Professional Documents
Culture Documents
Contract 1
Contract 1
Contract 1
Fr ee C on se nt
[176]
Coercion 177
. . [S
[S· 151
sent 15 caused' by mtstake, the ag. reement is void . s. 20 - 221
. t eniorcea bl e at t e option of either part. y. (S , l( g)J
re connent is
h
I
~ 1eag1.ee.1 no
·d
~ vol COERCION
· ,
c. 'tion [S. tS] h' h' coercion is voidable at
V~•ma reement the consent to w IC Is caused by . "Coercion" I·s d fi d
nt was so cau sed e . ne
Ao _g of the party whose conse .
the 0puon
. section 15. • "d fi d "C . ,,. h threatening
111 11coere1one ne ·- oerc,on IS t e committing, or
0) or the
15 t forbid den by the Indian Penal Code (XLV of 186 '
s.comm• ·,t, any ac . d . to the preiudice of
, de taining , or threa ten ing to etam, any property, '
to . t t· f rson to enter into an
unlaw, uson whatever, wi·th th e in en 10n o causing any pe
1
anY per . . f 1860), is
reement.
n. t is im ma terial wh eth er the Indian Penal Code (XLVo
ag E /anatio -I
the coerc. .ion is employed.
. xnpot in force in the place where . '
orrs ''
tions
Illustra
an agreement by an
an Eng lish ship on the high seas, causes 8 to enter into
A on board Code (XLV of 1860).
ation under the Indian Penal
act a~ounting to criminal intimid
contract at Calcutta.
Aafterwards sues Bfor breach of the law of England, and
I
coe rcion, althoug h his act is not an offence by
Ahas em plo yed in force at the time
tion 506 of the Ind ian Pen al Code (XLV of 1860), was not
although Sec
s done. '
when or place where the act wa
.
Techniques of causing coercion pressure
coercion when it is obtained by
Consent is said to be caused by
techniques:
exerted by either of the following
g or threa tening to comm it any act forbidden by the Indian
(1) committin
Penal Code; or .
unlaw fully de taining or threatening to detain any property
(2)
Illustrations
Co) A, having advanced money to his son, B, during his minority, upon
B's coming of age
obtains, by misuse of parental influence, a bond from B for a
greater amount than the
sum due in respect of the advance. A employs undue influence.
(b) ~, a man enfeebled by disease or age, is induced, by B's
influence over him as his med·
,cal attendant, to agree to pay 8 an unreasonable sum for his
professional services. 8
employs undue influence.
(c) A, ~eing in debt to B, the moneylender of his village, contra
cts a fresh loan on terms
~hich appear to be unconscionable. It lies on 8 to prove that
induced by undue influence. the contract was not
(d) A applies to a ba~ker for a loan at a time when there
is stringency in the money market.
The banker declines to make the loan except at an unusually
high rate of inter~st. A
accepts the loan on these terms. This is a transaction in the ordina
ry course of business,
and the contract is not induced by undue influence.
Undueinflucnce 181
[S· t6l
inate will of other
. tO dotn
J\bihtY . the parties to an agreement are so related to each other that
5001et1t11e~s1 able to dominate the will of the other. The person who occu•
Of rhem erior positwn
• •
may prevai·1 upon t he other to obtain his consent
0oe
pies the sup ,ent to which he, but for the influence so exerted would not
ro an agree1;ed. The relationship between the parties so as to e~able one of
d 1jnate the WI·11 Of t he ot her is· a sma
n3ve consen · qua non for
undue influence
ro on .. l d . (
rhe 111 10 • to play. 14 A spmtua a viser guru), for example in a case before
ro corne
llahabad H1g · h Court, 15 111
• d
uce d the Plamt1
. 'ff'. h'1s devotee,
' to gift to him
the A I of his property to secure benefits to his soul in the next world.
the who \sent is said to be obtained by undue influence. "Would any rea-
Such aI cornan " the court sa1·d, "'m full possession· of his senses and not under
sonab el •nfl~ence of some kind or the other do such a thing?"
unusua I ,
!~·: ~llachi ~ Pakeeran, (2009) 12 SCC 95: (2009) 4 SCC (Civ) 640.
A;nnu Singh v
16 Umadat Pande, ILR (1888-90) 12 All 523.
17. Mashoy Kumar Patil v New India Assurance Co, AIR ~007 Del 136.
18 S hboob Khan v Hakim Abdul Rahim AIR 1964 Ra1 250.
· axon V Saxon, (1976) 4 WWR 300, 305, 306 (BC SC).
b
182 Chapter 5 Free Consent
[S, l
6]
. .ch involve domination
Rclauons whi . h ne party is able to dominate th .
1
When can it be ~a ?n talrc;ses where there is active trust an~ ; 111 of th
other? The answ~r is, 1 h rties are not on equal footing.19 lh 0n6den e
between the parties or th e p~nfluence is acquired and abused ''·he Princi11c1e
• s to every case w ere 1
applie " 11 · ' n er "e
. d nd betraye d. It applies to a variety of relat·100 . e co"c ,,,,,
dence 1s repose a . ed by one person over another."20 "..,.1n \Vhicb
. .
dommat1on may be exerc1 s . .nfl
ating 1 uence of one O •he tela
. h' h' h may deveIop a domin . Ver ,
t1on~ 1p~ w ic . us. There is no precisely de.fined law s~tting lirni another
are !nfimt~ly.Vrl~on of a court to relieve agamst undue mfluence. ~h~o .the
eqmtable 1u~1s i~tot of neat and tidy rules. The courts of equity have ts ts a
world d~c~m;f learning enabling relief to be g~anted where the law ieve1.
oped a O Y . unimpeachable unless 1t can be held to h as to
treat the transaction as . h b'l'
d b d ·nfluence. It is the unimp eac a 11ty at law ofaved'been
procure y un uaect11·on which is the startin g-point from which tha tsad.
vantageous trans . . h d e
advances to con Sl.der whether the transacuon 1s t e pro uct merely of cou rt
. d b h one's
own fo11y or of the. U ndue influen
. . . . ce.exercise f y anot. er. A court. in. the
exercis• e of thi's eqmtable 1urisd1ct1on 1s.a courth o conscience. Definni·o .
poor instrument when used to .detcrm_me w et her a transaction . nts a
_is or is not
unconscionable: this is a quesuon which depends upon the particular fact
of the case."21 For example, in Willia ms v Bay/ey:11 s
A son forged his father 's signature on several promissory notes and
paid them into his bankin g account. Wh_en the truth came to light, the
manager of the bank threatened prosecution of the son and 16 transporta-
tion" if a satisfactory solution were not found. To avert this threat, the
father agreed to give an equ itable mortgage to the bank on his property
in return for the promissory notes. Subsequentl y the father sought to have
this agreement cancelled on the ground rhat he was influenced by the
threat.
The House of Lords held the agreement to be voidable. Lord CHELMSFORD
expressed the opinion that the negotiation proceeded upon an understanding
that the agreement to give security for the promissory notes would relieve
the son from the consequences of his criminal act; and the fears of the father
were stimulated and operated on to an extent to deprive him of free agency,
and to extort an agreement from him for the benefit of the bankers. There
19. !he ordinary _trade buyers and sellers are on equal footing and not
11!. Sec Devk1 Nandan v Gokli Bai, (1886) 90 PLR 325 (P&H). related in fuiuciarycapac·
20. Sir SAMUEL ROMILLYin Huguenin v Basely, (1807) 14 Yes 273: 9
RR 283; Krisl,namoOrl~
v_Sivak~mar, (2009) 3 CTC 446, an election candidate cannot be regarde
d as being in 3 po!'"
tton to mfluence the will of voter, nor in that process they are making
any agreement- Anf
such agreement,_if at aH, would be contrary to law and public policy.
21. Lord SCARMA Nm National Westminster Bank P&C v Morgan , (1985)
22 · (! 866 2 WLR 588 (Hl)- .
) LR I HL 200. It has been observed by the Supreme Court that S. 16 is
law of undue mfluence. Subhas Chandra Das Mush .b G l,asecf 00 ~
SC 878: (1967) 1 SCR 331. 1 p asad Das M11shib , AIJ1. 19
v anga T
UndueinAuenct 183
[S 161
· u~litY between th e p.1rties and one of them took unfair adva ntage
,i\s jr,e_q . tion of the other and used un<lue influence to force an ag reement
i I s1ru,1
fr ,e .
o{rottl htrtl··cular , however, and without prejudice to the generality of the
art1 d . b .
_In_. Ple, rhe Act lays . ?wn, m su .-section (2~ of Section 16 that a person is
prindP ro be in a pos1t1on to dommate the will of another in the following
Jee111ed
Id I h .
' ases.-h e he ho s a rea or apparent aut ortty over the other or where he
(a) w erds in fiduciary relation to the other; or '
stan .h
where he makes a contract wit a person whose mental capacity is
(b) porarily or.permanently affected by reason of age ' illness , or men-
rem
tal or bodily distress.
apparent authority
Real or . . . .
A rson in authority 1s defimtely able to dommate the will of the person
pehom the authority is held. The authority may be real or apparent.
over w · ld . 1 d I t ·
Persons in authority wou 1~c u fefi an .ncome_ ax Officer m relation to an
see· a magistrate or po1tee o cerhm re 1at1on to an accused person and
. " .
asses , . "
the like. The expression a~parent _aut ority wou1d mclude cases in which
real authonty, but 1s able to approach the other with a show
apers on has no .
or colour of authority.
Fiduciary relation
Fiduciary relations are of several kinds. Indeed every relationship of trust
and confidence is a fiduciary relation. And confidence is at the base of innu-
23
23. See Subhas Chandra Das Mushib v Ganga Prasad Das Mushib, AIR 1967 SC 878: (1967) 1
SCR 331.
24. Pushong v Mania Halwani, 1868 BLR AC 95, where a poor woman agreed to give one-half of
the property which she might recover with the assistance of her Mookhtaar. See, for example,
Moody v Cox, (1917) 2 Ch 71, where a solicitor sold a trust property to one of his clients who
subsequently sought rescission on the ground that the property was considerably overvalued.
The Court of Appeal held that when undue influence is alleged against a solicitor he has to
prove that he disclosed all the material facts and that the transaction was of advantage to the
client.
2S. Raghunath v Var;ivandas, (1906) 30 Born 578.
26 · Mannu Singh v Umadat Pande, ILR (1888-90) 12 All 523.
27• Mitchell v Homfray (1881) LR 8 QBD 587 (CA).
28 · Wa;;d Khan v Raia Ewaz Ali Khan, (1890-91) 18 IA 144; Subbamma v Mohd Abdul Hafiz,
AIR 1950 Hyd 55.
29 Lakshmi Doss v Roop Lau/, JLR (1906-08) 30 Mad 169; Suguna v Vinod G. Nehemiah,
·
(l008) 2 CTC 433, for twenty long years the daughter was taking care of her aged father, the
latter settled his property upon her. The court felt that burden of proving that no influence
184 Chapter S Free Consent [S, 16
30 The relationship of trust and confidence l
Creditor and debtor, h person in whom confidence is held Present
very good opportuni·ty to t betwee e
n persons so re Iate d ts,
. to
therefo e}(Ploit .
s~
to his own use. A contra . ctd by abusing thecon fid ence. Th e dut re, v01dab1 . It
if the consent was obtan~e posed was explained by the Court yofo! the "e e
fidence 1s re
son in whom con . . r sold certain property to one of his cl·l\pPealt'f,in
A so 11c1to
~oody v Cox.
31 . tent
Ile ed that the property was considerably ove s. lhe
chent subsequently ad dg follows: "Generally when you haven. drvalued
SCRUTTON LJ procee e as .. d. .,,a ea I ,
recd expressed it in wntmg, an it has not been ob ~gaJ
contract a_nd cor y f facts innocent or fraudulent, the contra ta1ned
b any misstatement o ' k f
Y h
and the fact t at one party or the other nows acts about whichct hstands,
. fi bl h e sa
nothin g, wh'1ch made the contract unpro •ta e1one · to t e other Part . Ys
d Y, 1s 0f
no lega l consequenCe · But there are certam re ations . an
d certain co
ntracts
m wh'1ch a h'1gher duty is imposed upon the parties
. an they must not
tell the truth, but they must tell the whole truth so far as it. is. material, only and
they must not only not misreprese~t by w~rds, the! must not misrepresent
by silence if they know of somethmg that 1s matenal. Some of those ca
depend on the relationship between the parties, and, generally speaking ;es
cases where the relation is such that there is confidence rep~sed by one p~r;
and influence exercised by the other. In that class of relation of parties you
may get the duty, first of all, that the party who has influence must make
a full disclosure of everything that he knows material to the contract, and,
secondly, that the party who has the influence must not make a contract
with the party over whom he has influence unless he can satisfy the court
that the contract is an advantageous one to the other party."
Mental distress
The last category of persons whose will is vulnerable to all sorts of influ-
ences is that of "persons in mental distress". A person is said to be in distress
when his mental capacity is temporarily or permanently affected. It may be
due to ext_reme _old age or mental or bodily illness or any other cause. Such
a person is ea stly persuaded to give consent to a contract which may be
unfavourable to him. Accordingly, if a contract is made with him by taking
advantage of his distress, it is voidable on the ground of undue influence. In
fo:
a case, example, before the Madras High Court, a poor Hindu widow~
who was m great need of money to establish her right to maintenance, w~2
pehr_su~ lby a_moneylender to agree to pay 100 per cent rate of interest:
T is is ded
a c ear mstance of d . fl erson in
.
distress, and the court red undueh m. uence being exerted upon a P
uce t e mterest to 24 per cent.
was exerted on the father's . d d
therefore the settlement w m,~n blwas upon her. The presumption could not be broned an
30 . . I
Dza a Ram v Sarga, AIR as taL e to be .d det
31. (1917) 2 CH 71. 1927 ah 536. set as1 e.
32. Rannee Annapurni Na h.
c zar v Sw · h
amznat a Chettiar, ILR (1909-11) 34 Ma d 7.·
Undue influence 185
[.s. t61 d'
do f money, no ,stress
,,,,r ,1ee ,1t need of money on the part of the bcJrr . f
vrg~ urge f l d' ower lS not O
,ere . t evidence o menta 1stress. Thus where a '
Ot1t 11 ffic1et1 . h • . ' person was
9 s\\ . rosecut1on at t e instance of his father and b d
•seIf, · 1na1P f df d
it- . crt'" 1s a sum o money to c en himself it Was horrowe
(J
Id h
on
h
f~c1t1i,
bit'1nt
rern . ld , e t at e
mental distress as wou
eior · 5uc11
not
f enable
. a moneylender to d .
om mate
1n
«aS . 33 s11nt ' . ·tai·ly where a person, eanng the result of the p .
, , rosecut1on
. \\1111, . t him enters mto an agreement m favour of the co •
btS a a111s ' . mp1amant
e .,dit\S
p •deratto
11 g . n of his abandonmg the prosecution it cannot be h Id •
, e s1m-
1·o,ons1on nes 1 e facts that the consent of such person was caused by undue
plY up 34
. fluence,
~ mpulsion, no d'tstress
Statutory co .
Ct made under statutory compulsion cannot be regarded as one
Acontra
undue influence. In a case before the Supreme Court a cane
de under
ma h d the freedom to offer canes to the factory of his area or not
'
but if
ower a f b d d
gr ade an offer, the actory was oun un er an Act to accept. The
111 court
he . d out that in such a case the consent, though compulsory, is not caused
Pointedue influence, fraud, m1srepresen
. . . k
tat1on or m1sta e. The compulsion of
by un. not coercion. "As a resu lt of economic . compu Is1ons
· and changes in the
\aw1s d f . .
l'tical outlook, the free om o contract 1s now bemg confined gradually to
poirower and narrower 1· · H ·
0
1m1ts. ere 1s a case where one party to contract of
:1: is compelled to enter into it on rigidly prescribed terms and conditions
:nd has no freedom of bargaining. But, in the eyes of the law, the agree-
ment is freely made." 35 Where the parties voluntarily executed a power pur-
chase agreement pursuant to an order passed by the Electricity Regulatory
Commission, avoidance of the agreement on the ground of duress, coercion
or undue influence was held to be not sustainable. 36
Burden of proof
In an action to avoid a contract on the ,g~ound of undue influence the
plaintiff has to prove two main points. He must show, in the first place, that
the other party was in a position to dominate his will, and, secondly, that he
actually used his influence to obtain the plaintiff's consent to the contract:
The law says that: (1) not only must the defendant have a dominant position,
~) he must use it. 37 It is not enough, for a person to avoid the contract,
!!· Rag~u~ath Prasad Sahu v Sarju Prasad Sahu, (1924) 19 LW 470: AIR 1924 PC 60.
35· Mas1zd, v Ayisha, 1880 Punj Rec No. 135, p. 398 .
. ~n~hra Sugars Ltd v State of A.P., AIR 1968 SC 599: (1968) 1 SCR 705; U.P. Coop Cane
co:o:s Federa_ti?ns v West U.P. Sugar Mills Assn, (2004)_5 SCC 430: AIR 200~ SC 3697,
. P lsory prtcing for sale is not undue influence, nor does at affect the character of the trans-
36 action as a sale.
37: ~~: ~uminium Ltd v Gabriel India Ltd, (2011) 1 SCC 167: (2011) 98 AIC 228 · .
th· ese requirements must coexist for the reversal of the rule as to burden of proot uo der
P;:;;ction and S. 111 of the Evidence Act, 1872. Sundari Devi v Naray~n ~ras~d, AIR 2011
, for proving coercion (S. 15) and undue influence, the defendant m his evidence stated
186 Chapter 5 Free Consent
fS. lGJ
to show that the oth er party is
his father wh o could ?a~e influence
must go further and show that his d him
fath er actu ally did mfluence hirn.18 • He
Presumption of undue influence
But in certain cases presumption
of undue influence is raised. The
of the presumption is that once it eff
is s_ho~n.tha~ the defendant was
tion to dominate the will of the pla in a P;s~~
mt1ff 1t will be presumed that he
have used his position to obtain rn
an unfair advantage. It will be st
the defendant to show that the pla then ~
intiff freely consented. For exarnp
39
Lancashire Loans v BIack:40 le ?r
, 1n
The defendant was a married gir
l of full age. She gave a security
the loan which her mother took froµ f
was from the solicitor of the compan
1 a company. The only advice she
h~~
y.
ScR UT TO N LJ held that
"in the case of the benefit of con
tage obtained from a person coming tractual advan-
within certain defined relations, suc
the relation of parent and young chi h as
ld, solicitor and client, religious sup
erior
that signatures were taken on blan
k papers_ and the agreement crea
ported by pleadings. Under S. 102 ted, but th!s was not sup-
of the Evidence Act, 1872, onus
facts alleged, but he could not do was upon him to prove the
so, the agreement was enforceable.
38. Aniadennessa Bibi v Rahim
Buksh, ILR (1915) 42 Cal 286. All
as in the case of fraud. Subhas Cha the particulars must be given
ndra Das Mushib v Ganga Prasad
SC 878: (1967) 1 SCR 331; Alec Das Mushib, AIR 1967
Lobb (Garages) Ltd v Total Oil Gre
WLR 87 (Ch D). Every person occ at Britain Ltd, (1983) 1
upying a position of influence doe
Thus where finance was provided s not necessarily abuse it.
twice over to a garage subject to
but with a genuine concern to help certain protective clauses
its business, no undue influence
of the agreement was struck down was found though a part
as unreasonable restraint of trad
Bibi, (1976) 2 SCC 142: AIR 1976 e. Afsar Sheikh v Soleman
SC 163, the fact of undue influen
the particulars pleaded by the plai ce must be made out of
ntiff and not from the written stat
father executed a sale deed in favo ement. Where an ailing
ur of his two sons who were cari
living apart questioned validity, the ng for him and the third
court held that though the burden
favoured, the transaction did not was on those who were
disclose any element of influence
Champa Devi, (1986) 34 BLJR 90, or fraud. Sukhdeo Rai v
gift deed in favour of grandson
by the donor only a few days befo upheld though executed
re his death. The court followed
LAWS OF ENLAND, Vol 17 the remark in HALSBURY'S
(3rd Edn) 678, to the effect that:
~nfluence in the case of gift to a son "There is no presumption of undue
, grandson or son-in-law, althoug
illness and a few days before his dea h made during the donor's
th." Shrimati v Sudhakar R. Bha
(19?7) 4 Born CR 237, the mere fact tkar, AIR 1998 Born 122:
that the person in whose favour
registered deed was the tenant of a property was gifted by
the owner was held to be not suff
of proof on the donee. Kartick Pra icient to shift the burden
sad Gorai v Neami Prasad Gorai
was no consideration and the sale AIR 1998 Cal 278, there
deed seemed to be fake, hence pr~
burden of proof on to the benefic sumption and shifting of
iary of the sale deed. Savithramm
~I.R 1996 Kant 99, a~legat!o~ a v H. Gurappa Reddy,
of undue influence, level of proof
•t IS rated on a par with cnm required is extremely high,
inal trial. Dalbir Singh v Vir Sing
of land, agreement between an ada h, AIR 200
tia and his customer, the former cou 1 P&H 216, sale
an~ , therefor e, bett er proof
of fairn ess was exp ected. NTPC ld influence the l~tter
Builders~ C?ntractors , (200~) ~ Ltd v Reshmi Construct1011s,
SCC 663: AIR 2004 SC 1330: (200
of th e ~arties 18 relevan t for arnvin 4) 1 KLT 1065, ~o ncluc;
g at
undue influence. The case involved a conclusion with resp ect to allegations of coercion an
39· full and final settlement.
Krishna Mo~an ~ul v Pratima Ma e
ity,
person standmg m fidu ciary relation (2004) 9 SCC 468 : AIR 2003 SC 4351, burden on th
40. (1934) 1 KB 380 (CA). ship.
Undue influence 187
s. t6 l
f ,. y the related member of that class, it is enough t h
·or, o . h h . . o prove t e
in fe ri f ch 3 relat10n to t row on t e recipient of the a d vantage t he
at1 d o su d d •
isrence ving indepen ent a vice to the donor and in oth
e" of pro . ,, H . L d h. h er respects
bordeO h t ransactton. is or s ip t en pointed out th a t a marr1e . d
. · g t e . . d d f .
·1.1st1fy1n_s no t necessanly in epen ent o the influence of her moth S h
I O 1 . h h . f er. uc
wotlla Id be dealt wit on t eir own acts, and not on any gen era I pre-
shou h h
cases .on. On the facts of t e case t e court found that she was under th e
41
sutllP0 of her mother.
infl~en_r ly where a parda lady of 70 years, having three daughters was
111
S11 ~ \ ; have gifted her entire land to the defendant, who was the t;nant
suppose! d it was held that from the position of his possession of the land
of thatst an have ·
' dommated t h e woman and b urden lay upon him to show the
he. rnu tances of the g1· f t. H e b e1ng . not a ble to d o so, the gift deed was set
c1rcums
.d 42
as•The e. presumption 1s · raise· d at Ieast 1n· t he roi: II · cases:
owmg
44
· Ranne~ Annapurni Nachiar v Swaminatha Chett
45. C~unn, Kuar v Rup Singh, ILR (1888-90) 11 All iar, ILR (1909-11) 34 Mad 7.
!;·. ~trlpk~ hRam v Sami-ud-din Ahmad Khan,
a. .'s an Das Madan Lal,
v
57
ILR (1901~03) 25 All 284 STANLEY CJ at P· 285,
(1907) 29 All 303 ,
48. Ph1!1P Lukka v Franciscan Assn, AIR 1987 Ker.2
49. Bhtmbha v Yeshwantrao ILR (1900) 04 R
2005 Born 13 '
7, a 1oan transa . 25 Born 126;· Union odar, Al
of India v M. V. Dam gh rhe
medium of the Sh . . D ction for pure hase of .
vessels was 6na 11se
· d throu
economic duress ~~::~:e
0
;v~1 sea going
opment F~n~ Committee. It could not be said that
t e monopolistic status of the Fund Comm t
h re was
e
ittee.
Undueinfluence 189
16]
[S· . d out by the Privy Council in Raghunath Prasad ahu v Sar1u s •
o111te 50
\Vas pJ sah"·
prttsa defendant and his father were equal owners of a vast joint family
CASE PIL01
rhe er which they had quarrelled. Consequently the father had
Proper
tY
d riminal procee d'mgs agam
ov . st the
son. The defendant in order
. ite c
josntt d himself, mortgage
d h'ts properties
. to the . . '
plamt1ff and borrowed
1
co def~ ; 111 about ten thous~nd rupees on 24 per cent compound interest.
frotll ars this rate of mterest had magnified the sum covered by the
Joe!even yemore than eleven fold , viz., . Rs 1,12,885. The
defendant con~
111ort~g~at the lender had, by exacting high rate of interest taken uncon~
te~d\b~e advantage of his mental distress and, therefore, there should be
scion tion of undue influence.
presumP
. Lordships, however, held that there could be no such presumption
Thet~ umstances of the case. Referring to sub-section (3) of Section 16
. the c1rc . f d . fl
in . h ovides for presumption o un ue m uence, Lord SHAW observed as'
whic ~r"By this sub-section three matters are dealt with. In the first place
follows. .
1 tions between the parties to each ot her must be such that one is in a'
the~~:n to
dominate the will of the other. Once that position is substanti-
d the second stage has been reac hed, viz.,
posttt · the issue
· whether the contract
::s been induced by undu~ in~uence. Upon the determination of this issue
third point emerges, which is that of the onus probandi. The burden of
;roving that the contract was not induced by the undue influence is to lie
upon the person who was in a position to dominate the will of the other.
Error is almost sure to arise if the order of these propositions be changed.
The unconscionableness of the bargain is not the first thing to be considered.
The first thing to be considered is the relations of these parties. Were they
such as to put one in a position to dominate the will of the other?"
The borrower failed to prove that the lender was in a position to dom-
inate his will. The only relation between the parties that was proved was
simply that they were lender and borrower. The first requirement of Section
16 was, therefore, not fulfilled and, therefore, the borrower got no relief.51
Unconscionable gifts
Where a person was suffering from a number of ailments which con-
fined him to a nursing-home and from there he made a deed gifting all his
?
SO. 0 24 ) 19 LW 470: AIR 1924 PC 60. See also Maria Eudaria Apolonia Gonsalves v Shripad
Vishnu .Kamat Tarcar, AIR 1998 Born 46, agreement for sale of property, immaterial that it
~as Written in Portuguese, seller's son knew that language, no particulars of undue intluence
S1. ~;eged, agreement enforceable, the price was found by experts to be reasonable and fair.
T~~lso Rani Sundar Kaer v Rai Sham Krishen, ILR (1906-07) 34 IA 9: (1907) 34 Cal 150.
ir Lo rd ships distinguished the case from Dhanipal Das v Raja Maheshw~r Bakhsh S~t1gh,
09 5 6
IL~ -0 ) 33 IA 118: ILR (1906) 28 All 570 and Raja Maheshwar Baksh Singh v Shad, Lal,
(l 908-09) 36 IA 76: (1909) 31 All 386 on the ground that in these cases the borrower
"'easbpllaced under the Court of Wards and ~as therefore, under a peculiar disability. This
na ed th I d ,
e en er to dominate his will.
\90 Chapter S Free Consent
[S, 16]
properties to one of his sons to the
_exclusion of others, ~~e ~uprerne
held that the presumption of undu C0ur
e influence was prfoper.h G1~ts of
are often made un der in· fl this kindt
uence. Ina n other case be ore t e Privy Co .
An old Malay widow, wholly illi unc1l:s3
terate, was the owner of considera
rent-producing landed property. She ble
gift~d all her property to her nephe\V
who was helping her, leaving for
her an income only of about 30
The deed of gift was prepared wi dollars
th the help of a lawyer.
On these facts the Lord CHANCELL .
OR obser~ed: "In t~e present case
Lordships do not doubt that the _la their
wyer a~ted in good faith, but he
have received a good deal of his inf seems to
ormation from the respondent (ne
he was not made aware of the ma phew)•
terial fact that the property wh
being given away constituted practi ich wa'
cally the whole estate of t_he don
he certainly does not seem to hav or, an:
e brought home to her mmd the
quences to herself of what she wa conse-
s doing, or the fact that sh~ cou
prudently and equally effectively, ld more
have benefited the donee without
risk to herself by retaining the pro undue
perty in her own possession dur
life and bestowing it upon him ing her
by her will. In their Lordships'
facts proved by the respondent are vie w the
not sufficient to rebut the presum
undue influence which is raised by pti on of
the relationship proved to have
existence between the parties; and bee n in
they regard it as most important
point of view of the public policy to from the
maintain the rule of law which has
laid down and to insist that a gift been
made under circumstances which
to the presumption must be set asi gave rise
de unless the donee is able to sat
court of the facts sufficient to rebut isfy the
the presumption." 54
In another case of benefits witho
ut consideration and which was
before the Privy Council, 55 a wo also
man, who was described as a sub
wife and who at the bidding of her missive
husband, gave security of her stri
~personal property), which compri dhan
sed some land, to secure the gro
1~d~btedness of her husband, Lo wing
rd GODDARD expressed the opi
"tt 1s unnecessary to enter int nio n that
o a discussion as to the burden
such a case as this as the evidence of pro of in
here abundantly justifies a presum
that she was acting under the influe ptio n
nce of her husband for whose ben
mortgage was being executed". Hi efit the
s Lordship continued: "It would
certainly
52. Lakshmi.Amma ~ Talengala
narayana, (1970) 3 SCC 159: AIR
CASE PILOT c:se of gi:t of entire property by 1970 SC 1367. In another
an old lady to the exclusion of her
~ e ~ge O te donor is definitely one sons the court said that
of the most important facts to
~ t _e tota •ty of the circumstances be taken into account
aniyaram.bath ~akshmikutty Amma surrounding the transaction M
Kar unnakara KuruP"
53
.;~c;; v
f;r tah Bmte Mohd Tah~r Sk Alli
fraud becH 147, 99. yeal r lea~e s1g~
, 1984 KLT 83 (SN). ·
e, AIR 1929 PC 3; Hamela Jan
·
v g Sher Singh,. Al~
ed by a
54 R ause nomma consideration, heldlady who was old, illiterate and sick, also victun o
· amu Mahabir v Ghu h s voidable
of 70 years 1· . . hr h~o amu, AIR 2006 All 273·
, ivmg wit is nephew h d : 2006 AIHC 3035 (All) vendor, Id man
nephew to the exc lusion of th h ~ 0 omma • d . o the
bona 1:des and te. him , transferred his who tY to
. le proper ro"e
genuineness ofe w
O e number of his daughters burden
1• on the nephew to P
55. Tungab ai Bhratar Purush cons'd · · h
h I e~~tion '
mt e tran tion, burden not disc · d
ottam S am1 1 Kumbhojkav v sac harge pC g,
Yeshvant Dinkar Jog, AIR 194 5
[S, 16] Undue influence 191
csum t • .
ot be true to say that there is a pr th p 100 !n eve_ry case where a wife
and w'I ·
fers a benefit on her husb erat1on · E_q ua11 Y it· is
11
d out cons1d h h not
con sary in or er to establish the pres um pt' 10 t at t e parties sh
0 ou ld sta nd
eces f . ip t h h
· 1 sh
n
1·n some
partICu ar categor·1y o rel
be more eas1 y establishe
ation
d an d ° indeacd ot erb. The presum . pti 0
n
A similar relief was allowed in a case where a ~ongwriter 's copyright \\t
bl ish his songs through as
Purchased on terms that he was not ·tohpu . 73
any Oth
· t his songs · "I n d eterlll ·er
company but the company had the rtg t to reJeC .
· • · · ·· f the parties ' the courts will ]Ookin.
mg the respective bargammg posrttons O .
d
a number of factors, such as age, poverty, illiteracy ao . emotional state,,,,!t
5 5
With these should be contrasted Natio~a! We !mtn !~r B~nk P&c v
Morgan.75 A self-employed businessman's 1omt h~me with his wife Was
mortgaged to a building society who w~re threatem~g foreclosure. A hank
provided him money with which he paid off the socie~y and a new charge
on the house was created in favour of the bank for all his present and futu
. h h re
liabilities. When his wife was called up?n to ~ig~. t. e papers, s e Was told
that it covered only the loan and not business habihties. The House . of Lorsd
were not able to relieve her from the consequences o f her signature. 1'he
charge had conferred reasonably equal benefit on both parties. The relatio _
ship of banker and customer is not automatically characterised as one ~
which the doctrine of undue influence attaches.
73. Clifford Dav M_anagement Ltd v W.E.A. Records Ltd, (1975) 1 WLR 61 (CA). An illiterate
donor transferrmg all her property to her lawyer, held, unconscionable. Takri Devi v Rama
Dogra, AIR 1984 HP 11.
74
• Nicholas Rafferty, Recent Developments in the Law of Contract, (1978) 24 McGill LJ
236,271.
5
; 6•~!? 85 2
) k WLR 588 (HL); noted, The Limits of Undue Influence (1985) 48 Mod LR 579.
· "tnaya appa Suryabhanappa D hen k ar v D u1tc ·b '
193 'd . f . a and Hariram Murarka AIR 1986 Bom
77. For ~::~:ilm~::::r :r1:r:utstorey comm~rcial complex unnaturally low. '
(1976) 39 Mod LR 369 .r~u~~ ?n ~he .sub1ect se~, Waddam, Unconscionability in Contract,
L
Long? (1980) 5 Can Bus 1~~~ie, wiss At/antique Revisited: How Long, O'Lords H?w
L Rev 237,341. J 'Dalzell, Duress by Economic Pressure, (1942) 20 N Carolina
78 • D~&C. Builders v Rees (1966) QB .
2 617
Liberty, (1943) 43 Col~m LR 603 d (CA); ~lewellyn, Bargaining, Duress and Economic
Duress by Threatened Bre h f Can What Prtce Contract, (1931) 40 Yale LJ 704. Beatson,
1976 ) 92 LQR 496. Sutton, Duress by Threatene~
Breach of Contract, (1974~c20oMc~~~~~Jt, (
554 · Adams, Contract Law at Sea, (1979) 42 Mo
LR 557: (1979) 95 LQR 475 . Co
PROMISES: A THEORY OF Co ' ore, (1980) Camb LJ 40· Charles Fried CONTRACTS AS
h . NTRACTUAL Oa , , rs
ave a growing conviction that s d LIGATIONS, where it is observed: "Many lawre d
and unskilful bargains is ne ome eg~ee of paternalistic protection of unsophisticate
led t 0 th d cessary to avoid I h h' bas
. e evelopment of do t · f resu ts t at shock the conscience and t is
;ct1o~s that violate the basicc;:i:e~ ~ u~~onscionability and a host of ad hoc statutory~;;
o:Jam Principle and its Limits f~~:2~ 9;e~dom of contract"; Melvin Avon EisenbergF LL
REEDOM OF CONTRACT, wh~re it is b ar~ LR 741; P.S. Atiyah, THE RISE AND :Jes
0
serve that society should not tolerate the res
Undue influen ce 197
[S, 16]
of th . . . .
ces as a pa rt ice.
lie d to grant of licen
e di sp arity in th ptnc J~le. of distributive just
a larg appli•
; 11p~his case th ere was ity . Th e ap p1ic e rg ;m m g P?wer of the
th or give his
r and the gra ntin g au ons im po se~n ~ ah no chot~e but to
1
d co nd iti th ~y. In such cases
ca0 ~sent to th e terms an expe ct ed to s. y t edau teon
' ost of the tim
e applic an ts ar e 1gn on ot d Imes. 79
111
ees and others from unreasonable terms
Rescuing employ scionable" f d. .
ea ni ng of th e w or d "uncon rom a 1ct1on-
Picking up the m d
C rtdh ash?ot~ .that It means so
. m ethi ng that show s no
S .h
aryso the upre~e ouan w 1ch 1s irreconcilable with what ts. ng t or reha-
regard for cons cience 1use m . t e
b t h
e co ur t w as a se rv ic e contract .s1A ca
e10re t
sonable. The matterd h p 1oyer (a Government undert ak'mg to remove
)
w ere t e em
contract empob h , .
tic e or pa y in lieu. The employee, who
e mf ohn~hs 1no ed by handing him ov
er a
an employehe yl~d ~e ts c a us e, w as re m ov
o t e to be
contested t e, va I ity Th e Su pr em e C ourt regarded the claus
ck et . any term
three months pay pa ra ct ua lly vo id . The court added that
as co nt
constitutionally ~s wel
l
le as to sh oc k th e co nscience of the court
unreasonab void under Section 23.
which is so unfatr and y an d th er ef or e al so
blic polic n
would be opposed to pu on a re al co ns en t. It was rather an impositio
based up so
The contract was not 82 te rm w as un co ns tit utional because it was
. The uct,
upon a needy person d be m ad e a ta rg et irrespective of his cond
er coul
absolute that any offic
a party
good or bad.
is ex pa nd in g po w er of the court to relieve
Commenting upon th n co nt ra ct , a learned writer says
that "free-
hi s ow
from the consequences
of
m isl ea di ng gu id e w he n so many contracts
out to be a ct as private legisla-
dom of contract turns Th e no tio n of co nt ra
omic sense. drawn up one-sidedly.
are not free in the econ le gi sla tio n is al w ay s
tive when t
tion appears less attrac in te rm s w hi ch ar e not there, or read ou
ed to read leness. Whatever is no
t
Judges are empower e to im po se re as on ab
They ar able,
terms which are there. rti es ha ve ag re ed to something unreason
reasonable is not law.
If the pa leased."
83
she put in tenants and fixed andshrecovercd rents from them in respect of
her house. The court held that
e could not be treated as a pardan ashin
la dy.
Once it is shown tha t a contract is made Wt'th a pardanash.,n woman the
• fl li'es on the ot her par. ty to s'h ow
law presumdes un· dflue m uence. The burden
ex lained
that no un ue
10
uence was used, that the contract was full yf hp •
to her and that she freely consented The a/ follo ·
s,·nwihn! state] n:1ent ho t e Pnv yf
Council in Kalibakhsh Singh v Ra;, Cop g exp ams t e extent o
" h fi st pardanashin lady, and the law
this onus: Int e r pl~ce, the lady was a
ion. It demands that the burden
throws aroun~ her a special cloak of protect
e who attack, but those who
of proof shall m such a case rest, not with thos
so far as to show affirmatively
found upon _the deed, and the proof must go
executed by, but was explained
and conclusively that the deed was not only
In such cases it must also, of
to, and was reall~ understood by, the grantor.
signed under duress, but arose
course, be estabhs~ed that the deed was not
ntor."
from the free and mdependent will of the gra
In this case:
widow (who was a par-
Abo~t two mont~s before her death, a Hindu
perties to the son of her
danash,n woman) gifted half of her landed pro
r) of her estate.
paramour, who was also the manager (mukhta
that she had no independ-
This, it was contended, combined with the fact
was the result of the influence
ent advice, was sufficient to show that the gift
ips, however, held that there
the mukhtar had over the lady. Their Lordsh
advice necessary in every case.
is no rule of law which makes independent
the absence of it, is a fact to be
"The possession of independent advice, or
d on a review of the whole of
taken into consideration and will be weighe
ther the grantor thoroughly
the circumstances relevant to the issue of whe
own free will carried out the
comprehended, and deliberately and of her 90
tion. If she did, the issue is solved and the transaction is upheld. "
transac e
by the Privy Council in mor
The extent of burden was further explained 1
v Shumsoonisa Begum.9 A
concrete terms in Moonshe Buzloor Raheem
d to her new husband certain
widow remarried and endorsed and delivere
to recover them back from him
valuable Government papers. In an action
t she had given over the papers
she proved that she lived in seclusion and tha
ed that he had given her full con-
to him for collection of interest. He contend
mere fact of endorsement and
sideration for the notes. It was held that the
icient to lift the presumption of
the allegation of consideration were not suff
saction was 3. bona fide s~le ~nd
undue influence. He should prove that the tran
which he received from his wife.
that he gave full consideration for the paper
·
89. (1913-14) 41 IA 23, 28-29.Gopal Singh, (1913-14) 41 IA 23, 31. See also LIC v Nandaram
90. Kali Balt.hsh Singh v Ram
· AIR 1963 SC 1203·.
Dassi, AIR 1970 Cal. 200. Kuer v Jangbaha dur Ra,, .
91. 1867 MIA 551 (PC) See further Kharbuja
(1963) 1 SCR 456.
200 CJlaprcr S free Consent
includes-
(1) the positive assertion, in a manner not warranted by the
information of
be true;
the person making it, of that which is not true, though he believes it to
(2) any breach of duty which, without an intent to deceive, gains
an advan-
ding
tage to the person committing it, or any one claiming under him, by mislea
him;
another to his prejudice, or to the prejudice of any one claiming under
a mistake
(3) causing, however innocently, a party to an agreement, to make
as to the substance of the thing which is the subject of the agreement.
The section includes the following types of misrepresentation:
1. Unwarranted statements
information
When a person positively asserts that a fact is true when his
this is misrep-
does not warra nt it to be so, thoug h he believes it to be true '
•
resentat1on. 92 In a Bombay case93 for example: