Decided: 22 August, 1962
Bench: K.C. Das Gupta, P.B. Gajendragadkar and Raghubar Dayal, JJ
FACTS:
One of the partners filed criminal accusations against his co-partners in the dissolution and settlement of accounts of a partnership firm, citing forgery in and manipulation of accounts. After the partners decided to take the dispute to arbitration, the complainant failed to present any supporting documentation, and as a result, his complaint was dismissed.
ISSUES:
Whether the arbitrator’s award was enforceable and the agreement between the partners to enter arbitration valid?
JUDGMENT:
Jus. Gajendra Gadkar, the later Chief Justice, believed the agreement to be against public policy. The pledge by the first respondent (complainant) not to pursue his complaint, which constituted a non-compoundable offence, was the unlawful consideration for the arbitration agreement, and as a result, the agreement was void under Section 23 of the Indian Contract Act of 1872. “If a person sets the machinery of criminal law into action on the allegation that the opponent has committed a non-compoundable offence and by the use of the coercive criminal process, he compels the opponent to enter into an agreement, that agreement would be treated as invalid for the reason that its consideration is opposed to public policy”
Comments