Kedar Nath Motani, (1960) 1 SCR 861 had an occasion to consider the question of application of the maxims ‘ex turpi causa non oritur actio‘ and ‘ex dolo malo non oritur actio‘. The Three-Judge Bench, speaking through M. Hidayatullah, J. (as His Lordship then was), observed thus:
“The correct position in law, in our opinion, is that what one has to see is whether the illegality goes so much to the root of the matter that the plaintiff cannot bring his action without relying upon the illegal transaction into which he had entered. If the illegality be trivial or venial and the plaintiff is not required to rest his case upon that illegality, then public policy demands that the defendant should not be allowed to take advantage of the position. A strict view, of course, must be taken of the plaintiff’s conduct, and he should not be allowed to circumvent the illegality by resorting to some subterfuge or by misstating the facts. If, however, the matter is clear and the illegality is not required to be pleaded or proved as part of the cause of action and the plaintiff recanted before the illegal purpose was achieved, then, unless it be of such a gross nature as to outrage the conscience of the Court, the plea of the defendant should not prevail.”
Subsequently, another Three-Judge Bench [Immani Appa Rao, (1962) 3 SCR 739], speaking through P.B. Gajendragadkar, J. (as His Lordship then was), observed thus:
“In deciding the question as to which maxim should govern the present case it is necessary to recall what Lord Wright, M.R. observed about these maxims in Berg v. Sadler and Moore, (1937) 2 KB 158. Referring to the maxim ‘ex turpi causa non oritur actio’, Lord Wright observed that, “this maxim, though veiled in the dignity of learned language, is a statement of a principle of great importance; but like most maxims it is much too vague and much too general to admit of application without a careful consideration of the circumstances and of the various definite rules which have been laid down by the authorities”. Therefore, it would be necessary for us to consider carefully the true scope and effect of the maxims pressed into service by the rival parties, and to enquire which of the maxims would be relevant and applicable in the circumstances of the case.”
“It could thus be seen that, although illegality is not pleaded by the defendant nor is relied upon by him by way of defence, yet the Court itself, upon the illegality appearing upon the evidence, will take notice of it, and will dismiss the action ‘ex turpi causa non oritur actio’. It has been held, that no polluted hand shall touch the pure fountain of justice. It has further been held, that where parties are concerned in illegal agreements or other transactions, Courts of Equity following the rule of law as to participators in common crime will not interpose to grant any relief, acting upon the maxim ‘in pari delicto potior est conditio defendetis et possidentis’. We have to apply the principles of law as deduced by this Court in the case of Kedar Nath and Immani Appa Rao, to the facts of the present case.
Let us apply the another test laid down in Immani Appa Rao. At the cost of repetition, both the parties are common participator in the illegality. In such a situation, the balance of justice would tilt in whose favour is the question. As held in Immani Appa Rao, if the decree is granted in favour of the plaintiff on the basis of an illegal agreement which is hit by a statute, it will be rendering an active assistance of the Court in enforcing an agreement which is contrary to law. As against this, if the balance is tilted towards the defendants, no doubt that they would stand benefited even in spite of their predecessorin-title committing an illegality. However, what the Court would be doing is only rendering an assistance which is purely of a passive character. As held by Gajendragadkar, J. in Immani Appa Rao, the first course would be clearly and patently inconsistent with the public interest whereas, the latter course is lesser injurious to public interest than the former.”
– Hon’ble Justice B.R. Gavai, Naryanamma v. Govindappa, [Civil Appeal Nos. 7630-7631 of 2019].