This article has been written by Khyati Mehrotra, pursuing a Certificate Course in Advanced Civil Litigation from LawSikho.

Introduction

A contract is an agreement enforceable by law between two or more parties that sets mutual obligations. For any contract to be valid and enforceable, one of the most important elements is legality of its ‘object’ and ‘consideration’. The ‘object’ is the purpose for which the contract is formulated and ‘consideration’ is the price one pays in return for the contract. Section 2(d) of the Indian Contracts Act, 1872 states that when a promisee, at the desire of the promisor, does or abstains from doing something in return, such an act is called consideration.  The object and consideration must not be hit by illegality and immorality to be valid, legal and enforceable. 

In India, the contracts are regulated by the Indian Contracts Act, 1872 and Section 23 of Indian Contract Act (hereinafter referred to as “Section 23”) deals with the legality of object and consideration and lays down that a contract would be considered unlawful if it is forbidden by law, defeat any provisions of any law, fraudulent, involves injury to any person or property or is immoral or opposed to public policy. Any contract which is unlawful in accordance with Section 23, will be considered void i.e that agreement is unenforceable from the very beginning of its creation. 

One of the conditions mentioned in Section 23 is based on the immortality of the object or consideration. If the object or consideration in an agreement goes against morality and the court considers then it to be immoral. Such an agreement will be void. What is considered to be moral or immoral is not defined in the Contracts Act and there can not be an exhaustive definition for the same. However, immoral agreements can be broadly understood as those agreements which go against the widely accepted moral norms in the society and have never received the protection of the law. This article will reflect on how the definition of immorality has changed over time, what are immoral agreements as per the Contract Act and what has been the role of the judiciary in the interpretation and enforcement of such agreements.

Meaning of immorality

Immorality in a general sense would mean any act which is inconsistent with the norms and morals prevailing in a particular society or a community. Contracts based on immoral objects or consideration are often considered to be void. But the definition of immorality will differ in different societies. What is immoral for one set of people, might not be immoral for the other. For instance, marrying one’s first cousin is considered to be immoral in several Hindu communities but it is not so for Muslim communities.

In Gherulal Parakh vs. Mahadeodas, the Supreme court while discussing Section 23 held that:

 “The word ‘immoral’ is a very comprehensive word. Ordinarily it takes in every aspect of personal conduct deviating from the standard norms of life It may also be said that what is repugnant to good conscience is immoral. Its varying content depends upon time, place and the stage of civilization of a particular society. In short, no universal standard can be laid down and any law based on such a fluid concept defeats its own purpose.”

The court in the same case further held that the provision contained in Section 23 indicates that legislature intended to give a restricted meaning to the word “immoral” and its juxtaposition with an equally elusive concept, public policy, depicts that immorality should be interpreted in a restricted sense as it should not overlap the concept of public policy. Further, Section 23 uses the words “as court regards” with the term “immoral” which means that what is immoral is confined to the principles recognized and settled by the courts.  

Immorality is subjective to society and changing times. What was earlier considered to be immoral can become moral due to the changing moral standards of society. It was laid down in Andrew vs. Parker, that the court shall judge the immortality of the act as per the current prevailing standards and moral norms in the society.

For example, earlier cohabitation between unmarried couples was considered to be immoral and thus, unenforceable. However, with the change in time and values of society, an unmarried couple can legally cohabit and are granted protection of the law. This is evident as live-in relationships have been recognized by the courts of India in recent years.

Scope of immorality under Section 23

As mentioned above, the concept of morality largely depends upon the court’s interpretation and earlier judicial decisions. In Gherulal Parakh vs. Mahadeodas Maiya & Ors. (hereinafter referred to as “Gherulal Parekh’s case”),  the apex court while dealing with the morality of wager agreements and discussed several earlier decisions and concluded that immorality, under Section 23, has been restricted to only “sexual immorality” and thus, wager agreements are not immoral. The court clearly refused to invent a new head of public policy or morality and stated that the courts shall be content to apply principles laid down in the previous judgments. 

Therefore, after the said judgement, the courts regarded only contracts against sexual norms to be void under Section 23. Agreements pertaining to concubinage, prostitution, marriage for money are considered to be immoral and void.

Though in Gherulal Parekh’s case, the court restricted the meaning of immorality to only sexual activities because all the previous judgements dealt with sexual immorality only. However, it never disregarded the probability that the scope of immorality can be extended with time and society. A lot of cases followed this landmark case of Gherulal Parekh and interpreted “immorality” under Section 23 to relate to only immoral sexual norms.

In 2015, Delhi High Court disregarded the earlier Supreme Court’s judgements and widened the ambit of immoral contracts without restricting it to only sexually immoral agreements. Delhi HC in its judgement, Union of India vs. M/s NK Garg & Co., held that non-payment of interest and money for a very long period illegally to the other party which it is entitled to get, is immoral and any contract restricting such payment is void. In this case the Delhi HC observed that the concept of immorality cannot be confined to sexually immoral agreements but has to be expanded to commercial contracts too. 

Immorality is a fluid concept and no universal fixed standard can be laid down for determining immorality of a contract.  Over several years, courts have dealt with this issue on a case-to-case basis keeping in mind the circumstances of the given case.

Examples of immoral agreements

Agreements regarding prostitution

Prostitution as a profession is not illegal, however, any agreement with the prostitute for the purpose of helping her in profession is void and unenforceable due to immorality. 

In Rajendra Nath Das vs. Abdul Hakim Khan, Calcutta High Court held that the agreement where the money was borrowed to visit brothels and bring in prostitutes, is immoral and unenforceable. 

Further, if a property is given on rent to a prostitute, knowing that she will use that property for the purpose of carrying on her profession, the rental agreement will be considered immoral and the rent can not be recovered as the agreement is unenforceable. 

In Pranballav Saha And Anr. Vs. Sm. Tulsibala Dassi And Anr., the Calcutta High Court observed that a contract transferring property for running a brothel is immoral and void. At the same time, it is pertinent to note that, if there is an agreement to lease out the property to the prostitute for purpose of residence and not for running a brothel or carry-on prostitution, that agreement will be legally enforceable. 

Therefore, it can be said from the above judgements that any contract which is specifically for the purpose of facilitating prostitution is immoral and unlawful.

Agreements related to divorce and marriage

Marriage has always been considered to be a pious relation between two people. Any agreement which promotes divorce or illicit marriage between two people will be considered to be immoral.

In Balvilji vs. Nansa Nagar, the court observed an agreement to be immoral where a woman was given money to obtain a divorce from her husband and then marry the promisor. Further, an agreement to lend money to a wife to give it to her husband in lieu of divorce is also immoral and void. 

In Kamla Bai vs. Arjan Singh, there was an agreement to give land to a father if he sends his married daughter to the donor for marriage. The court held that this transfer is for illegal or immoral purposes and thus, the title does not pass to the father.

Agreements related to the cohabitation of unmarried couples

Agreements related to illicit cohabitation are considered to be immoral. Though cohabitation of unmarried couples is no longer seen as a taboo or an immoral act, if a contract is entered to pay for cohabitation, then the contract will be void.  The contract may be for the payment for past cohabitation or future cohabitation. Earlier the courts dealt with the enforceability of such contracts differently on the basis of past or future cohabitation. However, in Husseinali Casan vs. Dinbai,  the court observed that contracts, in which promises are made for paying consideration either for past cohabitation or for future cohabitation, will be immoral and void. 

A contract for paying consideration for sexual immoral service cannot be legal only for the reason that it was a past cohabitation. Further,  if cohabitation is not the very ‘object’ or ‘consideration’ of an agreement, then such agreement will not be void. For example, in Pyare Mohan vs. Narayani, a gift deed was executed by the donor in the favour of a woman with whom he was in adulterous cohabitation in the past. The court considered the point that past cohabitation was only the motive and not the consideration or object of the gift, therefore the gift deed is not hit by Section 23 of the Contract Act.  If the gift deed was executed in return for sexual favors in the past, then it would have been immoral and unenforceable.

Enforcement of immoral agreements 

Immoral agreements are unlawful under Section 23 and therefore, cannot be enforced in the court of law. The parties to an unlawful agreement can not claim any relief including recovery of money or property from the court. According to the principle, “in pari delicto potior est conditio posidentis”, where both parties are at fault, the position of possession is the best which means that the party who has the possession at present should not be disturbed. 

In Kali Kumari Baisnabi vs. Mono Mohini Baisnabi, a promissory note was issued by the defendant for the return of the security deposit amount which was deposited by the plaintiff. The security deposit was with respect to the premises lent out for the purpose of prostitution. When the plaintiff approached the court for the enforcement of the promissory note, the court held that the promissory note originated from an illegal contract and it was nothing but consideration for immoral purposes. Therefore, in the said case the plaintiff could not recover the balance amount of the security deposit from the plaintiff.

Where the plaintiff has conveyed its property to the defendants as a consideration for future adulterous cohabitation, the court refused plaintiff the relief to recover the property from the defendant. 

If the party seeking claim does not have to rely upon the immoral agreement to prove his cause of action, the court may grant relief in such cases. Additionally, as per the principle laid down in Sita Ram vs. Radhabai And Ors., if the defendant owes a fiduciary duty to the plaintiff, he can not retain the property by pleading that he was entrusted with such property as a result of an illegal transaction.

The courts do not enforce the contract which are immoral, however, if the plaintiff is the victim of the defendant and not enforcing the contract will go against the principles of fairness, justice and equity, the courts have the power to enforce the rights of the plaintiff.

Conclusion

Immorality is a volatile concept which is subject to the change in the social environment. There can be no standards fixed to determine what is immoral. Under Section 23 of the Indian Contract Act, the court considers the agreements to be immoral on the basis of current standards prevalent in society and previous judicial decisions. In the cases, where courts deal with the issue of immorality of contracts, the plaintiff has to maintain cause of action without showing the court that he was guilty of illegality as a part of that cause of action. If he succeeds in ascertaining his claim without relying upon the illegal contract, his rights can be enforced by the court. 

With the changing times, the scope of immorality will vary too and the court will determine the illegality of contracts under Section 23 only on the basis of facts of each case. 

References

• Upfill v. Wright (1911) 1 KB 506
• Thunki w/o Deoman vs. Bajirao Sitaram Dhoke AIR 1956 Ngp 160
• Kamarbai And Ors. vs Badrinarayan And Anr. AIR 1977 Bom 228
• https://www.mondaq.com/india/contracts-and-commercial-law/447438/section-23-of-indian-contract-act-lawful-considerations-and-objects
• https://indiankanoon.org/doc/930662/
• https://www.aapkaconsultant.com/blog/agreements-collateral-wagering-agreements-perfectly-legal-enforceebale-court-law/

Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skills.

LawSikho has created a telegram group for exchanging legal knowledge, referrals, and various opportunities. You can click on this link and join: