Report No. 57
4.13. Indian case law as to illegal transfers.-
The Federal Court of India1 and the Supreme Court,2 as well as the High Courts,3 have had occasions to consider whether the beneficial owner ought to be allowed to recover from his benamidar when the latter proves that the intention of the parties was to commit an illegality. The present position4 seems to be that where the illegal object is not carried out or where other special reasons exist, the illegality will be disregarded.
The matter has also arisen before the Privy Council in appeals from other countries.5-6-7
In these cases, it would be against the public policy to allow the defendant to violate his fiduciary relationship with the plaintiff.
"He must not expect that a judicial tribunal will degrade itself by an exertion of its powers, by shifting the loss from the one to the other, or to equalize the benefits or burthens which may have resulted by the violation of every principle of morals and laws. As Chancellor Walworth puts it: "Wherever two or more persons are engaged in a fraudulent transaction to injure another, neither law nor equity will interfere to relieve either of these persons, as against the other, from the consequence of their own conduct."
1. Punjab Province v. Daulat Singh, AIR 1942 FC 38 (40, 41) (1942) FCR 67 (75, 76).
2. Kadar v. Prahlad, (1960) SCJ 1072: AIR 1960 SC 213.
3. See (a) Quadir Baksh v. Hakam, AIR 1932 Lah 503 (FB) (reviews cases); (b) Pranballav v. Tulsibala Dassi, AIR 1958 Cal 713 (725), para. 114.
4. See para. 4.14 et seq infra.
5. Sajjan Singh v. Sardara Ali, (1960) 1 All ER 269 (PC).
6. Chettiar v. Chettiar, (1962) 1 All ER 494 (PC), commented on by Derrett in 11 ICLQ 864.
7. Mistrt Amur Singh v. Kulubra, (1963) 3 All ER 499 (PC).