIS
aw. ome vo1'd.
(201 I·,
"'· n ts .are void ab-m
. al a eem ents do not bec
l agrc
Illegaatera
,1) ColJ
((vir) emc
l transactmns to an illeg gr
. 'd . ·
Sem. l, 2012)
te mon opol y 1s v01 •
(1'iir) An agreeme nt to crea , . f hich is unlawfuJ in part is valid.
g bje• :;r; :~:~ ::~: ::: : a bett er posi·
tion than that of
(i\:) Agre
(x) In case equoa]
s oft the
emen
.
plaintiff.
Hints to True or False Statements
True Statements : ( ir), (vr), ( viii) and (x).
.
1
I False Statements:
I
used in Sec tion 23 mter-
(,) The words 'object and consideration' are not
I
{
ect is the purp o~e o:
I changeabfy. They are different in me_aning. Obj
i design for which agreemen! is ente red mtodesr w~e reas the con s~er at1o n >
I
I
the act, abstinence or promise mad e at the re of the prom1sor. 1

( ii,) An agr, eme or consideration

nt the object rdin of whi ch is unlawfu ) is not valid
but void and illegal acco g to Sect ion 23.

(ii•) An agreement made With an alien enem

y is not vali d but void as being
not. scd to puhlic policy. Alien friend can con trac t but alien enem y can·
c,ppo
' ~ne Part y havi ng som e inte rest in
(v) h11ga11011r1y
Cb11m_pe ii. es
, agre
agrc
an to ~me
assis t anot her :cb.l:
nt whe1 tn litigation.

coll ater al tran sact ions to an

(vii) An illegal agreement is void ub-initio. The efor e, are not
enforcea
illegalagrecmcn1 are al8o lahu ,,J wi1h illt•gality and ther
bJe.
h is unla wfu l is part is vuid ·
( ix) Agr ~me nts t~e obj~ct u~ cu1~si<leratiun uf whicis the lutn psum mon ey aud
. proVktcd cons1<lera11on fur different promises let out
from the illegal !>art (e.g., house
the leg~! pa'.1 cannot be s~paratcdose • · , ..
for , 50,000). . .
for reSJdentJal and gamblmg purp