In Shri Lachoo Mal v. Shri Radhey Shyam, (1971) 1 SCC 619 this Court while deciding whether an agreement was void and not enforceable under Section 23 of the Indian Contact Act held:
What makes an agreement, which is otherwise legal, void is that its performance is impossible except by disobedience of law. Clearly no question of illegality can arise unless the performance of the unlawful act was necessarily the effect of an agreement.
We are, therefore, of the opinion that unless the effect of an agreement results in performance of an unlawful act, an agreement which is otherwise legal cannot be held to be void and if the effect of an agreement did not result in performance of an unlawful act, as a matter of public policy, the court should refuse to declare the CONTRACT void with a view to save the bargain entered into by the parties and the solemn promises made there under. As has been observed by Lord Wright in Vita Food Products Incorporated v. Unus Company Ltd. (in liquidation) (1939) AC 277 at p. 293):
Nor must it be forgotten that the rule by which CONTRACTs not expressly forbidden by statute or declared to be void are in proper cases nullified for disobedience to a statute is a rule of public policy only, and public policy understood in a wider sense may at times be better served by refusing to nullify a bargain save on serious and sufficient grounds.