The doctrine

of
“Severability in Contract”

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 Declaration by Scholar
I, Mr. Sunil Suresh Agarkar Studying in LLM (Semester- IV)
(Business Law) Roll No. 6 Undersigned, Do Hereby Declare That
The Doctrinal Research Report Entitled, " The Doctrine of
Severability in Contract " is a result of my own work and effort.
Any material scripted by any other commenter, and used hereinafter
has been thoroughly acknowledged.

Date:
Place: Anand
Sunil Suresh Agarkar
Name and Signature of Researcher
(Shree P. M. Patel P. G. Institute of law & Human Rights)

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 List of Cases

1. 1957 AIR 628 / 1957 SCR 930

2. [2023] 15 S.C.R. 1081 : 2023 INSC 1066

3. SUPREME COURT REPORTS [2006] SUPP. 6 S.C.R

4. SUPREME COURT REPORTS [2006] I S.C.R

5. [2014) 1 S.C.R. 796

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 Table of Contents

1. Introduction (context and general background)

2. Statement of Research Problem
3. Objectives
4. Literature Review
5. Hypotheses/ Research Question
6. Data Collection (Identification of material and cases etc.)
7. Discussion (Critical commentary by examining the
objectives and hypotheses and deriving inferences)
8. Conclusions / Recommendations
9. Bibliography
10.Appendix

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 1. Introduction (context and general background)

In the realm of contract law, the doctrine of severability holds

significant importance, offering a mechanism to salvage agreements
tainted by invalid or unenforceable clauses. This foundational
principle allows courts to surgically excise problematic provisions
from contracts while preserving the enforceability of the remaining
agreement. The doctrine operates on the premise that a contract
should be upheld to the fullest extent possible, despite the presence
of defects or breaches.

The genesis of the doctrine of severability can be traced back to the

inherent flexibility of contract law, which seeks to balance the
interests of parties while upholding principles of fairness and equity.
Contracts are dynamic instruments designed to govern relationships
and transactions, but they are not immune to errors, ambiguities, or
unforeseen circumstances. In such instances, the doctrine of
severability serves as a vital tool for courts to rectify contractual
imperfections without nullifying the entire agreement.

Historically, the application of the doctrine of severability has

evolved through judicial precedent and legislative enactments,
reflecting the changing landscape of contract law. Over time, courts
have refined the criteria for severability, considering factors such as
the parties' intentions, the nature of the offending clause, and public
policy considerations. This evolution underscores the adaptive
nature of contract law, which seeks to strike a delicate balance
between stability and flexibility.

In the contemporary legal landscape, the doctrine of severability

continues to play a central role in contractual disputes, offering a
nuanced framework for resolving conflicts and interpreting
agreements. Its application spans a wide array of contractual
contexts, from commercial transactions to employment agreements,
where the need for clarity and certainty is paramount.

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Against this backdrop, this doctrinal report seeks to explore the
doctrine of severability in contract law, examining its historical
origins, underlying principles, judicial interpretations, and practical
implications. By delving into these key aspects, we aim to provide a
comprehensive understanding of this fundamental doctrine and its
significance in modern contract law jurisprudence. Through a
nuanced analysis, we endeavour to shed light on the complexities and
nuances surrounding the doctrine of severability, offering insights
into its application and relevance in contemporary legal practice.

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 2. Statement of Research Problem
The doctrine of severability in contract law serves as a critical tool
in preserving the validity of contracts amidst disputes or breaches.
However, there exists a need for a comprehensive examination of
this doctrine within the Indian legal framework. The research aims
to address the following key questions:

1) How does the doctrine operate within the context of Indian

contract law?
2) What are the criteria used to determine severability in contract
clauses or agreements?
3) What are the implications of the doctrine of severability on
contractual rights and obligations in Indian jurisprudence?
4) Are there any limitations or ambiguities in the application of
the doctrine within Indian courts?
5) How do Indian courts interpret and apply the doctrine in cases
of contractual disputes?

By addressing these research questions, the study aims to contribute

to a deeper understanding of the doctrine of severability in Indian
contract law and provide insights for legal practitioners, scholars,
and policymakers.

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 3. Objectives
1) To analyse the legal framework governing the doctrine of
severability in Indian contract law: This objective involves
a brief examination of the relevant statutes, case law, and
judicial interpretations that shape the application of the
doctrine within the Indian legal context.

2) To identify the criteria for determining severability in

contract clauses or agreements: This objective seeks to
elucidate the factors considered by Indian courts when
assessing the severability of specific contractual provisions,
including considerations of legality, intention of the parties,
and public policy.

3) To assess the implications of the doctrine of severability on

contractual rights and obligations: This objective involves
an analysis of how the doctrine impacts the enforceability of
contracts, the allocation of rights and responsibilities between
parties, and the remedies available in cases of breach or
dispute.

4) To examine the limitations and ambiguities in the

application of the doctrine within Indian jurisprudence:
This objective aims to identify any inconsistencies,
uncertainties, or gaps in the application of the doctrine by
Indian courts, as well as potential areas for clarification or
reform.

5) To evaluate judicial interpretations and case law related to

the doctrine of severability: This objective involves a critical
analysis of relevant court decisions and legal precedents,
examining the reasoning employed by courts in applying the
doctrine and its implications for contractual disputes.

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 4. Literature Review
1) Legal Framework Governing the Doctrine of Severability
in Indian Contract Law
The doctrine of severability in Indian contract law is rooted in
both statutory provisions and judicial precedents. An Author
in its scholary article (can be viewed at
https://lawbhoomi.com/doctrine-of-severability/)
have extensively analysed the legislative framework
surrounding doctrine of severability. The Indian Constitution
provides the foundational principles governing the doctrine.

2) Criteria for Determining Severability in Contract Clauses

or Agreements
Determining the severability of contractual provisions
requires a nuanced analysis of various factors. Scholars such
as have highlighted the importance of examining the parties'
intentions, the nature of the contractual terms, and
considerations of public policy. Additionally, judicial
decisions such as have elucidated specific criteria used by
Indian courts when assessing the severability of contract
clauses, emphasizing principles of reasonableness and
fairness.

3) Implications of the Doctrine of Severability on

Contractual Rights and Obligations
The application of the doctrine of severability significantly
impacts the rights and obligations of contracting parties.
Scholars such as have discussed how the doctrine affects the
enforceability of contracts and the allocation of
responsibilities between parties. Furthermore, case law
developments, such as, have demonstrated the practical
implications of severability on remedies available in cases of
breach or contractual disputes.

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4) Limitations and Ambiguities in the Application of the
Doctrine within Indian Jurisprudence
Despite its importance in contract law, the doctrine of
severability is not without limitations and ambiguities in its
application. Scholars such as have identified inconsistencies
and uncertainties in judicial interpretations, particularly
regarding the standard for severability and the scope of its
application. Furthermore, exemplifies instances where the
doctrine's application may be subject to differing judicial
interpretations, leading to potential challenges for
practitioners and litigants.

5) Judicial Interpretations and Case Law Related to the

Doctrine of Severability
An analysis of judicial interpretations and case law provides
valuable insights into the practical application of the doctrine
of severability. Notable cases have contributed to the
development of jurisprudence surrounding severability,
shaping the legal landscape for contractual disputes. Legal
scholars and practitioners continue to engage with these
precedents, examining the reasoning employed by courts and
their implications for contractual interpretation and
enforcement.

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 5. Hypotheses/ Research Question

The doctrine of severability in contract law is a legal principle that

allows courts to separate valid and invalid provisions within a
contract. It is applied when certain parts of a contract are found to be
unenforceable due to illegality, invalidity, or unconscionability,
while other provisions remain valid and enforceable. This doctrine
can be applied to contracts to preserve the parties' intentions and
uphold the fundamental purpose of the agreement, ensuring fairness
and promoting efficiency in contractual relationships. However,
there are limitations to its application. The doctrine may not be
applied when the invalid provision is so integral to the contract that
removing it would fundamentally alter the parties' obligations or
intentions. Additionally, if severing the invalid provision would
result in an inequitable outcome or go against public policy, the
doctrine may not be applied.

Explanation:

What is the doctrine of severability?

The doctrine of severability allows courts to separate valid and

invalid provisions within a contract. When certain parts of a contract
are deemed unenforceable, the court can "sever" or remove those
parts while upholding the remaining valid provisions.

How is it applied to a contract?

The doctrine is applied by examining the validity of individual

provisions within a contract. If a provision is found to be illegal,
invalid, or unconscionable, the court may choose to sever it from the
contract while leaving the rest of the agreement intact and
enforceable.

When can this doctrine be applied to a contract?

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This doctrine can be applied when there are specific provisions
within a contract that are found to be unenforceable due to illegality,
invalidity, or unconscionability. By severing these provisions, the
court aims to preserve the valid aspects of the contract and fulfil the
parties' intentions to the extent possible.

When can this doctrine not be applied to a contract?

The doctrine may not be applied in cases where severing the invalid
provision would fundamentally alter the parties' obligations or
intentions, or if it would lead to an inequitable outcome.
Additionally, if severing the provision would go against public
policy, the court may choose not to apply the doctrine.

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 6. Data Collection (Identification of material and cases etc.)

The following material is identified for the study that includes legal
texts, cases, statutes, and scholarly articles:

Legal Texts and Statutes:

Indian Contract Act, 1872: This primary legislation governs

contracts in India and provides foundational principles relevant to
the doctrine of severability.

Relevant Sections of the Indian Penal Code (IPC): Sections

pertaining to unlawful agreements (Sections 23-30) can provide
insights into the legality of contract provisions.

Case Law:

Various Indian judicial decisions listed on page 3 of this report are

referred that have addressed the doctrine of severability in contracts.

Scholarly Articles and Commentaries:

Academic articles, commentaries, and legal journals that discuss the

doctrine of severability in contracts, particularly in the Indian
context.

Academic databases such as SCCOnline, Manupatra, HeinOnline ,

Coursera, JSTOR, Bloomsbury or for relevant publications are
searched for scholarly debates, theoretical frameworks, and practical
implications discussed in these sources.

Government Publications and Reports:

I have also explored government publications, reports, and guidance

documents related to contract law and judicial decisions. From
Government websites, law commission reports, and legal databases

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may contain valuable information on contract law developments and
interpretations.

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 7. Discussion (Critical commentary by examining the
objectives and hypotheses and deriving inferences)

Considerable number of data is referred. But only the relevant to the

objectives of this research is documented here.

The doctrine of severability is embedded in the Indian legal

framework. Foundation of this doctrine can be traced from Article
13 of the Constitution of India. In Part III – Fundamental Rights,
under the provisions of “Laws inconsistent with or in derogation of
the fundamental rights.” Article 13 (1) states that:

“All laws in force in the territory of India immediately before the

commencement of this Constitution, in so far as they are inconsistent
with the provisions of this Part, shall, to the extent of such
inconsistency, be void.”

Significance of this article is:

The excerpt states that any laws existing in India before the
commencement of the Constitution that are inconsistent with
the Fundamental Rights outlined in Part III of the Constitution
shall be void to the extent of such inconsistency.

The Indian Constitution was adopted on January 26, 1950, and

it guaranteed certain fundamental rights to the citizens of India.
These rights include the right to equality, right to freedom, right

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 against exploitation, right to freedom of religion, cultural and
educational rights, and the right to constitutional remedies.

The purpose of Article 13 is to ensure that the fundamental

rights guaranteed by the Constitution are upheld and protected.
It serves as a mechanism to invalidate any pre-existing laws that
conflict with these fundamental rights.

If any law, whether enacted by the central government, state

government, or any other authority, violates the fundamental
rights enshrined in the Constitution, such provisions of the law
will be rendered void and unenforceable to the extent of the
inconsistency.

Article 13 reflects the principle of constitutional supremacy,

which means that the Constitution is the supreme law of the
land, and any law inconsistent with it is deemed invalid. This
ensures that the fundamental rights of individuals cannot be
infringed upon by legislative enactments.

Article 13 empowers the judiciary to review the

constitutionality of laws and strike down those that are
incompatible with the Constitution. The judiciary acts as the
guardian of the Constitution and ensures that legislative and
executive actions adhere to its provisions.

Article 13 of the Indian Constitution addresses the doctrine of

severability implicitly by stating that any laws inconsistent with the

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Constitution's provisions, particularly those related to fundamental
rights, shall be void to the extent of such inconsistency. Here's how
Article 13 and the doctrine of severability are interconnected:

Voiding Inconsistent Laws: Article 13 provides that any law in force

before the Constitution's commencement that contradicts the
Constitution's provisions, especially those related to fundamental
rights, shall be void to the extent of the inconsistency. This implies
that if a provision within a pre-existing law violates fundamental
rights guaranteed by the Constitution, only that particular provision
will be deemed void while the rest of the law may remain valid.

Severability Principle: The doctrine of severability allows courts to

separate valid and invalid provisions within a law or contract. In the
context of Article 13, if a provision within a pre-constitutional law is
found to be inconsistent with fundamental rights, the court may
choose to sever that particular provision while upholding the validity
of the remaining provisions that are consistent with the Constitution.

Preservation of Valid Provisions: Article 13, by voiding only the

inconsistent provisions of pre-existing laws, aims to preserve the
valid portions of those laws. Similarly, the doctrine of severability
ensures that valid contractual obligations remain enforceable even if
certain provisions within the contract are deemed invalid.

Judicial Interpretation: Courts in India have applied the doctrine of

severability in cases involving the interpretation of Article 13. When
examining the constitutionality of laws, courts assess whether the

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offending provisions can be severed from the rest of the law without
affecting its core purpose or validity.

Balancing Rights and Legislative Intent: Article 13 and the doctrine

of severability involve a balancing act between upholding
fundamental rights and respecting legislative intent. Courts must
carefully consider the impact of severing provisions on the overall
effectiveness and purpose of the law while ensuring that fundamental
rights are not unduly infringed upon.

Therefore, Article 13 of the Indian Constitution and the doctrine of

severability are closely related in their objectives to ensure the
supremacy of the Constitution and protect fundamental rights. Both
aim to invalidate inconsistent provisions while preserving the
validity of the remaining laws or contracts to the extent possible.

Section 23 of the Indian Contract Act, 1872, deals with the legality
of consideration in contracts. Following is the text of Section 23:

"The consideration or object of an agreement is lawful, unless—

(1) It is forbidden by law; or

(2) It is of such a nature that, if permitted, it would defeat the

provisions of any law; or

(3) It is fraudulent; or

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(4) It involves or implies injury to the person or property of another;
or

(5) The Court regards it as immoral, or opposed to public policy."

It outlines the principle that for a contract to be valid, the

consideration or object of the agreement must be lawful. It specifies
various circumstances under which consideration or objects of
agreements are deemed unlawful:

Forbidden by Law: If the consideration or object of an agreement is

expressly prohibited by law, it renders the contract void.

Defeat of Provisions of Law: Even if the consideration or object is

not explicitly forbidden by law, if allowing it would result in
defeating the provisions of any law, the contract is void.

Fraudulent: If the consideration or object of the agreement involves

fraud, the contract is void.

Injury to Person or Property: If the consideration or object of the

agreement implies injury to the person or property of another, the
contract is void.

Immoral or Opposed to Public Policy: If the consideration or object

of the agreement is immoral or against public policy, as determined
by the court, the contract is void.

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Section 23 serves as a fundamental principle in contract law,
ensuring that contracts are based on lawful considerations and
objects. It aligns with broader legal principles of legality, fairness,
and public policy. Courts rely on this section to determine the
validity of contracts and to protect the interests of parties involved in
contractual agreements.

Following two questions comes up before us:

1) What will be the effect, if considerations mentioned in section
23 is included in the contract?
2) Will the whole contract be void, if considerations mentioned
in section 23 are included in the contract?

Section 23 of the Indian Contract Act, 1872 deals with the

consideration for a contract. It states that the consideration or object
of an agreement is lawful unless it is forbidden by law or is of such
a nature that, if permitted, it would defeat the provisions of any law
or is fraudulent or involves or implies injury to the person or property
of another or the court regards it as immoral or opposed to public
policy.

Including considerations mentioned in Section 23 of the Indian

Contract Act, 1872 in a contract has a significant effect on the
validity and enforceability of the contract. If the consideration
mentioned in the contract falls within the ambit of Section 23, the
contract may be deemed void or unenforceable.

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For example, if the consideration involves an illegal activity or is
against public policy, the contract would be considered void.
Similarly, if the consideration is fraudulent or involves injury to
another person or their property, the contract would also be void.

It is important to note that the court has the authority to determine

whether a particular consideration mentioned in a contract is lawful
or not. The court will consider various factors such as the nature of
the consideration, its impact on public policy, and its legality under
the relevant laws.

In conclusion, if considerations mentioned in Section 23 of the

Indian Contract Act, 1872 are included in a contract, it can have a
significant effect on the validity and enforceability of the contract. It
is essential to ensure that the consideration is lawful and does not fall
within the prohibited categories mentioned in Section 23 to have a
valid and enforceable contract.

Addressing to the second question; If any part of the consideration

in a contract is unlawful, but the other part is not, the whole
agreement will be void if the unlawful part cannot be separated from
the lawful part. For example, if A promises to work for B who runs
both illegal and legal businesses for a salary of Rs. 40,000 per month,
and B agrees to pay this amount to A, the part of the salary pertaining
to the legal business is lawful consideration. However, if the legal
and illegal businesses cannot be separated, the whole salary of A will
constitute unlawful consideration.

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Therefore, if the considerations mentioned in Section 23 are included
in a contract and they are found to be unlawful, the whole contract
will be void if the unlawful part cannot be separated from the lawful
part. It is important to ensure that the considerations in a contract
comply with the provisions of Section 23 to avoid any legal issues.

Let us examine the same by study of citations and judicial reviews.

In [2023] 15 S.C.R. 1081 : 2023 INSC 1066 the Supreme Court held:
The concept of separability reflects the presumptive intention of the
parties to distinguish the underlying contract, which captures the
substantive rights and obligations of the parties, from an arbitration
agreement which provides a procedural framework to resolve the
disputes arising out of the underlying contract.

In [2014) 1 S.C.R. 796 Parliament has made the Arbitration and

Conciliation Act, 1996 providing domestic arbitration and
international arbitration as a mode of resolution of disputes between
the parties and Exception 1 to s. 28 of the Contract Act, 1872 clearly
states that s.28 shall not render illegal a contract, by which two or
more persons agree that any dispute which may arise between them
in respect of any subject or class of subjects shall be referred to
arbitration and that only the amount awarded in such arbitration
shall be recoverable in respect of the dispute so referred.

In Shin Satellite Public Company Limited vs. Jain Studios Limited,

Supreme Court held:

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1.1 A court of law will read the agreement as it is and cannot rewrite
nor create a new one. The contract must be read as a whole and
it is not open to dissect it by taking out a pa1 t treating it to be
contrary to law and by ordering enforcement of the rest if
otherwise it is not permissible. But it is well settled that if the
contract is in several parts, some of which are legal and
enforceable and some are unenforceable, lawful parts can be
enforced provided they are severable. In several cases, courts
have held that partial invalidity in contract will not ipso facto
make the whole contract void or unenforceable. Wherever a
contract contains legal as well as illegal parts and objectionable
parts can be severed, effect has been given to legal and valid
parts striking out the offending parts. (942-G; 943-B]

1.2 The proper test for deciding validity or otherwise of an

agreement or order is 'substantial severability' and not 'textual
divisibility'. It is the duty of the court to severe and separate
trivial or technical part by retaining the main or substantial part
and by giving effect to the latter if it is legal, lawful and otherwise
enforceable. In such cases, the Court must consider the question
whether the parties could have agreed on the valid terms of the
agreement had they known that the other terms were invalid or
unlawful. If the answer to the said question is in the affirmative,
the doctrine of severability would apply and the valid terms of
the agreement could be enforced, ignoring invalid terms. To hold
otherwise would be " to expose the covenanter to the almost
inevitable risk of litigation which in nine cases out of ten he is
very ill able to afford, should he venture to act upon his own

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 opinion as to how far the restraint upon him would be held by the
court to be reasonable, while it may give covenantee the full
benefit of unreasonable provisions if the covenanter is unable to
face litigation." [946-C-E)

In BEED DISTRICT CENTRAL CO-OPERATIVE BANK LTD vs.

STATE OF MAHARASHTRA AND ORS. The Supreme Court has
observed and held about Blue Pencil Rule:

“Blue pencil rule/test. - Legal theory that permits a judge to limit

unreasonable aspects of a covenant not to compete.

Severance of contract. - "severance can be effected when the part

severed can be removed by running a blue pencil through it without
affording the remaining part. Attwood v. Lamont, (1920) 3 K 571
(Banking)

A rule in contracts a Court may strike parts or. a covenant not to A

compete in order to make the covenant reasonable. (Merriam
Webster)

Phrase referring to severance ( q. v.) of contract. "Severance can be

effected when the part severed can be removed by running a blue
pencil through it" without affording the remaining part. Attwood v.
Lamont, (1920) 3 KB 571. (Banking)"

Applying the 'Golden Rule of Interpretation of Statute', to us it

appears that the question should be considered from the point of view

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of the nature of the scheme as also the fact that the parties agreed to
the terms thereof. When better terms are offered, a workman takes it
as a part of the package. He may volunteer therefor, he may not. Sub-
Section (5) of Section 4 of the 1972 Act provides for a right in favour
of the workman. Such a right may be exercised by the workman
concerned. He need not necessarily do it. It is the right of individual
workman and not all the workmen. When the expression "terms" has
been used, ordinarily it must mean "all the terms of the contract".
While interpreting even a beneficent statute, like, Payment of
Gratuity Act, we are of the opinion that either contract has to be
given effect to or the statute. The provisions of the Act envisage for
one scheme. It could not be segregated. Sub-Section (5) of Section 4
of the 1972 Act does not contemplate that the workman would be at
libert)' to opt for better terms of the contract, while keeping the
option open in respect of a part of the statute. While reserving his
right to opt for the beneficent provisions of the statute or the
agreement, he has to opt for either of them and not the best of the
terms of the statute as well as those of the contract. He cannot have
both. If such an interpretation is given, the spirit of the Act shall be
lost.”

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 8. Conclusions

In conclusion to the above judicial reviews discussed illustrate the

courts' nuanced approach to interpreting and enforcing contractual
agreements. The Supreme Court's rulings emphasize the importance
of understanding the underlying intentions of the parties and
applying principles of severability and reasonableness.

Firstly, the concept of separability, underscores the distinction

between substantive rights and procedural frameworks within
contracts. This principle ensures that arbitration agreements are
treated separately from underlying contractual obligations.

Secondly, the Parliament's enactment of the Arbitration and

Conciliation Act, 1996, is upheld, affirming arbitration as a valid
mode of dispute resolution. The term confirming the use of the
arbitration is not void and not required to be separated.

Moreover, the doctrine of severability, underscores the courts' duty

to enforce valid contractual provisions while disregarding invalid or
unlawful terms. This doctrine allows courts to preserve lawful
aspects of contracts, ensuring fairness and enforceability.

Furthermore, the Blue Pencil Rule, as discussed above provides

courts with the authority to strike unreasonable clauses in contracts,
promoting fairness and reasonableness.

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Lastly, the application of the 'Golden Rule of Interpretation of
Statute' emphasizes the importance of interpreting statutes and
contracts in a manner that upholds their intended purpose and spirit.
This approach ensures consistency and clarity in legal interpretation.

In conclusion, these judicial reviews underscore the courts' role in

safeguarding contractual rights and promoting fairness in contractual
relationships. Through principles of separability, severability,
reasonableness, and statutory interpretation, courts strive to uphold
the integrity of contracts while ensuring justice and equity for all
parties involved.

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 9. Bibliography and Appendix

- The Constitution Of India

- The Indian Contract Act, 1872
- The Arbitration And Conciliation Act, 1996
- https://judgments.ecourts.gov.in/
- https://indiankanoon.org
- https://www.chadha-chadha.com/post/doctrine-of-blue-
pencil-in-india
- https://lawbhoomi.com/doctrine-of-severability/
- CITATIONS

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