Severable mortgage consideration leaves only the unlawful share-purchase portion unenforceable, while the valid part of the debt stands.

A composite mortgage transaction was treated as severable: the Rs. 12,000 retained and adjusted towards purchase of the lender-company's shares was unlawful as financial assistance for acquisition of its own shares, while the remaining Rs. 18,000 was valid and had been repaid. Applying the Contract Act alongside the Transfer of Property Act, the analysis stated that section 24 of the Contract Act does not govern a completed transfer of property in the same manner as a mere contract. Because the invalid consideration was separable from the valid part, the mortgage was not void in its entirety, but the unenforceable portion could not be recovered. The dismissal of the suit was affirmed.

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Issues: Whether the mortgage transaction was void in its entirety for contravention of the prohibition against financial assistance for purchase of a company's own shares, or whether it was void only to the extent of the Rs. 12,000 adjusted towards share capital.

Analysis: The mortgage was found to have two severable components. The amount of Rs. 12,000 was not advanced as cash but was retained and adjusted towards the purchase of shares of the lender-company, attracting the statutory prohibition against a company giving financial assistance for acquisition of its own shares. That part of the consideration was therefore unlawful. The remaining Rs. 18,000 was valid and had already been repaid. The provisions of the Contract Act governing unlawful consideration were applied in the light of the Transfer of Property Act, and it was held that section 24 of the Contract Act does not govern a completed transfer of property in the same way as a mere contract. Since the invalid portion was severable from the valid portion, the mortgage was not void as a whole.

Conclusion: The mortgage was valid to the extent of Rs. 18,000 and invalid only to the extent of Rs. 12,000. The plaintiff-corporation could not recover the suit claim representing the invalid portion.

Final Conclusion: The appeal failed and the dismissal of the suit was affirmed because the enforceable debt had already been discharged and the remaining claim rested on an unlawful and severable part of the transaction.

Ratio Decidendi: Where a mortgage transaction is composite and the unlawful portion of the consideration is severable, only the invalid part is unenforceable and the valid part may stand; but a court will not enforce the portion of a transaction that is forbidden by law or opposed to public policy.

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