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Issues: (i) Whether a loan of foodgrains in kind, though permissible under the Bombay Money Lenders Act, 1946, could be enforced when the transaction contravened the Foodgrains Control Order; (ii) Whether Section 65 of the Indian Contract Act, 1872 entitled the lender to restitution of the grain or its value despite the illegality of the transaction.
Issue (i): Whether a loan of foodgrains in kind, though permissible under the Bombay Money Lenders Act, 1946, could be enforced when the transaction contravened the Foodgrains Control Order.
Analysis: A loan in kind was within the definition of loan under the money-lending law, but that permission did not override a separate statutory prohibition controlling dealings in foodgrains. Clause 10 of the Foodgrains Order prohibited sale or other disposal of foodgrains except in the permitted cases and the lending of paddy for sowing amounted to an "otherwise dispose of" of foodgrains within that clause.
Conclusion: The transaction was hit by the Foodgrains Order and was not enforceable merely because it was otherwise permissible under the money-lending law.
Issue (ii): Whether Section 65 of the Indian Contract Act, 1872 entitled the lender to restitution of the grain or its value despite the illegality of the transaction.
Analysis: Section 65 was held inapplicable where the agreement was in violation of a statutory provision and the illegality was attributable to the parties by imputation of knowledge of the law. Since the transaction was forbidden by the Foodgrains Order, granting restitution would amount to judicial assistance in enforcing an illegality.
Conclusion: Section 65 did not apply and no restitution could be granted in favour of the petitioner.
Final Conclusion: The revision applications failed because the underlying transaction was contrary to the statutory foodgrains order and no relief could be founded on Section 65.
Ratio Decidendi: A transaction prohibited by statute cannot be enforced merely because it is otherwise permissible under another law, and Section 65 of the Indian Contract Act, 1872 does not apply to restore benefits arising from an agreement tainted by statutory illegality.
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