UNDER s23 INDIAN CONTRACT ACT 1872
BENCH: Subbarao K, J
FACTS:
- There was a partnership agreement between the Appellant and the Respondent. The objective of the agreement was to enter into wagering transactions to bear equal profits and losses
- They entered into a transaction of sale and purchase of wheat in which losses were incurred and the Respondent solely paid the entire amount due to the third parties
- Thereby the Appellant denied liability on his part to bear half of the losses as per their agreement
ISSUE:
- Whether the agreement between the parties was forbidden or illegal, as opposed to the public policy.
APPELLANT’s CONTENTIONS:
- That the agreement between the parties to enter into wagering transactions was unlawful under s. 23 of the Contract Act
- That the suit is barred as under s69(1) of the Act as the partnership was not registered
JUDGEMENT:
In the present case, the parties had no intention to take delivery of the goods but were only dealing with price differences such that they mutually intended the transaction to be of wagering nature. Although wagers are void u/s 30 of ICA but cannot be considered as forbidden by law u/s 23. This collateral agreement cannot be held to be void under s23. Void agreements cannot be equated to illegal agreements. Hence the agreements were held to be enforceable.
