Securities Contracts (Regulation) Act, 1956
16.Power to prohibit contracts in certain cases.-
(1) If the Central Government is of opinion that it is necessary to prevent undesirable speculation in specified securities in any State or area, it may, by notification in the Official Gazette, declare that no person in the State or area specified in the notification shall, save with the permission of the Central Government, enter into any contract for the sale or purchase of any security specified in the notification except to the extent and in the manner, if any, specified therein.
(2) All contracts in contravention of the provisions of sub-section (1) entered into after the date of the notification issued thereunder shall be illegal.
Comment: It would follow that if pursuant to an agreement to do an illegal act a transaction, in part, takes place which would otherwise be valid if there was no such prior agreement, then notwithstanding the illegality of the contract the said completed transaction itself cannot be regarded as invalid. B. O. I. Finance Ltd. v. The Custodian and others AIR 1997 SUPREME COURT 1952