Madhub Chunder poramanik Vs.

Rajcoomar Doss and Others.

(14 B.L.R 76)
Submitted by

Abhipsa Upasana Dash

Division: A
PRN. No: 14010224001
Class BB.A. LL.B.

of
Symbiosis Law School, NOIDA
Symbiosis International University, PUNE

In
March, 2015
Under the guidance of
Dr. Mhd. Salim
Designation and official address of research guide
First Floor, Faculty Room
Symbiosis Law School, Noida

C E R T IF IC AT E

The Project entitled Madhub Chunder poramanik Vs. Rajcoomar Doss and
Others to the Symbiosis Law School, NOIDA for law of contracts as part of
Internal assessment is based on my original work carried out under the
guidance of Dr. Md. Salim from December to March 2015. The research
work has not been submitted elsewhere for award of any degree. The
material borrowed from other sources and incorporated in the thesis has
been duly acknowledged. I understand that I myself could be held
responsible and accountable for plagiarism, if any, detected later on.
Signature of the candidate

Date:

Madhub Chunder poramanik Vs. Rajcoomar Doss and

Others. (14 B.L.R 76)

INTRODUCTION:
LEAD IN
This case as decided by the high court of Calcutta, assumes the effect of
Contract Act IX of 1872, revolves around restraint of trade and protection of
freedom of trade and commerce. The facts giving rise to this appeal are, for
the most part, undisputed and the cause of contention between the parties
centres round the short point as to whether a contract for partial or total
restriction on trade of goods as discharged and came to an end by reason of
certain supervening circumstances which affected the performance of the
material part of it. Through this short essay on the case of Madhub
Chunder Poramanik Vs Rajcoomar Doss and others, it is clearly stated
that section 27 is attracted whether the restraint is partial or total. Honble
judges Sir Richard Couch, Kt., C.J. and Pointifex, JJ held that the plaintiff
held no right to recover the money which he claimed. It was directed in the
judgment to be entered for the defendants with the costs of suit, including
the costs of reserving and arguing this case.

STATEMENT OF FACTS:
In this case the parties to the contract carried on business as braziers in a
certain part of Calcutta. As the mode of the business of the plaintiff was
found by the defendants to be detrimental to their business interest, an
agreement was entered into between the plaintiff and the defendants
whereby the plaintiff agreed to stop his business in that quarter and the
defendant promised in consideration of his doing so to pay the plaintiff all
the sums which he had then distributed as advance to the workers. In terms
of the agreement the plaintiff ceased carrying on the business in that
quarter, but the defendants failed to perform their part of the contract,
namely, to pay to the plaintiff all the sums which the plaintiff had advanced
to their workmen.
The plaintiff therefore sued to recover from the defendants Rs. 900 being the
amount advanced by him to their workmen. It was held by the High Court

that the agreement was void under section 27 of the Indian contract act
even though the restriction put on the plaintiffs business was limited to a
particular location. The plaintiffs suit failed on the ground that when the
agreement on the part of the plaintiff was void, there was no consideration
for the agreement on the part of the defendants to pay the money and the
whole contract was to be treated as one which could not be enforced.

Posture & Holding

The plaintiff sued the defendants, for that the plaintiff having opened a shop
in Kansareepara, in Simla, in the town of Calcutta, for the sale of copper
utensils, the defendants proposed to the plaintiff to cease carrying on the
said business in the said locality, on the ground of its being detrimental to
their business, and offered and agreed in consideration of his doing so to pay
to the plaintiff all sums which he had then disbursed as advances to
workmen, whereupon the plaintiff did agree and consent to cease carrying
on the said business, and did accordingly cease; and that the defendants
have neglected and refused to perform their part of the contract, to wit, to
reimburse the plaintiff in all same that he had advanced to workmen,
whereby the plaintiff has sustained damages to the amount stated, namely,
Rs.900.

HISTORY
The plaintiff drew the attention with the introductory statement The
restraint referred to in s. 27 of the Contract Act must mean an absolute and
not a partial restraint; according to English law a partial restraint of trade
like the present would be perfectly legal. It was restraint by defendant; that
a party shall not be restricted in carry on a trade in a certain locality; this is
a restraint, and clearly comes within the purview of the section, and,
therefore, the agreement is void.
The case became complicated with the term of that, it was a matter between
Hindus residing in Calcutta, and asked to be allowed to argue that the
Contract Act did not apply to such a case.
As what constitutes restraint of trade is summarized in Halsburys Laws of
England , where it is opined that it is a general principle of the Common Law
that a man is entitled to exercise any lawful trade or calling as and when he
wills and the law has always regarded jealously any interference with trade,
even at the risk of interference with freedom of contract, as it is public
policy to oppose all restraints upon liberty of individual action which are
injurious to the interests of the State. In deciding whether a contractual
term amounts to a restraint of trade, the Court looks not at the form of the
term but its effect. It was held that the doctrine can therefore apply to
indirect restrictions, such as a financial incentive not to compete with the

employer. Agreements in restraint of trade are extremely common and it

would be intolerable hindrance to business if they were not allowed.

CASE ANALYSIS:
The Case has become the locus classicus on this subject. The observations
were:" The words 'restraint from exercising a lawful profession, trade or
business' do not mean an absolute restriction, and are intended to apply to a
partial restriction, a restriction limited to some particular place, otherwise
the first exception would have been unnecessary .'
Moreover, 'in the following Section (Section28) the legislative authority when
it intends to speak of an absolute restraint and not a partial one, has
introduced the word 'absolutely'.... The use of this word in Section 28
supports the view that in Section 27 it was intended to prevent not merely a
total restraint from carrying on trade or business, but a partial one. We have
nothing to do with the policy of such a law. All we have to do is to take the
words of the Contract Act, and put upon them the meaning which they
appear plainly to bear."
According to a classic interpretation by Sir Richard Couch in one of the
earliest judicial interpretations of the statute, s.27 covers both complete and
partial restraints. The words restraint from exercising a lawful profession,
trade or business do not mean an absolute restriction, and are intended to
apply to a partial restriction, a restriction limited to some particular place,
otherwise the first exception would have been unnecessary. Moreover, in the
following s. (s.28) the legislative authority when it intends to speak of an
absolute restraint and not a partial one, has introduced the word
absolutely.... The use of this word in s.28 supports the view that in s.27 it
was intended to prevent not merely a total restraint from carrying on trade
or business, but a partial one. We have nothing to do with the policy of such
a law. All we have to do is to take the words of the Contract Act, and put
upon them the meaning which they appear plainly to bear.
The learned judge drew support from the word absolutely in section 28,
which deals with restraint of legal proceedings. As this word is absent from
section 27, therefore, he concluded, that it was intended to prevent not
merely a total restraint but also a partial restraint. The section has abolished
the distinction between partial and total restraints of trade. Whether the
restraint is general or partial, qualified or unqualified, if the agreement is in
the nature of a restraint of trade, it is void.

AUTHORS ANALYSIS:
The words 'restraint from exercising a lawful profession, trade or business'
do not mean an absolute restriction and are intended to apply to a partial

restriction, a restriction limited to some particular place, otherwise the first

exception would have been unnecessary. Moreover, in the following (section
28) the legislative authority when it intends to speak of an absolute restraint
and not a partial one, has introduced the word 'absolutely'....the use of this
word in section 28 supports the view that in section 27 it was intended to
prevent not merely a total restraint from carrying on trade or business but a
partial one. We have nothing to do with policy of such a law. All we have to
do is to take the words of the Contract Act, and put upon them the meaning
which they appear plainly to bear. The case, as stated, assumes that Act IX
of 1872 applied, and when the case was first argued before as, no question
was raised as to the application of that Act, but, subsequently, when the
judgment was just about to be delivered, it was called upon the question
which had been stated in the case, it was submitted to us that the Act did
not apply in the Small Cause Court to a case of this kind between Hindus.
That the law as it was before the Act was passed continued applicable, and
the case was governed by, Hindu law.
The decision by the court was rightly taken and as expected came under the
ambit of the ICA itself. The court did not presume the things; it went all on
facts, circumstances and evidences provided. The case reflected a good law
and doesnt tumble down the provisions of ICA henceforth. The method of
evaluating the decision of the court was systematic; it also took the help of
English cases and theories propounded by the English jurists while analyzing
its decision. Henceforth I would say the court properly analyzed its
circumstances and everything in set order.

CONCLUSION:
Contract law, for that matter, business law in general, must take into
consideration the practices of business and law must be expounded by the
legislature and the courts to implement the business decisions between
consensual parties. Hence, the concepts of contract law and their legal
consequences should ideally represent business practices as was in this
case, unless the overt intent of the law is to a secure a specific consequence.
The plaintiff held no right to recover the money which he claimed. It was
directed in the judgment to be entered for the defendants with the costs of
suit, including the costs of reserving and arguing this case.

BIBLOGRAPHY:
Making my case comment, I underwent a thorough study of the following
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AVTAR SINGH, CONTRACT AND SPECIFIC RELIEF 401 (11TH ed., EASTERN
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DR. KAILASH RAI,
PUBLICATIONS, 2009)

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Different Websites