# KEDAR NATH MOTANI AND OTHERS v. PRAHLAD RAI AND OTHERS

- **Citation:** [1960] 1 S.C.R. 861
- **Court:** Supreme Court of India
- **Decided:** 1960
- **Case number:** ·Civil Appeal No. 151of1955
- **Bench:** S. R. DAs, M. Hidayatullah, K. c. DAS GUPTA
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/kedar-nath-motani-and-others-v-prahlad-rai-and-others-1834
- **Pages:** 15

## Headnote

861
Fraud ani illegality-Benami transaction-Frau.a intended
but not effected-Person to be defrauded aware of the fraud but elects
not to cancel transaction-Illegality committed in the course of
transaction-Cause of action not based on illegality-" Exturpi
causa non oritur actio "-Exception to the rule.
In 1922 the Manager of the Court of Wards granted a lease
of a villal?'e to R for a term of years. By cl. 4 of the lease the
lessee undertook not to make any settlement of land with a
raiyat or other tenant without the consent of the Manager, and
disclose the fact to the Manager if it was proposed to make a
settlement with a relative or servant of the lessee. Under cl. 16
ryoti lands taken in the names of the lessee or his relatives or
his servants were liable to be resumed by the Court of Wards
after the termination of the lease.
Between the years 1920 to 1925 R acquired the lands in
question but they were settled benami in the names of P, G and
N by the Court of Wards at the instance of R.
After the death
of R in 1934 disputes arose as to the title to the lands, and his
legal representatives, the appellants, instituted a suit against P
and the legal representatives of G and N, the respondents, for a
declaration of their title to the lands and for possession, on the
footing that the respondents were in possession of the suit lands
as benamidars. It was found (r) that the· consideration for the
acquisition of these lands had proceeded from R who had them
settled in the names of his relatives, but did not inform the Court
of Wards that they ,were his relatives, in order to avoid the
operation of els. 4 and 16 of the lease, (2) that the application
forms for the settlement of the lands were not signed by P, G
and N, but that !heir names had been written by some one else,
and (3) that before the expiry of the period of the lease R
informed the Court of Warr.s the benami nature of the tran~ac
tion, but the Court of Wards.did not enforce cl. 16. The respondents contended inter alia (r) that as on the ap1·ellants' own
showing the lands harl been settled benami to effectuate a fraud
upon th!' Court of Wards the appellants were not entitled to a
judgment, and (2) that the acquisition of these lands having been
achieved by means of forging the signatures of P, G and N, the
appellants were not, in any case, entitled to succred, dn the
application of the maxim, ex turpi causa non oritur actio,
109
I9$9
862
SUPREME COURT REPORTS [1960(1}]
'959
Held: (r) that on the facts of the case, fraud, though it
-
might have been intended, was not perpetrated, ,because it could
Ktdar Nath Motani only be effected at the end of the term of the lease and the locus
v.
poenitentiae which the lessee possessed was duly used long before
P.ahlad Rai
the expiry of the lease. The appellants were not, . therefore, disenti,lled to recover the lands from the respondents who were
found to be only benamidars ;
(2) that the correct position in law is that what one has to
see is whether the illegality goes so much to the root of the
matter that the plaintiff cannot bring his action without relying
upon the illegal transaction into which he had entered. If the
illegality be trivial or venial and the plaintiff is not required to
rest his case upon that illegality, then, public policy demands
that the defendant should not be allowed to take advantage of
the position. A strict view, of course, must be taken of the
plaintiff's conduct, and he should not be allowed to circumvent
the illegality by resorting to some subterfuge or by mis-stating
the facts
If, however. the matter is clear and the illegality is
not required to be ple•<led or proved as part of the cause of action
and the plaintiff recanted before the illegal purpose was achieved,
then, unless it be of such a gross nature as to outrage the
conscience of the Court, the plea of the defendant should riot
prevail.
In the present case the illegality was of a trivial character,
inasmuch as the signatures of P and others

## Text

S.C.R.
SUPREME COURT REPORTS
KEDAR NATH MOTANI AND OTHERS
v.
PRAHLAD RAI AND OTHERS
(S. R. DAs, C.J., M. HIDAYATULLAH and
K. c. DAS GUPTA, JJ.)
861
Fraud ani illegality-Benami transaction-Frau.a intended
but not effected-Person to be defrauded aware of the fraud but elects
not to cancel transaction-Illegality committed in the course of
transaction-Cause of action not based on illegality-" Exturpi
causa non oritur actio "-Exception to the rule.
In 1922 the Manager of the Court of Wards granted a lease
of a villal?'e to R for a term of years. By cl. 4 of the lease the
lessee undertook not to make any settlement of land with a
raiyat or other tenant without the consent of the Manager, and
disclose the fact to the Manager if it was proposed to make a
settlement with a relative or servant of the lessee. Under cl. 16
ryoti lands taken in the names of the lessee or his relatives or
his servants were liable to be resumed by the Court of Wards
after the termination of the lease.
Between the years 1920 to 1925 R acquired the lands in
question but they were settled benami in the names of P, G and
N by the Court of Wards at the instance of R.
After the death
of R in 1934 disputes arose as to the title to the lands, and his
legal representatives, the appellants, instituted a suit against P
and the legal representatives of G and N, the respondents, for a
declaration of their title to the lands and for possession, on the
footing that the respondents were in possession of the suit lands
as benamidars. It was found (r) that the· consideration for the
acquisition of these lands had proceeded from R who had them
settled in the names of his relatives, but did not inform the Court
of Wards that they ,were his relatives, in order to avoid the
operation of els. 4 and 16 of the lease, (2) that the application
forms for the settlement of the lands were not signed by P, G
and N, but that !heir names had been written by some one else,
and (3) that before the expiry of the period of the lease R
informed the Court of Warr.s the benami nature of the tran~ac
tion, but the Court of Wards.did not enforce cl. 16. The respondents contended inter alia (r) that as on the ap1·ellants' own
showing the lands harl been settled benami to effectuate a fraud
upon th!' Court of Wards the appellants were not entitled to a
judgment, and (2) that the acquisition of these lands having been
achieved by means of forging the signatures of P, G and N, the
appellants were not, in any case, entitled to succred, dn the
application of the maxim, ex turpi causa non oritur actio,
109
I9$9
862
SUPREME COURT REPORTS [1960(1}]
'959
Held: (r) that on the facts of the case, fraud, though it
-
might have been intended, was not perpetrated, ,because it could
Ktdar Nath Motani only be effected at the end of the term of the lease and the locus
v.
poenitentiae which the lessee possessed was duly used long before
P.ahlad Rai
the expiry of the lease. The appellants were not, . therefore, disenti,lled to recover the lands from the respondents who were
found to be only benamidars ;
(2) that the correct position in law is that what one has to
see is whether the illegality goes so much to the root of the
matter that the plaintiff cannot bring his action without relying
upon the illegal transaction into which he had entered. If the
illegality be trivial or venial and the plaintiff is not required to
rest his case upon that illegality, then, public policy demands
that the defendant should not be allowed to take advantage of
the position. A strict view, of course, must be taken of the
plaintiff's conduct, and he should not be allowed to circumvent
the illegality by resorting to some subterfuge or by mis-stating
the facts
If, however. the matter is clear and the illegality is
not required to be ple•<led or proved as part of the cause of action
and the plaintiff recanted before the illegal purpose was achieved,
then, unless it be of such a gross nature as to outrage the
conscience of the Court, the plea of the defendant should riot
prevail.
In the present case the illegality was of a trivial character,
inasmuch as the signatures of P and others were made on. the
faith of the appellants' close friendship and relationship and
under the assumption that-no objection from them would proceed
to the making of the application on their behalf and to the
signing of the forms in their names. The appellants were not
required to prove this fact as part of their cause of action and
indeed, if the respondents were to be believed, they asserted that
the signatures were not forged but were their own,
Accordingly,
the appellants were entitled to sue and get a decree in their
favour.
CIVIL APPELLATE JURISDICTION: ·Civil Appeal No.
151of1955.
Appeal from the judgment and decree dated
March 6, 1952, of the Patna High Court, in Appeal
from Original decree No. 273 of 1946, arising out of
the judgment and decree dated March 29, 1946, of the
Additional Sub-Judge, l\fotihari, in Title Suit No. 42/12
of 1944/45.
N. C. Chatterjee and R. C. Pra.sad, for the appellants.
A. V. Viswanatha Sastri and B. P. Jfaheshwari, for
the respondents.
S.C.R.
SUPREME COURT REPORTS
863
1959. September 25. The Judgment of the Court
was delivered by
z959
Kedar Nath Motani
HIDAYATULLAH J.-This appeal with a certificate
v.
granted by the High Court of Patna has been filed
Prah/ad Rai
against its judgment and decree dated March 6, 1952.
By that judgment, the High Court reversed the decree Hidayatullah J.
of the Subordinate Judge of Motihari dated March 29,
1946.
The suit was filed by the present appellants for a
declaration of theirtitle to 136 odd bighas of Ryotika8ht lands ai1d ·for possession thereof" either exclusively or jointly with the defendants. A claim for
mesne profits and interest was also made. The suit
was decreed by the Subordinate Judge, Motihari, on
the 'ground that the defendants were in possession of
the suit lands as benamidars. The trial Judge found
that the consideration for the acquisition of these lands
had proceeded from the predecessor ofthe plaintiffs, who
had acquired them in the f arzi names of Prahlad Rai,
Gulraj Rai and Nawrang Rai. He also held that the
benamidars were related to Radhumal by marriage, and
that Radlmmal found it convenient to use their names.
These findings were accepted by the present respondents in the High Court. They, however, raised before
the High Court certain contentions found against them
by the trial Judge. In the plaint, the appellants had
given their reasons for acquiring the property benami
in the names of Prahlad Rai, Gulraj Rai and Na wrang
Rai. They had stated that, according to the terms
of the lease, ryoti lands taken in the names of the
lessee or his relatives and servants were liable to be
resumed by the Bettiah Raj after the termination of
the lease, and that the benami transaction was entered
into to avoid this contingency. The answering respondents, therefore, contended in the Court of First
instance that the predecessor of the appellants had
caused these lands to be settled by the Bettiah Raj
benami in their names to effectuate a fraud upon the
Bettiah Raj, and the fraud having succeeded, the
plaintiffs-appellants were not entitled to a judgment.
They also contended that after the termination of the
lease of the appellants with the Bettiah Ra.j these
864
SUPREME COURT REPORTS [1960(1))
•959
lands.were settled or deemed to be settled with them.
K•tlar Nath Motani Both these grounds were accepted by the High Court.
v.
In this Court, the respondents have taken the same
Prahlad Rai
stand, a:nd have also contended that the acquisition of
these lands having been achieved by means of forging
Hidayatullah J. the signatures of Prahlad Rai, Gulraj Rai and Nawrang Rai, the present appellants are not entitled to a
judgment on the application of the maxim, ex turpi
causa non oritur actio. They, however, contend that if
it be the view, of the Court that both the parties had
conspired to deceive the Bettiah Raj or were guilty of
illegality, even then, potior est conditio defendantis.
By the decisions of the two Courts below and the
concession of the respondents, all questions of fact
must be taken to be finally decided. The question as
to whether the acquisition was benami or not cannot
any longer be-reopened, and the case has therefore to be
considered only with regard to the principles contained
in the maxims above referred to and the fact whether
there was any fraud intended on the Bettiah Raj and,
if so, whether it was effected and who was responsible
for it.
Though the decision of the case may appear to lie
within a very ·narrow compass, it is necessary to
recount rather voluminous facts bearing upon the
history of these acquisitions. On April 1, 1922, the
manager of the Court of Wards, Bettiah Raj, granted
a lease of village Bijbe.nia for 10 years (Asin 1327 to
Bhado 1336, vide Ex. 7, to Radhumal, who was the
karta of the joint family now represented by the plaintiffs and Mahadeo, respondent 6. On June 26, 1931,
the lease was renewed for a further period of 10 years
(1337 to 1346). Two of the conditions of this lease
will have to be referred to in the sequel, and may conveniently be quoted here for easy reference :
"4. Not to make any settlement of land with a
raiyat or other tenant without the consent of the
manager, and in any application for such consent
to any settlement of land recorded as zirat or
bakasht in the record of rights to state the reason
of tb.e lessee for wishing to make such settlement,
and the area or zirat or bakasht land which would
S.C.R.
SUPREME COURT REPORTS
865
remain in the demised property after such settle·
.r959
ment if it were made, and wheri it is proposed to .,. d
N ,,, M t
.
.
.
near a
oant
make any settlement with a relative or servant of
v.
the lessee to state that fact; and it is hereby
Prahlad Rai
declared that the manager shall be entitled as a
condition of giving consent to any such settlement Hidayatullah J.
to require that an amount to be assessed by him
shall be charged as.a salami on any such settlement.
16. Not to retain possession after the expiry of
lease of any raiyati holdings or other interest in the
leased property, acquired during the term of the
lease whether by private purchase, purchase at
auction sale, mortgage, sub-lease, surrender or otherwise, and any such holding or interest thus acquired
will pass to the lessor, provided that the lessee wiJI
be entitled to receive from the lessor a sum equivalent to any loss he may have "suffered by purchasing
holdings at auction sales for a.rrears of rent, the loss
to be calculated by setting against the purchase price
the profits made by the lessee from the land since
the <late of purchase subject to any general instructions which may be isimed by the Board of Revenue,
the Manager will determine the amount to be received
by the lessee under this clause, and his decisions will
be final."
Between the years 1920 to 1925 Radhumal acqmred
1'36 odd bighas of lands, now the subject of dispute, in
various ways. 94 odd bighas were purchased at Court
sale, 7 odd bighas by private sales and 6 odd bighas
were acquired by abandonment of tenancies by the
previous tenants. These 136 odd bighas also included 27 odd bighas of lands, which are described
as Ghair Mazrua, Patti Kad,im and Kabil Lagan.
These lands were settled with Prahlad Rai, Gulraj Rai
and Nawrang Rai by the Bettiah Raj. The answering
respondents are Prahlad Rai and the legal representatives of the other two. In settling these lands with
these persons, Radhumal himself as lessee recommended them to the Bettiah Raj, and it is now proved and
admitted in the case that he had also caused the
signatures of these persons to be made upon the documents filed in the Bettiah Raj by others than the
866
SUPREME COURT REPORTS [1960(1)]
'959
apparent signatories. As has been pointed out already,
Kedar Nath Motoni this device was resorted to, to avoid the operation of
v.
cl. 16 of the lease quoted above. It was also used to
Prahlad llai
reduce the salami payable to the Bettiah Raj under
cl. 4 whfoh in the case of a stranger was lower than in
Hidayatullal•J· the case of the lessee, his relatives and servants. The
respondents had denied al\ these pleas, and had stated
that the lands were settled with them .by the Bettiah Raj,
and that they were not ~he benam1dars of Radhumal.
They now rely upon the facts pleaded by the appellants in regard to the device resorted to, to save the
lands from the operation of els. 16 and 4 -and further
plead the illegal conduct of Radhumal in causing the
signatures of Prahlad Rai, Gulraj Rai and Nawrang
Rai to be forged on the documents filed with the
Bettiah Raj.
Uadhumal died on February 28, 1934. After his
death, Bala Prasad, appellant No. 3, was adopted, and
the adoption was also recognised by the Bettiah Raj.
The lease was also transferred to the name of Bala.
Prasad. In 1935, it is alleged the widow denied, at
the instigation of l\fahadeo, respondent 6, this adoption, and Mahadeo, in his tum, started to disclaim all
interest in the property. The other respondents also
began asserting their title against the heirs and
representatives of Radhumal. It was also alleged that
Mahadeo had removed all the /cabalas and some of the
receipts and had given them to Prahlad Rai, which
were used by the answering respondents in all subsequent proceedings. In 1936, proceedings under s. 144
of the Code of Criminal Procedure were commenced,
which terminated in favour of Prahlad Rai's party by
an order of the Sub-Divisional Officer on June 4, 1936.
The order of the Sub-Divisional Officer was, however,
reversed by the District Magistrate, Champa.ran, a~d
on revision to the High Court, the finding of the District Magistrate was reversed in its turn, though the
rule itself was dicharged. The High Court recommended
the commencement of proceedings under s. 145 of the
Code of Criminal Procedure, if there was any apprehension of breach of peace. These proceedings were commenced and finally terminated on May 18, 1942, by an
S.C.R.
SUPREME COURT REPORTS
867
order against the appellants, who were therefore
x959
compelled to bring this suit inasmuch as, according to Kedar Nath Motani
them, the decision in the criminal courts cast a cloud
v.
upon their title.
Pruiilad llai
The m'.jn issue around which the controversy in the
present case has revolved in the trial Court is the Hidayatullah J.
fifth, framed by the Subordinate Judge. It reads as
follows:
" Are the defendants farzirlars of the plaintiff..-, in
respect of the suit lands ?"
As we have already stated above, this issue has now
been finally decided in favour of the appellants. The
High Cqurt hl'A.s held that they are not entitled to a
judgment in spite of this finding, on the ground that
they had perpetrated a fraud upon the Bettiah Raj,
and this fraud disentitles them to a judgment. The
High Court has also stated that after the termination
of the lease, the answering respondents must be deemed
to be ryoti tenants of the Bet.tiah Raj, because rent
was accepted from them and not from the lessee. One
of the learned Judges of the High Court decided the
ca.se mainly on this ground, but the learned Chief
Justice gave reasons on both the points. The learned
Chief Justice also adverted to the fact that there were
certain illegalities committed by Radhumal, which
made the condition of the respondents stronger.
We begin with the point about the creation of a new
tenancy by the Bettiah Raj after the expiry of the
lease granted to Radhumal. We may point out that
this aspect of the case was not pleaded by the answering respondents, and it is difficult to accept this case,
which requires fresh evidence and material for a finding. The case of the respondents was that they had
taken settlement of these lands from the Bettiah Raj in
the very beginning. There was no occasion, therefore,
for a fresh settlement with them, and the plea that
after the expiry of the lease there was, in fact, or
there must be deemed in law, a fresh settlement with
them, is not open to them. There is evidence in the
case to show that B. H. forms were not issued once
again after the expiry of the lease given to Radhumal.
R. N. Prasad (P. W. 3) stated that a certified copy of
868
SUPREME COURT REPORTS [1960(1)]
'959
the B. H. form under which land was settled with a.
K d
N t • M 1 .ryoti tenant was issued to the settlee for his informa-
• •• •• oan• ·
d
f
hBH £
v.
t10n, an no such res
. . orms have been produced
P•ahlad Rai
by the rnspondents. In view of these two facts, we
must say, with respect, that the High Court was in
Hidayatullah J. error in constructing a new case for the respondents.
It is not open to a Court in appeal to consider media
cancludendi not pleaded by a. party a.nd to give judgment on their basis.
This leaves over for consideration the two maxims
and the question of fraud perpetrated upon the Bettiah
Raj. The maxim, in pari delicto etc., can hardly be
made applicable in this context. Neither the appellants nor the respondents at any time pleaded that
Prahlad Rai, Gulraj Rai and Nawrang Rai conspired
to effect a fraud upon the Bettiah Raj. In this respect,
the cases of the appellants and the respondents are
poles apart. While the appellants claim that Radhumal
did not even consider it necessary to obtain the consent
of these three persons and even did not obtain their
signatures, the respo.ndents claim that Radhumal had
nothing whatever to do with the acquisition of these
lands and had merely recommended them to the Bettiah
Raj in his capacity as the lessee. Where both parties
do not show that there was any conspiracy to defraud
a third person or to commit any other illegal act, the
maxim, in pari delicto etc., can hardly be made applicable. The appellants and the answering respondents
were not in pari delicto.
The respondents claimed to
be innocent parties, who had acquired the lands themselves, and the appellants, on the other hand, stated
that the respondents knew nothing about the matter
and were not even consulted. In our opinion, the
application of the maxim was erroneous.
This leaves over for consideration firstly whether a
fraud was effected upon the Bettiah Raj, and whether
it was successful. The appellants contend that the
Bettiah Raj was in full possession of the information
that this was a benami transaction and salami was
obtained to the tune of Rs. 1,680 and was waived only
in respect of lands considered not worthy of demanding a salami, It is stated by the appellants in the
S.C.R.
SUPREME COURT REPORTS
869
evidence that the Bettiah Raj was informed about the
z959
benami nature of the transaction and Rai Bahadur Kedar Nath Motani
l\fotilal Basu, the Assistant Manager of the Bettiah
v.
Raj, which was under the Court of Wards, was informPraklad Rai
ed a.bout this. R. H. Prasad (P.W. 3) stated that Rai
Bahadur Moti Lal Basu was Assistant Manager of the Hidayatullah J.
Estate, and that he was an experienced officer. Narain
Lall, (P.W.17), deposed that in his presence Radhumal
had told Moti Lal Basu that he was taking the settlements in the farzi names of his relations. It is also
clear that in 1936 when the dispute went to the District
Magistrate, Champaran, all these facts were set out in
the rival cases of the parties-both under ss. 144 and
145 of the Code of Criminal Procedure. The District
Magistrate was an officer of the Court of Wards, and
lie knew by 1936 that the tenancies were taken benami
by Radhumal. After the expiry of the lease, the Court
of Wards did not enforce cl. 16 in spite of this knowledge, and it therefore appears that the fraud was not
effected, because the person or authority said to be
defrauded knew all the facts, and elected not to take
any action. There is nothing in the record beyond the
statement of the appellants in the plaint to show that
the salami was unduly low. On the other hand, the
answering respondents claimed to have paid proper
salami from their own funds. It has been held, however, that Radhumal paid the salami, a fact not now
questioned. The rival admissions cancel each other
and leave the matter at large. The matter was never
put in issue except as to who paid the salami and the
sufficiency or otherwise of the salami was never tried.
In view of the fact that fraud cannot be said to have
been effected, we do not think that the appellants who
have clearly established the benami nature of the
transactions can be deprived of their judgment. The
authorities do not go to that length, because public
policy demands that where fraud might have been
contemplated but was not perpetrated, the defendants
should not be allowed to perpetrate a new fraud.
Coming now to the question whether the appellants'
suit was rightly dismissed by the High Court on the
application of the maxim, ex turpi causa etc., we have
no
870
SUPREME COURT REPORTS [1960(1)]
'959
first. to see what are the specific facts on which this
K ,_ N 'h M 1
. contention is based. The case of the appellants was
•-• ••
0 ""'th
th
k
b
· '
h
f
v.
at
e property was ta en enam1 m t e names o
p,.111.d Rai
Prahlad Rai and others to avoid the implication of
cl. 16. In making the application to the Bettiah Raj
Hidaymullah J. the signatures of Prahlad Rai and others were made
by Radhumal or some one under his instructions,
because the relationship between Radhumal, Prahlad
Rai and others was so intimate that it was considered
unnecessary to trouble them. Inasmuch, as the matter
was brought to the notice of the Assistant Manager of
the Court of Wards, all these facts were capable of
being investigated, including the making of the
signatures by Radhumal. No doubt, the making of
the signatures of another person without his consent,
express or implied, is an offence under the ordinary
law, but the intention was not so much to forge the
signatures but to present the application in the names
of those persons. However it be, we proceed on the
assumption that there was some illegality committed
by Radhumal in approaching the Bettiah Raj and
also in the execution of the B. H. forms, which were
also signed with the names of these persons. The
question is whether this illegality is sufficient to nonsuit the plaintiffs on the application of the maxim.
The Iaw was stated as far back as 1775 by Lord
Mansfield in Holman v. Johnson(') in the following
words:
" The principle of public policy is this ; ex dolo
malo non aritur actio.
No Court will lend its aid to
a man who founds his cause of action upon an
immoral or an illegal act. If, from the plaintiff's
own stating or otherwise, the cause of action appears
to arise ex turpi causa, or the transgression of a
positive law of this country, there the Court says
...
he has no right to be assisted. It is upon that ground
the Court goes; not for the sake of the defendant,
but because they will not lend their aid to such a
plaintiff. So if the plaintiff and defendant were to
change sides, and the defendant was to bring his
action against the plaintiff, the latter would then
\1) (1775) I Cowp. 341, 313; 98 E.R. 1120, IUI.
-
s.c.R.
SUPREM~ COURT REPORTS
871
have the advantage of it; for where both are equally
I959
in fault, potior est conditio de1endentis."
K d
N "M
.
:I '
e ar
at
olans
There are, however, some exceptions or "supposed
v.
exceptions " to the rule of turpi causa. In Salmond
Prahlad Rai
and William on Contracts, four such exceptions have
been mentioned, and the fourth of these exceptions is Hidayatullall J.
based on the right of restitutio in integrum, where the
relationship of trustee and beneficiary is involved.
Salmond stated the law in these words at p. 352 of his
Book (2nd Edn.):
"So if A employs B to commit a robbery, A
cannot sue B for the proceeds. And the position
would be the ~ame if A were to vest property in B
upon trust to carry out some fraudulent scheme: A
could not sue B for an account of the profits. But
if B, w4o is A's agent or trustee, receives on A's
account money paid by C pursuant to an illegal
contract oetween A and C the position is otherwise
and A can recover the property from B, although
he could not have claimed it from C.
In such cases
public policy requires that the rule of turpis causa
shall be excluded by the more important and
imperative rule that agents and trustees must faithfully perform the duties of their office."
Williston in his Book on Contracts (revised edition),
Vol. VI, has discussed this matter at p. 5069, para.
1785 and in paras. 1771 to 177 4, he has noted certain
exceptional cases, and has observed as follows:
" If recovery is to be allowed by either partner or
principal in any case, it must be where the illegality
is of so light or venial a character that it is deemed
more opposed to public policy to allow the defendant
to violate his fiduciary relation with the plaintiff
than to allow the plaintiff to gain the benefit of an
illegal. transaction."
Even in India, certain exceptions to the rule of turpi
wusa have been accepted. Examples of those oases
are found in Palaniyappa Chettiar v. Chockalingam
Chettiar(i) and Bhola Na,th v. Mul Ghand(2).
(1) (1920) I.L.R. H Mad. 334·
{2) (1903) I.L.R. 25 All. 639.
872
SUPREME COURT REPORTS [1960(1)]
z959
The respondents rely upon Farmers' Mart Limited v.
-
.llfilne (1), Alexander v. Rayson (2) and Berg v. Sadler
Kedar N~hMolan• & Moore (3) to show that this case falls within the
Prahlad Rai
rule accepted and applied in those cases. The application of the rule is, however, conditioned by one
Hidayatullah]. thing, namely, that a plaintiff who is not allowed to
succeed must 15e unable to sustain an- action except
upon the plea of the illegality committed by him. In
Lord Dunedin's speech in Farmers' Mart Limited v.
Milne (1 ), reference has been made to three cases,
Simpson v. Bloss('), Fivaz v. Nicholls(') and Tayl<YI' v.
Ch,e,ster (6). In the first case, it was laid down that
the test was whether a demand connected with an
illegal transaction was capable of being enforced in
law, and whether the plaintiff required any aid from
the illegal transaction to establis_h his case.
Tindal,
C. J., in the second case observed as follows :
"I think that this case may be deterinined on the
short ground that the plaintiff is unable to establish
his claim as stated upon the record, without relying
upon the illegal agreement originally entered into
between himself and the defendant."
In the last case, Mellor, J., observed that the true test
was by considering " whether the plaintiff could make
out his case otherwise than through the medium and
by the aid of the illegal transaction to which he was
himself a party". In Alexander v. Rayson (2), it was
held by the Court of Appeal that there was a locus
poenitentiae but that the repentance must be before the
fraud or illegality had been carried out.
Recently, the Court of Appeal in Bowmalcers Ltd. v.
Barnet lnstrumenUI, Ld. (') reviewed the law on the
subject, and laid down that every illegality did not
entitle the Court to refuse a judgment to a plaintiff.
Du Parcq, L. J., observed as follows:
•
" In our opinion, a man's right to possess his own
chattels will as a general rule be enforced against
(I) [1915] A.C. 106.
(2) [1036] I K.B. 169.
(3) [1937] 2 K.B. 158.
(4) (1816) 7 Taunt. 246; 129 E.R. 99.
(5) (1846) 2 C.B. 501; 135 E.R. 1042.
(6) (1869) L.R. 4 Q.B. 309.
(7) (1945] I K.B. 65.
S.C.R.
SUPREME COURT REPORTS
873
one who, without any claim of right, is detaining
I959
them, or has converted them to his own use, even K d
N-h M
.
h
h .
. h
f
th
l d'
e ar
al
otatu
t oug
it may appear e1t er rom
e p ea mgs, or
v.
in the course of the trial, that the chattels in question
P•ahlad Rai
came into the defendant's possession by reason of an
illegal contract between himself and the plaintiff, Hidayatullah J.
provided that the plaintiff does not seek, and is not
forced, either to found his claim on the illegal
contract or to plead its illegality in order to support
his claim."
We are aware that Prof. Hamson has criticised this
case in (1949) 10 Cambridge Law Journal, 249, and has
forborne its application, except in the clearest possible
circumstances. The law has been also considered by
Pritchard, J., in Bigos v. Bousted(1), where all the
authorities are referred to.
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 tha.t the plaintiff
cannot bring his action without relying upon the illegal
transaction into which he had entered. If the illegality
be trivial or venial, as stated by Williston and the
plaintiff is not required to rest his case upon that
illegality, then public policy demands that the defendant should not be allowed to take advantage of the
position. A strict view, of course, must be taken of
the plaintiff's conduct, and he should not be allowed
to circumvent the illegality by resorting to some
subterfuge or by mis-stating the facts. If, however,
the matter is clear and the illegality is not required to
be pleaded or proved as part of the cause of action and
the plaintiff recanted before the illegal purpose was
achieved, then, unless it be of such a gross nature as
to outrage the conscience of the Court, the plea of the
defendant should not prevail.
We must remember that benami transactions a.re
common in India, and have always been recognised.
They are entered into for a variety of reasons, and
the benamidar holds the property in trust for his
principal. In the present case, the object of the
benami transaction was merely to keep the property
(r) [1951] I All. E.R. 92.
874
SUPREME COURT REPORTS [1960(1)]
r959
from being resumed by the Bettiah Raj on the expiry
K d
" 1 • ., 1
. of the lease in favour of Radhumal, which undoubte ar"-•an~v.ioans
.
.
v.
edly the Bett1ah RaJ could have done, if it had
Prahlad Rai
been so minded. The information about the benami
transaction was, however, not withheld from the
flidayatullah J. Bettiah Raj, and even with that knowledge, the
Bettiah Raj took no action against Radhumal or the
benamidars. The plaintiffs recanted inasmuch as
they asserted their true title and true facts before the
occasion for the Raj to act arose. Thus, the fraud,
though intended, was not perpetrated, because the
fraud could only be effected at the end of the lease
term, and the locus poenitentiae which the lesseee
possessed was duly used long before the expiry of the
lease. The illegality was also of a trivial character,
inasmuch as the signatures of Prahlad Rai and others
were mad11 on the relative documents on the faith of
their close friendship and relationship and under the
assumption that no objection from them would
proceed to the making of the application on their
behalf and to the signing of the B. H. forms in their
names. The appellants were not required to prove
this fact as part of their cause of action, and indeed,
if the answering respondents are to be believed, they
asserted as vehemently that the signatures were not
forged but were their very own.
In establishing the benami nature of a transaction,
the cardinal point to be proved is the source of money
and this was done, and it was also established that
Prahlad Rai and others were merely f arzidars. To
prove these things, it did not require the proof of the
signatures, and we do not think that the plaintiffs
could not make out a case of the benami nature of the
transaction, without having to rely upon the additional fact that the signatures of Prahlad Rai and
others were made upon the application and the forms
without their knowledge.
We think that in the present case there is no room
for the application of the maxim, ex turpi c,a.usa non
oritur actio in all its rigour, and the exceptional case,
to which we have referred, applied. We are accordingly of the view that the appellants having proved
S.C.R.
SUPREME COURT REPORTR
875
their case of benami acquisitJon of these propertiesI959
a case which is not now questioned-the fact that the K
-
signatures of Prahlad Rai and others on some relative edar Nath Motani
documents were not their own, cannot disentitle the
Prahl:~ Rai
plaintiffs-appellants to a decree. The exceptions to
the rule contained in the maxim were not considered Hidayatullah J.
by the High Court, which proceeded entirely upon
the supposition that every illegality or fraud disentitled a plaintiff to a judgment. That, however, is not
the law. We accordingly hold that the appellants
were entitled to a decree in their favour, and with
respect, it was wrongly disallowed by the High
Court.
\Ve set aside the judgment and decree of the High
Court of Patna, and restore those of the Subordinate
Judge, Motihari. In the circumstances of this case,
we think that we should make no order about costs
of this appeal.
Appeal allowed.
SITARAM RAMCHARAN ETC.
v.
M. N. NAGARSHANA & OTHERS
(B. P. SINHA, P. B. GAJENDRAGADKAR and
K. N. WANCHOO, JJ.)
Payment of l-V ages-Application claiming overtime wages-Bar
of limitatron-Condonation of delay-Applicant, if must show
sufficient cause for delay till presentation-Payment of Wages Act,
r936, (4 of r936), s. r5(2), second proviso.
The appellants, who were employees in the Watch and Ward
Department of various textile Mills of Ahmedabad, applied for
overtime wages under s. r5(2) of the Payment of Wages, r936.
The applications were presented to the authority under that Act
between July 22, r953, to October 6, 1953, claiming overtime
wages for the period between January r95r, to December, r95r,
beyond the period of six months prescribed by the first proviso
to that sub-section. Their case as made in the applications for
condonation of delay under the second proviso, in substance, was
that they were unaware of their rights under s. 70 of the Bombay
Shops and Establishments Act, r948, until that section was for
September 25