Courts Supreme Court
Supreme Court rejects suit to recover money for illegal loan procurement
The case concerns a dispute over the recovery of money paid for the procurement of bank loans, where the Supreme Court determined that the underlying agreement was illegal and fraudulent.
The core issue was whether the suit for recovery was maintainable or should be rejected under Order VII Rule 11 of the Code of Civil Procedure.
Who it concerns: Appellants: Poosa Sri Krishna and 9 others; Respondents: Gattu Kishan Rao and Gattu Indrasena; Bench: Justice Ahsanuddin Amanullah and Justice Manmohan.
What the court decided
- The appeal is allowed.
- The application under Order VII Rule 11 of the CPC is allowed.
- The Suit bearing O.S. No.18 of 2018 pending before the Additional District Judge at Godavarikhani, Peddapalli District, Telangana is rejected.
Also in the document
- The Court held that the agreement was void under Section 23 of the Indian Contract Act, 1872, as the consideration was forbidden by law and opposed to public policy.
- The Court applied the principle of 'in pari delicto', stating that neither party can obtain relief when both are at equal fault.
- The Court noted specific averments in the plaint that part of the money was for satisfying bank officials in their personal capacity and that demonetized notes were procured for exchange.
- The Court distinguished the case of Sita Ram v. Radha Bai, finding that the illegal purpose had been substantially carried into effect.
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The original document
Supreme Court of India — orders & judgments
Court order · 11 Sep 2026
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