The Revival of Ray LXI

In every case where a statute inflicts a penalty for doing an act, though the act be not prohibited, yet the thing is unlawful, because it is not intended that a statute would inflict a penalty for a lawful act. It is a question of construction in each case whether the Legislature intended to prohibit the doing of the act altogether, or merely to make the person who did it liable to pay the penalty.

Where a contact, express or implied, is expressly or by implication forbidden by statute, no Court will lend its assistance to give it effect. A contract is void if prohibited by a statute under a penalty, even without express declaration that the contract is void, because such a penalty implies a prohibition.

A distinction is sometimes made between, contracts entered into with the object of committing an illegal act and contracts expressly or impliedly prohibited by statute. If a contract is made to do a prohibited act, that contract will be unenforceable. It is well established, a contract which involves in its fulfilment the doing of an act prohibited by statute is void.”

– Hon’ble Chief Justice of India, Hon’ble Justice A.N. Ray, Mannalal Khetan v. Kedar Nath Khetan, (1977) 2 SCC 424.

The principle underlying Mannalal Khetan v. Kedar Nath Khetan, (1977) 2 SCC 424 must apply on all fours while analyzing the purport of Section 31 of The Foreign Exchange Regulation Act, 1973.

Hon’ble Justice A.M. Khanwilkar, Asha John Divianathan v. Vikram Malhotra, [Civil Appeal No. 9546 of 2010].