ujjvalasalian
1

4.11.2006
Dear All,
My assignement for Law (MBA) IS " cONTRACT MADE AGAINST PUBLIC POLICY ARE VALID CONTRACT OR NO. (SECTION-23)
I NEED ONE CASE STUDY AND THE JUSTIFICATION FOR THE SAME.
Its very urgent.
SUVARNA

From India, Mumbai
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akm18
46

Section 23 of the Indian Contract Act
What consideration and objects are lawful, and what not
The consideration or object of an agreement is lawful, unless -It is forbidden by law; oris of such nature that, if permitted it would defeat the provisions of any law or is fraudulent; ofinvolves or implies, injury to the person or property of another; orthe Court regards it as immoral, or opposed to public policy.
In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void.

From India, Bahadurgarh
akm18
46

Under section 320 of the Code of Criminal Procedure, 1973 offences under the Indian Penal Code as specified in the tables provided in the section may be compounded by persons with or without the permission of the Court. However, there are several offences that do not fall within the purview of the Indian Penal Code. These offences are defined by other Statutes. Can the said statutory offences be compounded when the Statute creating them does not provide for their compounding? In Ram Lal v. State of J. and K. (AIR 1999 SUPREME COURT 895) the Hon'ble Supreme Court has held that an offence which law declares to be non-compoundable, even with the permission of the Court, cannot be compounded.

While compounding an offence, a person in his individual capacity is permitted by law to come to terms with the party against whom he complains for consideration. In Cr.P.C, for the purpose of compounding, offences are graded in terms of their impact upon society. Offences that are not grave in nature are allowed to be compounded. More serious offences cannot be compounded in view of their bearing upon the society. Generally summons cases can be compounded and not warrant cases. The reasoning behind compounding may be that it saves unnecessary litigation and is in the interest of both the parties. The injured party may accept some form of solatium as sufficient compensation for what he has suffered. Compromise/composition provisions as a matter of policy are included in various statutes in the interest of parties concerned and to lessen the burden of judiciary.

It is necessary, however, that serious law breakers be brought to book and adequately punished rather than giving them a chance to escape from penalties of law merely by offering "composition monies’’. In view of the recent scams, growing corruption, organised crime and growing evil of fraudulent practices in the market, it is imperative that the society impose deterrent punishment on the wrong doers. Composition should be allowed only in cases, which do not affect society in general but are of personal nature.

Under section 23 of the Indian Contract Act, 1872, agreements to compound offences which are not compoundable, have been held, by Indian courts, to be against the public policy. Courts have observed that it is against the public policy to make trade of felony or attempt to secure benefit by stifling a prosecution or compounding an offence that is not compoundable in law. The principle is that no court of law can countenance or give effect to an agreement that attempts to take the administration of law out of the hands of the judges and put it in the hands of private individuals. However, it has also been said that it is only in the cases of certain serious offences against the State that no composition is allowed.

In the very important case of Union Carbide Corporation v. Union of India AIR 1992 SC 248 the Supreme Court observed that the allegations of unlawfulness of consideration against the settlement reached in Bhopal Gas Disaster case on ground that dropping of criminal charges and undertaking to abstain from bringing criminal charges in future were part of the consideration for the offer of 470 million of US dollars by the UCC and as the offences involved in the charges were of public nature and non-compoundable, the consideration for the agreement was stifling of prosecution and, therefore, unlawful, are not tenable. The settlement is not hit by S.23 or 24 of the Contract Act and no part of the consideration for payment of 470 million US dollars was unlawful.



In our country, where the arrears of pending court cases is huge, it is appropriate that, in public interest, we keep reviewing the penal statues and have a policy regarding compounding of offences. One instance which comes to mind is the treatment of offence under section 138, Negotiable Instruments Act, 1881. It is quite surprising that under the said Act there is no provision for compounding the offence. Once the accused has been summoned he has to go through the trial after appearance in court, even if he is willing to pay the cheque amount to the complainant whose main purpose is recovery of money rather than punishment of the accused. This is a deemed offence, which is basically between the complainant and the accused, and there is no reason why the complainant should not be allowed to withdraw it after receiving his payment from the accused. Once the complainant is satisfied, the discharge of accused does not have any adverse repercussions on the society. The very appearance of the accused before the Court, and being on bail, is sufficient deterrence for him to repeat the offence.

From India, Bahadurgarh

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