Agreement against Public Policy Indian Contract Act

In simple terms, public policy refers to the government`s policy for the well-being of society, it can also be said that if an agreement violates a developed interest of society or the morality of the time, it can be considered contrary to public order and the agreement turns out to be invalid. It has been found that an agreement cannot be enforced if it violates the public good[ii] or violates the general policy of the law[iii]. In P. Rathinam v. Union of Idnia[iv], the Supreme Court held that the concept of public policy is open to amendments and extensions to the Privy Council in Raja Venkata Subhadrayamma Guru v. Sree Pusapathi Venkapathi Raju[vi], concluded that the court can refuse to apply such agreements only if it finds that they are not concluded with an object or reward in good faith, seems exorbitant and ruled that Champerty and maintenance are not illegal in India. Pursuant to subsection 2(7) of the Arbitration and Conciliation Act, 199622 an arbitral award under Part I of the Act referred to as a “national award”. The award shall be deemed final and binding on the claimants (and witnesses to the arbitration) of the arbitration. In addition, in accordance with the Code of Civil Procedure, the award will be enforced in the same way as if it were a court order within which the period for challenging the award has elapsed (90 days). Prior to the 2015 amendment, challenging an arbitral award essentially meant suspending the enforceability of the award, but now challenging the award does not mean directly suspending enforceability until the court grants it. Where an agreement is concluded by a person by whom he is required to do something contrary to his public duty, the agreement is null and void for reasons of public policy. For example, an agent`s agreement to make secret profits is void because it is contrary to public order. Similarly, an agreement by a government official to buy land in his county is illegal as opposed to public order.

Agreements that interfere with marital obligations are contrary to public policy and are void. Some actions are not expressly prohibited by law, but their nature is so malicious that they cannot be included in a legal contract. Edward Q keabey`s article mentions laws made for the provision of legal assistance to companies that have been convicted in various states that should not violate public order and should not fall under agreements restricting trade. Companies with huge amounts of ownership, rapid growth, large companies, etc. should be controlled and managed and trading with competing companies for small amounts of money can lead to epidemics. In simpler terms, such agreements or contracts that restrict an adult`s freedom to choose a partner for marriage are contrary to public policy and are considered null and void. In a contract, one of the most important elements is legal consideration, and contracts without unlawful consideration are cancelled under section 23 of the Indian Contracts Act. A clause in § 23 prevents a person from concluding a contract contrary to public policy. Public policy does not have an appropriate definition. Public order is essentially an issue that benefits the public and is in the public interest. Agreements that are directed against the well-being of the public are therefore rejected.

The task of the courts is to enforce contracts, but the courts may refuse to enforce contracts for reasons of public interest. A state amendment to the Registration Act of 1908 allowed the Registrar to refuse registration of a power of attorney authorizing the lawyer to transfer certain immovable property because the registration of such documents was contrary to the State of Rajasthan v. Basant Nahata, (2005) 12 SCC 77: AIR 2005 SC 3401. In ruling on the dispute, the Court held that the methods of payment which form an integral part of the agreement are ambiguous. Such uncertainty rendered the agreement null and void under the provisions of Article 29. The agreement was annulled because it violated public order of the law. 5.2 India`s public policy in contradiction with arbitral awards – An agreement by which a party agrees to terminate criminal proceedings pending in court for a certain amount of money is illegal. . . .

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