Supreme Court: Subordinate Legislation considered as Law under Section 23 of Indian Contract Act

Shivani Gadhavi

Published On: January 21, 2022 at 15:20 IST

The Supreme Court on January 18, 2022 observed that in accordance with Section 23 of the Indian Contract Act, Subordinate Legislation in the form of Statutory Rules could be considered as Law.

The Supreme Court Bench of Justices K M Joseph and P S Narsimha were hearing an Appeal pertaining to a Case under Specific Performance within which the Petitioner (Defendant in the Original Case) was Challenging Orders of the Trial Court and the High Court.

The Advocate for the Petitioner, Senior Counsel Kiran Suri, stated that the Order of the High Court ruling that the Suit against the Petitioner is maintainable was unsustainable. The Advocate stated that granting of Specific Relief by the Trial Court is also unsustainable in vide with Rule 18(2) of the Bangalore Rules of Allotment, 1972.

The Advocate contended that according to Rule 18(2) of the Bangalore Rules Allotment, the agreement within which the Defendants (in the current case) relied upon is Unlawful and hence, the granting of relief to the Defendants is unsustainable.

It was pointed out that according to Section 23 of the Indian Contracts Act, the agreement can be Ruled as Unlawful. Section 23 states that “consideration or object of an agreement is Lawful, unless it is forbidden by Law.”

The Bench in the present Case, observed that “What is contemplated under Section 23 of the Indian Contract Act is Law, in all its forms, being immunized from Encroachment and Infringement by a Contract, being enforced. Not only would a Statutory Rule be Law within the meaning of Article 13 of the Constitution of India but it would also be Law under Section 23 of the Indian Contract Act.”

The Supreme Court stated that, “It is very clear that Regulations or Orders made under the Authority derived from the Legislature referred to by this Court, are species of Subordinate Legislation. Statutory Rules would also, therefore, clearly be Law.”

The Court ruled that the agreement between the parties involved is not enforceable as it would defeat the object of the Bangalore Rules Allotment, 1972.

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