DR.

RAM MANOHAR LOHIYA NATIONAL

LAW UNIVERSITY

ACADEMIC YEAR 2017-18

FINAL DRAFT

TOPIC:- SUBHAS CHANDRA DAS MUSHUB V. GANGA PRASAD DAS

MUSHIB

SUBMITTED TO: SUBMITTED BY:

DR. VISALAKSHI VEGESNA SHREYA SINGH, 134

ASSOCIATE PROFESSOR (LAW) SHREYA YADAV, 135

DR. RMLNLU, LUCKNOW Section B

 ACKNOWLEDGEMENT

I would like to express my gratitude towards all those whose help and constant support the
project would not have reached its current facet. Foremost I would like to thank Dr.
Visalakshi Vegesna for her kind guidance and for quenching my queries on many doubts and
technicalities which I came up during the making of this project. I would take advantage of
this situation to thank him for providing me with such an enriching opportunity to work and
research on this topic.

This project would not have seen the light of the day without the constant direction and
guidance of my parents and guardians to whom I owe a lot. I would also like to use this
opportunity to thank my seniors in helping me out with the nitty-gritty of formatting.

I would also like to thank all of my friends who aided me along the way. I must also extend
my gratitude to the library and library personnel who provided me with research material and
good books to work upon and the distinguished authors, jurists and journals for providing in
the public domain such invaluable information.

Thank you.
Contents
ACKNOWLEDGEMENT ......................................................................................................... 2
DECLARATION ....................................................................................................................... 4
OBJECTIVE .............................................................................................................................. 4
NEED OF THE STUDY ............................................................................................................ 4
LITERATURE REVIEW .......................................................................................................... 4
INTRODUCTION ..................................................................................................................... 5
FACTS OF THE CASE ............................................................................................................. 5
HELD ......................................................................................................................................... 7
Section 16 of The Indian Contracts Act:- Concept of undue influence ..................................... 8
Fiduciary relationships ............................................................................................................... 8
Burden of proof: ......................................................................................................................... 9
Presumption: .............................................................................................................................. 9
CASE LAWS ............................................................................................................................. 9
Wajid Khan v Raja Ewaz Ali Khan .......................................................................................... 9
Williams v Bailey .................................................................................................................... 10
Allcard v Skinner ..................................................................................................................... 11
Lingo Bhimrao Naik v Dattatrya Shripad Jamadagni .............................................................. 11
National Westminster Bank v Morgan ................................................................................... 12
CONCLUSION ........................................................................................................................ 14
 DECLARATION

I, hereby, declare that this project work submitted to Dr. Ram Manohar Lohiya National Law
University, Lucknow, is a record of an original work done by us under the tutelage of Dr.
Visalakshi Vegesna, Associate Professor of Law. The Detailed study on the topic embodied
in the project has not been submitted to any other University or Institute.

OBJECTIVE

This project aims to elucidate the circumstances surrounding the undue influence, the causes,
the cases in the light of the facts of the main case and the problems faced.

NEED OF THE STUDY

This project topic challenging as a topic because of the misinterpretations and the suits that
follow in the legal field. Therefore, a thorough research is essentially required in this area.

LITERATURE REVIEW

Avtar Singh, Contract and Specific Relief (12th edn, EBC Publishing Ltd 2017) 227

Dinshah Fardunji Mulla, Mulla The Indian Contract Act (13th edn, Lexis Nexis Ltd 2011) 96

PC Markanda The Law Of Contract (2nd edn, Wadhwa Nagpur 2008) 1061, 1067- 1069.
 INTRODUCTION

The suit in the present case was for declaring that a dead of settlement executed by the
plaintiff's father and the plaintiff's sister in favour of the plantiff's brothers son in respect of
certain properties was fraudulent, collusive and invalid and for cancellation of the said
document.

FACTS OF THE CASE

1. The plaintiff’s father, Prasanna Kumar, owned certain lands in two villages, namely,
Parbatipur and Lokepur, holding an eight annas share in each. The exact valuation of
the properties is not known, but it would not be wrong to assume that the Lokepur
properties, the subject-matter of the suit, were the more valuable ones.
2. Prasanna Kumar died in January or February, 1948 when he was about 90 years of
age. He had two sons, namely, Ganga Prosad, the plaintiff, and Balaram, the second
defendant in the suit, besides a daughter Swarnalata, and an only grandson Subhas
Chandra, who was the first defendant in the suit. Ganga Prosad had no son. He had
served in the Medical School at Bankura from 1932 to 1934. Thereafter he worked as
a contractor for one year. From November 1944 to 1948 he served in Searsole Raj
Estate. The family consisted of Prasanna and his wife, their two sons and their wives,
besides the grand-son Subhas Chandra and Prasanna’s daughter Swarnalata who
became a widow in her childhood and was residing with her parents. It appears that
Balaram always lived with his father and was never employed elsewhere.
3. According to the plaintiff’s own evidence he was looking after the property of his
father so long as he was at Bankura. The Lokepur properties were put to auction in
execution of a decree for arrears of rent and were purchased by Prasanna, benami in
the name of Swarnalata. The deed of gift shows that the transaction was entered into
out of natural love and affection of the donor for the donee and for the respect and
reverence which the grand-son bore to the grand-father.
4. There is no direct evidence as to whether the plaintiff was present in Bankura at the
time when this deed was computed and registered. It is the plaintiff’s case that he was
not.
 5. The suit was filed in 1952, more than eight years after the date of the transaction and
more than four years after the death of Prasanna. There is a considerable body of
evidence that in between 1944 and 1948 a number of settlements of different plots of
land in village Lokepur had been effected by Balaram acting as the natural guardian
of his son Subhas Chandra and in all of them the Nirupan Patra had been recited and
in each case Prasanna had signed as an attesting witness. These settlements were
made jointly with the other co-sharers of Prasanna.
6. In 1947 the Municipal Commissioners of Bankura filed a suit against Prasanna for
recovery of arrears of taxes. Prasanna filed his written statement in that suit stating
that he had no interest in the property. After Prasanna’s death the Municipal
Commissioners did not serve the plaintiff with a writ of summons in the suit but
obtained a decree only against Balaram ex parte.
7. The plaintiff attended the funeral ceremony of his father in 1948, but he alleges that
he never came to know of any of the settlements of land in Lokepur after 1944. He
admitted never having paid any rent to the superior landlords and stated that he came
to know about the deed of settlement some two years before the institution of the suit
from his cousins none of whom were called as witnesses.
8. Once and how a plaintiff who seeks relief on this ground should proceed to prove his
case and when the defendant is called upon to show that the contract or gift was not
induced by undue influence. The instant case is one of gift but it is well settled that
the law as to undue influence is the same in the case.1

In Subhas Chandra das Mushib v. Ganga Prasad Das Mushib and Others, AIR 1967 SC 878,
hon’ble Supreme court held ‘that the Court trying the case of undue influence must consider
two things to start with, namely,
1. Are the relations between the donor and the donee, such that the donee is in a position
to dominate the will of the donor?
2. Has the donee used that position to obtain an unfair advantage over the donor?
Upon the determination of these two issues a third point emerges, which is that of the onus
probandi. It appeared to the judge that there was no sufficient pleading of undue influence at
all in the plaint. If the transaction appears to be unconscionable, then the burden of proving
that the contract was not induced by undue influence lies upon the person who is in a position

1
SCC Online
to dominate the Will of the other. It was further said that merely because the parties were
nearly related to each other or merely because the parties were nearly related to each other or
merely because the donor was old or of weak character, no presumption of undue influence
can arise. There was no presumption of undue influence in the case of a gift to as son, grand-
son, or son-in-law, although made during donor’s illness and a few days before his death.
Generally speaking the relations of solicitor and client, trustee and cestuique trust, spiritual
adviser and devotee, medical attendant and patient, parent and child are those in which such a
presumption arises.2

HELD

Under Section 16 of the Indian Contract Act, the first thing to prove so as to claim undue
influence is the existence of such a relationship between the parties that one is in a
position to dominate the will of the other. But mere relationship of such a nature will not
raise any presumption of undue influence; for it must be further proved that the defendant
had used such a relation to obtain an unfair advantage over the plaintiff.

U/s 16(2)(a) the phrase “real or apparent authority” can be taken to mean “relations of the
parties such that one naturally relied on the other for advise and the latter was in a position
to dominate the will of the first in giving it”. The Court observed that no presumption of
undue influence arises in case of gift to a son, grandson, son-in-law, although made during
the donor’s illness or old age. Though, the relationship of solicitor-client, spiritual advisor
and devotee, doctor-patient, parent and child are those in which such a presumption arises.

The statement filed by donor that “he no longer holds any interest in the property” shows that
he was fully conscious and consented the transfer of property to the defendant. Further, the
fact that donor was actively involved in the management of his property clearly proves that
no undue influence was exercised over him.

The unconscionableness of the bargain is not the first thing to be considered.3 The first thing
to be considered is the relations of the parties. But the High Court neither determined the

2
< https://legalconsultancysite.wordpress.com/case-analysis/> last accessed on March 28, 2018
3
Indian Contract Act, 1872
relationship of the parties as required in s. 16(1), nor did it find that the transaction was
unconscionable. Therefore the presumptions made by it were unwarranted by law.4

Section 16 of The Indian Contracts Act:- Concept of undue influence

There are some instances wherein one person is so placed to the other that he can dominate
the will of the other. Such an advantage over the other is used to get the other to enter into a
contract. In this case the consent is said to be obtained through undue influence.

The two important points to be noted are close relationship with the person and domination of
will .

eg: A advances a sum to his minor son B. As B attains majority, using parental influence A
obtains a bond from B for a greater amount. This is undue influence.

A man suffering from a disease is looked after by X. Here X obtains a very large sum from
that man for the treatment. This is undue influence. Eg of persons having a dominant-weak
character :

Income tax officer- assesee

Moneylender-person in debt

Policeman-accused

Master- servant

Fiduciary relationships
A fiduciary relationship encompasses the idea of faith and confidence and is generally
established when the confidence given by one person is actually accepted by the other person.
Mere respect for another individual’s judgment or general trust in his or her character is
ordinarily insufficient for the creation of a fiduciary relationship. The duties of a fiduciary
include loyalty and reasonable care of the assets in his custody. All of the fiduciary’s actions
are performed for the advantage of the beneficiary.

4
<www. http://llbanswers.blogspot.in> last accessed March 28, 2018
A fiduciary relationship extends to every possible case in which one side places confidence in
the other and such confidence is accepted. This causes dependence by the one individual and
influence by the other. Blood relation alone does not automatically bring about a fiduciary
relationship. A fiduciary relationship does not necessarily arise between parents and children
or brothers and sisters.

From the above, we can deduce to the two key features in fiduciary relationship; namely:

i. Existence of trust (good faith, confidence, and condor)

ii. Acting for the benefit of another

If a fiduciary abuses his or her position to obtain an advantage or benefit at the expense of the
confiding party, the latter will be able to seek relief from court to prevent such advantage
accruing to the fiduciary.

Burden of proof:
The burden of proof lies on the person who is in a position to dominate the will of the other.If
it appears on the face of it that the contract was entered into using undue influence it is the
person who is in a dominating position to prove that undue influence was not used.

Presumption:
It is always presumed that one of the parties was in a position to dominate will of the other
and such position was used to obtain an unfair advantage. The effect of presumption is that
once it is shown that the defendant was in a position to dominate the will of the plaintiff it
will be presumed that he must have used his position to obtain an unfair advantage.

CASE LAWS

Wajid Khan v Raja Ewaz Ali Khan 5

An old woman was incapable of managing her business. She appointed a managing agent.
She conferred on her managing agent without any valuable consideration an

5
Wajid Khan v Raja Ewaz Ali Khan (1891) LR 18 IA 144, 148
important pecuniary benefit in the form of a trust. It was held this was active undue
influence.6

Before a court is called upon to examine whether undue influence was exercised or not it
must scrutinize the pleadings to find out that such a case has been made out and
that full particulars of undue influence have been given as in the case of fraud. These
conditions remained unsatisfied in the present case.
On the evidence in the case the trial court was right in its conclusion that the donor was
fully aware of the fact that he had transferred the property to defendant
No. 1. It had not been established that he was of unsound mind. There could be no
presumption of undue influence merely because the donor and the donee were nearly related
to each other. Nor could the fact that a grandfather made a gift of
a portion of his properties to his only grandson a few years before his death show that
the transaction was unconscionable.7

It has been observed by the Supreme Court that Sec 16 is based on English law of undue
influence.8

Williams v Bailey (1866) LR 1 HL 2009

A son forged his father's signature on promissory notes and gave them to their bankers. At a
meeting of all the parties at the bank, one of the bankers said to the father: "If the bills are
yours we are all right; if they are not, we have only one course to pursue; we cannot be
parties to compounding a felony." The bank's solicitor said it was a serious matter and the
father's own solicitor added, "a case of transportation for life." After further discussion as to
the son's financial liability the bank's solicitor said that they could only look to the father. The
father then agreed to make an equitable mortgage to the bank in consideration of the return of
the promissory notes. The father succeeded in an action for cancellation of the agreement.

It was held by Lord Westbury that the security given for the debt of the son by the father
under such circumstances, was not the security of a man who acted with that freedom and

6
<http://llbanswers.blogspot.in> last accessed March 25, 2018
7
SCC Online
8
Contract and Specific Relief, Avtar Singh
9
William v Bailey (1866) LR 1 HL 200
power of deliberation that must be considered as necessary to validate a contract to give
security for the debt of another.

Allcard v Skinner (1887) 36 Ch D 14510

In 1867 an unmarried woman aged 27 sought a clergyman as a confessor. The following year
she became an associate of the sisterhood of which he was spiritual director and in 1871 she
was admitted a full member, taking vows of poverty, chastity and obedience. Without
independent advice, she made gifts of money and stock to the mother superior on behalf of
the sisterhood. She left the sisterhood in 1879 and in 1884 claimed the return of the stock.
Proceedings to recover the stock were commenced in 1885.

It was held by the Court of Appeal that although the plaintiff's gifts were voidable because of
undue influence brought to bear upon the plaintiff through the training she had received, she
was disentitled to recover because of her conduct and the delay.

Lingo Bhimrao Naik v. Dattatrya Shripad Jamadagni11

Defendant, adoptive mother of plaintiff, was alleged to use undue-influence to obtain the
consent of the plaintiff, once he attained the age of majority, to ratify the gift deeds made to
her daughters in regard to non-watan property. Though the agreement to ratify such deeds
was in contemplation of defendant and natural father of plaintiff, even before plaintiff’s
adoption, but as and when he came off by age, he was compelled by defendant to ratify the
gifts without waiting to consult his natural father, by threatening him that: firstly, his
marriage will not be performed, secondly, his education will be stopped, and thirdly, his
adoption will be cancelled. He was further pressurized by elders and well-wishers of family
that he will be ruined if didn’t execute the deeds.

Issue:- Whether the ratification of gift deed by plaintiff was obtained by undue influence such
that any conveyance of title under said deed was rendered void?

Held:-Importunity or threats or moral command asserted for the sake of escaping

from distress of peace or mind, if carried to such an extent by a person by virtue of his

10
Allcard v Skinner (1887) 36 Ch D 145
11
Lingo Bhimrao Naik v Dattatrya Shripad Jamadagni (1937) 39 BOM LR 1233
position to dominate the will of other, that the judgment or free will of other party
is overweighed, then the consent so obtained is vitiated by undue influence as under S.16.

National Westminster Bank v Morgan [1985]12

Lord Scarman stated: "A meticulous examination of the facts of the present case reveals that
[the bank] never 'crossed the line'. Nor was the transaction unfair to the wife. The bank was,
therefore, under no duty to ensure that she had independent advice. It was an ordinary
banking transaction whereby the wife sought to save her home; and she obtained an honest
and truthful explanation of the bank's intention which, notwithstanding the terms of the
mortgage deed which in the circumstances the trial judge was right to dismiss as 'essentially
theoretical', was correct; for no one had suggested that... the bank sought to make the wife
liable, or to make her home the security, for any debt of her husband other than the loan and
interest necessary to save the house from being taken away from them in discharge of their
indebtedness to the building society."

The three stages for consideration of a case of undue influence were expounded in the case
of Ragunath Prasad v. Sarju Prasad and others13 in the following words :-

"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 substantiated the second stage
has been reached-namely, 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 appears to be unconscionable, then the burden of proving
that the contract was not induced by undue influence is to lie upon the person who was in ,I
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?" It must also be noted that merely because the parties were
nearly related to each other no presumption of undue influene can arise.

12
National Westminster Bank v Morgan [1985] AC 686
13
Raghunath Prasad v Sarju Prasad (1924) 26 BOMLR 595
As was pointed out by the Judicial Committee of the Privy Council in Poosathurai v.
Kappanna Cheittiar and others.14

"It is a mistake (of which there are a good many traces in these proceedings) to treat undue
influence as having been established by a proof of the relations of the parties having been
such that the one naturally relied upon the other for advice, and the other was in a position to
dominate the will of the first in giving it. Up to that point "influence" alone has been made
out. Such influence may be used wisely, judiciously and helpfully. But whether by the law of
India or the law of England, more than mere influence must be proved so as to render
influence, in the language of the law, "undue".

The law in India as to undue influence as embodied in s. 16 of the Contract Act is based on
the English Common Law as noted in the judgments of this Court in Ladli Prasad Jaiswal v.
Karnal Distillery Co. Ltd15. and ors. According to Halsbury's Laws of England, Third
Edition, Vol. 17, p. 673, Art. 1298, "where there is no relationship shown to exist from which
undue influence is presumed, that influence must be proved". Article 1299, p. 674 of the
same volume shows that "there is no presumption of imposition or fraud merely because a
donor is old or of weak character"The nature of relations from the existence of which undue
influence is presumed is considered at pages 678 to 681 of the same volume. The learned
author notes at p. 679 that "there is no presumption of undue influence in the case of a gift to
a son, grandson, or son in-law, although made during the donor's illness and a few days
before his death". Generally speaking the relation of solicitor and client, trustee and cestui
que trust, spiritual adviser and devotee, medical attendant and patient, parent and child are
those in which such a presumption arises. Section 16(2)16 shows that such a situation can
arise wherever the donee stands in a fiduciary relationship to the donor or holds a real or
apparent authority over him. Before, however, a court is called upon to examine whether
undue influence was exercised or not, it must scrutinise the pleadings to find out that such a
case has been made out and that full particulars of undue influence have been given as in the
case of fraud. See Order 6, Rule 4 of the Code of Civil Procedure.17

14
Poosathurai v Kappanna Cheittiar and others 47 IA p 1 at p 3
15
Ladli Prasad Jaiswal v Karnal Distillery Co Ltd15 and ors [1964] 1 SCR 270 at 300
16
Indian Contract Act, 1872, Section 16(2)
17
<www.contractlawsign.com> last accessed March 26, 2018
 CONCLUSION

Transactions affected by undue influence are voidable, but not void, and so third parties who
acquire some interest in the subject matter of the contract in good faith and for a value cannot
be displaced by the person seeking rescission.

Undue influence was introduced to deal with cases where a contract was entered into as a
result of pressure, but this pressure did not amount to duress.

Undue influence can arise where there is a relationship between the parties which has been
exploited by one party to gain an unfair advantage.

In Bank of Credit & Commerce International v Aboody (1990), the Court of Appeal set out
three different classes of undue influence:

 Class 1 – actual undue influence

 Class 2a – presumed undue influence

 Class 2b – presumed undue influence

Class 1 – actual undue influence

Actual undue influence requires proof that the contract was entered into as a result of the
undue influence. It could include acts such as threatening to end a relationship or persistent
pestering of a party where they have refused consent until they eventually submit.

Class 2a – presumed undue influence

In this class, there is no need to prove that improper influence was actually exerted. It must,
however, be shown that that there was a relationship which in law gives rise to a presumption
of undue influence (eg, parent/child; doctor/patient; solicitor/client) and the transaction
cannot easily be explained by the relationship of the parties.

Class 2b – presumed undue influence

If a relationship exists which does not give rise to an automatic presumption under Class 2a,
but in which it can be shown that someone placed their trust and confidence in another, a
presumption of undue influence can still be found ((eg, employee/employer; cohabitees).
Rebutting presumed undue influence

The person accused of exerting undue influence can rebut the presumption by showing that
the other party entered into the transaction of their own free will and were aware of the risks
involved. Showing that they received independent legal advice before signing the contract
might suffice.