A, in Bombay, bets with B and loses. A applies to C for a loan in order to pay B. C gives the loan to A to enable him to pay B. Can C recover the amount of loan from A? Would it make any difference if this transaction takes place in Hyderabad?
No- C cannot recover the amount of loan from A. The contract between the two is void being a collateral transaction to an illegal agreement. In Bombay, wagering agreements are not merely void; they are illegal. The consequence of an agreement being illegal is that if any collateral transaction is made by a person knowing the illegal object of the main transaction, the collateral transaction also becomes unenforceable.
If the aforesaid transaction had taken place in Hyderabad, it would have been a valid and enforceable contract since in Hyderabad betting transactions are only void and not illegal. Transactions collateral to a void agreement are valid.
No- C cannot recover the amount of loan from A. The contract between the two is void being a collateral transaction to an illegal agreement. In Bombay, wagering agreements are not merely void; they are illegal. The consequence of an agreement being illegal is that if any collateral transaction is made by a person knowing the illegal object of the main transaction, the collateral transaction also becomes unenforceable.
If the aforesaid transaction had taken place in Hyderabad, it would have been a valid and enforceable contract since in Hyderabad betting transactions are only void and not illegal. Transactions collateral to a void agreement are valid.
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