RESEARCH NOTE

The Apex Court’s in the case of Grasim Industries Ltd. and Ors. Vs.
Agarwal Steel, (2010) 1 SCC 83 observed as under:

“5. In our opinion, when a person signs a document, there is a

presumption, unless there is proof of force or fraud, that he has read the
document properly and understood it and only then he has affixed his
signatures thereon, otherwise no signature on a document can ever be
accepted. In particular, businessmen, being careful people (since their
money is involved) would have ordinarily read and understood a
document before signing it. Hence the presumption would be even
stronger in their case. There is no allegation of force or fraud in this case.
Hence it is difficult to accept the contention of the respondent while
admitting that the document Ex.D-8 bears his signatures that it was
signed under some mistake. We cannot agree with the view of the High
Court on this question. On this ground alone, we allow this appeal, set
aside the impugned judgment of the High Court and remand the matter
to the High Court for expeditious disposal in accordance with law.”

In the case of Alva Aluminium Ltd. Bangkok vs Gabriel India Limited

(2011) 1 SCC 167, the Supreme Court held the following:

“The documents, information and correspondence when taken in their

totality especially in the light of the signed contract document that
stipulates the mutual rights and obligations of the parties do not show
that the parties were simply negotiating a contract. The information
provided, the correspondence exchanged and the documents executed
are on the contrary clearly suggestive of the parties having finalized and
signed a contract.

So also the assertion of the respondent that the petitioner had mis-
directed, enticed or mis-guided Shri Dabri who was admittedly
negotiating the contract on its behalf, had no authority to do so need be
noticed only to be rejected. There are no particulars leave alone any
material to establish that the signatures appended by Shri Dabir to the
contract document in token of its acceptance, was vitiated by any
misrepresentation or such other considerations that could have the effect
of vitiating the contract. In the absence of details and particulars of what,
according to the respondent, constituted inducement, mis- guidance or
mis-direction referred to in paragraph 8, it is difficult to see how a fluent
use of such expressions can help the respondent in avoiding a contract
that had come into existence between the parties. A heavy duty lies upon
the party who seeks to avoid a contract on the ground of mis-
representation, fraud or coercion to prove any such allegation. Nothing of
the sort has been done in the instant case by the respondent. So much
so the respondent has not even placed on record any charter of duties
and powers of Shri Dabir and Shri Sengupta nor has it chosen to place
on record any material to suggest that any action was indeed taken
against Shri Dabir for the alleged transgression of the limits of his
authority and if so the nature of the disciplinary action taken against
him. All this information and material was within the special knowledge
of the respondent. Non- furnishing of such information must, therefore,
give rise to an adverse interference against it. The petitioner company
had in any event no reason to believe or even suspect that Shri Dabir
with whom it was dealing did not have the authority to sign the contract
which was finalized between the two companies acting through their
representatives. That is so especially when even according to the
respondent, Shri Dabir had been authorized to negotiate the terms on
behalf of the respondent. If Shri Dabir was competent to negotiate the
terms of the contract, the petitioner cannot be said to have induced or
defrauded him into signing of the contract, which was forwarded to the
respondent and which was returned duly signed by Shri Dabir. The
petitioner was in this backdrop justified in proceeding on the basis that
the contract was duly negotiated and signed on behalf of the respondent
company.
 In the totality of the above circumstances, I have no doubt that a legally
valid contract had indeed come into existence between the parties which
contained an arbitration clause for adjudication of disputes that may
arise between them.”

In Unikol Battlers Ltd. Vs. Dhillon Kool Drinks 1994 SCC OnLine Del
83, the Delhi High Court held:

“While dealing with the question of duress/coercion and unequal

bargaining power one is really concerned with the question of free will,
i.e. did the parties enter into the agreement with a free will? It is the
plaintiff who has raised the question of its will being dominated by the
defendants and, Therefore, not being a free agent. Therefore, the plaintiff
is on test. It has to be ascertained whether the plaintiff exercised a free
will or not while entering into the Supplemental Agreement. For this
purpose there are several factors which need to be looked into. They are -

1.Did the plaintiff protest before or soon after the agreement?

2. Did the plaintiff take any steps to avoid the contract? 3.Did the
plaintiff have an alternative course of action or remedy? If so, did the
plaintiff pursue or attempt to pursue the same? 4. Did the plaintiff
convey benefit of independent advice?

(33) The above questions when examined in the light of the facts on
record it appears that the plaintiff never made any protest before entering
into the Supplemental Agreement or even thereafter. On the contrary the
plaintiff affirmed the Supplemental Agreement and went ahead with its
performance. The agreement was challenged only just before it was about
to expire. Thus the plaintiff took all the benefits under the agreement and
chose to attack it and raises all the questions now raised in the present
suit after the agreement had been allowed to run its full course. While on
protest it is also worth noting that the plaintiff did not even reply to the
two notices of termination served on it by the defendant. The conduct of
the plaintiff in challenging the Supplemental Agreement is further to be a
decried for the reason that the plaintiff submits that it was not getting
any great advantage under the agreement. Therefore, there was all the
more reason that the plaintiff should have instead of entering into this
agreement, raised its voice and sought the remedy in Court at that stage.
Already there was no love lost between the parties. Pfl had already served
notices of termination and nothing worse could have happened. The
plaintiff could have approached the Court at that stage. This also
answers the second question posed above, i.e. did the coerced party take
steps to avoid the contract? The plaintiff on the contrary affirmed the
contract and took benefit there under by allowing it to run its full course.
The third question is also already answered because the plaintiff could
have sought alternative remedy before entering into the Supplemental
Agreement by going to Court. It did not do so. It rather went ahead with
the agreement. After having done so the plaintiff is not entitled to
challenge the agreement. If the party complaining of an unfair contract
does not do anything to avoid it or accepts it then the complaining party
cannot make a grievance of the contract.

It appears that it was more out of plaintiff's own commercial necessities

that the plaintiff entered into the Supplemental Agreement and the
Supplemental Agreement was not the result of any legitimate pressure
exercised on the plaintiff by PFL. If that was not so, the plaintiff should
have challenged the threatened termination of the contract by Pfl, if
necessary, by going to Court. There was nothing which prevented the
plaintiff from going to Court and seek its remedies against the threatened
termination of the parent agreement at that stage. Therefore, it is difficult
to say that the Will of the plaintiff was dominated by Pfl on account of
duress or unequal bargaining power. The plaintiff look a conscious
decision in March 1992 when it entered into the Supplemental
Agreement. It was a conscious decision to use the Supplemental
Agreement was admittedly discussed and the plaintiff made its comments
on the agreement. The Supplemental Agreement was negotiated in the
background of threatened termination of the parent agreement. The
notices of termination served by Pfl on the plaintiff were pending. Thirdly
the language of the Supplemental Agreement does not suggest any kind
of pressure on any of the parties. On the contrary its language suggests
absolute free will of both the parties indicating that it was a voluntary act
of the parties. The agreement was arrived at in a spirit of amicable
resolution of the pending issues between both the parties.

(37) The Contracts are meant to be performed and not to be avoided.

Justice requires that men who have negotiated at arm's length, be held to
their bargains unless it can be shown that their consent was vitiated by
fraud, mistake or duress. The real test is to first establish that the means
pursued were illegitimate in the sense of amounting to or threatening a
crime, tort or a breach of contract (though possible not plausible breach
of contract will suffice). Secondly, one must establish that the illegitimate
means were a reason, though not necessarily the pre-dominate reason for
the victim's submission. Applying' these tests to the facts of the present
case. I am unable to persuade myself to hold that the consent of the
plaintiff to enter into the Supplemental Agreement was not free or was
vitiated on any of the grounds urged before me and discussed
hereinbefore.”