WHAT IS THE DOCTRINE OF IN PARI DELICTO?

 WHAT IS THE DOCTRINE OF IN PARI DELICTO?

COURTS CANNOT LEND THEIR ASSISTANCE TO AN ILLEGAL OR UNACCOUNTED TRANSACTION; THE LOSS MUST LIE WHERE IT FALLS.

You Cannot Recover Money through Court When the Payment Itself Was for an Illegal Purpose

Poosa Sri Krishna & Ors. v. Gattu Kishan Rao & Anr., 2026 INSC 974, decided on 31 August 2026, the Supreme Court held that where the plaint itself reveals that the money was paid for an illegal and fraudulent purpose, the suit cannot be permitted to proceed. The plaint was accordingly rejected

The underlying arrangement involved payments allegedly made for procuring bank loans, including amounts intended to satisfy bank officials in their personal capacity. The plaint also referred to the procurement and exchange of demonetized currency.

The Court held that law, opposed to public policy and fraudulent, rendering the agreement void under Section 23 of the Indian Contract Act, 1872, forbade the object of the arrangement.

Court then applied the doctrine of in pari delicto—where parties are equally at fault in an illegal transaction, the Court will not come to the rescue of either party

The Supreme Court also reaffirmed the principle laid down in G. Pankajakshi Amma v. Mathai Mathew, (2004) 12 SCC 83: courts cannot lend their assistance to an illegal or unaccounted transaction; the loss must lie where it falls.

# Your Compliance expert R V SECKAR, FCS, LLB 79047 19295,