Illegal contract for spindle transfer was unenforceable where prior written permission was mandatory and never obtained.

An agreement for the sale and transfer of woollen spindles without prior written permission of the Textile Commissioner was unlawful and unenforceable, because Clause 3(1) of the Woollen Textiles (Production and Distribution) Control Order, 1962 prohibited such disposal without permission. The contract was therefore hit by Sections 23 and 24 of the Indian Contract Act, as its object was forbidden by law and enforcement would defeat the statutory restriction. Section 65 did not apply, since the arrangement was void from inception rather than later discovered void. The plaintiff could not recover the balance price, and the defendant could not claim refund of the advance.

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Issues: Whether an agreement for sale and transfer of woollen spindles without prior written permission of the Textile Commissioner was lawful and enforceable, and whether the plaintiff could recover the balance price and the defendant could claim refund of the advance.

Analysis: The sale of the spindles was governed by Clause 3(1) of the Woollen Textiles (Production and Distribution) Control Order, 1962, which prohibited acquisition, installation, sale, or disposal of such spindles except with prior written permission of the Textile Commissioner. The parties were aware that such permission was necessary, and no such permission had been obtained. On that footing, the agreement was hit by Sections 23 and 24 of the Indian Contract Act, 1872, because its object was forbidden by law and enforcement of the bargain would defeat the statutory prohibition. The Court further held that Section 65 of the Indian Contract Act, 1872 did not assist either side, since the agreement was not discovered to be void later but was unlawful from the outset. The claim for refund of the advance also could not succeed, especially in the absence of a counterclaim.

Conclusion: The agreement was illegal and unenforceable, the plaintiff was not entitled to recover the suit amount, and the defendant was not entitled to refund of the advance.

Final Conclusion: The suit failed because the transaction contravened the statutory prohibition on transfer of the spindles without prior permission, and both parties were left to bear their own loss from the unlawful arrangement.

Ratio Decidendi: A contract whose object is prohibited by law is void and cannot be enforced, and no party can obtain relief that would give effect to the prohibited transaction.

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