Tag Archives: undue influence

Case Summary

Subhas Chandra Das Mushib v. Ganga Prasad Das Mushib, AIR 1967 SC 878

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This Case Summary is written by Kritika Soni, a student of National Law Institute University, Bhopal

Introduction

Plaintiff alleged that his father’s will deed, which conveyed the whole estate to defendant, plaintiff’s nephew, was influenced by undue influence on the donor. The deed, on the other hand, specifies that the property was given out of natural love and affection between the donor and the defendant. The main issue in this case was whether there had been undue influence.

Facts

Prasanna Kumar, the plaintiff’s father, owned land in two villages, Parbatipur and Lokepur, with an eight annas portion in each. Although the actual value of the properties is unknown, it is reasonable to presume that the Lokepur properties, which are the focus of the lawsuit, were the more valuable. Prasanna Kumar, who was almost 90 years old at the time of his death, died in February of 1948.

He had two sons, Ganga Prosad, the plaintiff, and Balaram, the second defendant in the claim, as well as a daughter Swarnalata and an only grandson Subhas Chandra, the first defendant. Ganga Prosad did not have a son. From 1932 until 1934, he worked at the Bankura Medical School. Following that, he worked as a contractor for a year. From November 1944 to November 1948, he was a member of the Searsole Raj Estate. Prasanna and his wife, their two sons and their wives, as well as Prasanna’s grandson Subhas Chandra and Prasanna’s daughter Swarnalata, who had become a widow in her childhood and was living with her parents, made up the family. Balaram appears to have always lived with his father and never worked elsewhere. According to the plaintiff’s own testimony, he was looking after his father’s property so long as he was in Bankura. The Lokepur properties were auctioned off in response to a court order for rent arrears, and Prasanna Benami purchased them under Swarnalata’s name. The gift deed demonstrates that the transaction was made out of the donor’s natural love and care for the donee, as well as the grand-respect son’s and admiration for his grandfather. He was not, according to the complaint. The lawsuit was filed in 1952, more than eight years after the transaction took place and more than four years after Prasanna died. There is substantial evidence that between 1944 and 1948, Balaram, acting as the natural guardian of his son Subhas Chandra, effected a number of settlements of various plots of land in village Lokepur, all of which included the recitation of the Nirupan Patra and the signature of Prasanna as an attesting witness. These agreements were reached in collaboration with Prasanna’s other co-sharers. The Municipal Commissioners of Bankura initiated a lawsuit against Prasanna in 1947 to reclaim unpaid taxes. In that suit, Prasanna made a written statement declaring that he had no interest in the property. The Municipal Commissioners did not serve the plaintiff with a writ of summons in the suit after Prasanna’s death, instead obtaining an ex parte decree against Balaram. The petitioner claims that he never learned about any of the land settlements in Lokepur after 1944, despite attending his father’s funeral in 1948. He admitted to paying no rent to the superior landlords and said that he learned about the deed of settlement from his relatives two years before the complaint was filed, none of whom were called as witnesses.

The following issues are the legal issues or questions of law that were raised in this matter:

  1. Whether the gift deed was induced by undue influence?

Held (Judgement)

The Apex Court firstly proceeded to consider what the essential ingredients of undue influence were and about how a plaintiff that’s currently seeking relief on its ground, after being called upon to show that the deed of gift or the contractual agreement was not induced by undue influence, shall proceed to prove his case. They acknowledge that the case in question consisted of a gift deed but the law relating to undue influence is the same in any case, regardless of a contract or a gift.

The case of Raghunath Prasad v. Sarju Prasad was considered, where the three stages for considering undue influence were explained and the Court had held that

Firstly, the relationship of the parties shall be such where one party is in a position to dominate the will of another.

Once that has been substantiated with evidence, whether a contract has been induced by undue influence is to be determined.

The third stage is that of onus probandi, which means that if the transaction seems to be unconscionable, the burden would be on the person who’s in a position to dominate the will of another, to prove that the contract has not been induced by undue influence.

The Judicial Committee of the Privy Council in the case of Poosathurai v. Kappanna Chettiar stated that while determining the relation of the parties with one another, it shall also be noted that just because the parties were very nearly related to each other does not give rise to a presumption of undue influence. They stated that it would be a mistake to think that undue influence may be proven by showing that the parties’ relationships were such that one naturally relied on the other for advice, and the other was in a position to override the first’s will in offering it. More than mere influence must be demonstrated in order for influence to be deemed “undue” in law. The law on undue influence in embodied in Section 16 of the Indian Contract Act that is based on English Common Law, as noted in the judgement of SC’s Ladli Prasad Jaiswal v. Karnal Distillery Co. Ltd[1]. According to Halsbury’s Laws of England, there’s no assumption of undie influence in cases of gifts to a son-in-law, grandson or son, even if they’re made during a donor’s illness and days before his death. Generally, these presumptions would arise in relationships between a doctor and patient, parent and child, lawyer and client, etc. Sec 16 (2) of Contract Act also shows that an undue influence can also arise where the done has a real or apparent authority over the done or is in a fiduciary relationship with the donor.

However, the Court said that the plaint included no pleading of undue influence as it referred to Order 6, Rule 4 of the Code of Civil Procedure as stressed on in the case of Ladli Prasad Jaiswal where it was observed that a general or vague plea would not serve the purpose of finding out whether case on undue influence has been made out. Rather, the party pleading shall be required to plead the precise and exact nature of the influence exercised, the manner in which it was used and the unfair advantage to the other party. The court found that there was no suggestion in the plaint that pointed to Prasanna being under the domination of Balaram or that he exercised his power in such a way so as to get the document executed and registered by Prasanna. It also stated that the High Court did not find Balram to be in a position to dominate the will of his father nor that the transaction to be an unconscionable one and that it the judges made presumptions which were neither supported by facts nor warranted by law.

The judges of this case held that the High Court’s decision was wrong and cannot be upheld. They also noted how they didn’t think it was necessary for the Additional Solicitor General to argue that the suit was defective because the judges were already of the view that undue influence had neither been alleged sufficiently on the pleadings nor had been substantiated with evidence. And so, the appeal of the Petitioner was allowed and the decree of the trial court as well as the High Court was set aside.

Conclusion

This case in question related to whether undue influence could be considered as the necessity of plea raised in pleadings and it ruled that before examining whether undue influence has been exercised or not, it must scrutinise the pleadings to find out whether all particulars of undue influence have been fulfilled or not and in the instant case, they could not be sufficiently substantiated. Under Section 16 of the Indian Contract Act, the first thing is to prove whether one party was indeed in a position to dominate the will of the other or not. But mere close relationship between the parties does not give rise to a party having an unfair advantage over the other.

Critical Analysis/ Suggestions

The Supreme Court in this case has rightly held that the High Court’s decision was wrong and that it cannot be upheld since the first two stages of determining whether there has been undue influence were completely ignored and not substantiated by evidence in the High Court to prove that Balaram was in a position to dominate the will of his father and nor did the court find the transaction to be an unconscionable one. Hence, the appeal was allowed and the judgement of the High Court was set aside and the decree of the trial court was restored. The respondents also had to pay the appellant, the costs throughout.

[1] [1964] 1 SCR 270

https://teamattorneylex.in/2022/11/01/subhas-chandra-das-mushib-v-ganga-prasad-das-mushib-air-1967-sc-878-2/
Case Summary

Ragunath Prasad vs Sarju Prasad (1923) 51 I.A. 101.

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This Case Summary is written by Shrasti Singh, a student of Shri Ramswaroop Memorial University, Lucknow

Introduction

This case is a landmark judgement in Indian Contract Act, 1872 for free consent and undue influence.  For valid contract, one of the main essential element is free consent. The Consent of the parties means that they understand the same thing in the same sense or meeting of the minds. In English law, this is called ‘consensus-ad-idem. Under section 13 of Indian Contract act has define the word consent means as two or more person agrees upon the same thing in the same sense. For contract to be valid it is not enough that parties have given their consent. The consent should also be free .it means it has been given by free will of the parties involving no pressure and use of force. 

Section 14 of Indian Contract Act 1872, provide the concept of free consent. The contract is said to be free when it is not caused by- coercion, undue influence fraud, misrepresentation and mistake. When the contract is not free, it is treated as voidable contract at the option of the party whose consent is not free.

This case deals with the undue influence which is defined under section 16 of Indian Contract Act 1872, it means as when one party is in position to dominate the will of others and actually misuses the power, and then it is case of undue influence. To prove undue influence, the party has to establish a relation between the parties in which the other person in the power to dominate a will of other by reason of:

  • A real or apparent authority for eg a factory owner exercise undue influence to employees to make a certain agreement with him, because he has power to remove the employee from job.
  • Fiduciary relationship for eg Doctor and Patient Relationship.
  • Mental capacity which is influenced due to reason of age, illness, mental or bodily distress. It can be either permanently or temporarily. 

This case is judged by four judge bench of: Shaw, Carson, J Edge, A Ali, L Jenkin.

Fact of the Case

This case is second appeal from a decree of first appeal lie in the High Court of Judicature at Patna on November9, 1920, which change the decree passed by the Subordinate Judge of Arrah on September 25, 1917. In this case, the suit is filed for recovery of the amount of mortgage principle and interest due by Sarju Prasad Sahu to Ragunath (here petitioner). The subordinate judge passed decree in the mortgage suit but allow only simple interest but in appeal high court allowed compound interest.

 The petitioner Ragunath Prasad was a member of joint undivided family along with a respondent Sarju Prasad (his son). But some difference arose and they fought over the properties. The petitioner had sued a criminal proceeding against his own son in the court of law.

 In order to defend himself defendant borrowed money from the plaintiff by mortgaging his properties on May 27, 1910 and acquire ten thousand rupees at a compound interest of 24%. In the mortgage deed, it was written that the respondent will pay the interest by the 30th of the month and in case of non-payment, the interest would add on to principal and the interest would be then charged on the new principal.  Due to this in Eleven year, the amount payable is magnified more the elven fold that is RS. 1,12,885. 

The respondent’s contention was that the lender has taken unconscionable benefit of his mental distress by demanding him high rates of interest and therefore exercised the undue influence which make a contract voidable at option of the party whose consent is not free.

Issued raised

Whether the petitioner, in the circumstances proved in the case, has used undue influence or not within the provision of section 16 of Indian contract ACT 1872?

  Judgement

 The lordship laid down clear views upon Sub-section 3 of Section 16 of the Indian Contract Act as amended. In order to determine that the person falls within the under sub-section 3 of Section 16, the lordship laid down three step process.

  • In the first place, the relations between the parties to each other must be such that one is in a position to dominate the will of the other. 
  • Once that position is confirmed, the second stage has been reached, viz., the issue whether the contract has been induced by undue influence.
  • Upon the determination of this issue a third point emerges, which is that of the onus probandi. If the transaction appear as unconscionable then burden of proving that the contract was not induced by undue influence is to lie upon the person who was in a position to dominate the will of the other.

The lordship view that this order followed in sequence otherwise error will arise. For eg: 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? 

After taking Evidence in the case, the lordship held that the borrower failed to prove that lender was in a position to dominate his will under Section 16 of Indian Contract Act, 1872 which is first requirement to be proved. And the only relation between the parties was of lender and borrower. Hence the borrower got no relief.

The lordship have used these precedents given below:

1. Lord Davey in Dhanipal Das v. Raja Maneshar Bakhsh Singh.

2.  Maneshar Bakhsh Singh v. Shadi Lal.

 (While using this precedent, the court view that in present case the borrower have the full power of bargaining and he lay under no disability. The only relation between parties in this case was proved that they were lender and borrower. No prove was found to have the relation to dominate the will of other.)

3. Sundar Koer v. Sham Krishen

4. Abdul Majeed v. Khirode Chandra Pal (The Lordships dissented from the principles laid down by the Appellate Civil Court in this case while declaring the judgement).  

The court upheld the decree of the High Court but varied the amount of mortgage money. The court allowed the compound interest on the principal at the rate of two per cent, from the date of the execution of the bond until September 25, 1917, and thereafter simple interest at the rate of six per cent, per annum up to the date of realization. And held that the appellant will pay the costs of the appeal.

Conclusion

The court in Ragunath Prasad vs Sarju Prasad case laid down three step process which will further help to determine the case fall under section16(3) of Indian Contract Act. Through this case the confusion regarding the relation between the parties to dominate the will other, undue influence and burden of proof was cleared.

 Critical Analysis

The court in this case give a clear view regarding the section 16(3) of Indian Contract Act, 1872. The court laid down three-step process which should be followed in the order not otherwise which may result in error.

Even the case has unconsicousable advantage, if the petitioner does not prove the relation between him and the respondent in which one will dominate the will. The question of undue influence and unconsicousable advantage cannot be raised under section 16(3).