] IS.

151 Coercion 149

COERCION

Definition [S. 15]

An agreement the consent to which is caused by coercion is voidable at the option
of the party whose consent was so caused. "Coercion' is defined in Section 15.

15. "Coercion" defined.--"Coercion" is he committing, or

threatening to commit, any act forbidden by the Indian Penal Code
(XLV of 1860), or the unlawful detaining, or threatening to detain, any
property, to the prejudice of any person whatever, with the intention of
causing any person to enter into an agreement.
Euplcmation.—It is immaterial whether the Indian Penal Code (XLV
of 1860), is or is not in force in the place where the cbercion is
employed.
I/h o;raIiO;Lc
A. on board an English ship on the high seas, causes Rio enter into an agreement by an act
amountin g to criminal intmidatiun under the Indian Penal Code XL\° o lShOi
'I aite.vards sues 13 foi breach of con:, act at Calcu:ta.
1 has emplo y ed coercion, althou g h his act is not an o(fencc b y the law of En g land. and
althou g h Section 506 01' the Indian Penal Code (XLV of I8601, was not in force at the time
when or place where the act was done

Techniques of causing coercion

Consent is said to be caused by coercion when it is obtained by pressure exerted
b y either of the followin g technqites:
(I) committing or threatenin g to cornmi: an y act forbidden by the Indian Penal
Code; or
(2) unlawfull y detaining or threatening to detain any property.
Acts forbidden b y !PC
"It is clear that coercion as thus defined implies a committin g or threatening to
commit some act which is contrary to law." 5 "The section has g iven rise to few
decisions. -5 Similarl y , the Priv y Council observed in Askri Mira v Thi Jai Kivliori7
that "cases brou g ht under this particular branch of Section 15 of the Contract Act must
he of rare occurrence". A clear illustration would be consent obtained at the point of
pistol, or b y threatenin g to cause hurt, or by intimidation or by threatening to burn a
man's house or slashin g his valuable picture. 5 An i n tr iguing, question in this
connection was before the Madras Hi g h Court in C!tikliwn Aotii'jii v Chik/uu,i
Sesha,nnta:9
B y threat of suicide, a Hindu induced his wife and son to execute a release
in favour of his brother in respect of certain properties which they claimed as
their own.

5. Gobordlia,i Doss 3m Kishen Dm, (1900)22 All 224.

6. OLDF1ELD 3 in C/iik/iani Aniiraju v Chikhaoi Seshni,na, (1917) 41 Mad 33, 36.
7. (1912) 161C344.
S. The Siboen and the SiL,'otre, Re, (1976) 1 Lloyd's Rep 293; cf. The Atlantic Baron, Re, (1975)3
All ER 1170
9 Nmc 6.
 150 Free Consent [S. 151 [C/rap.

It was held by a majority ''that the threat of suicide amounted to Coercion \Vitliiii
Section 15 and the release deed was, therefore, voidable" The difference iii
related to whether suicide is an act forbidden b y the Indian Petal Code. An :utternpt
to commit suicide is punishable under the Code, but there is no punishment
provided for suicide) 0 The majority consisting Of WALLIS CJ and Snssl.s.nli g t .1
believed tlrzit the man who commits suicide goes unpunished, not because the act is
not forbidden, but because there is nobody left to be punished. OLI.inELu J dissented
on the oround that unless an act is made punishable it cannot be said to he
forbidden.
"When a criminal prosecution is instituted a gainst a peison and such pni
fearing the result of the prosecution enters into an agreement in favour of the
complainant in consideration of his abandoning the prosecution, it cannot he held
simply upon these facts that the consent of such person was caused by coercion.'''
"To threaten a criminal prosecution is not per se an act forbidden by the Indian
Penal Code. Such an act could only he one forbidden by the Indian Penal Code if it
amounted to a thi eat to file a false charge." This was pointed out b y the Privy
Council in Askari Mirca v Bibi Jai Kislnori:'
A minor, having borrowed on two mortgage deeds, agreed to a
compromise decree although the mortgages were void. Subsequently he
pleaded that he entered into the compromise because he was threatenedith
prosecution for falsely misrepresenting his age and that this amounted to
coercion. Their Lordships observed: "The law as contained tit IS is
much wider than anything to he found in the English authorities and in India it
is not correct to say that a contract is vitiated merely by proof of a threat to
bring a criminal char ge. Of course, if the charge of cheating was a true one.
there is an end to the plaintiff's ease, for a threat to brin g such a charge would
not be an act forbidden b y the Indian Penal Code.'' 13
As the court below recorded no finding as to the truth or falsity of the charge, the
case was referred back for re-trial.
The plea was that the plaintiff was dispossessed of promises forcibly under
threat that he would be arrested and detained under the Maintenance of Internal
Security Act. The court said that such threats would fall within the mischief of S. 15.3
Detention of property
An illustration of detention of property is provided by an early case. The
plaintiff had pledged his plate with the defendant for £ 20. When he went to redeem
it the pledgee insisted that an additional £ 10 interest was also owed. The plaintiff
paid this to redeem his plate and then sued to recover it back. The court allowed it.

0. Section 309, Indian Pena] Code.

it. Msjrth v A yrsha, (1880) Punj Rcc No. 135. p 378. See also Gobardlian Dos v Jai K:she,i
9s, (1900)22 All 224.
12. t-ote7above.
13 Compulsory sales prescribed by an Act, for example, that the grower will sell all his product
Only to a particular mitt, there is no coercion in it. And/ira Sugars Ltd v State oJAP, (1968)1
SCR 705: AIR 1968 SC 599. For an earlier view see ,5'ew India Sugar Mills, Re, 1963 Supp
(2) SCR 459: AIR 1963 SC 1207. For a subsequent decision see Solar Jung Sugar Mills v
Stare of Mysore, (1972)1 SCC 23: (1972) 2 SCR 228: AIR 1972 SC 87.
14. Kis/iwi La? Ka?ra v NDMC, AIR 2001 Delhi 402: (2001) 92 Delhi LT 67.
51 [S. 161 Li,iciue Influence 1-51

lie was in immediate need of his article and the defendant extracted from him an
extra amount b y refusing to deliver it. 15Refusal by a government department to
release the pa y ment of a contractor unless he gave up his IaTrn for extra rates
amounted to ci:ercion under the category of detention of propertv.°
Comparison with English Law
The following comparison has been attempted by the Madras High Court:7
"What the Indian Law calls coercion' is called in En g lish Law Duress or
Menace'. Duress is said to consist in actual or threatened violence or
imprisonment of the contracting party or his wife, parent or child, by the other
parts or by anyone acting with his knowledge and for his advantagc But
coercion as defined in S. 15 is much wider and includes the unlawful detention
of property also. Further, coercion may he committed by an y person, not
necessaril y a party to the contract Again, it need not be directed against the
contracting party, or his parent v ifc or child. It may be directed a g ainst ar
person, even if he is a stranger. While in English Law, duress must he such as
will cause immediate violence and also unnerve a person of ordinar y firmness
of mind, these requisites are not necessar y in Indian Law"
L'sI)t;r: INFLUENCE
Definilion IS. 16]
Section ( of the Act defines endue influence.
16. (1 ) A contract is suid to be tnduccd b y 'undue itifluonce"
where the relations subsistin g between the parties are such that one of
the parties is in a position to dominate the will of the other and uses
that position to obtain art Ltnfair ad anlago over the other.
(2) In particular artd witliciut preuiJice to the generality of tile
foreeoituiz principle, a person is deemed to be itt a position to dominate
the will of another
(a) where he holds a real or apparent authorit y over the other or
where he stands in a ftcluctarv relation to the other; or
(b) where he makes a contract xvilii a person whose mental
capacity is temporarily or permanently affected by reason of
age, illness, or mental or bodil y dtstress.
(3) Where a persoti who is in a position to dominate the xviii of
another, enters into a contract with him, and the transaction appears.
on the face of it or oil adduced, to he unconscionable, the
burden of proving that sttch contract was not tnducecl b y undue
illfluence shall lie upon the person in a position to dominate the will of
the other.

IS. Ao/cr v RemuS/s (t731) 2 STR 915:93 ER 939.

16. Supri,ite,iding Engineer, Irrigaiwn Dept: v Progressive Engg Co. (1997) 4 Andh LID 4S9
DE3, AP.
7. Karuppayee ,'k,nnw! v Kan4ppinh Pilini, (t9S7) 1 Mad U 138.
152 Free Consent IS. 16] [Chap.

Nothing in this sub-section shall affect the provision of Section

111 of the Indian Evidence Act, 1872(1 of 1872).
i/lust raoons
(o) A. having advanced money to his soil, R. d u r i n g his Illinolity, upon /1 'a
comin g of age obtaros, b y misuse of parental influence a bond from 1/ for a
greater amount than the sum due in respect of the advance. A cinplos S utid'cc
influence.
(6) A. a roan enfeebled by disase or a g e, is induced. b y B's miillucnce over loin
as his medical attendant. to agree to pay B an unrcasori.ihlc twin or iris
professional services. 11 emplo y s undue influence
() 1, being in debt to /1, t he mone\ lender of his s illase. contacts a fresh loan on
terms which appear to be unconscionable It ticS on B to pi•ose that time
contract was not induced by undue ir:flucr:s'.
Oft A applies to a hanker for -I at a iiine when there isStrinOency
mone y market. ]'he hanker dcci nes to make the loan except it in Ii 101511 :ill
hi g h rare of interest A accepts the loan on these icrnis 'l'hms is a transaction in
the ordinary course of business, and the contract is not indricd irv undue
influence.
A bilitv to dominate will of other
Sometimes the parties to an aorccmetit are so related to each other that one of
them is able to dominate the will of the other. The person sc ho OcCupies the superior
position may prevail upon the other to obtain his consent to in aercement to which
he. but for the influence so exerted, o ould not have consented. A spiritual adviser
(guru). for example, in a case before the Ailahabad Hi g h (Torrrt,' 5 induced the
plaintiff, his devotee, to gift to him the whole of his property to secure
ecre heefits
rt to
h i s soul in the next world. Such a consent is said to be obtained b y undue Influence.
"Would any reasonable man," the court sand, ''in full possession of his senses and
not under unusual influence of some kind or the other do such a thino'?"
Subtle Species of rnud

"Undue influence is said to he a subtle species of fraud whereb y mastery is

obtained over the mind of the victim, by insidious approaches and seductive
artrfices. Sometimes the result is brought about by fear, coercion, importunity or
other domination, calculated to prevent expression of the victim's true mind. It is a
'-.'nt ' .derm: ng froc , e ti, cs ul Ic;,,a1arce, Uiiiiiii
about a submission of the other." 9 The following statement bears out the distinction
between coercion and undue influence:
"The law draws a distinction between duress and undue influence. Duress
(coercion) in the execution of a contract or deed occurs svhcti there is a physical
compulsion of the person, which must be very rare, or when there is a threat to
the person's life or limb, or threat of a physical heating or of imprisonment. It
may also take into account threats of a wrongful imprisonment or prosecution
of the person and possibly of the person's near relative.

IS. Mannu Singh v Umodat Pande y, (1890) 12 All 523. For an English case of the same kind see
Ahlcardv Skinner, (1887)36 Ch D 145.
19. Ma/rboob Khan v Hakim Abdul Rahim, AIR 1964 Raj 250.
51 [S. 161 Urn/ne /iijluericc

Ill contrast to duress, undue influence ma y exist without violence or t.

of violence arzainst the victim. It depends upon the ex i stence of a relattonshi_
bcts eCu 1550 parties which. wlii Ic it CollfillLICS, c tilseS one to place a coubdence
in the other which produces a natural influence over the one which that other
abuses to his own ads antacc."-0

Relations xi hiCh IF) viilve domination

When .an it he said :li:it one part y is able to dominate the will of the other'? The
ansucr is. in all ciscs schee there is aCtise trust md confidence het',secru the parties
or he p.trlies are nut on equal 1ooting. The rrmncir l e applies to every case where
influence is acquii ed and ibused, 's here cont deuce is reposed and be i vaycd . " c It
applies ''to all variet y of relation in which domination ma y he exercised b y one
person oser another. Tilee relationships hich may develop a dominating
influence of one over another arc intiuitels various. Flicre is no precisely defined
law settine limits to the equitable jurisdiction of a court to relieve against undue
mittluence. This is ii world doctrine, not of neat and lids rules The courts of equity
hoedes do ed a bod y of learning enabI:n chef to be g ranted where th law la has
has to
neat the transaction as uni tipeachahic unless ml can he held to have been procured
b y undue influence. It is the uriimpcachahihitv at law of a disadvantageous
transaction whmh is the stallin g -point from 55 hvh the court advances to consider
ss heher the transictiori is the product mcclv of ones own foll y or of the undue
influence exercised b y another. A court in the c\erdise of this equitable jUllsdiction
is a court of conscience. Definition is a poor tnstt ument when used to determine
ss hether a transaction is or is limo unconscionable: this is a question ss hich depends
upon the particular facts mt the casc.' For example, in lYi/liitis V BuYIeV.
A son bi ged his father's si g nature on several promissory notes and paid
hcn the truth caine to light, the mana g er of the
them into his banking account. \V
bank threatened prosecution of the son and "transportation' if a satisfactory
soluliOti were not found. To avert (his threat, the father agreed to give an
equitable mortgage to the bank on his propert y in return for the promissory
notes. Subsequentl y the father sought to have this a g reement cancelled on the
ground that he ss is 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
a g reement 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 art extent to deprive him of free agency, and to extort an agreement
from him for the benefit of the bankers. There was inequality between the parties
and one of them took unfair advantage of the situation of the other and used undue
influence to force an agreement from him.

1-0.Saxo, v Sri.o,n. (1976) 4 WWR 300, 305. 306 (BCSC) Canada

21 The ordinary u'adc buyers and scitcrs are on equal footing and not related in fiduciary
ciipxciiv. Sec Deru Ncirrdan v GoAl, fbi, ft 886) 2 Punj, tR 325 P&H.
22 Lord Kixosoosvts in Snitih v Ka y , (t 859) 7 1 tLC 750. 779.30 U Ch 45.
23. Sir SAMUEL RONFILLY in Huguenin v Ba.rr,' y . I 180 7 ) 4 Ves 273: 9 RE 283.
24. Lord Sc\RxiAN in National We.rr,nu,ivfrr Bank v Morgan. (1985) I All ER 821.
25. (1866) LR I UL 200: (I861-73) All ER Rep 227. Ii has been observed by the Supreme Court
that S. 16 is based on English law of undue influence. Subluac Chandra v Ganga Pd, (t967)
1 SCR 331: AIR 1967 SC 878.
 154 Free Consent [S. 16] [Chap.

In particular, however, and without prejudice to the generalit y of the principle,

the Act lays down, in sub-section (2)of Section 16 that a person is deemed to be in
a position to dominate the will of another in the following cases--
(a) where he holds a real or apparent authority over the other, or where he
stands in fiduciary relation to the other; or
(b) where he makes a contract with a person whose mental capacity is
temporaril y or permanentl y affected by reason of age, illness, or mental
or bodily distress.
Real or Apparent A ut/tority
A person in authority is definitely able to dominate the will of the person over
whom the authority is held. The authority may be real or apparent. Persons in
authority would include an Income Tax Officer in relation to an assessec; a
magistrate or police officer in relation to an accused person and the like. The
expression "apparent authorit y " would include cases in which a person has no real
authority, but is able to approach the other with a show or colour of authority.
Fiduciary Relation
Fiduciar y relations are of several kinds Indeed ever y relationship of trust and
confidence is a fiduciar y relation. 5 And confidence is at the base of innumerable
transactions of mankind. This cate g or y is. therefore, a ver y wide one. It includes the
relationship of solicitor and client. 7 trustee and cestui que trust, 8 spiritual adviser
and his devotee.' doctor and patient. t ° v.oman and her confidential managing
agent. 3t parent or guardian and chikl. 3 and creditor and dehu:ir. 23 The relationship
of trust and confidence presents a very good onpartuniis to the person in Whom
confidence is held to exploit it to his ass n use. A contract hciweei person, so related
is, therefore, voidable it the consent was obtained by abusing the confidence. The
dut y of the person in svhont confidence is reposed was erplained by the Court of
Appeal in "Wood v v Cox. A solicitor sold certain property to one of his clients. The
client subsequentl y alleged that the property was considerably overvalued.
SCRUTFON LJ proceeded as foflovs_
"Generall y when you have made a le g al contract and correctly expressed it
in writing, and it has not been obtained b y any misstatement of facts, innocent
or fraudulent, the contract stands, and the fact that one parts or the other knows

26. Sec Sub/ins Chandra v Gaizga Pd. ( 19 67) 1 SCR 331: AIR 1967 Sc 878.
27. l'usiimig v ,%frui jri lialuani, (186S) [3LR AC 95. whew a poor woman agreed to g ive one-
half of the property which she might recover with the assistance of her Monklniaar, See also
Brajenidrn Ann/i v .Srensniiitv (I 9 0) 6 C'A N S 16; Santh'ronis A Sfitr'a,is V Slu/iwilnl AIR
1955 Cat 319. See, for e.xain;lc, ,Shuilv v Co y , (1917) 2 Ch 71. (1916-17) All ER Rep 545.
CA, where a solicitor sold a trust propciiy in one of his clients who suhsequer.ily sought
rescission on the ground that the property was considerabl y overvalued. The Court of Appeal
held that when undue influence is alle g ed aganinsi a solicitor he has in prove that he disclosed
all the material facts and that the transaction was of advantage to lie client.
28. Rag/iuiiritli v Varjiranrhi.v, (1906) 30 Boin 579.
29. Mannu Singh v Unindrit Pam/c, (1890) 12 All 523.
30. Mitchell v Honifray, (1381) S QI3D 587.
3.1. Wa,nd Khan v Raja Eiva: Ali Khan, (1891) 18 IA 144; Pala,iii'elu v nVeelavathi, AIR 1937
PC 50; Subbania in v Mohd Abe/ui, AIR 1950 Hyd 55.
32. Lokahnii Doss v Raop Loll, (1907) 30 Mad 169.
33. Dialarani v Sarga, AIR 1927 LaIi 536. See Dcaly, Fiduciary Relationships, 1962 Comb U 69.
34. (1917)2C1-17t:(l916-17) All ER Rep 54S,CA.
- [S. 161 Undue Influence 155

facts about which he sass nothuig, which made he coniraci unptc . htitble one to
the other party, is of no legal consequence. But there aic certain relations and
certain cortraciS in which a hieher dut y is imposed upon the'allies and they
must not onl y tell the uuih. but the y rust tell the sslioie truth so tar is it is
material, and the y must not univ not misrepresent by svords, they roust not
nhisrcl'reseiti b y silence 11 the y know of s ntcthitiit that is material .S tine 0
those cases depend on he chiiiinnshio hcist cc:1 :lie p.1 iiL.,tijd. ecnci.ills
speakin. are cases whcrc the relation is riticli that tl.erc is confidence r'Cpiseii
J)", one party and infltlerke exercised he the other. In 11:1l class of rcl;ition k,l
pates you may get the duty. first 01 all. hit the part y who hi:ts iniluenee roust
make a full disclosure of everything thai he knies rii:iierial to the c,'ritract. huh.
secndlv, that the part\ who has the inulticrrce must nat mike a contract With
the pun y over svloiin he has influence unless he cart satisfy the court huit the
contract is tn adv:tntaccous one to the oth-r par iv:
.\ Ion nit Do!/ 053

The last cate g or y it peiserts whose will s sulnerable to ,ll tarts

of uttlitences is
that of ''persons In menial distress .. . . \ person is said to he in distiess when his
mental capacit y is temporaril y or permanently sHeeted. It ma y be due to extreme
old age or mental or bodily dlncss in ins other cause, SLJJI a person is easily
persuaded to give consent to a contract which nsav he i:ntas'ourahlc to titus.
Accordingly,if a cotliract is made with 1 hun by utkinr .rdsant,ine of hi distress. ii 15
oidable Ori the g round it undue inliuerrcc. In a Case, ttir example. before the
.Madras Hich Court. a poor Hindu widow. %0w was in great need of nuiiile\' to
establish her ri g ht to maintenance, was persuaded b y a moneylender to a g ree to pay
100 per cent rate of imiicrest. 35 This is a clear Instance of undue influence being
exerted upon a person in drress, and the court educed the interest in 24 per cent.
of intones. no distress
(Ir, t'c,tt iteed
But mere urgent riced of mone y on the part of the borrow cr is not, if iislf, a
sufficient evidence of menial distress. Thus, where a person was facing criminal
prosecution at ihe instance of his father and borrowed on exorbitant terms a sum of
mone y its defend himself, it was held that he was not in such menial distress as
would enable a moneylender to dominate his will. 55 Strnilarlv, where a person.
fearing the result of the prosecution pendi rig against him. enters into an agreement
in favour of the complainant in consideration of his abandoning the prosecution,
cannot be held simply upon these facts that the consent of such person was caused
by undue influence. 37
Statutory coinpulsioui, no distress
A contract made under statutory compulsion cannot be regarded as one made
tinder undue influence. In a case before the Supreme Court, a cane grower had the
freedom to offer canes to the factor y of his area or not but if lie made an offer, the
factory was bound under an Act to accept. The Court pointed out that in such a case
the consent, though compulsor y , is not caused by undue influence, fraud.

35. Rriiznee Antiapurni v Swam,norha. (1910)34 Mad 7.

36. Ragtmu,iath Prarari v Sarju J'riu ' nrl, AIR 1924 PC 60.
37 Sioijidi v Aiuha ISSO Punj Rec No 135. p 398 1 (, bard, ii Var v fin kiiI'en Var. (10001
22 All 224.
156 Frc Consent [S. 161 [Chap.

rnisreprcscntation or mistake. The compulsion of law is not coercion. 'As a result of

economic compulsions and changes in the political outlook, the freedom of ccsniraet
is now being confined graduall y to narrower and narrower limits. Here is a case
where one part y to contract of sale is compelled to enter into it on rigidl y prescribed
terms and conditions and has no freedom of bargaining. But, in the eyes of the law,
the agreement is freely made." 33
Burden of proof
In an action to avoid a contract on the ground 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 onl y must the defendant have a dominant
position, but (2) he must useit. 39 It is not enough, for a person to avoid the
contract, to show that the other part y is his father who could ha'e influenced
turn. lie niust go further and show that his father actually did influence him.4°

38. Atndnot .Siiinri Ltd v ft's sf11', (I Q6S . i I SCR 705: AIR 196S SC 599. .5,',' also V'i, Su,o
Mills Lot, Pt . , AIR 190 Sc 1207.
39. Both ihse rcrnuircnncinrs must coexist for the res ersal of the rule as to burden of proof under
this sccnicon and S. 1 1 I Of the Es nsicncc Act, 187-1 . Sec .1/tutu v (./n,'rLi,n, i 1990) 1 Kv'r LT
416.
-10, .4njcitoiti so tubs v RoInni,n fAil s/i. 191 Si .12 Cat 286. The Supreme Court has held iliaL all
the prnrticnrl:ins must he nuiven as in the c:rsc tlf fraud. Snil'/ratin Chandra v Gana I'd. (1967) I
SCR 3$ I . AIR 1967 SC 878. Sec also Rent (iisisuira Sun/t 8axrb'n Sint4/:. AIR 19s , All
A roan's onl y son died. Ills wtdsscd J,iughter . in . law with the help ol her brothers
,i.iose hint ow of h:s land fl'j.:'ired his itephc'.ss and rransfcrrej his land to ihcnni. Held, they
thsuc qsicsiicntnci ruiuO rcvr indite influence .O/ti Is! ' o (Glrir.t,') Lid" isOsl! Or) ( ii
I

Intl. (I 953) 1 All ER 944 Ch H. Escry person oecupvinn a position ofe influenc
does not
tiecessarnl\ abuse 1. Thus sxtrerc finance was provided i's ice over to a garage snnb(ccn to
cci tam 1CiiCOii'. c clauses Our oath in g enuine concern 0 help its business, no undue influence
\s as found ihuiush a part uf Inc arrecroent was stru c k down as unreasonable restraint of
trade. /ifvcrr S),'jHt v So/'oint /1/Ot,11976) 2 5CC 142, ow fact of undue influence must be
made out of the tr.urictilari pleaded by the plaintiff and not froits the written statement.
Where art ailing father executed a sale deed iii favour or his two sons who s'. etc carin g for
him and the third tivinin apart questioned validity, the Cowl held ihit thou g h the burden snas
on those who were fasourcct, the transaction did not disclose any clement of influence or
fraud. D/ncnra,,rdrts /81 v Krni/i,ninrIInrn /'stl, 1988 Reports 25, 276, Sc. The courts must give
reasons as to ssh y the Ciii has bern held to he unconsictonable. Snilhs/,'t Rai v C/tampa Devi,
19S6) 34 BLJR 90, gilt deed in l':tsour of grandson upheld thounth executed isv th1' lmrsr
OL, JIU il,s ucair,. line runt tollnssveo the remark in HAt5ORY'S LAWS OF
Fuct.Austs, p 678, Vol 17 (3rd edn) to tile effect that: "There is no preninnipuon of undue
nnfiu"nec in the case of ,fr to a sort, grandson or son-in . lasv, althou gh made during Ihe
donors dIness and a few da y s betore his death." Slnrinnarn v Stndhafarr // Bai/innr, (1997) 4
ttsini CR 237, fine mere l,net that the person in whose favour a property was gifted by
rcnrismercnt steed w as the tenant of the owner was held to be not sufficient to shift the burden
of proof on the dance. Karock Prowd Garan v Neanti Prasaci Gorai, AIR 1998 Cat 278,
there was no consideration and the sale deed seemed to he fake, hence presumption and
slotting of burden of proof on to the beneficiary of the sale deed. C/osinsrppa v 'lvyanar
Rail, (1996 2 Mad U258, no cause of undnt itrflucnce shown, both Parties leading
evidence, question of burden of proof loses significance. Shim/nv Laksrarlrring v Gavaiaai
SIta,ikar Surira,sn', (1993) Malt Li 1623, mere cxisicrice of ihe relationship not enough, initial
Isu rite rt is on the plaintiff to sit ow ret at totssh p and prejudicial bargain. So rd/i ra,nima V //.
Gurappa Rn's/c/v, AIR 1996 Kant 99, allegation of undue influence, level of proof required is
extremely high, it is rated on us par with criminal trial. K.M. ,bladits'akris/rnr,tan v S . R. Strains,
AIR 1995 Mad 318, undue influence alleged but could not he substantiated. Pr,-mnara yari v
Kmnnns'arji, AIR 1993 MI' 162, alleged undue influence in a contract of sale not substantiated
by proof. K. Jagasinal/tasi V A.M. Vn.sus1rnn, AIR 2001 Mad 184, family partition, no proof
of unfairness or of coercion or misrepresentation. Daibir S/ugh v Vir Singh, AIR 2001 P&F1
 I [S. 161 Undue Influence 157

Presumption of undue influence

But in certain cases presumption of undue influence is raised. The effect of
the presumption is that once it is shown that the defendant was in a posit ion to
dominate the will of the plaintiff it will he presumed that he must have used his
position to obtain an unfair advantage. If ss ill be then for the defendant to show
that the plaintiff teclv consented. For cainple, in Lctncaaliuc Lowis Lid
Bloc!..:4'
The defendant \s as a married girl of full age. She gas e a sCcuriiv for the
loan which her mother took from a company. The onl y advice she had was
from the solicitor of the company.
SCRLTFON LJ held that 'in he case of the benefit of contractu.tl ads antage obtained
from a person coming within certain defined relations, such as the relation of parent
and y oung child, solicitor and client, religious superior and inferior, b y the i elated
member of that class, it is enouch to prove the existence of such a relation to thross
on the recipient of the advantage the burden of proving independent ads ice to the
donor and in other respects jnstifvinc the transaction'' His Lordship then pointed
out that a married ss oman is not necessaril y independent of the influence of her
mother. Such cases should be dealt with on their os.. n facts, and not on an y general
presumption. On the facts of the case the court found that she was under the
influence of her mother.4
Similarl y , where a paida lady of 70 years, having three daughters, was
supposed to have gifted her entire land to the defendant, who was the tenant of that
land, it was held that from the position of his possession of the land he must have
dominated the woman and burden la y upon him to show the circurnstancs of the
gift. He being not able to do so, the eifi deed was set aside.-3
The presumption is raised at least in the follc..o ing cases:
I. Uitc'onscioitoble Bargains, Inequality of Bargaining Power or Economic
Duress

UNCONSCIONARLENE.SS.—'Where one of the parties to a contract is in a position

to dominate the will of the other and the contract is apparentl y unconscionable, that
is, unfair, the law presumes that consent must have been obtained by undue
influence. The burden is shifted to the stronger party to prose that he did nothing to

2 16, sate of land, agreement between an adatia and his customer, the former could influence
the tatter and, therefore, better proof of fairness was expected.
41. (t934) 1 KB 380: (1933) All ER Rep 201, CA.
42. For a contrar y decision where no influence was in evidence, see Maliabir Saba v Haripadn
Saha, AIR 1982 Cat 353. Turnbull .. Co v Lineal, 1902 AC 429 and Chaplin ..4 Co V
Bra,nrnn/, (1908) I KB 233 are two cases mnvols ing the relationship of husband and wile. In
w
Turnbull the creditor used the husband in order to exert pressure on the ife to procui e a
security for the benefit of the creditor. In Chaplin the creditor left it to the husband to obtain
the execution of a guarantee by the wife. In these cases, equity intervened to grant relief to
the two wises on the giound of undue influence exerted by their husbands This should he
contrasted with Bank of Baroela v Shah, (1988) 3 All ER 24 where the pressuse to create a
legal charge in favour of the bank was exerted not at the biddance of the bank and, without
its krioss ledge, but be the director of the borrower company upon his Sister and, therefore.
mortgage in favour of the bank was held to be not voidable. For a survey of a large number
of such cases see C/me Sam Bi,ite v Mahn P Lid, (1989) 2 CU 893, 906911, High Court,
Singapore.
43. Charid Singh v Rant Katie. (1987)2 Purmj LR 70. Rajgor Bhanji MuI,ii v Sonabai, (1993) 2 Gui
LR 1243, a clog on the equity of redemption, presumption of unconscionable transaction.
 158 free Consent IS. 161 tC/iaj..

overbear the will of the other. An instructive illustration is the decision of the Privy
Council in Wijid Khan v Raja Ewa- Ali K/ian:
An old and illiterate woman, incapable of an y business, conferred on her
confidential managing a g ent, without any valuable consideration, an important
pecuniary benefit under the guise of a trust.
Their Lordships said that "a!l the facts of the case go to show that there was active
undue influence. The onus is on the grantee to shosc conclusively that the
transaction is honest, bans fide. well-understood, the subject of independent ads ice
and free from undue influence".
Some instances of unconscionableness
The presumption of undue influence was raised where a poor Hindu widow,
having no means for maintenance, borrowed, in order to establish her right to
maintenance, a sum or mone y at 100 per cent ratewhere
interest;-5 of a person,
without having the means of subsistence, in order to prefer an appeal against a
jud g ment, borrowed Rs 3700 oil bond promising to pa y Rs 25.000 within a scar
from recovery of the possession of an estate; 4 where a y outh of 1$ years of age,
spendthrift and a drunkard. borrowed Rs 900 oil bond bearing compound interest
it 2 per cent per mensein with monthls rests, the court saving that "the instrument
itself bears upon its face the impress of unconscionable dealin g , the rate of interest
charged bein g so evorhitant"; where a person of the nec of sortie 28 y ears, the son
of a wealth y marl, hut of profligate hahns and greatly in need of mone y
, his father
havin grefused to suppl y him m, executed a bond to secure a su of Rs 500 with 37
1/2 per cent interest with six-monthl y rests, the hand fu ther providin g that the sum
would not he renav,mhle ssith in three years and even 11 - it wa.j repaid the interest
scould run for three vezirs. 45 in all these cases the court gave relief by scaling down
the rate of interest to ss hat appeared to he reasonable in the circumstances. Gift in
to'. our of a religious trrganisorion by a person sseak in mind and sufferin
g in health
has been held to be one which carries the apparent impress of undue influence '°
I.\ .\tNEYi.E\Dir; TR.'\\S.ACTJtrNS ._Uncoseionahle
hai gains have been svitiressed mostly in nioneylending ti ansacrions and in gift '.. But
the principle is not confined to such transactions only. In a ease before the tlomhav
Hi g h Court.° poor former, bein g unable to pay hack a loon, executed a sale deed
I'll ky mice oweS toe value of
the sum due, the
court g ranted relief b y setting aside the sale and allo
ss n g the farmer to pay back the
lender within a fixed period.
PoSi'ttoN or t)(ThI IN-\NCF: NECESSARY FOR PRI;St_;MVFION TO ARISE—It should,
ho'.'. ever, be borne in mind than the presumption of undue influence on the ground
of unconscionmableness A' the bar g ain is raised only when one of the parties is in a
position to dominate the will of the other. As between parties on equal tooting the
mere uneonscion,ihlcness of the bargain does not create the presumption of undue

44 (1591) IS IA 144.
45. Rcmrriiee Anriaprir;r, v Sri'nniiriat/ra, ( 1910) 34 Mad 7.
46. C/iun,ni Kiiar v Rup Singh, (1889) II All 57.
47. Knpo Rain v Sanri . uc(. jn Ad Khan, (1903)25 All 284. STANUcY U at p285.
48. L?u/kishrradirs v Madi'mr,fü/, (1907)29 All 303.
49. Philip Lakka v Franciscan Axon, AIR 1987 Ker 204.
50. B/zi,,nbat v Yeshwanitrac,, (1900)25 Boni 126,
51 [S. 161 (iitthie liiJluencc 159

influence. The mere fact that the harmon is a hard one is no irround in itself for
granting relief. This was pointed out b y the Pris y Council in Rri , '/iioiaih P,'asarl v
Sin jii I',asai/.5

The defendant and his father sseie equal ossners of a vast joint family
properly over which the y had quarrelled. Consequently the father had instituted
criminal proceedings :lc tlnst the sun. The defendant, in order to defend htinself,
mortgaged his propei ties to the plaintiff and borrowed front hrm ,ibout ten
thousand rupees on 24 compound interest. ]it y ears this rote of interest
had ma g nified the sum coveted by the mortgaoe moie than eks enfold. 'ic.. Ri,
1,12885. The defendant contended that the lender had, by exactin g hi g h rate of
interest, taken unconscionable advantage of his mental distress and, therefore,
there should be presumption of undue influence.
Their Lordshtps, however, held that there could be no such presumption in inc
circumstances of the case. Referring to sub-section(3) of Section 16, hichi
provides for presumption of undue influence, Lord SI-lAw observed as follows:
"By this sub-section three matters are dealt with. In the first place. the
relations between the parties to each other must he 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, i - ic., 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 oiiiis proharidi. The burden of proving 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 he changed.
The unconscionableness of the bargain is not the first thing to he 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 svill of the other."
The borrower failed to prove that the lender was in a position to dominate his ss ill.
The only relation between the parties that was proved was simply that the y were
lender and borrower. The first requirement of Section 16 was, therefore, not fulfilled
and, therefore, the borrower got no relief.'
UNCONSCIONABLE. cttrs.—Where a person was suffering from a number of
ailments which confined him to a nursing-home and from there he made a deed
gifting all his properties to one of his sons to the exclusion of others, the
Supreme Court held that the presumption of undue influence was proper 53

51. AIR 1924 Pc 60. See also Maria LTiidaria Apolonus Gonsalves s' Shripad Vi.ili,iu Kiniai
Ta rear, AIR 1998 Bo rn 46, agrccmerii for sale of properly, immaterial that it was written in
Portuguese, seller's son knew that language, no particulars of undue influence attcgcd,
agreement enforceable, the price was found by experts in he reasonable and fair.
52. See also Sundar Koer v S/tani A't.v/ian, (1907) 34 Cal 150: 34 IA 7. Their Lordships
distinguished the ease from D/mnnipol Dat v Raja Malie.s/iirar Bak.sh Singh, (1906) 28 All
570: 33 IA I IS and Raja Ma/me.m/iis-r Baks/, Singh v Sharlilo/, (1909) 31 All 386: 36 IA 16,
on the ground that in these eases the bortower was placed under the Court of Wards and was,
therefore, under a peculiar disabilit y . This enabled the lender to dominate his will.
53. L.akihnij ,4rnnia v 1. 'sara van, (1970) 3 SCC 59: AIR 1970 SC 367. 1lowc Cr, the uric
fact of old age or that the donor had no other property with hum would not crcOic a
presumption of undue influence. Dharanm Kaur s Gurder Singh, (1988)2 Punj LR 436 P&H.
In another case of gift of entire property by an old lady to the exclusion of her sons the court
said that the age of the donor is definitely one of the most important facts to be taken into
 60 Free Consent [S 16] [Chop.

Gilts of this kind are otien made under influence. In another case before the
Privy Council: 54
An old Milav widow, wholly illiterate, was ihe owner of considerable rent-
producing landed property. She gifted all her property to her nephew who was
helping her, leaving for her an income only of about 30 dollars. Ihe deed of gilt
was prepared with the help of a lawyer.
On these facts the Lord CHANCELLOR observed:
"In the present case their Lordships do not doubt that the lawyer acted in
good faith, but he seems to have received a good deal of his information from
the respondent (nephew); he was not made aware of the material fact that the
property which was being given away constituted practicall y the whole estate of
the donor, and he certainly does not seem to have brought home to her mind the
consequences to herself of what she was doing, or the fact that she could more
prudently and equally effectively, have benefited the dunce svithout undue risk
to herself by retaining the propert y in her own possession during her life and
bestowing it upon him by her will. In their Lordships' view the facts proved by
the respondent are not sufficient to rebut the presumption of undue influence
which is raised by the relationship proved to have been in existence betssccn the
parties; and they regard it as most important from the point of vies of the
Public polic y to nlalntatn the rule of law which has been laid down and to insist
that a gift made under circumstances which gave rise to the presumption must
be set aside unless the dunce is able to satisf y the coui i of the facts sufficient to
rebut the presumpti( in
In another case of benefits without consideration and which was also before the
Privy Council.-' 5 a woman. who was described as a submissive wife and who at the
bidding of her husband, uave securit y of her siridhian (personal property), which
ci:inrprised some land, to secure the g rowin g indebtedness of her husband. Lord
GODDARD expressed the opinion that "it is unnecessar y to enter into a discussion as
to the burden of proof in such a case as this as the evidence litre abundantly justifies
a presumption that she was acting under the influence of her husband for %s hose
henfit the mortc,ice was being executed. His Lordship continued:
"It would certainl y not be true to say that there is a presumption in every
a "::f.'c'a f:: ,•J i,iU cS ILOUUL consiueratron.
Equall y it is not necessar y in order to establish the presumption that the parties
should stand in some particular category of relationship to each other. The
prcaiitntplion no doubt can be more easil y established and indeed ma y be
assumed in such cases as transactions between parent and infaru child, solicitor
and client, or spiritual adviser and penitent, but It will arise in any case in which

accou iii in the iotl its ol the circu nisnances surro en di n the transaction. Al.
Kicrup V ta,iivn,i:,iifiaoi I,. ,tninin, 1984 Ker LT S3 SN. Ssbronoiiuin v IAiiiiachinnira,,
1905) 2 Kcr LT 38 (Short Notes), dispute as to the genuineness of a wilt.
Incur .'cnrah lime ,SlohcI Ia/ui v S/iaik .4/n, AIR 1929 PC 3; /Ianielo v Jung Slier Sing/n,
AIR 2002 P&II 147, 99 year lease signed by a lady hn was old, illiterate and sick, also
vsctiill 01 fraud becausenominal consideration, held voidable.
2) Another tzistance of an unccnscioiiabln dealing of this kind. La/mm S/rig/i v Do//nOr
C/iandnnwu Del, (1984) tI PIJR 622
56 lungabri Bhirrrcii- Puriishc:inni Shan, j i ku,ribiioj kav v Yri/ivani D:.'1h0r Jog, AIR 1945
PC 8.
 5J [S. 161 Undue influence 161

the facts show that the circumstances are such that influence can fairl y be
inferred."
RELATIONSHIP BY BLOOD, MARRIAGE OR ADOPTION NOT SINE QUA NON—Thus,
what is necessary to establish the presumption is not that the parties should he
related by blood, marria g e or adoption, but that their relations are, or position
toss ards each other is, such that one is in a superior position over the other. 5 ' Even
where the y are sit related, the presumption may not arise for the influence ma y as
well be fairly and wisely exercised. This has been pointed out by the Supreme Court
in Sub/ins Chandra Dos v Gangn Pra sad Dos:55
Some agricultural property was gifted by a person to his onl y grandson
through one of his two sons to the total exclusion of his sons. Although the
donor was of great age, he was taking active interest in his property. Four years
after the gift he died and still four years after that the other sons questioned the
validity of the gift on the ground of undue influence.
The court approved the principles laid down by the Privy Council in Rag/munadi
Prasaci v Sarju Pru.sad and also rioted the fact that Section 16 of the Contract Act
is based on the English common law as noted in the judgment of the Supreme Court
in LsrJ/i i'rascid forestal v Karma! Dr5!ifle'n, C 060 and held that on the facts of the
case no presumpuon of undue influence could arise. "The circumstance that a
grandfather made it of it portion of his properties to his only grandson (on
account of natural love and affection) a few y ears before his death is not art the face
of it an unconscionable transaction." Where, on the other hand a person made a
crc ne g li g ible provision for his third wife and the dau g hters borne hr her, and
donated the whole of his property onl y to one of his graridsuins, the Suprenie Court
held that. in the absence of art y explanation from the side of the donor for the
discrimination, the presumptron of undue influence arose.su

57. See, for example, Avo Finti,zcs' Co v Brjdi'r, ( 19S5) 2 All ER 28! CA. An elderl y COUiC

willing to purchase a retirement house, signed certain documents at the hOldin g of their son
which were prepared by the finance eoirrprrnv's solicitors and executed at the Solicitors
fIice, the son acrrr. g as an a g ent to procure si5nnatenre arnel did sct iv CQrrt:rnittnrrg a fr:innd on
his parents, ihe Court of Appca unairv'roust y he'd that the chaise should he set asndc
Similarly, nc Kirr,roort/n 7rrsr lits [(vi. l9S6( I .'\Il ER 427, the Court of Appeal set aside
tIre transaction of a nnioi incise s',hich , executed hr zi wife upon her propcirv unitIes
misrepresentation 1mm her husband sshee cornrpany h:id hecir piuvsdcd tile loan and who
was aunhoi ised by the lending compar.\ to cci ire documents executed. Con t ras-, with
Co!1invJ! vAll (An0sos,
ER 1986 429
I CA, here no relief as al lsvcJ because tire
0
'a as rot acibig as air r 1 eiir of the finance ccsmp.si'.v to get their prs' signiciures upon:
mori g ugc documents Much he procured by coninrnruin g a fraud on his parents.
58 AIR 1967 SC 578. (1907) I SCR 371.
59. AIR 1924 PC 60.
60. 1 1964 I SCR 270. 300: AIR 967 sc 1279
61. Lc—h-i .4ninw' s f,(cnn 5'ui Varaxa. (1970n 3 SCC 159: AIR 1)70 SC 1767.
See also idkrn
Devi v Rama Do,na, AIR 1984 HP II, where the donor was an illiterate ad y
separated ibm
her husband and the donee was her legal advitc.r, held, presumption undue influence.
Alareu Ce/inc D'Soiii v Rrme Fernandez, AIR 1998 Ker 280, the person CXCCliiinC
centle'mcnm f nrsyg srnv a a', nor ci the drfvrdsr.rs was . n:ii depe ndent no hone
existence. The defendants had no other claim tu or iriLcrest in the property. Held, the
document was vitiated by undue influence. Kenned y A/enurs v Executive Engineer, ( 1998) 2
Born CR 320, the doctrine of ineuaitty of bargaining power does not sppiy where the
Government is a party to the contract. A tender for one- sear supl'!r s ystem was approved for
3 months' SuPplics with right 'to extend up to 12 cr050 No eXtCSren
15 n ,,as granted after firsi
extension. No illeva:tv on the porn of b Go-, crrnn.rcr,t. T'ir erilirt distinguished the once 5
162 Free Consent IS. 16] LC1inp.

IEQ1J.AL1rY OP BARGAINING POWPR.—ihe presumption of undue influence

ma y also arise from the tact that hide IS such an incqri:ility of batr':uning power
cen the parties that one can cause economic duress to the other. The dccsion of
the Court of Appeal in Lloids Bank v Buiidv t' 2 is a tcnt:u kable illustration of the
concept of inequality of bargaining power.
A contractor borrowed a sum of money from a bank. He could not pay
hack in time. The hanker pressed for payment or for securit y . lie suggested that
his father might mortgage the famil y 's only residential house. The bank officer
visited the father and obtained his signatures upon ready-made papers. The
contractor still could not pay and the hanker sought to enforce the mortgage
ss hich itiiglil have mea nt throwing
w out of the family from its only residence.
.- ccordin g lv Mr Bundyrelied upon the unfair character of the mortgage.
He was allowed to set aside the mortgage. Lord DONNING MR tried to locate the
principle which runs through all the varied Situations in which relief is allowed on
account of unequal bargaining power. He said:
English law gives relief to one who, without independent advice, enters
into a contract upon terms which are very unfair, or transfers property for a
consideration which is grossly inadequate, when his bargaining power is
grievously impaired by reason of his own needs or desires, or by his own
ignorance or infirmity, coupled with undue influence or pressure brou g ht to
bear on him by or for the benefit of the other.'
The bank exploited the vulnerabilit y of the father, caused by his desire to help his
son, to such an extent that he charged his house to his ruin for a very short
moratorium, which was a highl y inadequate consideration for the mortgage.

Central J/and tVori-r Triiri.vport Corpn v R.N. Carig:i/i, AIR 1986 Sc 1571: Kun;ori
Shr,lekha Vidiarr)ii s Arnie of 11?. AIR 1991 Sc 537 and LJC of hid/a v Co,iswiier
Education & Research Ci'nrrs', AIR 1995 Sc 1811 where it was observed that the State could
not he allowed to enforce a contract which has been entered into with a citizen where there
did not exist equalit y of bargaining power. Sins Beica v Gatigcidhar B/iaraei, AIR 1999 On
154, sale deed executed hN, an illiterate lad y , there was a concurrent finding of fact based on
material evidence that she understood the nature of the transaction. The court refused to
interfere in the finding in second appeal.
62. (1975) 1 QB 326. See also Mid/and Bank P1ev Masse y , (1995) 1 All ER 929 CA, where the
woman borrower for the benefit of another had the indcoendent advice of her nticiirirc Th'
bank was entitled to treat the solicitors as respectable solicitors who would take seriously
their obligation to give Ms Massey independent advice. It was not for the bank to check up
and find out exactly what advice had been given. Bank of Baroda v Ra yasel, (1995) 2 FLR
376 CA, facts similar in those of Masse y case. Banco Ericrior Inierrra,ional v Mann, (1995)
I All ER 936, u ife mortgaging her joint property with her husband for the husband's loan.
The court said that the hark was not required to conduct a meticulous examination of the
advice given by the solicitor. Once the bank knows that the wife had received advice from a
solicitor, the bank was entitled to think that the solicitors advice would be such as a
reasonably competent professional person would give. TSB Bank p/c v CarnJiei'd. (1995) 1
All ER 951, CA, the husband misrepresented to induce his wile to charge her property for
the husband's loans. She had no advice. The whole transaction was set aside and not merely
the extent to which she was told that her estate would be burdened. Barclays Batik p/c v
O'Brien, (1993) 4 All ER 417 IlL, wife standing surety for the husband's debt without
independent advice, held voidable because of undue influence or misrepresentation. CRC
Mortgages p/c v Pitt, 1993) 4 All ER 433 HL, wife told loan needed for buying holiday
home, she agreed to give her property in mort gage, money spent by husband on investment
in shares, loss, wife allowed to avoid, for the finance company did not Lake care to sec that
she had independent advice.
51 IS, 161 Undue Influence 163

INFLUENCE DISTINGUISHED FROM PERSUATION,—"InflUCnCC" has to be

distinguished for this purpose from persuation. This dstinctron was put to work by
the Bombay High Cour( 63 in a case in which the only relationship between the
parties was that the defendant was a tenant of a part of the plaintiff's premises. The
owner was an illiterate widow, but she had been managing her agricultural property
for over two decades. The tenant treated her as his mother and presuaded her to gift
to him her entire property. The gift deed, as duly executed by her, was registered.
The court felt that it could not he said that the tenant was in a position to dominate
her will. The gift deed was not the result of undue influence. The court said:
Influence in the eyes of the law has to be contradistinguished with persuation. Every
persuation is not the same thing as influence. One may by his acts and conduct
convince and persuade the other party to do a particular act and if the other party
does such an act freely and out of own volition, may be to his prejudice or
disadvantage or peril, it cannot he said that such act was influenced by the other.65
ECONOMIC DURESS DY FORCING RENEGOTIATION OF TERMS—The House of
Lords in their decision in Universe Twiksliips Inc. v lnrernaiional Transport Workers
Federrition 65 allowed the shipping company to recover back from the Workers'
Federation 80,000 US Dollars which were paid under an agreement and which agreement
The shipping company had to execute because the workers did not permit the ship to leave
without signature. It amounted to economic duress upon the shipowners. The conduct
was so catastrophic as to amount to coercion of the shipowner's will which vitiated their
consent to those agreements and payments made by them.
The Bombay High Court 67 followed this case so as to hold that where a supplier
of raw materials to the ONGC, which was an import substitution, gave a bank
guarantee to the ONrC which was to be enforced only when the customs duty paid
by the supplier was refunded to him and he was subsequently asked to drop this
condition and make the guarantee enforceable absolutely and that the condition
would be orally observed, it amounted to economic duress and fraud. The court

63. Sliri,nati v SirdhakarR. Bhnrkar, AIR 1998 Born 122.

64. Atp 125.
65. The court distinguished the case from Shis'gangawn Madiwiilappri Vulavir v
Gorindgoura Pnuil. AIR 1938 Born 304. In this case a widow's husband's brother sas living
with her. They quarrelled and the man threw her out. She recovered the premises with the help
of an influential Watwidnr Path, who started living with her in immorality. He drove her oui
after obtaining from her the gift of her property. The Court observed that the git'i n as
presumably obtained through undue influence. The court also distinguished firi thou v Durtiirb
Naval, AIR 1982 On 174, where the sale deed was executed by an illiterate lady thinking that it
was a power of attorney in favour of her son-in-law who was living with her and rnanagng her
property. The burden was on the latter to prove that there was no undue influence. Similarly in
Jakri Devi v Ratna Dogra, AIR 1984 HP II, a.i illiterate lady, living separately froin hr
husband, donated her apple orchard to her lover and the same was held 10 be the result of undue
influence. Annarpurna Bank Dev v I,idu Bewa, AIR 1995 Ori 272, deed executed by llimcinic
woman, burden is on the other party to prove that terms were fair and equitable. th.im she hai
independent advice and that the document was explained to and understood b y her
66. (1982) 2 WLR 803 HL: (1983) AC 366. For further study see M.H.Ogilvie. Fxnnonihm- Dmires.r.
inequality of Batgaining Power amid Threatened Breach of Corn i-act, (1980) 26 McGill U 'S9.
67. Dal-ichi Karkuria P Lid v Oh! and A'ivirrnl (Iris Commission, AIR 1992 Born 309. Followed
in B & S Contracts and Designs lid v Victor Green Publications Ltd. (1989) 1CR 419 v.-here
it was obrved that for the purpose of this case it was sufficient to say that if the claimant
had been influenced against his will to pay money under the threat of unlawful damage to his
economic interest, he would be entitled to claim that money back.
 164 Free Consent [S. 16] [Chop.
cited Lord DtPLOCK in Pao On v Lao Yin Lang'1 a, saying that the rationale behind
the developin g law of.ecortomtc duress was that the apparent consent of the party
aggrieved was induced by pressure exercised upon him by the other p3110 o hich the
law does not regard as legitimate with the consequence that his consent was treated
as revocable unless approbated expressl y or by implication after the illcgdimne
pressure had ceased to operate on mind. ,) His Lordship took specific precaution to
distin g uish the concept of economic dure s s front mere commercial pressure which
ri some degree always exists whenever one part y to a commercial transaction was in
a stronger bargaining Position than the other party. Commercial pressure b y itself
does not amount to economic duress. fit view of the Priv y Council, two elements
crc necessar y to constitute duress, t c' - (1) pIessimrc amountin g to compulsion of
the %% ill of the ictint, and (2) the illegitimacy of the pressure exerted. For ill
practical purposes the victim of the duress must have no other choice.7°
In another case on the subject, 7 ' a national road carrier backed out of ihe
contract already entered into and compelled the other side to renegotiate the terms
of the contract. The defendants were heavil y dependent on the retail chain's contract
and were unable at the time to find an alternative carrier, The y agreed to the new
terms but later on refused to pa y at the new rate. The court observed:
'Where a party to a contract was forced by the other party to re-negotiate
theter-ms of the contract to ]its disadvantage and had no a1ternatie but to
accept the new terms offered, his apparent consent to the new terms was
vitiated b y economic duress
The court cited the dictum of Lord DEN,e'G in D&'CB;ijfde,'s Ltd v Rees :7
'No person call on a settlementprocured b y intimidation'
The part y had to surrender to the demand of increased char g es for carriace because
they had to meet their commitment to customs. Accordingly, there was no
consideration for the promise to pay increased charges arid the same was held to be
not enforceable.
Where a government department refused to extend time for completion of the
ongoing works unless thecontractor agreed to do the same type of further work at
the old rates, the court said that it amounted lo economic duress.73
EXPLOITATION OF THE NEEDY—This approach has been used in some other
f2c of thcni i .1. Co v

68. I980AC614 PC: (t979)3 All ERoSPC.

p
69. For exam le, i n North Ocean Shipping Co lid v 1/iindai Can strut iron Co Lid, (19 779) t QB
705' (1978) 3 All ER 1170 QB, the shipbuilders refused to honour the contract unless the
stipulated payment was increased by 10. Thcy made the final payment without protest and
thereafter claimed refund. But their conduct was held as amounting to ratilicauon. The
pressure on mind had ceased to exist when final hilts were under consideration.
M. Their Lordships cited Goff and Jones, Tue LAW OF RrsTrrLrnoN, with the renraik thit the
devcloprnentr, in this field are very well iraecd in the work.
71. Arta Express Lzdv Kafco,(1989) 1 All ER 64t QBD Commercial Court,
72. (1965) 3 All ER 837, 841. 'line cotter also referred to Occidental Worldwide l,ive.vtpnn,
Corpn v Skibs A/sAwinri, (1976) t Lloyd's Rep 293, 336.
73. Supernevt4en: &ignnesr, Irrigation Depu v Progressis'e Engineering Co, ( 1997) 4 Andh LD
489 DB, AP.
74. (1974) 1 WI_fl 1308.
51 [S. 161 Undue Influence 165

There was an agreement between a young songwriter and a music

publishing compan y . The arrangement was to remain in force for 5 years and
was to be automaticall y extended for another five years should the boy's
royalty reach the figure off 5,000. The compan y could terminate the agreement
at any time by a month's notice. The boy had no such right and he wanted to
O ct out of it.
The House of Lords ordered his liberation from . the bond. The contract was on the
terms of company's standard terms and was, therefore, the result of the company's
dictation.
A similar relief was allowed in a case where a songwriter's copyright was
purchased on terms that he was not to publish his songs through any other company
but the compan y had the right to reject his songs75
"In determining the respectise bargaining positions of the parties, the
courts will look at a number of factors, such as a g e, poverty, illiteracy and
emotional state."76
With these should be contrasted National Westniilisrer Bank v Moigan. 7 A
self-employed businessman's joint home with his wife was mortgaged to a building
society who were threatening foreclosure A hank provided him money with which
he paid off the society and a new char g e or, the house ssas created in favour of the
bank for all his present and future liabilities. When his v i fe was called upon to sign
the papers. she was told that it covered onl y the loan and not business liabilities. The
House of Lords were not able to relieve her from the consequences of her signature.
The charge had d conferred reasonabl y equal benefit on both parties. The relationship
of hanker an customer is not automatically characterised as one to which the
doctrine of undue influence attaches.
TECHNIQUE OF JUDICIAL INTERVLNTION IN UNFAIR BARGAINS—These
developments show that undue influence or duress has become a technique of
judicial intervention in unfair bargains.' 6 The traditional approach of confining
duress to threats to the person and to goods is about to undergo expansion to include
other threats, particularly those forms of economic coercion which force a person to
en,er or vary a comract against his wtllJ Forcin g a person to accept less money
than is due to him by exploiting his economic stringenc y is an r sample of this
kind SO

73. Clifford David Mrnratenncnt , Ltd v W.E.A. Reord.i Ltd. (1975) 1 All ER 227 An illiterate
donor transferrinic her properly it, hei lass \cr. held, unconscionable. loAn Devi v Ranniz
Doerin. AIR 1954 HP II.
76. N cU t.i R die its, h'eeeu: f), elapnieius in 1he Lit, oll Cant rt. t: o st tcc : U 23 e.

77. (19S5) I All ER 821 (1985) 2 WLR -;SS IlL; noted, The Li,niii of Undue lnfiuienve. 19S3)
4S Mod LR 579.
7S. A stud y in this respect has been prccntcd by 51 H. O g livie, Fciinopnc Duress. liir'quilirv if
lJar,çinunznig Potter one! I A rs'sz!ined Breach f ('viuraif, (1980) 26 MeG ill CR 259. Si's' also
t'ni:civakappa v Dulls lun,nd, AIR 1956 Born 193, consideration for a rnuliistorcy conirnercial
ceIlirIcs uiinaturtllv low
79. For recent spurt of literature on the subjeci ads', Waddarn, Unconxcio,iab:litv in ('orizrrnu,
(1976) 39 Mod LR 369; O 8 ile i c , Sn isa An'annque Reviailed: Floir Long. 0 Lords i/inc
Long?. 09S0) 5 Can Bus Li 100; DalecIl, l)uess l's Economic Pressure, (1942) 20 N
Carolina L Rev 237, 341.
SO. DS C Builders v Rces, (1966) 2 QB 617 CA; Ltcwellyn, ilnrgc!niimg. Duress nil
10.13, 43 Coturn LR 603 arid tt'lit Price (inn-ocr. (1931)40 'Sale Li 7053. Bc;si'n,
166 Free Consent IS. 16) (Chop.

RESCUING EMPLOYEES AND OTHERS FROM UNREASONAIILE TERSIS.—Pickirirz up

the meaning of the word "unconscionable' from a dictionary° the Supreme Court
has noted that it means something as shows no regard for COflSCiCflCC and which is
irreconcilable with what is right or reasonable. The matter before the COU;T Was a
service contracL 82 A clause in the contract empowered the employer (a Go\ernment
under takine) to remove an employee b y ihree months notice or pay in lieu. The
employee, who contested the validity of this clause, was removed by handing him
over a three months' pay packet. The Supreme Court regarded the clause to be
constitutionally as well as contractually void. The court added that any term which
is so unfair and unreasonable as to shock the conscience of the court ss ouhl he
opposed to public policy and therefore Aso sod under S. 23. The contract was not
based upon a real consent. It was rhthcr art upon a needy person.1'lie
term was unconstitutional because it was so absolute that any officer could be made
a target irrespective of his conduct, good or bad.
Commenting upon this expanding pUss ci of the court to relieve a party from the
consequences of his own contract, a learned writer sa y s that "freedom of contract
turns out to be a misleading guide Mien so many contracts are not free in the
economic sense. The notion of contract as private legislation appears less attractive
when legislation is always drawn up one-sidedly. Judges are empowered to read in
terms which are not there, or read out terms which are there. They are to impose
reasonableness. Whatever is not reasonable is not law. If the parties have agree'd to
something unreasonable, they should he treated as if the y have not agreed at all and
released.''

Duress b y Threatened Breas Ii of (onrIast, (1976) 92 LQR 496. Sutton. Duress by

20 McGill Li 554. Adams, Contract Law at Sea,
Threatened Breach of Contract, (1974)
(1979) 42 Mod LR 557: (1979) 95 LQR 475; Cooie, (1980) Camb Li 40: Charles Fried,
CONTRACTS AS PROMiSES: A THEORY OF CONTRACTUAL OBLIGATIONS, where it is
observed: "Many lawyers have a glowing conviction that some degree of paternalistic
protection of unsophisticated and unskilful bargains is necessary to avoid results that shock
the conscience and this has led to the development of doctrines of uncoriscionability and a
host of ad hoc statutory protections that violate the basic principle of freedom of contract'':
Melvin Avon Eisenberg, The Bargain Principle and its Limits, (1982) 95 Uarv LR 741: P.S.
Atiyah, THE RISE AND FALL OF FREEDOM OF CONTRACT, where it is observed that society
should not tolerate the results of unequal starting points for the trading process as the lottery
cc Oi co wisal.1011. are aiso i, inayakappa v L)uiicha,arl, AIR 1986 Born
193, consideration for multistorey commercial complex unnaturally low; Atlas Express Lad v
Kafco (Importers and Distributors) Lid, (1989) I All ER 641. complaining party forced to
accept change of terms.
81. SHORTER OXFORD ENGLISH DICTIONARY, 2288 (Vol II, 3rd edn).
82. Central Inland Water Transport Corpa v Brojo Nath Gao guly, (1986) 3 SCC 156, 206.
83. The court consulted the following on the subject of unconscionable bargains: CHITT't' ON
CONTRACTS, Vol 1, Para 4, 25th edn, where contracts by way of imposition are considered;
BLcx's LAW DICTIONARY, 38 (5th edn) for definition of ADHESION CONTRACT;
RESTATEMENT OF THE LAW by the American Law Institute, 107, Sec. 28, Vol It for
Unconscionable Contract Terms; John R Peden, THE LAW OF UNJUST CONTRACTS, 28-29
(1982); the court noted the influence of the emerging doctrines of distributive justice and
unfairness and their impact upon the law of contract at pp. 210-2)1; as to relationship
between unfairness and public policy under S. 23 see the judgment of MADON J at p 217.
Reaffirmed In Delhi Transport Carpn v DTC Mac,door Congress, 1991 Supp (1) SCC 600:
AIR 1991 SC 101.
84. 1 H Baker, From Sanctity of Contract to Reasonable Expectation, Current Legal Problems
1979. The law playa in this respect the rote of a parent. See Anthony T Kronman,
Paternalism and the Law of Contracts, (1988) 32 Yale Law Journal 763. A person who
51 [S. 161 (1'na'ue Influence 167

NATURAL JUSTICE—The process of contracting has also been subjected to the

requirements of natural justice. The acceptance of a revised price by a low bidder
without giving any such opportunit y to the highest bidder was held b y the Supreme
Court to he a denial of natural justice rendering the auction to he void.55
2. Coiuracts with Pctrdaiia.c/ii,t Wonton
A contract ss ith a jairdanaslzur woman is piesurned to have been induced by
undue influence. She can avoid the contract unless the other party can show that it
was her "intelligent and voluntary act. There is, however, no statutory or judicial
definition of the term "pardanashin woman". In the opinion of the Bombay High
Court sS a woman does not become pordanashirt simpl y because "she lives in some
degree of seclusion". The concept probably means a woman who is totally
secluded from ordinar y social intercourse''. The following observation of the Privy
Council explains the concept to a certain extent.57
"It is abundantly clear that Mrs Hod g es was not a pardanaslzui. The term
.quasuparthuios/iut seems to ha-,e been invented br this occasion. Their
1.erdships take it to mean a a oman. who not being of the pardonas/rro class, is
yet so close to them in kinship and habits, and so secluded from ordinar y social
intercourse, that :s like amount of incapacit y fn r business should be ascribed to
her, and the same amount of prrccdcn whch the lao gixes to furJona.v/ri,is
must he extenddd to her. The contention is a novel one, and their l,ordshrps are
not fax ourahly impressed be it. As to a certain well-known and castle
ascertained class of women, a ell . knua n rules of law are established with the
a isdom ot which we are not now concerned outside that class it must depend
in each case on the character and position ii) the individual wonian whether
those who dealt with her are or ate nut bound C take special prccauzions that
her action shall he intelligent and voluntar y . arid to prove that it was so in case
of drpute."
In a case before the Bomba y Histh Court5
It was found that a lad y appeared before the Re g istrar for registration of
Certain documents, that she stOOC ,15 a 55 llilCsS in the box in a sul:, that she put
in tenants and fixed and recovered reins rum theta in respect of her house. The
court held that she could not he treated i , a J /rJoiaS/r!f/ lads
Once it is shown that a contract is made xx itt a prr//aninsiior worn in the law
presumes undue influence. The burden ltes on the other pane to show that no undue
influence xx as used, that the contract was tulle explained to her and that she freely
consented. The following statement of the Priv y Council in A'ahibiks/i .Sui'/t v
Gopc:! riii/i 5 " explains the extent of this onus
"In the first place, the lady was a j rrdwiaslriri lad). and the law throws
around her a special cloak of protection. It demands that the burden of proof

would givc ,t.....too mu h of his c, %% n h l) CM I lm] 51 he proleetcd toni hansel I, no matter hn'sn
rational his dcisjri or :ererp's'lhins the circumstances
85. Rant and Shini,n Cu v Srcnte of Hnrnmno, ( 1 9S5 1 S SC C 2(' -1.
86. S/rank I'a,iail v Aririr Bnbi, ( 1902) 4 Born LR 146. 14S.
87. IIc'sIte.i v Delh i & Ltciü'i Bark, (1901) 27 IA 168, 175-76.
88. S)iaik Jrnisii v Aniir Bib:, (1902) 4 Born LR 146.
89. (1913)41 IA 23, 28-29.
168 Piec Consent [S. 19-A) [Chap.

shall in such a case jest, not with those s' ho attack, but those who found upon
the deed, and the proof must go so far as to show affirmatisely and cohclusively
that the deed was not only executed b y , but was explained to, and was really
understood by, the grantor. In such cases it must also, 01 cirUtse, be csi:ihlished
that the deed was not si g ned under (turr'ss. :iiose turin thc fcc md
independent ss ill of the granto:
In this case:
About 1550 months hc1rc her death, ii Hindu widow (w)o was a
poirlwisia/uii woman) g ifted halt of her landed properties to the son of her
paraniour, who was also ilic mana g er (oiuk/iior) of her estate.
'Plus, it r as contended, con'hriicd with the fact that she had no independent advice,
was sufficient to show that the gift svis the result of the influence the iiiii/iir0 had
oem the lady. Their Lordships, however, held that there is no rule of law ''Itich
makes independent advice necessar y in es cr y case. ''The possession of independent
advice, or the absence of it, is a tact to he taken into consideration and ss ill be
weighed on a review of the s0 10]e of the circumstances relevant to the issue of
whether the grantor thoroughl y comprehended, and deliberately and of her ou ii flee
will carried OUt the transaction. if she did, the issue is solved and the transaction is
upheld."
The extent of burden was further explained b y the Privy Council in more
concrete terms in Moons/ic Buloor Roliecnr v Sluoiisoonisa Begii,ir.Si A widow
remarried and endorsed and delivered to her new husband certain valuable
Government papers. In an action to recover them back fiom him she proved that site
lived in seclusion and that she had gisen over the papers to lion for collection of
interest, lie contended that he had g iven her full consideration loi the macs It 'o as
held that the mere fact of endorsement and the allegation of consideration sr crc not
sufficient to lift the presumption of undue influence, lie should prove that the
transaction was a hens fide sale and that he gave full consideration for die paper
which he received from his wife.
Rescission [S. 19-A]
Rescission ocontraet for undue influence is allowed tinder the provisions of
Section 19-A.
19-A. Power to set asidp rnnrmu't inr1ii"d by
influence—When consent to an agreement is caused by undue
influence, the agreement is a contract voidable at the option of the
party whose consent was so caused.
An y such contract ma y be set aside either absolutel y or, if the
party who was entitled to avoid it has received any benefit thereunder,
upon such terms and conditions as to the Court may seem just.

90. (1913) 4 t IA 23, 31 See also Life Insurance Corpri v Ndrwn.AtR 1970 Cat 200.
91. (1867) M 1 551 PC. See further Kharbuja Kuer s' JanI,hadur Rai,( 196.-) I SCR 456: MR
1963SC 1203.