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TMI Blog2022 (7) TMI 1545X X X X Extracts X X X X X X X X Extracts X X X X ..... the parties is a harmful thing, having harmful tendencies, having ramification on the interest of the welfare state in the realm of a freedom of contract. The concept of public policies broadly is founded on public good or public interest and in the changing times may extend it to any transaction which affects the public at large. It is sometimes regarded as an unruly horse and the Judges remained on a slippery road, yet had a firm footing in a patent case of injury to a public at large. It is no longer res integra that Court should seldom exercise the inherent powers enshrined under Section 151 of the Code when there is a specific provision contained in the Code yet sometimes the Court for securing the ends of justice i.e. ex-debito justitiae may invoke such power necessitated by circumstances. Ordinarily, the Court decides the cause pleaded in the respective pleadings and the reliefs claimed therein, yet it has not brindled the power of the Court after noticing the special facts in passing an order under the public policy to secure the interest of the welfare state. There are no infirmity and/or illegality in the impugned order - The appeal is dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... ied to. Interestingly, a plea was taken by the defendant-respondent in the said reply that the alleged transaction was not real but is an accommodated entry or "Jamma Kharji" and, therefore, the claim is fraudulent and fictitious as the plaintiff- appellant never actually gave the said amount from its own resources or the income but the unaccounted money in cash was given by the defendant- respondent to the plaintiff-appellant and, therefore, there was no real transactions entered into by and between the parties. Even the same defence has been projected and/or repleted in the written objection filed by the defendant-respondent to an application of the plaintiff-appellant under Order 39, Rule 1 and 2 read with Order 38, Rule 5 of the Code of Civil Procedure. Such being the basic facts discerned from the restrictive pleadings of the parties, the Trial Court not only refused to pass an interim order on an application but upon noticing the startling facts emerged from the respective stands of the parties directed the member (investigation), Central Board of Direct Taxes to cause an investigation into the monetary dealing being the subject matter of the suit to file a report on the ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PASL Wind Solutions Pvt. Ltd. VS GE Power Conversion India Pvt. Ltd. reported in (2021) 7 SCC 1. According to him, the concept of public policy is not rigid and varies with the changing times and needs of the society, more particularly in relation to a contract unless it tends to injure the public interest or the public welfare as envisaged under Section 23 of the Contract Act and relied upon a judgment of the Apex Court in case of Gurmukh Singh Vs. Amar Singh reported in (1991) 3 SCC 79. Mr. Sahni vociferously submits that both the parties knowing fully well the antecedent of the transactions entered into a contract which cannot be said to be perse illegal but later on the defendant-respondent tried to resile therefrom taking a plea of invalidation and/or illegality which is impermissible unless the Court after a full-fledged trial declared such contract to be illegal and relied upon a judgment of the Supreme Court in BOI Finance Ltd. Vs. Custodian & Ors. reported in (1997) 10 SCC 488. It is further submitted that once the contract is clear and explicit and exposes the intention of the parties without any ambiguity brought in it, the Court cannot add or insert any word nor perceiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onspectus of the above facts and the submissions so advanced it would be apposite to record that both the Counsels of the respective parties are ad idem to the stand that such direction was unwarranted and should not have been passed in absence of any pleading as well as the reliefs claimed in the suit yet we decided to proceed with the hearing of the appeal after noticing the unusual stand taken by the defendant-respondent that the transaction was not real and was mere ostensible and, therefore, no right is created upon the plaintiff to seek recovery of the said amount. At the very outset we must record that such being the defence taken and ultimately proved after full-fledged trial in the suit or otherwise, has a larger impact on the society as well as the economic development of the country. Precisely for such reason, we intend to decide the said issue keeping in mind that whether the Court should remain a mute spectator even if perceived a sinister attempt on the part of the parties to get away with the offence having committed in other law and seeks blessing of the Court to decide the issue within the circumference of the civil rights. Apparently, the contract appears to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... though the Judge stands of a slippery ground but has a firm footing in the event the contract is called a harmful thing and found on the harmful tendencies. The principles of the public policy can be applied in a clear and incontestable cases of harm to the public at large. "The same view is confirmed in Bhagwant Genuji v. Gaugabisan Ramgopal, ILR (1941) Bom 71: (AIR 1940 Bom 369) and Gopi Tihadi v. Gokhei Panda, ILR (1953) Cut 558: (AIR 1954 Orissa 17). The doctrine of public policy may be summarized thus: Public policy or the policy of the law is an illusive concept; it has been described as "untrustworthy guide", "variable quality", "uncertain one" "unruly horse", etc; the primary duty of a Court of Law is to enforce a promise which the parties have made and to uphold the sanctity of contracts which form the basis of society, but in certain cases, the Court may relieve them of their duty on a rule founded on what is called the public policy; for want of better words Lord Atkin describes that something done contrary to public policy is a harmful thing, but the doctrine is extended not only to harmful cases but also to harmful tendencies; this doctrine of public policy is only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have before them the beacon light of the Preamble to the Constitution. Lacking precedent, the court can always be guided by that light and the principles underlying the Fundamental Rights and the Directive Principles enshrined in our Constitution. 93. The normal rule of Common Law has been that a party who seeks to enforce an agreement which is opposed to public policy will be non-suited. The case of A. Schroeder Music Publishing Co. Ltd. v. Macaulay, however, establishes that where a contract is vitiated as being contrary to public policy, the party adversely affected by it can sue to have it declared void. The case may be different where the purpose of the contract is illegal or immoral. In Kedar Nath Motani v. Prahlad Rai, reversing the High Court and restoring the decree passed by the trail court declaring the appellants' title to the lands in suit and directing the respondents who were the appellants' benamidars to restore possession, this Court, after discussing the English and Indian law on the subject, said (at page 873) : The correct position in law, in our opinion, is that what one has to see is whether the illegality goes so much to the root of the matter that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose of borrowing was unlawful as it was opposed to the public policy of celebrating the marriage of a minor in violation of the statutory provisions, and therefore, the promissory note was held to be unenforceable. An agreement between A and B to purchase property at an auction sale jointly and not to bid against each other at the auction is perfectly lawful, though the object may be to avoid competition between the two. But if there is an agreement between all the competition between the two. But if there is an agreement between all the competition bidders at the auction sale, but it of the court sale or revenue sale, or sale by the government of its property or privilege and formed a ring to peg down the price and to purchase; the property at knock out price, the purpose or design of the agreement is to defraud the third party, namely the debtor or government whose property is sold out at the court auction or revenue sale, or public welfare. The object or consideration of the contract, oral or written, to share such property is unlawful. There is also implied "injury to the debtor" within the meaning of Section 23. Thereby the contract was fraudulent. The contract thus is al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion (Supra) and held that it is capable of being modified and/or varied and may be expanded depending upon the public conscience, public good and the public interest and, therefore, is not a rigid principles solely based on the common law or the precedents in past. It would be profitable to quote the relevant observations made in Paragraph 71 of the said report which runs thus: 71. This Court's judgment in Central Inland Water Transport Corpn. V. Brojo Nath Ganguly, after referring to the case law on the subject, then held: "92. The Contract Act does not define the expression "public policy" or "opposed to public policy". From the very nature of things, the expressions "public policy", "opposed to public policy", or "contrary to public policy" are incapable of precise definition. Public policy, however, is not the policy of a particular government. It connotes some matter which concerns the public good and the public interest. The concept of what is for the public good or in the public interest or what would be injurious or harmful to the public good or the public interest has varied from time to time. As new concepts take the place of old, transactions which were once consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y normal at one time have today become obnoxious and oppressive to public conscience. If there is no head of public policy which covers a case, then the court must in consonance with public conscience and in keeping with public good and public interest declare such practice to be opposed to public policy. Above all, in deciding any case which may not be covered by authority our courts have before them the beacon light of the Preamble to the Constitution. Lacking precedent, the court can always be guided by that light and the principles underlying the Fundamental Rights and the Directive Principles enshrined in our Constitution." The law as expounded in the above noted report can be succinctly summarised that though the principle of public policy traces its origin from the common law yet the said principles have been expanded in the judicial parlance and may apply in deserving cases. It is inconceivable that the Court would remain a mute spectator where the contract between the parties is a harmful thing, having harmful tendencies, having ramification on the interest of the welfare state in the realm of a freedom of contract. The concept of public policies broadly is founded on pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deciding the issues involved in the suit yet it is as good as a piece of evidence in juxtaposition with the other evidence that may be brought by the respective parties. It is no longer res integra that Court should seldom exercise the inherent powers enshrined under Section 151 of the Code when there is a specific provision contained in the Code yet sometimes the Court for securing the ends of justice i.e. ex-debito justitiae may invoke such power necessitated by circumstances. Ordinarily, the Court decides the cause pleaded in the respective pleadings and the reliefs claimed therein, yet it has not brindled the power of the Court after noticing the special facts in passing an order under the public policy to secure the interest of the welfare state. We thus do not find any infirmity and/or illegality in the impugned order. The appeal is dismissed. Urgent photostat certified copies of this judgment, if applied for, be made available to the parties subject to compliance with requisite formalities. (Harish Tandon, J.) I agree. (Shampa Dutt (Paul), J.) Later: After the judgment is delivered in open Court, Mr. Sahni, learned advocate appearing for the appellant, makes an oral ..... X X X X Extracts X X X X X X X X Extracts X X X X
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