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of <h1>Court Orders Review of Profits from Illegal Contracts; Defendants Must Account for Funds Despite Waived Defense by Third Parties.</h1> <h3>Bhola Nath Versus Mul Chand and Ors.</h3> The HC remanded the issue to ascertain profits received by defendants under contracts deemed illegal under section 30 of the Contract Act. Despite the ... - Issues:Interpretation of contracts entered into by the plaintiff with third parties through the defendants as agents, legality of contracts under section 30 of the Contract Act, accountability of agents for money received under illegal contracts, waiver of illegality by third parties, applicability of section 30 of the Contract Act, need for further inquiry into actual payments made to defendants, remand of issue for determination of profits received by defendants.Analysis:The High Court examined the case where contracts were entered into by the plaintiff with third parties through the defendants acting as agents. The contracts fell under the purview of section 30 of the Contract Act, which prohibits suits for recovery of profits from such contracts. However, the third parties waived their right to rely on this section and paid money to the defendants for losses incurred. The Court emphasized that an agent receiving money under an illegal contract must still account to the principal, even if the other party waives the illegality. Citing legal precedents like De Mattos v. Benjamin and Bridger v. Savage, the Court reiterated that an agent cannot use the illegality of the contract as a defense for withholding payment. The principle from Tenant v. Elliott was also referenced to support this stance.The High Court disagreed with the lower appellate court's decision on the legal question raised in the case. While the contracts in question were found to be within section 30 of the Contract Act, the Court noted that the judgment was incorrect. It was highlighted that the lower court failed to determine if any money was actually paid to the defendants in relation to the contracts. The Court directed a remand of the issue under section 566 of the Code of Civil Procedure to ascertain the actual profits received by the defendants from the contracts. The remanded issue sought to determine the amount of profits received by the defendants and the remaining sum due to the plaintiff after accounting for brokerage, commission, and other charges as per the contract terms.In conclusion, the High Court emphasized the need for a detailed inquiry into the actual payments made to the defendants and the determination of profits received. The remand of the issue was aimed at clarifying the financial aspects of the contracts in question and ensuring a fair assessment of the amounts owed to the plaintiff after considering all relevant factors. The Court allowed for objections and the admission of further evidence to facilitate the resolution of the remanded issue.
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