Gherulal Parakh v. Mahadeodas Maiya

Two managers of joint families formed a partnership to deal in wheat futures for differences only. The deals made a loss, and one partner paid it all and sued the other for half. The Supreme Court held that a wager (a bet on an uncertain event) is void but not forbidden by law, so a partnership to carry on wagers is not unlawful under section 23 of the Indian Contract Act.

Quick Revision

Read the full judgment: Supreme Court of India (sci.gov.in)

Parties

Gherulal Parakh — appellant (the party who appealed); manager of one of the two joint families, and defendant in the suit.

Mahadeodas Maiya — respondent No. 1; manager of the other joint family, and plaintiff in the suit. He sued with his sons.

Respondents Nos. 1 to 5 — the plaintiffs in the suit. The judgment names the first respondent and his sons.

Mulchand Gulzarimull and Baldeosahay Surajmull — two firms of Hapur. They were the third parties with whom the wagering contracts were made. They were not parties to the suit.

Procedural History

1. The first respondent and his sons first filed O.S. No. 18 of 1937 in the Court of the Subordinate Judge, Darjeeling. They sued for half of the loss on the Mulchand transactions.
2. That suit was referred to arbitration. On the award, the Subordinate Judge made a decree of Rs. 3,375 in favour of the first respondent and his sons.
3. The first respondent then filed the present suit in the same Court, Money Suit No. 5 of 1940, for Rs. 5,300 with interest.
4. The plaint was later amended to ask for the same relief on the basis that the firm had been dissolved.
5. The defence pleaded three points. The agreement to enter wagering contracts was unlawful under section 23 of the Contract Act. The unregistered partnership was barred under section 69(1) of the Partnership Act. The suit was barred under section 2, rule 2 of the Code of Civil Procedure.
6. Subordinate Judge, Darjeeling (judgment and decree of 4 December 1945): the agreement was to enter wagering contracts depending on the rise and fall of the market. He held it void, as the object was forbidden by law and opposed to public policy.
7. The Subordinate Judge also held that the claim on the Mulchand transactions, so far as not in the earlier suit, was not barred under section 2, rule 2. The cause of action for that part had not arisen when the earlier suit was filed.
8. He held that the partnership was between the two joint families, that law does not allow such a partnership, and that section 69 of the Partnership Act therefore did not apply. He dismissed the suit with costs.
9. Calcutta High Court (judgment and decree of 1 April 1953, Appeal from Original Decree No. 89 of 1946): the partnership was only between the two managers, and it was valid.
10. The High Court found a single venture with each of the two Hapur merchants for a single season. It held that the partnership dissolved after the season, so sub-sections (1) and (2) of section 69 did not bar the suit.
11. It found that the partners meant to deal in differences. Those transactions were wagers and void under section 30, but the object was not unlawful under section 23.
12. On the claim, the High Court found no satisfactory proof of payment on the Mulchand contracts. It found that the first respondent paid Rs. 7,615 on the contracts with Baldeosahay.
13. It decreed Rs. 3,807-8-0 to the first respondent, with another small item, and disallowed interest. The suit was in substance one for accounts of a dissolved firm.
14. It dismissed the suit as regards the plaintiffs other than the first respondent and the defendants other than the appellant.
15. The appellant appealed to the Supreme Court (Civil Appeal No. 215 of 1955). Judgment was delivered on 26 March 1959.

Facts

1. Gherulal Parakh and Mahadeodas Maiya were managers of two joint families.
2. They entered into a partnership to carry on wagering contracts with two Hapur firms, Mulchand Gulzarimull and Baldeosahay Surajmull.
3. They agreed that the contracts would be made in the respondent's name on behalf of the firm. They agreed to bear profit and loss in equal shares.
4. The first respondent entered into 32 contracts with Mulchand and 49 contracts with Baldeosahay.
5. The net result of all these transactions was a loss. The first respondent paid the Hapur merchants the entire amount due to them.
6. The appellant denied his liability to bear his share. The first respondent and his sons then filed O.S. No. 18 of 1937 for half of the loss on the Mulchand transactions. They reserved the right to claim any further amount found due after final settlement of accounts.
7. That suit went to arbitration, and a decree for Rs. 3,375 followed on the award.
8. After final accounts were settled with the two merchants and the amounts paid, the first respondent filed the present suit for Rs. 5,300 with interest.
9. The plaint as first presented did not expressly say the business was dissolved. It said the parties jointly entered contracts with two merchants between 23 March 1937 and 17 June 1937.
10. The plaint added that the plaintiffs got complete accounts of profit and loss from the merchants after 17 June 1937. They then gave notice to the defendants to pay Rs. 4,146-4-3, half of the total payments, and the defendants denied liability.
11. The defendant filed his written statement on 12 June 1940 and did not plead section 69 of the Partnership Act. He filed an additional written statement on 9 November 1941 and pleaded it.
12. The plaintiffs then sought to amend the plaint with a new pleading. It said that section 69 was no bar because the joint business was dissolved, and that the Court need only go into the accounts.
13. On 14 August 1942 the defendant filed a further additional written statement. It denied the allegations of the earlier pleading and said no date of dissolution was stated. The judgment dates the amendment itself to 17 November 1941.
14. Both lower Courts concurrently found that the partnership was only for forward contracts with two named persons for a particular season.
15. Both Courts also concurrently found that the agreement was made to carry on wagering transactions. There was no intention to ask for or take delivery of goods, only to deal with differences.

Issues Raised

1. Was the finding that the partnership stood dissolved after the season supported by the pleadings and the evidence?
2. Was there any wagering transaction at all, given that no Court found a common intention between the first respondent and the Hapur merchants not to take delivery?
3. Is an agreement of partnership to carry on wagering contracts unlawful within the meaning of section 23 of the Indian Contract Act?
4. Is the object forbidden by law, because a wager is void under section 30 of the Contract Act?
5. Is the object opposed to public policy?
6. Is the object immoral?
7. Can the appellant raise, for the first time in the Supreme Court, the plea that a wager is extra commercium (outside commerce) so there can be no partnership for wager under section 4 of the Partnership Act?
8. In the accounts, can the loss paid by one partner on wagering transactions be counted in the accounts?

Arguments Contended

For the appellant (L. K. Jha and D. N. Mukherjee):

• The finding that the partnership was dissolved after the season was not supported by the pleadings or the evidence.
• A wagering contract is void under section 30. It is therefore also forbidden by law within the meaning of section 23 of the Contract Act.
• The concept of public policy is very comprehensive. In India, after independence, its content should be measured by the political, social and economic policies of a welfare State. It should also reflect the traditions of this ancient country, reflected in Srutis, Smritis and Nibandas.
• Wagers are illegal under Hindu law. The appellant relied on observations of the Supreme Court in The State of Bombay v. R. M. D. Chamarbaugwala.
• Wagers are immoral. The appellant drew an analogy from the Hindu law doctrine of pious obligation of sons to discharge their father's debts.
• Hill v. William Hill accepted the dissenting view of Fletcher Moulton, L.J., in Hyams v. Stuart King, or the view of Darling, J., in Thomas v. Day and O'Connor and Ould v. Ralston.
• Even if the partnership was not illegal, the loss paid by one partner on wagering transactions could not be taken into account in the accounting. The appellant relied on Chitty's Contract, p. 495.
• A wager is extra commercium, so there cannot be a partnership for wager within section 4 of the Partnership Act. The appellant relied on Chamarbaugwala.

For the respondents (C. B. Aggarwala, K. B. Bagchi and Sukumar Ghosh):

• Neither the Subordinate Judge nor the High Court found that the first respondent entered into any wagering transactions with either Hapur merchant. No question of illegality therefore arises.
• To make a wagering contract there must be proof of a common intention not to take delivery but only to pay differences. The respondents said there was no such proof as between the first respondent and the merchants.
• The judgment does not otherwise set out the respondents' arguments on sections 23 and 30. It records only that the plea on section 4 of the Partnership Act would have called for an amendment of the plaint, had it been raised early.

Court's Reasoning

Opinion of Subba Rao, J. (for the Court)

1. Noted: The appeal is against a judgment of the Calcutta High Court. It raises the question of the legality of a partnership to carry on business in wagering contracts.
2. Noted: The facts lie in a small compass. The judgment omits those not germane to the controversy.
3. Noted: The Court sets out the course of the earlier suit, the present suit and the pleadings as in the facts above.
4. Noted: The Subordinate Judge held the agreement void as forbidden by law and opposed to public policy. The High Court held the partnership valid and the object not unlawful under section 23.
5. Noted: The Court first disposes of the questions of fact. Counsel for the appellant said the finding of dissolution after the season had no support in the pleadings or evidence.
6. Held: Although the express allegation of dissolution came only by amendment, the plaint as first presented contained all the facts sustaining the plea.
7. Why: The defendants denied any partnership for forward contracts with the two merchants. They therefore did not specifically deny those facts.
8. Noted: Both Courts concurrently found those facts. The only difference of view was whether the partnership was between the two families or between the two managers.
9. Held: The findings mean the partnership covered only forward contracts with two named persons for a particular season.
10. Noted: The documents did not clearly give any period limiting the partnership.
11. Held: From the defendants' attitude in the earlier suit and in the present pleadings, the nature of the transactions and the parties' conduct, no other conclusion was possible than that of the High Court.
12. Held: Section 42 of the Partnership Act applies directly. Absent a contract to the contrary, a firm formed to carry out one or more adventures or undertakings is dissolved by completing them.
13. Held: The partnership was formed for contracts with specified persons in one season. It dissolved when those contracts closed.
14. Noted: Counsel for the respondents argued that neither Court found that the first respondent entered into wagering transactions with the merchants.
15. Noted: The law is well settled. A wagering contract needs proof that the contract was made on terms that performance would not be demanded and only price differences would be paid.
16. Noted: There must be a common intention that delivery will not be demanded and only the difference taken on the happening of an event.
17. Held: This argument is not germane to the question in the case. The suit was on a dissolved partnership for accounts.
18. Held: The defendants said the partnership's object was to carry on wagering transactions, with no intention to give or take delivery. The Courts found this on direct and circumstantial evidence.
19. Held: That is a concurrent finding of fact, and the Court accepts it by its usual practice. The appellant and first respondent formed a partnership to carry on wagering transactions. The claim relates only to the loss on those transactions.
20. Noted: Now comes the main point. The question, with its different facets, is whether the partnership agreement is unlawful within section 23 of the Indian Contract Act.
21. Noted: Section 23 says that the consideration or object of an agreement is lawful unless it is forbidden by law, or the Court regards it as immoral or opposed to public policy.
22. Noted: In each of these cases the consideration or object is said to be unlawful. Every agreement with an unlawful object or consideration is void.
23. Noted: The appellant's argument has three sub-heads: forbidden by law, opposed to public policy, and immoral. The Court considers each in turn.

Point (i): forbidden by law

1. Noted: Under section 30, agreements by way of wager are void. No suit lies to recover anything alleged to be won on a wager, or entrusted to a person to abide the result of any game or uncertain event on which a wager is made.
2. Noted: Sir William Anson defines a wager as a promise to give money or money's worth on the determination of an uncertain event. This brings out the concept of wager that section 30 declares void.
3. Noted: A contract to pay differences only, with no intention to give or take delivery, is admittedly a wager under section 30.
4. Noted: The appellant argued that such a contract, being void, is also forbidden by law within section 23.
5. Noted: The question is whether what is void can be equated with what is forbidden by law. The argument has been raised in England and India and rejected uniformly.
6. Noted: The English law is in the Gaming Acts of 1845 and 1892. The Court reproduces section 18 of the 1845 Act and section 1 of the 1892 Act.
7. Noted: Section 18 of the 1845 Act makes contracts by way of gaming or wagering null and void. No suit lies to recover any sum alleged to be won upon any wager, or deposited with a stakeholder to abide the event. A proviso saves subscriptions for prizes for lawful games.
8. Noted: Section 1 of the 1892 Act makes void any promise to repay sums paid under such contracts. It also voids any promise to pay a commission, fee or reward in respect of them. No action lies to recover those sums.
9. Noted: The 1845 Act declared wagers void but only barred recovery of money won or deposited with stakeholders. The 1892 Act went further. It barred recovery of money paid under wagers and of agents' commission for betting on behalf of principals.
10. Noted: Until 1892 the English law was analogous to the law in India. English law on a similar situation is therefore of considerable help.
11. Noted: Anson states that law may forbid an agreement to be made, or may only say courts will not enforce it. The first is illegal and the second only void. Illegal contracts are also void, but void contracts are not necessarily illegal.
12. Noted: Anson applies this to wagers. Wagers being only void, no taint of illegality attached to a transaction by which one man employed another to make bets for him.
13. Noted: Pollock and Mulla define the phrase forbidden by law in section 23. In India it practically means acts punishable under the Penal Code and acts prohibited by special legislation, regulations or orders made under authority from the Legislature.
14. Noted: In Thacker v. Hardy a broker employed to speculate on the stock exchange became personally liable on contracts. He sued for indemnity and commission and the Court allowed recovery despite section 18 of the 1845 Act.
15. Noted: Lindley, J., said that if gaming and wagering were illegal, the illegality would taint what the plaintiff did in furtherance. He added that gaming and wagering contracts cannot be enforced but are not illegal. He cited Fitch v. Jones, Oulds v. Harrison and other cases.
16. Noted: In Read v. Anderson an agent made a bet in his own name for his principal. Hawkins, J., said wagers were not illegal at common law. The 1845 Act only made the law unavailable to enforce them, leaving the parties to pay or not as honour dictated.
17. Noted: Hawkins, J., added that nothing in section 18 affects the legality of wagers. They are simply rendered null and void. The Court of Appeal confirmed the result on the ground that the agency became irrevocable on the bet. That is not a direct decision on the point.
18. Noted: Bridger v. Savage affirmed the principle. An agent had received winnings from persons with whom he betted. Brett, M.R., said the statute applies only to the original contract between the bettors, not to the contract between principal and agent.
19. Noted: Bowen, L.J., said the original betting contract is not illegal but only void. A bettor who pays his bet waives a benefit the statute gave him and confers good title. The Court says this case states the correct principle.
20. Noted: Partridge v. Mallandaine held that professional bookmakers are chargeable to income tax on profits from betting as a vocation. Hawkins, J., said mere betting is not illegal and a man may bet if he likes.
21. Noted: Hyams v. Stuart King dealt with a fresh agreement between wager parties for new consideration. Two bookmakers had betting dealings and the defendant gave a cheque for lost bets.
22. Noted: The plaintiff held the cheque over at the defendant's request, and part was paid. A fresh verbal agreement followed. The plaintiff would hold the cheque over and not declare the defendant a defaulter. The defendant promised to pay the balance in a few days and did not.
23. Noted: The Court of Appeal, Fletcher Moulton, L.J., dissenting, held that the fresh agreement had good consideration and the plaintiff could recover.
24. Noted: Sir Gorell Barnes posed three questions. Did the new contract fall within section 18? Was there any illegality affecting it? Was it a lawful contract on good consideration?
25. Noted: On the second question he said there was nothing illegal in the strict sense in making the bets. They were merely void, and there would have been no illegality in paying them. The statutes impose no penalty. Their only effect is that gaming and wagering contracts cannot be enforced.
26. Held: This view is consistent with the view all along accepted in England. The Court will notice the dissent of Fletcher Moulton, L.J., later.
27. Held: These decisions establish that in England a clear distinction is kept between a void contract and an illegal one. A wagering contract is void and unenforceable between the parties but not illegal. It therefore does not affect the validity of a collateral contract.
28. Noted: The same principle has been applied to collateral partnership contracts. In Thwaites v. Coulthwaite the plaintiff claimed an account of profits of a bookmaking and betting partnership. Chitty, J., rejected the plea that no relief could be had.
29. Noted: Chitty, J., said the Gaming Act, 1845, did not make betting illegal. It merely avoided the wagering contract. A man may habitually bet or carry on a betting business, provided it does not fall within the Betting Act, 1853.
30. Noted: In Thomas v. Day, Darling, J., held that a partnership to carry on a bookmaker's business was not recognised by law. He held that even if it were valid, an action for account between two bookmakers on betting transactions would not lie.
31. Held: The judgment supports the appellant, but the judge did not notice the previous decision and later decisions have not followed it.
32. Noted: In Brookman v. Mather, Avery, J., rejected the same plea and decreed for the plaintiff. Two years after the partnership, in 1910, it was dissolved and the defendant gave a promissory note. The Court notes the decree followed the principle that betting was not illegal per se.
33. Noted: Avery, J., pointed out that Thomas v. Day was decided without reference to Thwaites v. Coulthwaite. The Court says this corrected the deviation made by Darling, J., and put the case law in line with earlier precedents.
34. Noted: Keen v. Price followed the earlier view. An action by one partner in a bookmakers' business against the other for an account was entertained. But the defendant could object to repaying anything representing profits from such business.
35. Noted: The reason for that apparent conflict is in the Gaming Act, 1892. Sargant, J., pointed out that Chitty, J., did not refer to the 1892 Act. The decision is good on the general law but not on the 1892 Act.
36. Held: Keen v. Price confirms that a wager is not illegal. After the 1892 Act, however, a claim for that amount even under a collateral agreement is not maintainable.
37. Noted: In O'Connor and Ould v. Ralston, bookmakers sued on five cheques given in payment of lost bets, which were dishonoured. Darling, J., held the action would not lie because the plaintiffs formed an association for betting. He relied on the dissent of Fletcher Moulton, L.J., in Hyams v. Stuart King.
38. Noted: Jeffrey and Co. v. Bamford did not accept that opinion. McCardie, J., held that a partnership to carry on a betting and bookmakers business is not per se illegal or impossible in law. He said betting or wagering is not illegal at common law. He considered the earlier decisions and observations of Fletcher Moulton, L.J., before holding it was not illegal.
39. Noted: The Court then examines Hill v. William Hill. The appellant argued that it accepted the dissenting view of Fletcher Moulton, L.J., or the view of Darling, J.
40. Noted: In Hill's case the appellant lost pound 3,635-12-6 on bets with a firm of bookmakers. The committee of Tattersalls directed him to pay pound 635-12-6 in fourteen days and the rest at pound 100 a month, failing which he would be reported and posted as defaulter.
41. Noted: He offered a post-dated cheque dated 10 October 1946 and letter promising monthly instalments. The respondents agreed. The cheque was dishonoured and the respondents sued on the later agreement.
42. Noted: The respondents said the sum was money due under a new lawful agreement, not money won upon a wager under the second branch of section 18. They added that even if it was won on a wager, the agreement was outside that branch.
43. Noted: The House of Lords held by 4 to 3 that the agreement contained a new promise to pay money won upon a wager. The second branch of section 18 applied to all suits to recover money alleged to be won on a wager, so the contract was unenforceable.
44. Noted: Viscount Simon, in the majority, agreed with Fletcher Moulton, L.J. The bond was an agreement to pay money won on a wager despite new consideration, so unenforceable under the second limb of section 18.
45. Noted: In Hyams v. Stuart King the majority held the later agreement supported by good consideration. Fletcher Moulton, L.J., dissented. He said too little attention had been paid to the distinction between the two parts of section 18.
46. Noted: He said the first part makes the wager contract absolutely void. The second part is wider. No action may be brought to recover anything alleged to be won on a wager, without limiting the provision to the wagering contract itself.
47. Held: These observations must be understood in the context of that case's peculiar facts. The suit was between the parties to the wager. The question was whether the second part of the section was wide enough to cover a claim under a substituted agreement.
48. Noted: Fletcher Moulton, L.J., considered separately whether the defendants' betting association was a legal partnership. He relied on the Gaming Act, 1892, and said no such partnership is possible under English law.
49. Noted: His reasons were that each partner is the partnership's agent and is entitled to credit for payments made for the firm. The 1892 Act made void all promises to repay sums paid in respect of a wagering contract. These words, he said, nullify the fundamental contract that must be the basis of a partnership.
50. Held: He laid down two propositions. First, the second part of section 18 covers recovery of money won on a wager even under a substituted contract between the same parties. Second, because of the 1892 Act's wide terms, even the fundamental contract of a partnership was a nullity.
51. Held: He did not express any opinion on the effect of a void wager contract on a collateral contract.
52. Held: In Hill's case the only question was whether the second part of section 18 barred a suit under a substituted agreement. The majority accepted the first view of Fletcher Moulton, L.J. The second question did not arise.
53. Held: The House of Lords did not, expressly or by necessary implication, hold that a collateral contract of partnership or agency was illegal. It did not hold that the long line of earlier decisions was wrong. The judgment does not support the appellant's contention.
54. Noted: The legal position in India is not different. Before the Act for Avoiding Wagers, 1848, the law on wagers in British India was the common law of England.
55. Noted: In Ramloll Thackoorseydass v. Soojumnull Dhondmull, the Judicial Committee ruled that the common law of England was in force in India. Under that law an action could be maintained on a wager.
56. Noted: The wager there was on the average price opium would fetch at the next Government sale at Calcutta. Lord Campbell said the English statute does not extend to India, and no peculiar Hindu law was alleged. The case must be decided by the common law of England.
57. Held: That is a direct decision on the point now argued, and it favours the respondents.
58. Noted: In Doolubdass Pettamberdass v. Ramloll Thackoorseydass the wager was on the price of Patna opium at the next Government sale. The plaintiff sued in the Supreme Court of Bombay in January 1847.
59. Noted: After the suit was filed, Act 21 of 1848 was passed. It made all agreements by way of gaming or wagering null and void and barred any suit to recover money won on a wager. It was similar to section 18 of the Gaming Act, 1845.
60. Noted: Their Lordships held that the contract was not void and the Act did not invalidate contracts made before it came into force. On the Hindu law argument they repeated that they were not satisfied that wagers were void among the Hindus.
61. Noted: In Raghoonauth Sahoi Chotayloll v. Manickchund and Kaisreechund the Judicial Committee held that a wagering contract on the average price of opium at a future Government sale was legal and enforceable before Act 21 of 1848.
62. Held: These three Privy Council decisions establish the position in India before Act 21 of 1848. Wagering contracts were governed by the common law of England, were not void and were enforceable. Hindu law did not prohibit such wagers.
63. Noted: Indian Courts took the same view after the Contract Act. In Pringle v. Jafar Khan an agent who paid betting losses recovered from his principal.
64. Noted: The reasoning was that betting at horse races is not illegal in the sense of tainting a connected transaction. The Contract Act distinguishes an agreement that is only void from one whose consideration is unlawful. Section 23 covers unlawful consideration. Section 30 covers agreements only void.
65. Noted: In Shibho Mal v. Lachman Das an agent who paid wagering losses recovered from his principal. In Beni Madho Das v. Kaunsal Kishor Dhusar a plaintiff who lent money to pay a gambling debt got a decree for it.
66. Noted: In Md. Gulam Mustafakhan v. Padamsi, two partners made a wager contract with a third party. The Nagpur High Court allowed the partner who paid to claim the other's share of loss. It said section 30 does not affect agreements or transactions collateral to wagers.
67. Held: These decisions rest on the settled principle that a wagering contract is only void and not illegal, so a collateral contract can be enforced.
68. Noted: A subsidiary point remains. The appellant argued that although the partnership was not illegal, the loss paid by one partner on wagering transactions could not be taken into account in the accounts.
69. Noted: He relied on Chitty's Contract, p. 495. It says the law does not refuse to recognise a betting partnership. On dissolution an account may be ordered. A partner can recover his share of unspent capital but cannot claim an account of profits or repayment of amounts actually applied to the partnership's bets.
70. Noted: Two decisions support that passage: Thwaites v. Coulthwaite and Saffery v. Mayer. The Court has already considered the first.
71. Held: Chitty, J., in Thwaites left open the question of particular transactions until the account was taken. This does not help the appellant and supports the respondents.
72. Held: The reservation presumably related only to transactions prohibited by the Betting Act, 1853. Such transactions would be illegal, so the partnership contract could not operate on them.
73. Noted: Saffery v. Mayer was a suit to recover money advanced for betting on horses on joint account. The Court of Appeal held it not maintainable because of the Gaming Act, 1892.
74. Noted: Smith, M.R., said the plaintiff paid money in respect of a contract made null and void, so it was not recoverable under the second limb of that section. The other Lord Justices also relied on the express words of the 1892 Act. They also pointed out that Chitty, J., had not considered it in Thwaites.
75. Held: The passage in Chitty's Contract must be understood only in the context of the Gaming Act, 1892.
76. Held: The discussion yields six results.
    • Under the common law of England a wager is valid. The primary contract and the collateral agreement are both enforceable.
    • After the Gaming Act, 1845, a wager is void but not illegal in the sense of forbidden by law. A primary wager agreement is void but a collateral agreement is enforceable.
    • The conflict on whether the second part of section 18 covers recovery under a substituted contract between the same parties was resolved in Hill's case. Such a claim cannot be sustained.
    • Under the Gaming Act, 1892, in view of its wide phraseology, even collateral contracts including partnership agreements are not enforceable.
    • Section 30 of the Indian Contract Act is based on section 18 of the Gaming Act, 1845. A wager is void and unenforceable, but it is not forbidden by law. So the object of a collateral agreement is not unlawful under section 23.
    • A partnership is an agreement within section 23. It is not unlawful, though its object is to carry on wagering transactions.
77. Held: The Court therefore holds that the partnership is not unlawful within the meaning of section 23(A) of the Contract Act.

Point (ii): public policy

1. Noted: The appellant said public policy is very comprehensive. In India, especially after independence, its content should be measured by the political, social and economic policies of a welfare State. It should also reflect the traditions of the country in Srutis, Smritis and Nibandas.
2. Noted: The Court first looks at the meaning of the concept and how the English and Indian courts have applied it.
3. Noted: Cheshire and Fifoot say the public interests are so comprehensive and heterogeneous, and opinions vary so greatly, that public policy is a treacherous and unstable ground for legal decision.
4. Noted: They make two observations. First, rules already established by precedent must be moulded to new conditions. But it is no longer legitimate for the Courts to invent a new head of public policy. A judge must expound, not expand, this branch of the law.
5. Noted: Second, even when a contract falls prima facie under a recognised head, it will not be held illegal unless its harmful qualities are indisputable. Lord Atkin said the doctrine should be invoked only in clear cases where the harm to the public is substantially incontestable.
6. Noted: Anson states the same rule. Jessel, M.R., said one should not lightly interfere with freedom of contract. The policy of the law on certain subjects has been worked into tolerably definite rules. Lord Wright said public policy is governed by the judicial use of precedents, like any other branch of the common law.
7. Noted: Halsbury's Laws of England says any agreement tending to injure the public or against the public good is void as against public policy. The branch of law will not be extended. What is contrary to policy varies over time.
8. Noted: Parke, B., in Egerton v. Brownlow called public policy a vague and unsatisfactory term. He said it is the province of the statesman and the Legislature to decide what is best for the public good. The judge expounds the law only, from statutes, common law decisions and writers of acknowledged authority.
9. Noted: Parke, B., added that some decisions rested on the prevailing view of the public good, such as the illegality of covenants in restraint of marriage or trade. They have become part of the recognised law and bind courts. Courts are not authorised to establish as law everything they think good for the public.
10. Noted: In Janson v. Driefontein Consolidated Mines, underwriters resisted a claim on insurance of treasure in transit from a foreign state on the ground of public policy. The House of Lords rejected the plea.
11. Noted: Earl of Halsbury, L.C., denied that any Court can invent a new head of public policy. He said marriage brokerage, perpetuities, restraint of trade (a bar on carrying on a trade), gaming or wagering contracts and assisting the King's enemies are unlawful because the common law enacted or assumed them to be so.
12. Noted: He added that a judge must still decide whether the facts come within a recognised principle of public policy that the contract infringes.
13. Held: These observations show that public policy is a branch of common law. Unless the common law recognises the principle, a Court cannot apply it to invalidate a contract.
14. Noted: Lord Lindley, at p. 507, called public policy a very unstable and dangerous foundation until made safe by decision. In Fender v. St. John-Mildmay a promise by one spouse after a decree nisi to marry a third person after the decree absolute was held not void as against public policy.
15. Noted: Lord Atkin said the contract should be given the benefit of the doubt. He accepted that the rule exists, but said the doctrine extends to harmful tendencies as well as harmful acts, where the ground is more treacherous.
16. Noted: Lord Atkin said Lord Halsbury seemed to decide that categories of public policy are closed. He found this too rigid and not expressly assented to by the House. But it fortifies the warning that the doctrine be invoked only in clear cases.
17. Noted: Lord Thankerton said the duty of the courts is to expound and not expand public policy. They may apply an existing principle to a new set of circumstances clearly within its scope, as in safety of the State. They must not be influenced by their view of what the principle should be.
18. Noted: Lord Wright explained two senses of public policy. In a wide sense every rule of law rests on public interest, such as the policy that people should fulfil their contracts. In the narrower sense, considerations of public interest require courts to depart from enforcing contracts, and the doctrine is then disabling.
19. Noted: Lord Wright laid down four principles. Public policy is not a branch of law to be extended. The judge expounds the law only. Public policy is governed by precedents like any common law branch. Courts apply recognised principles to new conditions by analogy, logic and convenience.
20. Noted: He said rules of public policy must be moulded to new conditions, as with the common law generally. He found it difficult to conceive that any new head of public policy could be discovered in these days.
21. Held: These Law Lords define the concept and its limits. The rules of public policy are well settled, and the Courts only expound them and apply them to varying situations.
22. Held: Lord Atkin does not accept that the categories are closed but warns the doctrine is for clear cases of substantially incontestable harm. Lord Thankerton and Lord Wright suggest the categories are well settled and Courts can at best apply them to new circumstances.
23. Held: Neither excludes the possibility of a new head in a changing world. But neither could conceive that any such head could be discovered under existing circumstances.
24. Noted: Asquith, L.J., in Monkland v. Jack Barclay Ltd. said that where a contract does not fit the recognised heads, courts should use extreme reserve in holding it void. They should do so only when it is incontestably and on any view inimical to the public interest.
25. Noted: Indian cases take the same view. The Bombay High Court in Shrinivas Das Lakshminarayan v. Ram Chandra Ramrattandas said section 23 lets a Court hold an object unlawful as opposed to public policy.
26. Noted: That Court said in India it cannot be affirmed as a matter of law, as Lord Halsbury did, that no court can invent a new head. But Lord Davey's dictum that public policy is always an unsafe and treacherous ground for legal decision may be accepted as a sound cautionary maxim.
27. Noted: The same view is confirmed in Bhagwant Genuji Girme v. Gangabisan Ramgopal and Gopi Tihadi v. Gokhei Panda.
28. Held: The Court summarises the doctrine.
    • "Public policy or the policy of the law is an illusive concept". It has been called an untrustworthy guide, variable quality, uncertain one and unruly horse.
    • A Court's primary duty is to enforce the promise the parties made and uphold sanctity of contracts. In certain cases it may relieve the parties on a rule founded on public policy.
    • Lord Atkin calls something done contrary to public policy a harmful thing. The doctrine extends to harmful tendencies as well as harmful cases.
    • The doctrine is only a branch of the common law, governed by precedents. Principles have crystallised under different heads. Courts may expound and apply them to different situations but should invoke them only in clear and incontestable cases of harm to the public.
    • The heads are not closed. Theoretically a new head may be evolved in exceptional circumstances of a changing world. In the interest of stability of society it is advisable not to try to discover new heads in these days.
29. Noted: The next question is whether England or India has evolved a definite principle of public policy invalidating wagers.
30. Held: As for England, the textbook passages and decisions discussed show that there has never been such a rule. Under the common law until 1845 courts enforced such contracts even between the parties. After the 1845 Act they were void, but collateral agreements were still enforced.
31. Held: Only after the Gaming Act, 1892, did collateral contracts become unenforceable, by its express words. Public policy was specifically raised and rejected in Thacker v. Hardy, Hyams v. Stuart King and Michael Jeffrey & Company v. Bamford.
32. Held: It is abundantly clear that the common law of England did not recognise any principle of public policy declaring wagering contracts illegal.
33. Held: The position in India is the same. Indian courts, before and after Act 21 of 1848 and after the Contract Act, held that wagers are not illegal and that collateral contracts are enforceable.
34. Noted: The Court cites a passage from Ramloll Thackoorseydass v. Soojumnull Dhondmull on public policy. Their Lordships said the wager might tempt a person to do wrong, but one cannot presume parties would commit a crime. It did not interfere with any duty, so neither individual nor Government interests could be affected. They could not say it was contrary to public policy.
35. Held: No decision from that case (1848) to the present day has declared wagering contracts illegal, or refused to enforce a collateral contract on wagers, on the ground of public policy.
36. Held: The common law of England on wagers was followed in India. Such contracts, though void after the Act of 1848, were never illegal.
37. Noted: Except for Bombay, the State legislatures made no attempt to bring Indian law in line with England after the Gaming Act, 1892.
38. Noted: When the Contract Act was passed in 1872, Central Act 21 of 1848, based on the Gaming Act, 1845, was in force. The Bombay Wagers (Amendment) Act, 1865 amended it in terms analogous to the later 1892 Act.
39. Held: The Contract Act repealed Act 21 of 1848 but did not take the Bombay Act's provisions. No amendment followed the English Act of 1892. The Legislature must be taken to have known the English law. The Court assumes it did not think fit to make wagers illegal or to hit at collateral contracts.
40. Held: The policy of the law in India has therefore been to sustain the legality of wagers.
41. Noted: The history of gambling law in India shows that gaming has been controlled in some respects but never absolutely prohibited. The Court lists many Acts.
    • The Public Gambling Act (III of 1867) and the Bengal Public Gambling Act (II of 1867).
    • The Bombay Prevention of Gambling Act (IV of 1887) and the Madhya Bharat Gambling Act (LI of 1949).
    • The Madhya Pradesh Public Gambling Act and the Madras Gaming Act (III of 1930).
    • The Orissa Prevention of Gambling Act (XVII of 1955) and the Punjab Public Gambling Act (III of 1867).
    • The Rajasthan Public Gambling Ordinance (Ordinance XLVIII of 1949) and the U.P. Public Gambling Act.
42. Held: These Acts do not prohibit gaming entirely. They aim at suppressing gaming in private houses for the owner's or occupier's profit, and gaming in public. Gaming that does not contravene them is legal.
43. Held: Where the State meant to make a form of gaming illegal it made an express statute, as in section 29-A of the Indian Penal Code. In other respects gaming and wagering are allowed. Horse races are allowed throughout India, and the State derives revenue from them.
44. Noted: The appellant next asked whether gambling contracts are illegal under Hindu law. He relied on observations in The State of Bombay v. R. M. D. Chamarbaugwala.
45. Noted: That case asked whether the Bombay Lotteries and Prize Competition Control and Tax (Amendment) Act of 1952 was valid. It extended the definition of prize competition in section 2(1)(d) of the 1948 Act to competitions run through newspapers printed outside the State.
46. Noted: The respondents there argued the Act offended Article 19(1)(g) and the freedom of inter-State trade under Article 301. This Court held that gambling is by nature extra commercium, so neither right was violated.
47. Noted: Das, C.J., collected Hindu law texts from the Rig Veda, Mahabharata, Manu, Brihaspati and Yagnavalkya at pp. 922-923. The Court says it is unnecessary to restate them.
48. Held: The Hindu sacred books condemned gambling in unambiguous terms. The question is whether those texts were only pious wishes or were enforced in recent centuries.
49. Noted: Not all branches of Hindu law were administered by Indian Courts. Only succession, inheritance, marriage, and religious usages and institutions were decided by Hindu law, except where legislation altered it.
50. Noted: Hindu law is also applied to Hindus in some matters by express legislation, or by justice, equity and good conscience. These matters are adoption, guardianship, family relations, wills, gifts and partition. Reference is made to Mulla's Hindu Law, p. 2.
51. Held: In other respects ancient Hindu law was not enforced in Indian Courts and became obsolete.
52. Held: There is not a single recorded case holding gambling or wagering contracts illegal as contrary to public policy because they offend ancient Hindu law. The Court finds it difficult to import Hindu law tenets to give a novel content to public policy for gaming and wagering contracts.
53. Held: The Court summarises on public policy.
    • The common law of England and of India have never struck down wager contracts on public policy. They have always been held not illegal although the statute declared them void.
    • After wagers were made void in England, collateral contracts were enforced until the 1892 Act. In India, except Bombay, they have been enforced even after Act 21 of 1848, which section 30 of the Contract Act replaced.
    • The moral prohibitions in Hindu law texts against gambling were not legally enforced and were allowed to fall into desuetude (falling out of use).
    • Gambling is controlled in specific matters but has not been declared illegal. Some gambling practices are a perennial source of State income.
54. Held: It is not possible to hold that there is any definite head or principle of public policy evolved by courts or laid down by precedents that applies directly to wagering contracts.
55. Held: Even if a Court may evolve a new head in extraordinary circumstances of incontestable harm, wager is not one. It has been recognised for centuries and tolerated by the public and the State alike.
56. Held: "it is for the legislature to make a law prohibiting such contracts and declaring them illegal". It is not for this Court to resort to judicial legislation.

Point 3: immorality

1. Noted: The appellant's argument under this head is rather broadly stated. He draws an analogy from the Hindu law doctrine of pious obligation of sons to pay their father's debts.
2. Noted: He says what Hindu law considers immoral in that context can apply to section 23 of the Contract Act.
3. Held: No authority is cited and no legal basis is suggested for importing that doctrine into contract law.
4. Held: Section 23 is inspired by the common law of England. It is more useful to refer to English law than to Hindu law texts dealing with a different matter.
5. Noted: Anson says the only aspect of immorality with which courts have dealt is sexual immorality. Halsbury says a contract for an immoral purpose is unenforceable, and the immorality is sexual immorality.
6. Noted: Cheshire and Fifoot say Lord Mansfield held a contract contra bonos mores (against good morals) is illegal. But the law gives morality no extended meaning and concerns itself only with what is sexually reprehensible.
7. Noted: Pollock and Mulla say "immoral" points in legal usage to conduct or purposes that the State disapproves of but is unable or not advised to punish directly.
8. Noted: The authors confine it to acts considered immoral by standards approved by Courts.
9. Held: The case law of England and India confines the doctrine to sexual immorality.
10. Noted: Instances held void because the object is immoral include the following.
    • Settlements in consideration of concubinage.
    • Contracts of sale or hire of things to be used in a brothel or by a prostitute for purposes incidental to her profession.
    • Agreements to pay money for future illicit cohabitation.
    • Promises in regard to marriage for consideration, and contracts facilitating divorce.
11. Noted: The word "immoral" is very comprehensive. Ordinarily it takes in every aspect of personal conduct deviating from standard norms of life. What is repugnant to good conscience may also be called immoral.
12. Noted: Its content varies with time, place and stage of civilisation of a society.
13. Held: "no universal standard can be laid down", and any law based on such a fluid concept defeats its own purpose.
14. Held: Section 23 shows a legislative intention to give the word a restricted meaning. Its placing beside an equally elusive concept, public policy, shows it is used in a restricted sense. Otherwise the two would overlap.
15. Held: In its wide sense what is immoral may be against public policy, because public policy covers political, social and economic grounds of objection. Decided cases and authoritative writers therefore rightly confined it only to sexual immorality.
16. Held: The other limit in the statute, that the court regards it as immoral, shows it is also a branch of the common law like public policy. It should be confined to principles recognised and settled by courts.
17. Held: Precedents confine the concept to sexual immorality. No case was brought to notice applying it to any other head. "we cannot evolve a new head so as to bring in wagers within its fold".

The new plea: extra commercium

1. Noted: The appellant lastly said a wager is extra commercium. There cannot be a partnership for wager within section 4 of the Partnership Act, which requires persons agreeing to share profits of a business. He relied on Chamarbaugwala.
2. Held: This question was not raised in the pleadings. No issue was framed. No such case was argued before the Subordinate Judge or the High Court. It was not raised in the application for a certificate for leave to appeal.
3. Noted: The appellant's advocate in the High Court said his client intended to raise only one question. It was whether a partnership to carry on a business in differences was illegal under section 23. The plea was also not disclosed in the appellant's statement of case in this Court.
4. Why: Had it been raised at the earliest point, the respondents could have asked for a suitable amendment of the plaint to sustain their claim.
5. Held: The Court does not think it right to let the appellant raise this new plea for the first time, as it would cause irreparable prejudice to the respondents. The Court expressly expresses no opinion on this point, so the question stays open.
6. Held: For these reasons the suit partnership was not unlawful within the meaning of section 23 of the Indian Contract Act.
7. Held: The appeal fails and is dismissed with costs.

Authorities

• Thacker v. Hardy, (1878) L.R. 4 Q.B. 685: a broker could recover indemnity and commission despite the Gaming Act, 1845. Gaming and wagering contracts are not enforceable but not illegal. Referred to.
• Read v. Anderson, (1882) L.R. 10 Q.B. 100 (appeal reported in 13 Q.B. 779): wagers were not illegal at common law. The 1845 Act only made them void. The appeal did not decide the point directly.
• Bridger v. Savage, (1885) L.R. 15 Q.B. 363: the original bet is void but not illegal, so the agency contract is enforceable. The Court says it states the correct principle.
• Partridge v. Mallandaine, (1887) L.R. 18 Q.B. 276: bookmakers are taxable on betting profits as a vocation. Mere betting is not illegal.
• Hyams v. Stuart King, [1908] 2 K.B. 696: a fresh agreement on new consideration to pay lost bets was enforceable by majority. The Court explains the dissent of Fletcher Moulton, L.J., and limits it to its facts.
• Thwaites v. Coulthwaite, (1896) 1 Ch. 496: a betting partnership is valid and an account lies. The 1892 Act was not referred to there.
• Thomas v. Day, (1908) 24 T.L.R. 272: partnership of bookmakers not recognised. Not followed in later decisions.
• Brookman v. Mather, (1913) 29 T.L.R. 276: a betting partnership's dissolution account enforced. It corrected the deviation in Thomas v. Day.
• Keen v. Price, (1914) 2 Ch. 98: an action for account between betting partners was entertained, but the 1892 Act barred repayment of profits.
• O'Connor and Ould v. Ralston, (1920) 3 K.B. 451: Darling, J., relied on the dissent in Hyams. Not accepted in Jeffrey and Co. v. Bamford.
• Michael Jeffrey & Company v. Bamford, (1921) 2 K.B. 351 (the judgment also calls it Jeffrey and Co. v. Bamford and Jaffrey and Co. v. Bamford): a betting and bookmaking partnership is not per se illegal. Approved.
• Hill v. William Hill, (1949) 2 All E.R. 452: the House of Lords held by 4 to 3 that a claim on a substituted agreement to pay money won on a wager failed under the second branch of section 18. Considered; it does not hold collateral contracts illegal.
• Saffery v. Mayer, L.R. (1901) 1 K.B. 11: a suit to recover money advanced for joint betting failed because of the Gaming Act, 1892. Distinguished.
• Ramloll Thackoorseydass v. Soojumnull Dhondmull, (1848) 4 M.I.A. 339: common law of England applied in India, and a wager was neither illegal nor against public policy. Relied on as directly in point.
• Doolubdass Pettamberdass v. Ramloll Thackoorseydass, (1850) 5 M.I.A. 109: a wager on the price of opium was not void. Hindu law was not shown to prohibit it. Relied on.
• Raghoonauth Sahoi Chotayloll v. Manickchund and Kaisreechund, (1856) 6 M.I.A. 251: a wager on the future price of opium was legal and enforceable before Act 21 of 1848. Relied on.
• Pringle v. Jafar Khan, (1883) I.L.R. 5 All. 443: an agent who paid betting losses recovered from his principal. Approved.
• Shibho Mal v. Lachman Das, (1901) I.L.R. 23 All. 165: an agent who paid wagering losses recovered from his principal. Approved.
• Beni Madho Das v. Kaunsal Kishor Dhusar, (1900) I.L.R. 22 All. 452: a lender of money to pay a gambling debt got a decree. Approved.
• Md. Gulam Mustafakhan v. Padamsi, A.I.R. (1923) Nag. 48: a partner who paid the whole loss on a wager could recover the other partner's share. Approved.
• Egerton v. Brownlow, 4 H.L.C. 1; 10 E.R. 359: Parke, B., on the vagueness of public policy. Referred to.
• Janson v. Driefontein Consolidated Mines, Ltd., (1902) A.C. 484: Lord Halsbury and others on limits of public policy. Referred to.
• Fender v. St. John-Mildmay, (1938) A.C. 1: Lord Atkin and Lord Thankerton on the scope of public policy. Referred to.
• Monkland v. Jack Barclay Ltd., (1951) 1 All E.R. 714: Asquith, L.J., on extreme reserve in using public policy. Referred to.
• Shrinivas Das Lakshminarayan v. Ram Chandra Ramrattandas, I.L.R. (1920) 44 Bom. 6: Bombay High Court on public policy in India. Approved.
• Bhagwant Genuji Girme v. Gangabisan Ramgopal, I.L.R. 1941 Bom. 71: confirms the same view. Approved.
• Gopi Tihadi v. Gokhei Panda, I.L.R. 1953 Cuttack 558: confirms the same view. Approved.
• The State of Bombay v. R. M. D. Chamarbaugwala, [1957] S.C.R. 874: gambling is extra commercium and Hindu law texts condemn it. Considered; the Court finds it does not make wagers illegal by public policy and does not decide the Partnership Act plea.
• Cases named only inside quoted passages: Cannan v. Bryce (3 B. & Ald. 179), McKinnell v. Robinson (3 M. & W. 434), Lyne v. Siesfeld (1 H. & N. 278), Fitch v. Jones (5 E. & B. 238), Oulds v. Harrison (10 Ex. 572), Knight v. Camber (15 C.B. 562), Jessopp v. Lutwyche (10 Ex. 614), Rosewarne v. Billing (15 C.B. (N.S.) 316), Oldham v. Ramsden (44 L.J. (C.P.) 309), Sharp v. Taylor (2 Phil. 801), Johnson v. Lansley (12 C.B. 468), Beeston v. Beeston (1 Ex. D. 13), Beyer v. Adams (26 L.J. (Ch.) 841, called not law).
• Also cited in footnotes: the report citations for the cases above only. No other case is named in the footnotes.
• Textbooks cited: Anson, Law of Contracts; Pollock and Mulla, Indian Contract Act; Chitty, Contract; Cheshire and Fifoot, Law of Contract; Halsbury, Laws of England; Mulla, Hindu Law.

Provisions discussed

• Section 23 of the Indian Contract Act, 1872: the object or consideration is lawful unless forbidden by law, or the Court regards it as immoral or opposed to public policy. Otherwise it is unlawful and the agreement is void.
• Section 30 of the Indian Contract Act: agreements by way of wager are void. No suit lies to recover anything won on a wager.
• Section 18 of the Gaming Act, 1845 (8 and 9 Vict. c. 109): gaming contracts are void. No suit lies to recover money won or deposited with a stakeholder.
• Section 1 of the Gaming Act, 1892 (55 Vict. c. 9): promises to repay money paid under such contracts, or to pay commission, are void.
• Act 21 of 1848 (Act for Avoiding Wagers): made wagers void in India. It was repealed by the Contract Act. The Bombay Wagers (Amendment) Act, 1865 carried it further for Bombay.
• Betting Act, 1853 (England): prohibited certain betting transactions. Transactions it prohibited would be illegal.
• Sections 4, 42 and 69(1) and (2) of the Partnership Act: section 4 defines partnership as persons agreeing to share profits of a business. Section 42 dissolves a firm formed for one or more adventures on completing them. Section 69 was pleaded as a bar to the suit by an unregistered partnership.
• Section 2, rule 2 of the Code of Civil Procedure (as printed in the judgment): the Subordinate Judge held it did not bar the claim, because the cause of action for that part had not arisen when the earlier suit was filed.
• Section 29-A of the Indian Penal Code: an express statute making a form of gaming illegal.
• Articles 19(1)(g) and 301 of the Constitution: trade freedom and freedom of inter-State trade, as discussed in Chamarbaugwala.
• Income Tax Act, 5 and 6 Vict. c. 35, Schedule D: tax on a vocation, discussed in Partridge v. Mallandaine.
• Indian gambling Acts listed above: they control but do not prohibit gaming.

Judgement

1. The Supreme Court held that the suit partnership was not unlawful within the meaning of section 23 of the Indian Contract Act.
2. The appeal was dismissed with costs.
3. The High Court decree for the first respondent therefore stood.

Legal Principle / Ratio

A wager is void under section 30 of the Contract Act but is not forbidden by law, so the object of a collateral agreement is not unlawful under section 23. No settled head of public policy or immorality covers wagers, and courts should not invent a new head.

Key holding: "though a wager is void and unenforceable, it is not forbidden by law".

Critical Analysis

Analysis based on the judgment text.

• The Court rests the result on English precedent and on Indian history. It says the Legislature did not follow England's 1892 Act, and it leaves reform to the legislature.
• The Court accepts that new heads of public policy may theoretically be evolved. It still advises against it for stability.
• The Court leaves open whether a wager being extra commercium makes a partnership for wager impossible under section 4 of the Partnership Act.
• The judgment notes the Hindu law texts condemn gambling but treats them as obsolete in courts. It does not say whether a statute could revive them.
• The judgment says collateral contracts became unenforceable in England after the Gaming Act, 1892. It does not say whether that English rule should apply in India.

Significance

• The case is the leading authority that a void agreement is not the same as an unlawful one under section 23.
• It settles that a collateral contract to a wager, such as a partnership or agency, is enforceable in India.
• It lays down that public policy is a branch of the common law, to be expounded and not expanded.
• It confines "immoral" under section 23 to sexual immorality, as recognised by courts.
• It shows that courts treat gaming and wagering as a matter for the legislature.

Exam-Important Points

• Rule: a wager is void under section 30 but not forbidden by law under section 23. Trap: void and illegal are different things.
• Rule: a collateral contract to a wager, such as a partnership, remains enforceable. Trap: the English Gaming Act, 1892, changed English law, but India did not follow it.
• Rule: public policy is a branch of common law governed by precedent. Courts should apply it only to clear cases of substantially incontestable harm.
• Rule: "immoral" in section 23 has been confined to sexual immorality. Wagers cannot be brought in as a new head.
• Rule: Hindu law texts against gambling were not enforced and fell into desuetude, so they give no ground of public policy.
• Rule: a new plea not raised in the pleadings or lower courts cannot be raised first in the Supreme Court. Here the Court refused because it would cause irreparable prejudice to the respondents. It expressed no opinion on the extra commercium plea.
• Trap: Hill v. William Hill did not hold collateral contracts of partnership or agency illegal.
• Result: appeal dismissed with costs.

Prepared from the full text of the judgment. The judgment text has no numbered paragraphs, so no paragraph numbers are cited. The header note: the citation is as printed in the judgment text.