E A JANU SAIT Vs. NRAMASWAMI NAIDU

JUDGEMENT

(1.) The plaintiff and the defendant are both merchants of Negapatarn and the plaintiff entered into a contract for the purchase of rice from the defendant en the terms of Exhibits A and Ai. At the time when the contract was entered into, namely, July 19, the import of rice was controlled by Government and rules were framed in accordance with which alone import and transport of rice was permitted. The defendant obtained a license from Government to import certain rice from Burma and it was this rice which he agreed to sell to the plaintiff. The nee was delivered to the plaintiff, but, shortly afterwards, 2123 bags were commandeered by Government and the plaintiff received only the actual controlled price, whereas he had paid to the defendant a considerably larger sum. The balance of 1320 bags had already been re-sold by the plaintiff and Government took no _ action in regard to them. The plaintiff now claims damages for loss that he has sustained by this action on the part of Government and alleges that he sustained this loss owing to the fraudulent representations of the defendant.

(2.) A question has now been raised in appeal as to whether the plaint contract was not one that was void, as being (1) opposed to public policy and (2) illegal. The question was not raised in the pleadings in the lower Court, but it is evident from the Subordinate Judge's judgment that it was, at any rate, raised at the time of arguments, and when a question of this sort is raised, I think that a Court should take notice of it, even though it does not appear in the pleadings vide Scott V/s. Brown (1892) 2 Q.B. 724 : 61 L.J.Q.B. 738 : 4 R. 42 : 67 L.T. 782 : 41 W.R. 116 : 57 J.P. 213. and this case can, I think, be disposed of upon this ground. When the contract was entered into, the defendant, under the terms of his license, Exhibit III, was forbidden to sell this rice to other whole-Sale merchants in the port of entry and he was only allowed to sell to retail dealers in the port of entry who were approved by the Collector of the District. Admittedly, the plaintiff was not one of those approved dealers and he was a wholesale merchant. Thus, these restrictions have been contravened by the sale to the plaintiff. It is contended for the plaintiff that he was not aware of these restrictions, and the lower Court has found in somewhat peculiar language that there is no doubt that defendant was a party in pari delicto so far as his obligations were concerned to the Director of Civil Supplies . . .. But there are no convincing circumstances to show that plaintiff was aware on the date of the suit contract, that defendant was committing a breach of a legal duty by entering into the suit transaction . . . and I am not prepared to hold that both the parties are in pari delicto though one of them is and that is the defendant." It is unnecessary to discuss here whether a contract would only be void if the plaintiff entered into it, knowing that it was in breach of public policy, or illegal for I think that, in the evidence on record, there is sufficient to establish plaintiff's knowledge.

(3.) The contract, Exhibit A, reads as follows:--"I have settled price with you at the Controller's rate for the rice coming for me by the Viravu Steamer and marked N. K. If perhaps the Madras Director of Supplies should ask the said bags from me and it I should have to give the bags to him, I shall return to you the money you have given me with one per cent, interest." Similar conditions appear in the counterpart executed by the plaintiff to the defendant Exhibit Ai. The rates are not specified: in these two documents, but a separate document bearing the same date was written by the defendant to the plaintiff in which the rates of the various kinds of rice are set forth. It is plaintiff's case that these were the agreed rates, he being informed by the defendant that they were the Controller's rates; but the defendant states that these rates were only given by him approximately as he did not know the exact rates fixed by the Controller until the 15 of July. On this point I think it is clear that the plaintiff's case is correct and that the rates were agreed upon as per Exhibit B. The defendant knew that he was not allowed to sell to the plaintiff and naturally would want some higher profit than the four annas a bag allowed to him by Government, and, if he entered into such a contract, he would naturally fix the prices at something higher than the controlled rates. Plaintiff being a big merchant in the place, must have known that he could not purchase rice except by permission from Government and, therefore, he was probably, very willing to pay defendant these higher rates in order to secure the rice; when there was control of rice imports and rice sales set up in Negapatam as in other places, it is impossible to believe that the plaintiff, who was himself a big rice merchant, did not know these facts. The mention in the contract of the possibility of the rice being taken by the Director of Civil Supplies is quite sufficient to put him upon notice of the control and of the various regulations which had been prescribed with reference to the sale of rice The plaintiff's contention that he did not know that the rates in Exhibit B were not controlled rates is somewhat futile, for no man ofreasonable prudence would have entered into such a large contract without taking some steps to ascertain what were the proper rates and it is unlikely that he would have been content with this simple document, Exhibit B. If the plaintiff was aware of the conditions governing the sale of rice, conditions which had been enacted by Government for the good of the country generally, it is obvious that, in entering into this contract in contravention of those conditions, the plaintiff knew, that he was inducing the defendant to sell the rice to him, and that such sale was undoubtedly opposed to public policy, if not actually illegal. No evidence has been let in to show what were the actual Notifications of Government at the time, or whither the license, Exhibit III, was based upon those Notifications, and, therefore, it is perhaps doubtful whether the contract was actually opposed to law, but, when it was in contravention of regulations imposed for the good of the country and the general public, it is clear that the contract was opposed to public policy. Under Secs.23 and 24 of the Contract Act the contract is, therefore, void and the plaintiff can base no claim upon it.