Contract voidness under Section 23 requires violation of law, not mere conflict with an administrative instruction.

An agreement is not void under Section 23 of the Indian Contract Act, 1872 merely because it may conflict with an administrative instruction; it becomes void only when its object or consideration is unlawful or necessarily defeats an expressed provision of law. Article 13(3)(a) of the Constitution governs laws and instruments having the force of law for fundamental rights, and does not by itself determine the enforceability of a private contract. A departmental letter, not being a legislative enactment, could not render the contract void ab initio. The arbitral finding of illegality was therefore legally unsustainable and patently illegal, justifying interference under Section 34 of the Arbitration and Conciliation Act, 1996.

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Issues: Whether the arbitral award could stand when the arbitrator treated the contract as void ab initio and unenforceable on the basis of a departmental letter, and whether such finding warranted interference under the Arbitration and Conciliation Act, 1996.

Analysis: Article 13(3)(a) of the Constitution of India is directed to laws, ordinances, orders, notifications and similar instruments having the force of law for the purpose of fundamental rights. It does not determine whether a private agreement is void or unenforceable. The question of enforceability has to be tested under Section 23 of the Indian Contract Act, 1872, which makes an agreement void only when its consideration or object is unlawful, including where it is of such a nature that, if permitted, it would defeat the provisions of law. The expression refers to defeating the expressed terms of a legislative enactment, not merely an administrative instruction. The departmental letter relied upon by the arbitrator was not an Act of the legislature declaring supplies at the stated rate unlawful. The finding that the contract was void and unenforceable was therefore legally unsustainable and patently illegal. Such an award was liable to be interfered with under Section 34 of the Arbitration and Conciliation Act, 1996.

Conclusion: The finding that the contract was void ab initio and unenforceable was set aside, and the arbitral award as well as the concurrent orders refusing interference were quashed.

Ratio Decidendi: An agreement is not void under Section 23 of the Indian Contract Act, 1872 merely because it may conflict with an administrative instruction; it is void only when its performance necessarily involves violation of the expressed provisions of law.

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