For business information, annual reports, laws, ordinances, regulations and articles.

	Web Paksearch.com

It will be sufficient for the present purpose to refer to a few of the leading authorities on the various points dealt with by the text of the Act. The first paragraph of the section lays down the principle in general terms; the second and third define the presumptions by which the Court is enabled to apply the principle. It is obvious that the same power which can "dominate the will" of a weaker party is often also in a position to suppress the evidence which would be required to prove more constraint in a specific instance. Modification of the ordinary rules of evidence is accordingly necessary to prevent a failure of justice in such cases. Where the special presumptions do not apply, proof of undue influence on the particular occasion remains admissible, though strong evidence is required to show that, in the absence of any of the relations which are generally accompanied by more or' less control on one side and submission on the other, the consent of a contracting party was not free. In the case of a pure voluntary gift (though there is no general presumption against the validity of gifts) the proof is less difficult; but this is not within our subject.

Sub-S. (1): Undue influence generally.---The first paragraph gives the elements of undue influence; a dominant position and the use of it to obtain an unfair advantage. The words "unfair advantage" must be taken with the context. They do not limit the jurisdiction to cases where the transaction would be obviously unfair as between persons dealing on an equal footing.

It is an essential condition for the application of the section that one of the parties should be in a position to dominate the will of the other. No further question arises until this is proved. A plea of undue influence can only be raised by a party to the contract and not by a third party.

Subs-S. (2): Different forms of influence.---The second paragraph of the present section makes a division of the subject-matter on a different principle, according to the origin of the relation of dependence, continuing or transitory, which makes undue influence possible. Such a relation may arise from a special authority or confidence committed to the donee, or from the feebleness in body or mind of the donor. However, it is impossible to find plain and clear-cut categories for transactions which are often obscure and complicated, and sometimes purposely made so. Practically the most important thing to bear in mind is that persons in authority, or holding confidential employments such as that of spiritual, medical, or legal adviser, are called on the act with good faith and more than good faith in the matter of accepting any benefit (beyond ordinary professional remuneration for professional work done) from those who are under their authority or guidance. In fact, their honourable and prudent course is to insist on the other party taking independent advice. Following these principles, the High Court of Allahabad set aside a gift of the whole of his property by a Hindu well advanced in years to his guru, or spiritual adviser, the only reason for the gift as disclosed by the deed being the donor’s desire to secure benefits to his soul in the next words. Similarly, where a cestui que trust had no independent advice, it was held that a gift by him to the trustee of certain shares forming part of the trust funds was void, though in the same case a gift of shares which did not form part of the trust funds was upheld. The case of Wajid Khan in which the Privy Council set aside a deed of gift executed by an old illiterate Muhammadan lady in favour of her confidential managing agent, comes under this head. And so does the case in which the Calcutta High Court refused to enforce an agreement executed by a poor woman in favour of her mookhtear by which she bound herself to give him, by way of remuneration for his services, one half of the property which she might recover by his assistance. Where the daughters paramour stayed in the same house with her and her father, and the father gifted away the whole of his property to the paramour, it was held that there was a presumption that the gift was obtained by undue influence. The same principles apply to agreements for remuneration between an attorney and a client, between a managing clerk in an attorney's office and a client, and between an elder sister's husband who was the manager of the estate and two younger sisters. A parent stands in a fiduciary relation towards his child, and any transaction between them by which any benefit is procured by the parent to himself or to a third party at the expense of the child will be viewed with jealousy by courts of equity, and the burden will be on the parent or third party claiming the benefit of showing that the child in entering into the transaction had independent advice, that he thoroughly understood the nature of the transaction, and that he was removed from all undue influence when the gift was made. But the presumption of undue influence does not apply to a gift by a mother to her daughter. If such a gift is sought to be set aside on the ground of undue influence, the burden lies upon those who seek to avoid it to establish domination on the part of the daughter and subjection of the mother, nor does the presumption of undue influence arise between husband and wife. It has also been held that the relation of master and servant is not by itself enough to show a dominant position, nor is the circumstance that the defendant is daughter-in-law of a ruler, and the plaintiff a subject.

It is not the only possible proof of a donor's competence and understanding; on the other hand, advice relied on to support the transaction must not only be independent, but "must be given with knowledge of all relevant circumstances and must be such as a competent and honest adviser would give if acting solely in the interests of the donor."

Mental distress.--- "A state of fear by itself does not constitute undue influence. Assuming a state of fear amounting to mental distress which enfeebles the mind, there must further be action of some kind, the employment of pressure or influence by or on behalf of the other party to the agreement." The mere fact, therefore, that a submission was executed by the defendant during the pendency and under fear of a criminal prosecution instituted against him by the plaintiff will not avoid the transaction on the ground of "undue influence."

An aged father executed deeds of gift and a wakfnama at a time when he was in a weak state of mind as the result of a long drawn out illness. These transactions were brought at the instance of his son and had the effect of depriving the other members of the family of their just share of the inheritance. As it was proved that the son was in a position to dominate the will of the father and that he used that position to his own advantage, the deeds of gift and the wakfnama were set aside.

Similarly where criminal proceedings were threatened against a mookadam for misappropriation of his master's moneys, and a bond was passed by an ignorant Hindu widow who had brought him up as her son to save him from the threatened prosecution, it was held that the agreement was not binding upon the widow, she having had no independent advice.

Proof of undue influence.---In dealing with cases of undue influence there are four important questions which the Court should consider, namely, (1) whether the transaction is a righteous transaction, that is, whether it is a thing which a right-minded person might be expected to do; (2) whether it was improvident, that is to say, whether it shows so much improvidence as to suggest the idea that the donor was not master of himself and not in a state of mind to weigh what he was doing; (3)whether it was a matter requiring a legal adviser; and (4) whether the intention of making the gift originated with the donor.

Transactions with Parda-nishin woman.---From a time before, though not long before, the passing of the Contract Act, some of the High Courts, with a certain amount of support from the Privy Council, have treated parda-nishin women (sometimes in terms only Hindu woman, but in fact those concerned are not always Hindus) as a class of persons specially exposed to undue influence, and have gone near to laying it down as a rule of law that every one dealing with a parda-nishin woman is bound to show affirmatively that she understood the nature of the transaction, and that the terms were fair. The rule was stated by the late Sir. W. Rattingan, in a paper where he forcibly criticised this policy, to have been first announced in 1867 in a Calcutta case not regularly reported. "It does not necessarily follow," Sir W. Rattingan observed, "that a native woman simply because she sits behind the parda, is to be placed in the same Category as the "weak, ignorant, and infirm persons' whom the Court of Chancery, under a proper interpretation of its approved practice, is accustomed to protect. On the contrary, it is common experience to find in India parda ladies who are highly intelligent, strong minded, and who possess excellent business capacity, and contrive to manage large estates with great success. To adopt a sweeping generalisation, and to hold that every parda-nishin lady who enters into any commercial transaction, or who makes a disposition of her property, is presumably the victim of 'undue influence,' is to make an assumption which is contrary to actual facts, and to cause the law to be abused for the purpose of avoiding bona fide engagements."

In the earliest Privy Council decision on the subject, where a Muhammadan lady sued to recover from her husband the value of Company's paper of a considerable amount alleged to have been endorsed and handed over to him to receive interest thereon, and the defence was that he had purchased the paper from his wife, it was held by their Lordships that, though the wife failed to prove affirmatively the precise case set up by her in the plaint, the burden of proof was upon the husband to show, the plaintiff being a parda-nishin that the sale was a bona fide one for value, and that upon the evidence he had failed to satisfy the burden. A few years later it was declared by the same tribunal that, as regards deeds taken from parda women, the Courts have always been careful to see "that the party executing them has been a free agent, and duly informed of what she was about". It is not sufficient to show that a document executed by a parda-nishin woman was read out to her; it must further be shown that it was explained to her or that she understood its conditions and effect, and the explanation must include all material points as well as the general nature of the transaction. The reason is that the ordinary presumption that a person understands the document to which he has affixed his name does not apply in the case of a parda-nishin woman.

The law as to the burden of proof is summarised in a decision of the Privy Council. "In the first place, the lady was a parda-nishin lady, and the law throws around her a special cloak of protection. it demands that the burden of proof shall in such a case rest, not with those who attack, but with those who found upon the deed, and the proof must go so far as to shew affirmatively and conclusively that the deed was not only executed by, but was explained to, and was really understood by the grantor. In such cases it must also, of course, be established that the deed was not signed under duress, but arose from the free and independent will of the grantor. The law as just stated is too well settled to be doubted or upset."

More lately, on an attempt to repudiate a parda-nishin woman's compromise of a litigated family dispute, Lord Buckmaster said: "lt is not necessary---Indeed, it is undesirable---to insist in such cases upon a test which depends upon a clear understanding of each detail of a matter which may be greatly involved in legal technicalities. It is sufficient that the general result of the compromise should be understood, and that people disinterested and competent to give advice should, with a fair understanding of the whole matter, advice the lady that the deed should be executed."

Some Indian decisions suggest that a deed of gift by a parda-nishin woman is invalid in the absence of proof that she had independent advice. But in a case the Privy Council held that there is no rule of law of the absolute kind above indicated. "The possession of independent advice, or the absence of it, is a fact to be taken into consideration and well weighed on a review of the whole circumstances relevant to the issue of whether the grantor thoroughly comprehended, and deliberately and of her own free will carried out the transaction. If she did, the issue is solved and the transaction is upheld, but if upon a review of the facts which include the nature of the thing done and the training and habit of mind of the grantor, as well as the approximate circumstances affecting the execution---if the conclusion is reached that the obtaining of independent advice would not really have made any difference in the result then the deed ought to stand. In short their view is that if independent outside advice, which is an essentially different thing from independent outside control, had been obtained, the lady would have acted just as she did. Much as their lordships support and approve of the protection given by law to a parda-nishin lady, they cannot transmute such a legal protection into a legal disability. She might, especially if the outside adviser had been a lawyer, have altered the shape or form of the transaction, but in substance and result she would have carried out the same purpose and will as are expressed by the deed under challenge.

It should be noted that "the undue influence which may affect a parda-nishin lady's understanding of a document may proceed from a third party." It was so held by Jenkins C.J in a Case where a mortgage of her property by a parda-nishin woman to a creditor of her husband was set aside, the undue influence having proceeded from the husband. It appears that most, if not all, of the decisions could have been arrived at without the aid of any general presumption, on such grounds as that the act was done under the influence of marital control, or actual fraud or misrepresentation, or even in total ignorance of its nature and effect. The only thing in English law that seems analogous to the treatment of a parda-nishin woman’s dealings as presumably invalid is the treatment of dealing with "expectant heirs" by Courts of Equity, where fraud is said to be "presumed from the circumstances and condition of the parties contracting." But this equitable doctrine is peculiar, and depends, in part at any rate, on reasons not existing in India.

A number of other cases relating to parda-nishin women are collected in foot-note. They do not lay down any rules differing in principle from those discussed above, but illustrate various aspects of the rules. With the gradual relaxation of the custom of parda and the spread of education, the cases on the subject will become of less and less importance.

Who is a parda-nishin.---The expression "parda-nishin" connotes complete seclusion. It is not enough to entitle a woman to the special care with which the Courts regard the deposition of a parda-nishin woman that she lives in some degree of seclusion. Thus a woman who goes to Court and gives evidence, who fixes rents with tenants and collects rents, who communicates, when necessary, in matters of business, with men other than members of her own family, could not be regarded as a parda-nishin woman. In a Privy, Council case, it was said: "It is abundantly clear that Mrs. Hodges was not a parda-nishin. The. term quasi-parda-nishin seems to have been invented for this occasion. Their lordships take it to mean a woman who, not being of the parda-nishin class, is yet so close. to them in kinship and habits, and so secluded from ordinary social intercourse, that a like amount of incapacity for business must be ascribed to her, and the same amount of protection which the law gives to parda-nishin must be extended to her. The contention is a novel one, and their lordships are not favourably impressed by it. As to a certain well-known and easily ascertained class of women, well-known rules of law are established, with the wisdom of which we are not now concerned; outside that class it must depend in each case on the character and position of the individual woman whether those who deal with her are or are not bound to take special precautions that her action shall be intelligent and voluntary, and to prove that it was so in case of dispute."

Sub.-S. (3): Rule of evidence.--- The third paragraph of the present section does not lay down any rule of law, but throws the burden of proving freedom of consent on a party who, being in dominant position, makes a bargain so much to his own advantage that, in the language of some of the English authorities, it "shocks the conscience." Money-lending cases are those chiefly contemplated [see illustration (c)]. It must not be supposed, however, that there may not be other forms of unconscionable bargain within the mischief and the remedy of this enactment.

"Unconscionable bargains."--- Illustration (c) contemplates the case of a person already indebted to a money-lender contracting a fresh loan with him on terms on the face of them unconscionable: In such a case a presumption is raised that the borrower's consent was not free. The presumption is rebuttable, but the burden of proof is on the party who has sought to make an exorbitant profit of the other's distress. The question is not of fraud, but of the unconscientious use of superior power. Inadequacy of consideration, though it will not of itself avoid a contract (S. 25, expl. 2, below), has great weight in this class of cases as evidence that the contract was not freely made. "Inadequacy of consideration in conjunction with the circumstances of indebtedness and ignorance were facts from which it would have been as permissible before the amendment of (this section) to infer the use of undue influence as it would be since that amendment". Relief in cass of unconscionable bargains is an old head of English equity. It was formerly associated in a special manner with sales of reversionary interests, which the Court was eager to restrain; and for some time it was the doctrin of the Court that a sale of any reversionary interest, if proved to have been made, for only a little, under the value, must be set aside without further inquiry. This rule was at last found so inconvenient that it was abolished by statute. But the general principles of equity in dealing with what are, called "catching bargains" remain, and the third clause of the, section now before us is apparently intended to embody them. In fact, the Indian High Courts had acted on these principles, both before and since the passing of the Contract Act, without any express authority of written law.

After the amendment of the present section, the High Court of Allahabad disallowed compound interest payable at 2 per cent. per mensem with monthly rests in the case of a bond executed by a spendthrift and a drunkard eighteen years old. And where a person twenty-eight years old, the son of a wealthy father, but of profligate habits and greatly in need of money, his father having refused to provide him with any money, executed a bond to secure a sum of Rs. 500 with interest at the rate of Rs. 37-8-0 per cent. per annum with six monthly rests, with a stipulation that the borrower should not be empowered to pay the money within three years, and if he did pay within three years, he should nevertheless be obliged to pay three years' interest at the rate above mentioned, the same Court held that the bargain was unconscionable, and gave the lender a decree of Rs. 500 with simple interest at the rate of 24 per cent per annum. Where a poor Hindu widow borrowed Rs. 1,500 from a money-lender at 100 per cent. per annum for the purpose of enabling her to establish her right to maintenance, the High Court of Madras allowed the lender interest at 24 per cent.

Again, where a person entirely under the influence of his manager, who managed his litigation and household expenses, executed a perpetual lease in favour of the manager for a wholly inadequate consideration and subject to terms onerous to the lessor, the transaction was set aside. But the question whether a transaction should be set aside as being inequitable depends upon the circumstances existing at the time of the transaction, and not on subsequent events.

Similarly, though the agreement be by a mortagagor for sale of his equity of redemption to the mortgagee upon onerous terms, the Court will not therefore refuse specific performance if the bargain is not unconscionable and there is no evidence to show that the mortgagee took an improper advantage of his position or of the mortgagor's difficult.

Drastic legislation in most parts of India with regard to money-lending transactions has to a great extent supplanted the provisions of the Contract Act for the protection of debtors. It is not possible in this book to enlarge on the details of this legislation and reference must be made to special works on the subject.

Lapse of time and limitation.---Delay and acquiescence do not bar a party's right to equitable relief on the ground of undue influence, unless he knew that he had the right, or, being a free agent at the time, deliberately determined not to inquire what his rights were or to act upon them. Lapse of time is not a bar in itself to such a relief. There must be conduct amounting to confirmation of ratification of the transaction.

Consent of a party to transaction induced by suggestion of a fraudulent fact---Person so deceived having means of discovering truth with ordinary diligence---Effect---Where consent of a party was induced by the suggestion of a fact which was not true, and was fraudulent, exchange deed so effected, held, would nevertheless be not voidable where person deceived had means of discovering truth with ordinary diligence.

Question about exercise of undue influence---Pre-eminently a question of fact--Concurrent finding on question of soundness of mind of vendor and absence of undue influence over him---Not open to challenge, when these findings arc fully sustainable on record---Constitution of Pakistan, 1973, Art. 188.

Transfer of Property Act (IV of 1882), S. 54---Qanun-e-Shahadat Order (X of 1984), Arts. 70 & 71---Sale transaction---Undue influence---Proof---Oral depositions of witnesses produced by plaintiff to prove mental incapacity of vendor and undue influence of vendees on such vendor in respect of disputed sale transaction, being not based on personal observations or knowledge of witnesses, held, could not be relied upon---Important facts like exercise of undue influence on vendor by vendees and mental incapacity of vendor which could affect sale transactions, could, hardly be established by such unreliable oral evidence.

Pardanashin' woman---Nature of protection given to---Party taking advantage under deed must prove that ‘pardanashin’ woman acted of her own free will. The doctrine of protection of pardanashin woman involves the view that mere execution by such a person, although unaccompanied by duress, protest or obvious signs of misunderstanding or want of comprehension, is in itself no real proof of a true understanding mind in the executant. The onus is always on the person who takes advantage of a transaction to show that the transaction was actually conceived and put into practice by the disposer herself. The party taking advantage must show to the Court that the deed was explained to and understood by the executant and she adopted it with full knowledge and comprehension. The fact whether independent advice was available to a pardanashin lady at the time when she entered into a transaction can be taken into consideration in order to determine whether she thoroughly comprehended and deliberately of her own free will, carried out the transaction. If it is found that the document was conceived and executed by her free will, it shall be upheld notwithstanding the fact that the executant is a pardanashin lady. The legal protection given to a pardanashin or an illiterate woman, cannot be transmuted into a legal disability. The protection that the Courts have built up for the pardanashin and illiterate women, would apply in all cases whether the lady is plaintiff or the defendant.

Suit to set aside contract on ground of fraud---Suit filed long time after cause of action arose---Relief refused. Where plaintiff alleged that she had been induced to enter into a contract by fraudulent representation of the defendant; but she brought a suit to set aside the contract on the last day of limitation with he result that in the meantime the defendant had greatly changed his position. Held: In such circumstances even if the grievance of the plaintiff is found to be genuine she cannot be given any relief by the Court.

Undue influence----Question of law---Existence of influence or authority on donor established---No existence of undue influence may be proved by donee. The question whether on proved fads undue influence can be held to be established may in a particular case be one of law. Once the existence of authority or influence by the person who has taken advantage is established, it is for such person to prove that the act of gift was the result of the free exercise of the will of the donor.

Woman literate and having business aptitude---No special latitude may be given to plea of undue influence. Where a woman claimed special protection of the Court on the ground that she had been unduly influenced into entering into a contract. Held: This section has no application to cases in which literate women are found to have full business aptitude and capacity to look after their interest.

Defendant alleging execution under undue influence---Onus of proof of allegations---Mere advantageous position not sufficient to prove undue influence. The onus of providing that plaintiff was in a position to dominate the will of the defendant is entirely on the defendant. Defendant is further called upon to prove that plaintiff has used that position to obtain in unfair advantage for himself. Merely showing that the plaintiff was in a more advantageous position as compared to that of the defendant so as to be able to drive a benefit by dominating the will of defendant is not enough.

Mortgage bond--Allegation that consideration for bond was less than stated---Court would not go into the matter. Unless defendant is able to prove that the contract, namely the mortgage bond, is hit by the provisions of section 16 the Court will enforce the terms of the contract without any further investigation as to the basis therefore it is not the case of the defendant that there was no consideration for the bond. His contention is that the debt consists of a considerably lower figure.

Undue influence---What is----Facts to be proved to avoid contract for undue influence. To prove that a contract was entered into under undue influence it must be established (a) that the relations subsisting between the parties should be such that one of them is in a position to dominate the will of the other; (b) that the dominant party obtains an unfair advantage over the other; and (c) that the dominant party uses his dominant position to obtain that unfair advantage. Raising merely an atmosphere of suspicion is not sufficient in a case of undue influence but there must be clear and definite evidence of the case propounded. It must be established that but for the undue influence which was practised upon him, he would not have entered into the transaction. In order that a contract may be had on this ground it is further to be established that the contract was unfair and unconscionable.

Undue influence---Contract induced by person in a position to dominate will of another---Burden of proof. Sub-section (3) of section 16 lays down that where a person who is in a position to dominate the will of another enters into a contract with him, and the transaction appears on the face of it or on the evidence adduced, to be unconscionable, the burden of proving that such contract was not induced by undue influence shall lie upon the person in a position to dominate the will of the other.

Coercion---Mental capacity of person affected temporarily by action of another---Other person may be guilty of coercion. If a person's mental capacity is temporarily affected by reason of mental or bodily distress by the action of another person, that person would be deemed to be in a position to dominate his will, and as such the latter may be said to have coerced the other into the doing of certain acts at that time.

Execution of receipt admitted but receipt of consideration denied---Allegation of undue influence---Burden of proof is on person denying consideration or alleging undue influence. Where the defendant admits that he signed the receipt, the presumption would be that he had received the consideration. It was for the defendant to prove that he had not received the consideration mentioned in the receipt or that he had executed the receipt under undue influence.

Party denying execution of document and alleging her signatures were obtained on blank paper---Onus of proof that signatures were properly obtained lies on the other party. Ordinarily in cases where a document is admitted to have been signed by a party and the payment of consideration is denied, the onus to prove that the consideration was not paid or the document was obtained by misrepresentation or fraud is on the party who admits his signature but contends that his signature was taken upon a blank paper. Such statement is taken as a denial and not execution of the document. In such cases the onus to prove the execution of the document lies heavily on the respondent.

Spiritual influence----Person impressing another by his deeply spiritual life---Impression not sufficient to be considered undue influence. It was suggested that the plaintiff had by his religious profession created a deep impression of his spirituality on the defendant so that the latter was not in a position to resist whatever terms the plaintiff proposed, on which he would serve the defendant.

Held: There is no force in this contention. It has been shown with reference to the letters of the defendant himself that he was extremely keen to get the plaintiff in his service and that he was not doing so under the spell of his immediate presence, The fact that the plaintiff was a religious man may well have been one of the considerations for the defendant to consider him desirable for the nature of the work which he was going to entrust to him. He was on the look out of a man who should be honest and possessed integrity so that he could trust him implicity and to that end the religious attitude of the plaintiff may have counted in his favour but that does not constitute undue influence.

Temporary Government employee---Made to agree to termination of his service on one month's notice---Agreement is under undue influence and void. Where a temporary employee was made to sign a declaration by which he agreed that his services may be terminated by one month notice.

Held: The Government (appellant) had a real authority over the respondent and by virtue of sub-section (2) of section 16 of the Contract Act, the appellant was deemed to be in a position to dominate the will of others. If therefore, the appellant enters into a contract with the respondent and the transaction appears, on the face of it or on the evidence adduced, to be unconscionable, the burden of proving that such contract was not induced by undue influence shall lie upon the person in a position to dominate the will of the other. The declaration signed by the respondent is in the nature of a contract. By this contract, the respondent subjected himself to a liability. There can be no denying the fact that the tenure and security of service is a very important aspect for a public servant. He would not like to impair it unless under compelling circumstances. The position of the respondent under the Government of India Act, 1935, before signing of the declaration was that he could not be removed from service unless in due compliance with the provisions of section 240 (3). After the declaration, his services would be terminated by one month's notice. It was, undoubtedly, a substantial change in the conditions or tenure of his service. Since the appellant was in a position to dominate the will of the respondent, the presumption was against them and it was for them to have proved that it was not induced by undue influence. The appellant, however, have failed to do so. Therefore the declaration was void and of no legal effect.

Onus---Undue influence---How proved and by whom. In order to determine the question of onus in a case attracted by section 16 (b) the first thing to be considered is the relationship between the parties that is to say whether one party was in a position to dominate over the other and then it must be proved that position was used to obtain an unfair advantage and even though the transaction may be unconscionable relief cannot be granted until the initial fact of the position to dominate the will is established. If such a position is proved and the transaction also appears to be unconscionable, the burden of proof that the contract was not induced by undue influence lies on the person in a position to dominate the will of the other.

When there is evidence of overpowering influence and the transaction is immoderate and irrational, proof of undue influence is complete. It is not necessary that such overpowering influence should be by threat or by committing any act forbidden by law or by unlawful detention etc. If a person has some influence over the other and by means of that influence reduces the will of the other to his subjection, whatever may be the nature of the influence spiritual moral, social or any other influence, then it is such coercion as is sufficient to constitute undue influence.

Relationship of tile parties---If sufficient to prove undue influence---How proved. "Undue influence is not established by 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 the point "influence" alone has been made out. Such influence may be used wisely, judicially and helpfully. But whether by the law of England more than mere influence must be proved, so as to render influence in the language of the law undue. It must be established that the person in a position of domination has used that position to obtain unfair advantage for himself and so to cause injury to the person relying upon his authority or aid. And where the relation of influence as above set forth has been established, and the second thing is also made clear viz. that the bargain is with the influencer and in itself unconscionable then the person in a position to use his dominating power has the burden thrown upon him, and it is a heavy burden of establishing affirmatively that no domination was practised so as to bring about the transaction but grantor of the deed was scrupulously advised in the independence of a free agent.

Spiritual influence---Person impressing another by his deeply spiritual life---Impression not sufficient to be considered undue influence. It was suggested that the plaintiff had by his religious profession created a deep impression of, his spirituality on the defendant so that the latter was not in, a position to resist whatever terms the plaintiff proposed, on which he would serve the defendant.

Held: I do not find any force in this contention. It has been shown above with reference to the letters of the defendant himself that he was extremely keen to get the plaintiff in his service and that he was not doing so under the spell of his immediate presence. The fact that the plaintiff was a religious man may well have been one of the considerations for the defendant to consider him desirable for the nature of the work which he was going to entrust to him. He was on the look out of a man who should be honest and possessed integrity so that he could trust him implicity and to that end the religious attitude of the plaintiff may have counted in his favour but that does not constitute undue influence.

Undue influence---How proved---Mere relationship or position from which One's will can be dominated not sufficient---Urgent need of party, a criterion. For avoiding a contract on the ground of undue influence existence of a particular relationship is not necessary. The only difference in the kinds of cases is, that where no such relationship exists the burden of proving the exercise of undue influence rests on the party who seeks to avoid the contract whereas in the case of existence of such relationship it is for the party who is in a position to influence the other to show that the transaction was fair.

After having determined as to whether one party was in a position to dominate the will of another, there still remains another question and that is whether an unfair advantage was taken. That again depends upon the circumstances of each case and the criterion would be whether the Court considering all the attendant circumstances regards the transaction as unconscionable.

Urgent need and helplessness, however have both of them reference to the effect of the failure of the borrower to secure the money and obviously the difference between the two is only a matter of degree. How is this degree of the need of the borrower to be determined? It is not possible to lay down any hard and fast rule. Each case must be decided on its own facts.

Undue influence---What is. In order to determine the question of onus in a case attracted by section 16 (b) the first thing to be considered is the relationship between the parties, that is to say, whether one party is in a position to dominate over the other and then it must be proved that position was used to obtain an unfair advantage and even though the transaction may be unconscionable, relief cannot be granted until the initial fact of the position to dominate the will is established, If such position is proved and the transaction also appears to be unconscionable, the burden of proof that the contract was not induced by undue influence lies on the person in position to dominate the will of the other

When there is evidence of the overpowering influence and the transaction is immoderate and irrational, proof of undue influence is complete. It is not necessary that such overpowering influence should be by threat or by committing any act forbidden by law or by unlawful detention, etc. If a person has some influence over an other and by means of that influence reduces the will of the other to his subjection whatever may be the nature of the influence, spiritual, moral, social or any other influence, then it is such coercion as is sufficient to constitute undue influence.

Agreement to sell old grant land---Contended that agreement was vitiated on account of old age and mental infirmity of deceased vendor---High Court going through entire evidence on record but finding that none of ingredients of S. 16 had been on record---Plea of undue influence not sustained.

S. 16 (2) read with Constitution of Pakistan (1973), Art. 185 (3)---Contract---Undue influence---Both Courts below recording concurrent findings of fact on question of soundness of mind of vendor and absence of undue influence over him and such finding sustainable on record---Question being pre-eminently one of fact, interference by Supreme Court, held, not justified.

Undue influence---Unconscionable transaction---Person being in a position to dominate will of other---Burden of proof---Appellant admittedly murid of respondent who was his murshid---Appellant alleging that respondent got power of attorney executed by him in his favour by fraud and misrepresentation saying that same was for management of his land---Respondent selling suit land under power of attorney---Power of attorney on face of it unconscionable---Burden, held, was on respondent to prove that general power-of-attorney was got executed by him without exerting any undue influence of fraud upon appellant---Both Courts below, held, committed material irregularity and illegality in not adverting to relationship of murshid and murid and placing burden upon appellant to prove due execution of power-of-attorney.

Transaction through documents with illiterate lady---Signature of such lady on document---Proof---Principle of protective cloak available to Pardanashin lady---Application---No evidence on record present to show that documents which were in English had been translated for consumption of said lady or they were explained to her and that she put signature after fully understanding contents of such documents. Merely because ultimately family member of such lady was to be benefited by document and thus lady had signed, held, could not be the reason by itself in absence of any other tangible evidence to conclude that for her relative's interests---Such must have not only signed documents but also fully understood their contents---Lady being illiterate, was therefore, certainly entitled to benefit of principle of protective cloak available to Pardanashin lady.

17. "Fraud" defined. "Fruad" means and includes any of the following acts committed by a party to a contract, or with his connivance, or by his agent, with intent to deceive another party thereto or his agent, or to induce him to enter into the contract :---

(1) the suggestion, as to a fact, of that which is not true by one who does not believe it to be true;
(2) the active concealment of a fact by one having knowledge or belief of the fact;
(3) a promise made without any intention of performing it.;
(4) any other act fitted to deceive;
(5) any such act or omission as the law specially declares to be fraudulent.

Explanation .---Mere silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud, unless the circumstances of the case are such that, regard being had to them, it is the duty of the person keeping silence to speak, or unless his silence is, in itself equivalent to speech.

Fraud in general.---Fraud is committed wherever one man causes another to act on a false belief by a representation which he does not himself believe to be true. He need not have definite knowledge or belief that it is not true. When fraud products damage it is generally a wrong entitling the person defrauded to bring a civil action. Under the Contract Act we are concerned with the effects of fraud only so far as consent to a contract is procured by it. We have already pointed out that the result of fraudulent practice may sometimes be a complete misunderstanding on the part of the person deceived as to the nature of the transaction undertaken, or the person of the other party. Such cases are exceptional. Where they occur, there is not a contract voidable on the ground of fraud, but the apparent agreement is wholly void for want of consent, and the party misled may treat it as a nullity even as against innocent third persons. But the fraudulent party is of Course estopped from denying that there is a contract if the party deceived finds it to be to his interest to affirm the transaction, which is a conceivable though not probable case. In the same way the party deceived must :be at liberty to treat the transaction as a voidable contract if he thinks fit. No doubt many transactions have in fact been so treated notwithstanding that under the law they might have been declared wholly void.

Sub-Ss. (3), (4), (5).---The language of the Act throws no light on the relation of fraud to misrepresentation. It might even be said to obscure it. That relation, however, may be very simply stated. Fraud, as a cause for the rescission of contracts, is generally reducible to fraudulent misrepresentation. Accordingly we say that misrepresentation is either fraudulent or not fraudulent. If fraudulent it is always a cause for rescinding a contract induced by it; if not, it is a cause of rescission only under certain conditions, which the definition of S. 18 are intended to express. There are, however, forms of fraud which do not at first sight appear to include any misrepresentation of fact, and sub-ss. 3, 4, and 5 are intended to cover these. With regard to a promise made without any intention of performing it (subs. 3) it may fairly be said that a promise, though it is not merely a representation of the promiser's intention to perform it, includes a representation to that effect. Some promises are given more readily and willingly than others; but we accept promises only because we believe them to be made in good faith, and no one would be content with a promise which he believed the promiser to have no intention of keeping. Similarly it is fraud to obtain properly, or the use of it, under a contract by professing an intention to use it for some lawful purpose when the real intention is to use it for an unlawful purpose. Our modern authorities have removed the difficulty which used to be felt in treating the statement of a man’s intention as a representation of fact. "There must be a misstatement of an existing fact, but the state of a man’s mind is as much a fact as the state of a man’s mind at a particular time is, but if it can be ascertained it is as much a fact as anything else." Accordingly it is fraud to obtain a loan of money by misrepresenting the purpose for which the money is wanted, even if there is nothing unlawful in the object for which the money is actually wanted and used. In particular, it is well settled that buying goods with the intention of not paying the price is a fraud which entitles the seller to rescind the contract. On the whole, then, sub-s. (3) of the present section did not introduced any novelty. Borrowing money with no intention of repaying it is cheating under the Penal Code, S. 415 illustration (f).

The mention of "any other act fitted to deceive" in sub-s. (4) appears to be inserted merely for the sake of abundant caution.

Acts and omissions specially declared to be fraudulent.---Sub-s. (5) applies to cases in which the disclosure of certain kinds of facts is expressly required by law, and non-compliance with the law is expressly declared to be fraud. Thus by S. 55 of the Transfer of Property Act, 1882, the seller of immovable property is required to disclose to the buyer "any material effect in the property or in the seller's title thereto of which the seller is, and the buyer is not, aware, and which the buyer could not with ordinary care discover," and the buyer to disclose to the seller "any fact as to the nature or extent of the seller's interest in the property of which the buyer is aware, but of which he has reason to believe that the seller is not aware and which materially increases the value of such interest," and "omission to make such disclosures...is fraudulent," and this, it seems, even if the omission be due merely to oversight. Various dealings with property are made voidable as being fraudulent, or declared to be fraudulent as against the transferor's creditors or assignees, by other enactment. But as these transfers of property cannot well be employed as inducements to any other party to enter into any contract beyond such agreement as is involved in the fraudulent transfer itself, they do not come within the scope of the Contract Act, and we have no occasion to dwell upon them here.

Mere non-disclosure.---There are special duties of disclosure (of which we have just seen an instance) in particular classes of contracts, but there is no general duty to disclose facts which are or might be equally within the means of knowledge of both parties. Silence as to such facts, as the Explanation to the present section lays down, is not fraudulent. There is a well-known American case on this point arising out of the conclusion of peace between Great Britain and the United States after the war commonly known as the war of 1812. The contract was for the gale of tobacco: the buyer knew, but the seller did not, that peace had been made; and on the seller asking if there was any news affecting the market price, the buyer gave no answer. The Supreme Court of the United States held that there was nothing fraudulent in his silence. But there are at least two practical qualifications of this rule. First, the suppression of part of the known facts may make the statement of the rest, though literally true so far as it goes, as misleading as an actual falsehood. In such a case the statement is really false in substance, and the willful suppression which makes it so is fraudulent. Secondly, a duty to disclose particular defects in goods sold, or the like, may be imposed by trade usage. In such a case omission to mention a defect of that kind is equivalent to express assertion that it does not exist. The illustrations will now be easily understood.

Fraud---Transaction induced by fraud---Effect---Exchange deed wherein · defendants showed themselves as full owners of property were guilty of suggesting a fact which was not true---Defendants, by such representation having deceived or induced plaintiff to enter into exchange with them were guilty of fraud within meaning S. 17---Exchange deed entered into by plaintiffs was a deed voidable at their option as their consent was secured through fraud.

Contract vitiated by fraud and misrepresentation---Defendant may repudiate. The plaintiff entered into a contract with the defendant company and the contract, as found from the evidence and circumstances, of the case, was brought about as a result of a secret deal between the plaintiff on the one hand and the defendant's officer on the other hand and the defendant was persuaded to agree to the contract on the misrepresentation of the officer of the defendant.

Held: The defendant in the circumstances of the case is entitled to repudiate the contract on the ground of its being , vitiated by fraud.

Fraud---Burden of proof of. Fraud involves firstly a finding in regard to facts. The burden of proof in such a case is on the party who alleges fraud. The Courts have to be careful in coming to a finding of fraud and should normally satisfy themselves that the finding is based on reliable evidence. The Court or authority competent to re-open a case should therefore satisfy itself from the material before it that the necessary situation as discussed above prima facie prevails, before it decides to proceed with a complaint for fraud.

Fraud---What is---No fraud constituted where misrepresentation has been scrutinized before acting on it. There must be an intention to deceive or to induce a person by misrepresentation or active concealment of an existing fact, to do or omit to do anything which he would not have done but for the inducement. It is, therefore, necessary to prove that the act or omission was because of the inducement on account of the misrepresentation or concealment of fact and of not independent motives. There would be no cheating if the inducement had been subjected to scrutiny before the act or omission took place.

S. 17---Order obtained by fraud---Only voidable not void.

Fraud---Concurrent finding of Courts below---When P.C. will interfere. If the Privy Council was asked to reverse concurrent findings of both Courts below on an issue of fraud involving as one of its essential elements the intention to defraud, the party alleging fraud must make out a case for taking that course.

Agent selling goods getting secret commission from other party---Fraud---Contract void. Held: When a bribe or secret commission is given or a promise to pay it is made to an agent of an employer by a person who has entered into a contract for sale or purchase of property in order to induce the agent to act otherwise than with loyalty and fidelity to his employer, such a contract being based on fraud is void and not enforceable in law.

When a contract is found to be based on fraud, it becomes a voidable transaction and the affected party can repudiate it. The result of repudiation is that the aggrieved party will be restored to its original position and the party at fault can be compelled either to return the property or to compensate the aggrieved party.

Sale of land---Seller hiding facts about title to property---Buyer may repudiate agreement. The defendant suppressed this material fact pertaining to the title of the property from the plaintiff and he was perfectly justified in cancelling the contract on this ground.

In law a purchaser is entitled to repudiate a contract if tile seller's title to the property is not free from reasonable doubt.

Contract of Insurance---Concealment of fact in---Insured ship encountering mechanical defect resulting ill failure of battery---Anchor snapping---Respondent not disclosing such position of ship before securing insurance extension---Held, insured bound to disclose every circumstance which would influence decision of insurer in either insuring risk or fixing rate of premium.

Fraud---Transaction induced by fraud---Effect---Exchange deed wherein defendants showed themselves as full owners of property were guilty of suggesting a fact which was not true---Defendants, by such representation having deceived or induced plaintiff to enter into exchange with them were guilty of fraud within meaning of S. 17---Exchange deed entered into by plaintiffs was a deed voidable at their option as their consent was secured through fraud.

18. "Misrepresentation" defined. "Misrepresentation" means and includes:---

(1) the positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true;

(2) any breach of duty which, without an intent to deceive, gains and advantage to the person committing it, or any one claiming under him, by misleading another to his prejudice or to the prejudice of any one claiming under him;

(3) causing, however innocently, a party to an agreement to make a mistake as to the substances of the thing which is the subject of the agreement.

Language of the section.---This is one of the sections taken wholly or in part from the draft Civil Code of New York, and it is one of the least satisfactory in point of form. In sub-s. 1 the use of the word "warranted" in a sense (whatever that sense may precisely be) unknown to the law, and in a subject-matter where the words "warranty and "condition" have already caused quite enough trouble, is an elementary fault. Nor is the intention of the qualifying clause, to which we shall return, altogether clear. However, the Contract Act has at least made some improvement on the classification of the New York draft, where the original of this clause stands under the head of Fraud. Sub-S. (2) is obscure and apparently useless. Sub-S. 3 (which does not occur in the New York draft Code 7 seems to involve confusion between contracts voidable because consent was obtained by misrepresentation and transactions which can have no legal effect, except possibly. by way of estoppel, because there was no real consent at all.

Sub-s. (1).---What is meant by "the positive assertion, in a manner not warranted by the information of the person making it, of that which is not true"? Many persons would say that, in any ordinary use of the English language, the assertion of that which is not ture, though it may be innocent and even free from negligence, cannot be "warranted" in any manner. Now the framers of the New York Civil Code put this clause under the head of Fraud. Probably what they meant was that a misrepresentation made with reasonable and probable cause for believing it true should in no case be treated as fraud, but that a reckless or grossly negligent misrepresentation should be. The result would be to lay down a more stringent rule as to fraud. When this clause is transferred to the head of misrepresentation, it would seem to mean that innocent misrepresentation does not give cause for avoiding a contract unless the representation is made without any reasonable ground. The High Court of Calcutta has held that an assertion cannot be said to be "warranted" for the present purpose where it is based upon mere hearsay. Thus if A makes a positive statement to B that C would be a director of a company about to be formed, and B applies for shares on the faith of that statement, the statement would be a misrepresentation if A did not derive the information from C direct, but from a third party, D. In the course of the judgment Maclean C.J. said :"I need scarcely say that we must deal with this case according to the law of India and not of England, and if we find the term 'misrepresentation' defined by statute in this country, we must do our best to ascertain whether the case is brought within that statutory definition ..................[A] says that [D] told him that he [D] had authority from [C] to use his name in the prospectus as director, in other words, that he [A] obtained his information not from [C] direct, but only through [D] I am not disposed to think that if [A] had relied on the second-hand information he derived from [D], he was "warranted" in making the positive assertion that [C] would be a director". This appears to require, on the part of the person making the representation, a belief not merely having some reasonable ground---for it is often quite reasonable to act upon second-hand information, even when it is not unavoidable---but founded on the best information that is available. There is no reason to be dissatisfied with this judgment, through it may be matter of historical doubt whether the framers of the Act intended to go so far. The qualification does, not, of course, apply to the classes of contracts where there is a special duty to disclose all material facts within a party's knowledge. Outside these contracts of "abundant good faith" the rule of the High Court of Calcutta sets up a standard of diligence which may well be thought adequate; though it would not satisfy those learned writers in England and America who take the view that "innocent misrepresentation which brings about a contract is now a ground for setting the contract aside" in all cases.

We may refer to a Punjab case to illustrate the meaning of the expression "positive assertion." A sells a mare to B Before the sale A writes to B as follows, in answer to inquiries from B :"I think your queries would be satisfactorily answered by a friend if you have one in the station, and I shall feel more satisfied. All I can say is that the mare is thoroughly sound." The letter is a "positive assertion" of soundness coupled with a recommendation to B to satisfy himself before purchasing; but it does not amount to a warranty.

Sub-s. (2)---This sub-section is, as already stated, obscure. It was considered in a Bombay case by Sargent J. "The second clause of S. 18 is probably intended to meet all those cases which are called in the Courts of Equity, perhaps unfortunately so, cases of constructive fraud', in which there is no intention to deceive, but where the circumstances are such as to make the party who derives a benefit from the transaction equally answerable in effect as if he had been actuated by motives of fraud or deceit." In that case the plaintiffs, who were creditors of the defendants, sued to set aside a composition deed executed by their agents, alleging that their signature was obtained by a representation made by one of the defendants that the deed was nothing more than an assignment to trustees for the benefit of creditors, as agreed to in a previous meeting of the creditors. It was further alleged that the deed contained a release of which no mention was made at the meeting, and of which the plaintiffs' agents had no knowledge. Under those circumstances the High Court of Bombay declared the release absolutely void, on the ground that the deed as it was signed was essentially different from that which the plaintiff's agent intended to execute, or thought they were executing, when they affixed their signature to the deed. The Court went further, and said that there was another ground on which the plaintiffs were entitled to relief, namely, that there was a duty on the part of the defendants within the meaning of the present sub-section to communicate to the plaintiffs' agents the fact of the existence of the release and that the breach thereof entitled the plaintiffs to avoid the transaction under S. 19 of the Act. But it is submitted that the first sub-section was more applicable, as there was a "positive assertion" by one of the defendants that the document was nothing more than a mere assignment of the creditors' property to trustees.

This sub-section would also cover the position where a true statement is made, but it becomes false to the knowledge of the maker before it has been acted upon.

Sub-s. (3).---This sub-section was applied in a Bombay case, where it was held that though a company was not liable as drawer on a bill of exchange signed by two of the directors and the secretary, treasurer, and agent of the company, yet it was liable to the bank to which the bill was sold as for money received by the company to the use of the bank. The decision proceeded on the ground that the directors, while acting within the scope of their authority, had sold the bill as one on which the company was liable, but upon which, having regard to the form in which it was drawn, the company could not be rendered liable, and the directors were therefore guilty of misrepresentation within the meaning of the present sub-section. The case was no doubt within the terms of the Act, but it might have been decided on the broader ground that a buyer "is entitled to have an article answering the description of that which he bought," and that here the document which the bank had bought had not the force or value which it purported and was supposed to have. Thus it might be regarded as a case of common mistake under S. 20 of the Act, entitling the party who had paid money to recover it under S. 72. The defendants in Bombay chartered a ship wholly unknown to them from the plaintiffs, which was described in the charter-party, and was represented to them, as being not more than 2,800 tonnage register. It turned out that the registered tonnage was 3,045 tons. The defendants refused to accept the ship in fulfillment of the charter-party, and it was held that they were entitled to avoid the charter-party by reason of the erroneous statement as to tonnage. It is difficult to see how the Court, having regard to the terms of the Act and to the evidence of the usage of Bombay and the understanding of the parties in the particular case, could have decided otherwise. But this case does not necessarily lay down any rule that an error in stating the amount of tonnage will in general render a charter-party voidable.

Misrepresentation of fact or law.---It used to be said in English books that misrepresentation which renders a contract voidable must be of fact; but there does not seem to be really any dogmatic rule as to representations of law. The question would seem on principle to be whether the assertion in question was a mere statement of opinion or a positive assurance---especially if it came from a person better qualified to know---that the law is so and so. It seems probable in England, and there is no doubt here, that at any rate deliberate misrepresentation in matter of law is a cause for avoiding a contract. Where a clause of re-entry contained in a kabuliyat (counterpart of a lease) was represented by a zamindar's agent as a mere penalty clause, the Privy Council held that the misrepresentation was such as vitiated the contract, and the zamindar's suit was dismissed.

Misrepresentation of fact---Insured stating to have produced all relevant papers including registration book of car in name of former owner and mortgage deed before relevant officers of Insurance Company alongwith proposal form---Insured further stating that during currency of insurance policy, Insurance Company on perusal of such documents paid compensation to insured' for two other claims---Held, such facts lead to conclusion that insured made all facts known to Insurance Company and Insurance Company indicated declaration contrary to facts stated in registration book and issued insurance policy causing risk mentioned in policy.

19. Voidability of agreements without free consent. When consent to an agreement is caused by coercion, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused.

A party to a contract, whose consent was caused by fraud or misrepresentation, may, if he thinks fit, insist that the contract shall be performed, and that he shall be put in the position in which he would have been if the representations made had been true.

Exception.---If such consent was caused by misrepresentation or by silence, fraudulent within the meaning of section 17, the contract, nevertheless, is not voidable, if the party whose consent was so caused had the means of discovering the truth with ordinary diligence.

Explanation.---A fraud or misrepresentation which did not cause the consent to a contract of the party on whom such fraud was practised, or to whom such misrepresentation was made, does not render a contract voidable.

Scope of the section.---The section states the legal effect of coercion, fraud, and misrepresentation, in rendering contracts procured by them voidable; the foregoing sections have only laid down their respective definitions. Perhaps the most important parts of the section, certainly those which need the most careful attention, are the exception and the explanation. These mark, though hardly with practical completeness, the limits within which the rule is applied. Before considering them we have to pause on the second paragraph of the body of the section. It reads plainly enough at first sight, but the thought does not seem to be really clear. The party entitled to set aside a voidable contract may affirm it if he thinks fit. That is involved in the conception of a contract being voidable. And if he affirms it, he may require the performance of the whole and every part of it (subject to the performance in due order of whatever may have to be performed on his own part) or, in default thereof, damages for non-performance (subject to special causes of excuse, if any, which we are not now considering). If, as may well be the case, the default is wholly or partly due to the non-existence of facts which the defaulting party represented as existing, this party can obviously not set up the untruth of his own statement by way of defence or mitigation; and, if the case is a proper one for specific performance, and if it is in his power to perform the contract fully, though with much greater cost and trouble than if his statement had been originally true, he will have to perform it accordingly. Is anything more than this meant by the declaration of the affirming party's right to "be put in the position in which he would have been if the representations made had been true"? There are obviously many cases in which such restitution is not literaly possible. Thus, if the owner of an estate subject to a lease for an unexpired term contracts to sell it to a purchaser who requires immediate possession, and conceals the existence of the lease. The purchaser cannot be put in the same position as if the representation that there was no tenancy, or only such a tenancy as could be determined at will, had been ture. Cases may occur, on the other hand, where a seller of land has held out, though not in express terms or willfully, an element of attractiveness or security in the property offered for sale which it is in his power to realise by some act or undertaking on or with regard to adjoining property of his own. But it is dangerous to formulate general propositions in the law of contract from decisions in suits for the specific performance of contracts relating to land, and it is not clear that the facts of the decision in question are not reducible to misrepresentation or an ambiguous offer. Nor is it certain that the present enactment can always be literally relied on. A sells a house to B, and by some blunder of A's agent the annual value is represented as being Rs. 2,000 when it is in truth only Rs. 1,000. According to the letter of the present paragraph, B, may insist on completing the contract and on having the difference between the actual and the stated value paid to him and his successors in title by A and A's successors in title for all time. Nothing short of that will put him "in the position in which he would have been if the representations made had been true." This is obviously not the intention of the enactment.

There is an important class of cases in which, although there is no such misrepresentation as to make the contract voidable, complete performance is, by reason of misdescription or otherwise, unattainable, and specific performance will be decreed subject to compensation for the defect. It was originally proposed to deal with such cases in the Contract Act. The enactment governing them is now to be found in the Specific Relief Act, S. 14.

Suit by representatives.---The option of avoiding a contract procured in any of the ways mentioned in Ss. 19, 10A, is exercisable by the party's representatives unless at the date of his death he had lost it by acquiescence or otherwise. It is rather surprising that the High Court of Bombay should have been called upon to reject an apparently serious argument to the contrary.

Exception: Means of discovering truth.---The exception is wider---we must suppose deliberately so. The test is not whether the party might have inquired for himself but whether he did inquire and trust his own inquiries rather than the representation; and so far is this doctrine from being confined to cases of actual fraud that there is no decisive or recent authority for not applying it even to cases where the misrepresentation consists only in failing to disclose some fact which ought to be disclosed. No doubt there may be a question whether the party alleged to have misrepresented a fact really said, "I tell you it is so," or only "I think you will find it so." This question will, according to the circumstances, be of the construction of particular words, or of the inferences to be drawn from words and conduct. Again, the possession of obvious means of knowledge may lead, in some cases, to a fair inference that those means were used and relied on. But still the real point to be considered is whether the party misled did put his trust in the representation made to him of which he complains, or in other information of his own. In the latter case the misrepresentation did not really cause his consent. In other words, the present Exception, so far as allowed by English law, is logically nothing but a branch of the following Explanation. However, the words of the Exception are perfectly clear. It will be observed that the Exception does not apply to cases of active fraud as distinguished from misrepresentation which is not fraudulent. The words "fraudulent within the meaning of S. 17" go with the word "silence" and not "misrepresentation". It has been held that if a person desirous of selling property causes letters to be written to him in which fictitious offers at high prices are made with the sole purpose of showing it to an intending purchaser, the making and exhibiting of such letters to the purchaser and thus inducing him to purchase the property amounts to fraud within the meaning of S. 17, and the case does not fall within the Exception to S. 19. A vendor of a house and land knew that the purchaser wanted immediate possession, and, while admitting that the property was occupied by a tenant, first concealed the fact that the tenant had a lease, and then pretended that the lease was forfeited; the purchaser was entitled to rescind the contract, although he might have ascertained by independent inquiry what the tenant's interest really was. A person purchased a decree obtained in favour of an insolvent from the Official Assignee for 20 per cent., of its face value by representing that the decree was practically unrealisable although he knew that satisfactory security had been given for the full amount of the decree. The Official Assignee was held entitled to rescind the contract.

The ordinary diligence of which the Exception speaks may be taken to be such diligence as a prudent man would consider appropriate to the matter, having regard to, the importance of the transaction in itself and of the representation in question as affecting its results. A possibility of discovering the truth by inquiries involving trouble or expense out of proposition to the value of the whole subject-matter would not, it is conceived, be "means of discovering the truth with ordinary diligence." It was contended on behalf of the company that the exception to S. 19 was applicable to that case, and that the bank could have discovered with ordinary diligence that the company was not liable on a bill drawn by its secretary, treasurer, and agent. Sargent J. said: "No ordinary diligence would have enabled, the bank to discover that the company was not liable on this bill. The form of the bill would naturally lead the bank, as it admittedly did lead the bank to suppose that it was the company's bill as represented, and the discovery could only be made by persons trained in the law and after a careful examination of legal authorities."

Explanation: as to "causing consent."---The principle of the caution given here is obvious. A false representation, whether fraudulent or innocent, is merely irrelevant if it has not induced the party to whom it was made to act upon it by entering into a contract or otherwise. He cannot complain of having been misled by a statement which did not lead him at all. In the common phrase of English text-books, .the representation must be definable as dans locum contractui, bringing about the contract. Hence an attempt to deceive which has not in fact deceived the party can have no legal effect on the contract, not because it is not wrong in the eye of the law, but because there is no damage. This rule is applicable where a seller of specific goods purposely conceals a fault by some contrivance, in order that the buyer may not discover it if he inspects the goods, but the buyer does not in fact make an inspection. In particular cases it may be hard to determine whether a certain representation was in fact relied upon so that it can be said to have caused consent to the contract. This question, where it arises, is a question not of law, but of fact, on which the character of the statement made and the probability that it would influence a reasonable man's determination may be taken into account. "If it is proved that the defendants with a view to induce the plaintiff to enter into a contract made a statement to the plaintiff of such a nature as would be likely to induce a person to enter into a contract, and it is proved that the plaintiff did enter into the contract, it is a fair inference of fact that he was induced to do so by the statement .... Its weight as evidence must greatly depend upon the degree to which the action of the plaintiff was likely, and on the absence of all other grounds on which the plaintiff might act". There is no rule of law that any particular kind of statement is necessarily material in some cases and immaterial in others.

The fact that a person has taken pains to falsify or conceal a fact is cogent evidence that to him at any rate that fact appeared material, and the falsification or concealment an important condition of obtaining the other, party's consent. A man who has so acted cannot afterwards turn round and say. "It could have made no difference if you had known the truth."

Illustrations.---There is nothing calling for particular comment in the illustrations to this section, except that the case put in illustration (c) would now be' more simply disclosed of under the specific provisions of the Transfer of Property Act.

Right of third party cannot be set up.---It is no defence to an apparently regular claim to property to suggest, without showing any title of one's own, that the original transaction from which the claimant's title is derived may have been voidable under this or the following section.

Gift under Muslim Law---Fraud in procuring gift---Principle of section applicable. A gift is not contract (though in Muslim Law it is called a contract) but the principle of section 19 may be applicable even to a gift. Therefore a gift tainted with fraud would be voidable and not void.

Contract by statutory body---Consent to contract given by Board under mistake of fact---Contract invalid. Held: The Karachi Port Trust is a statutory body and is governed by the statute and its bye-laws. Before a contract of high valuation could have been validly awarded, it would have to be with the consent not only of the Chief Engineer but also of the Board. In the present case, the Chief Engineer and the Board gave their consent upon a mistake of fact. Therefore there was no valid contract in existence.

Promise to do an act in future not performed---Not a misrepresentation. A promise to perform an act in future, if not fulfilled would not amount to misrepresentation. It may be a breach of promise or an agreement, but it is not a misrepresentation as to existing facts within the meaning of section 19.

Voidable contract acted upon---Cannot be challenged subsequently.

S. 19 read with S. 13 (2) Sale of Goods Act---Misrepresentation regarding the model of the car by the seller---if contract can be rescinded after the car had been used by the buyer. The plaintiff purchased a car from the defendant which he was wrongly told was 1949 model. He used the car for sometime and then found that it was 1948 model car. He therefore gave notice to the defendant that he rescinded the contract on ground of fraud and asked them to pay back the price of the car paid by him.

Held by Rehman C.J. on reference from D.B. There is no provision in the Sale of Goods Act, 1930, bearing on the effect of fraud, misrepresentation, coercion and undue influence, on a contract of sale. I would be, therefore, disposed to hold that the relevant provisions of the Contract Act on these questions continue to be applicable to contracts of sale despite the provisions of section 13 of the Sale of Goods Act. This section also does not contain any reference to cases of fraud etc, and apparently contemplates such cases as involve a breach of a condition without fraud, misrepresentation and the like affecting the formation of the contract itself, at its inception, if thus interpreted, there would be no difficulty in holding that section 19 of the Contract Act can stand with section 13 of the Sale of Goods Act, 1930. The result would be that in case of fraud and misrepresentation etc. vitiating the contract unless there was a waiver on the part of the party affected, the right of recision would not be lost.

Fraud---Limitation---Person in possession of land but a deed ownership of such land got executed by misrepresentation and fraud---Reason getting ownership of land by execution of such leed if suing for possession on basis of such deed and claiming deed to be genuine, executant of deed, held, within her right to plead deed being void on account of fraud and other party having no title or right to posses land and no impediment of limitation could arise to raise such plea.

Applicability---It is an essential requirement that when executing sale deed a person (pardanashin lady) should be in know that deed in question was of sale---S. 19 would not apply if her awareness was only that deed she was executing was a power of attorney.

Registered sale deeds on basis of agreement---Suit for declaration and cancellation of deeds on plea that documents were procured from plaintiffs by deceased through fraud and misrepresentation---Requires ad valorem court-fee---Court Fees Act (VIII of 1870), Ss. 3, 12.

19-A. Power to set aside contract induced by undue influence. When consent to an agreement is caused by undue influence, the agreement is a contract voidable at the option (if the party whose consent was so caused.

Any such contract may be set aside either absolutely 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.

Scope of the section.--- The practical scope of this section is shown (though not completely) by the illustrations. No doubt is possible as to the actual solution, in any civilised system of jurisprudence, of the cases put. But the wording of the section (which follows the Indian Law Commissioners’ original draft) trends to obscure the principle which governs them. It is not that the mistake has any special operation because it is a mistake, but that the true intention of the parties was to make their agreement conditional on the existence of some state of facts which turns out not to have existed at the date of the agreement. Where the contract was for the sale of an object not existing, or which had ceased to exist according to the description by which it was contracted for, the result is still more easily apprehended if we say that there was nothing to buy and sell.

The mistake must be as to an existing fact.---The mistake must be "as to a matter of fact essential to the agreement." It is not enough that there was an error "as to some point, even though a material point, an error as to which does not affect the substance of the whole consideration." The circumstances, therefore, that at the date of lease neither the lessor nor the lessee supposed that the Government assessment would ever be increased will not avail the lessor to avoide the lease if the assessment is subsequently enhanced. "The circumstances that both the parties to the least supposed (if they did suppose) that the assessment would never be increased, did not prevent their united will from forming a contract, any more than from making the terms of the contract, when thus concluded, binding, in spite of any future change of circumstances.

In India the appropriate section would be S. 56 not S. 20. Even a mistake as to an existing fact will not render void an agreement concluded with retrospective effect, where the circumstances have changed between the date from which the agreement is to begin, and the date the bargain is concluded. There the company issued a cover note, insuring goods against fire with effect from a date three days before. Unknown to either party, the goods had been destroyed by fire two days before the issue of the cover note. The company was held liable. Where a settlement was entered into between Government and certain inamdars in respect of a village whereby the latter agreed to pay a certain yearly quit-rent, and both parties believed that the inamdars were the superior holders of all the lands in the village, it was held that the settlement was void as regards a portion of the lands which subsequently turned out to be wanta lands held by certain girassias as owners in possession. Where a property agreed to be sold had been notified for acquisition under the Calcutta improvement Act, and neither the vendor nor the purchaser was aware of the notification at the date of their agreement, the notification was held to constitute a matter of fact essential to the agreement within the meaning of this section and the agreement was declared void. Upon the same principles a compromise of a suit will be set aside if it was brought about under a mistake as to the subject-matter of the agreement. Not only a compromise, but an order of the Court made by consent, may be set aside if the arrangement was entered into even under a one-sided mistake of counsel to which the other party, however innocently, contributed, or even otherwise if the mistake was such as to prevent any real agreement from being formed. A fortiori it is so in the case of the mistake being common to both parties. The existence of a separate warranty in a contrail of sale is evidence that the matter of the warranty is not an "essential" part of the contract. In such a case, if there is a breach of the warranty, the purchaser is only entitled to compensation for the breach, and the sale is not even voidable. It is still a stronger case where not only no warranty is given by the vendor, but the purchaser buys "subject to all defects". Thus, where a mortgagee sold his claim under the mortgage subject in effect to all defects, and it was subsequently discovered that the mortgage was inoperative, as it was attested by only one witness, it was held that, though both parties were ignorant of that fact at the time of the assignment, the purchaser was not entitled to rescind the contract and claim back the purchase-money, the purchase having been made subject to all defects. An administration bond given under S. 256 of the Succession Act, 1865 (now S. 291 of the Indian Succession Act, 1925) is not void under this section, though the party to whom the grant of letters of administration is made may have obtained the grant by fraud upon the Court, and though neither the sureties nor the Court to which the bond is passed were aware of the fraud when the grant was made. In a modern case letters of administration of the estate of a deceased person were granted to A on execution of a bond by him and two sureties engaging for the due administration of the estate. It was subsequently discovered that A was not entitled to the grant, and that he had obtained it by false and fraudulent representations made in his petition for letters of administration. The grant to A was thereupon revoked, and a suit was brought against the sureties to recover from them the amount misappropriated by A and forming part of the estate. One of the defences raised on behalf of the sureties was that the bond was void under the present section, and that they were not therefore liable upon the bond. It was contended that both the Court and the sureties were under a mistake as to a matter of fact "essential" to the agreement, namely, that A was entitled to letters of administration, and that the sureties would not have executed the bond but for that mistake. But a majority of the High Court of Calcutta held that the mistake of the Court and of the sureties did not relate to the essential subject of the contract. The decision was also based on the ground that the liability of sureties under an administration bond did not depend on the Validity or invalidity of the grant. This decision was upheld on appeal to the King of Council. The same principle has been held to apply to surety bonds under the Guardians and Wards Act, 1890. Thus, where A was appointed guardian of the property of a minor on passing a bond to the District Court executed by him and B, as surety for the due management and realisation of the minor's property, and failed to account for the income of certain property which actually belonged to the minor, but was not included in the list of properties belonging to the minor annexed to the petition for his appointment, it was held that B was liable to make good the amount, though it might be said that both the Court and B were led to believe by A that the property did not belong to the minor.

In a Bombay case, A, fraudulently representing himself to be B, purported to mortgage to C property belonging to B C then transferred the pretended mortgage to D. D insisted that the mortgagor should be a party to the deed of transfer. A still personating B, joining in executing that deed as a concurring party. The deeds of mortgage and transfer contained the usual covenants. D subsequently discovered that the mortgage and transfer deeds were not executed by B, but by A, personating him, and he sued C, for return of the transfer money. The Court of first instance held that D was not entitled to a return of the transfer money; but, on appeal, the case was held to be one of a mistake of fact under this section, so that C was bound under S. 65 to repay the transfer money to D. The correctness of the reversal seems doubtful. On principle D was not entitled to recover as on a total failure of consideration; for, although the assignment passed nothing as a conveyance, it gave D, a title to the debt (for which the property was only a security) as against A, who was clearly estopped from denying his identity with B for this purpose; and likewise, by estoppel, a right of action against him on the mortgagor's covenant for title express or implied. Morever D, having required the supposed B's concurrence, had not relied on any assurance of C's as to the reality of the mortgage made in the name of B. The fact (as presumably it was) that A was missing or insolvent or both does not affect the legal result. Then as to the Indian Acts, it is obvious that there was no contract formed between C and D; but D paid C not under the agreement but as consideration for an assignment made in pursuance of it, and therefore it does not appear that S. 65 of the present Act applies to this case; neither does anything in the Transfer of Property Act seem applicable.

Rectification.---The Courts will not rectify any instrument on the ground of mistake unless it is shown that there was an actual concluded contract antecedent to the instrument sought to be rectified, and that the contract is inaccurately represented in the instrument. Thus in a Bombay case, the plaintiffs chartered a steamer from the defendants to sail from Jedda on "the 10th August, 1892 (fifteen days after the Haj)," in order to convey pilgrims returning to Bombay. The plaintiffs believed that "the 10th August, 1892," corresponded with the fifteenth day after the Haj, but the defendants had no belief on the subject, and contracted only with respect to the English date. The 19th July, 1892, and not the 10th August, 1892, in fact corresponded with the fifteenth day after the Haj. On finding out the mistake the plaintiffs sued the defendants for rectification of the charter-party. It was held that the agreement was one for the 10th August, 1892; that the mistake was not mutual, but on the plaintiffs' part only; and, therefore, that there could be no rectification. The Court further expressed its opinion that even if both the parties were under the mistake, the Court would not rectify, but only cancel, the instrument, as the agreement was one for the 10th August, 1892, and that date was a matter materially inducing the agreement. See also Specific Relief Act, Ch. III below, and the undermentioned case.

Compensation.---Note, in connection with the present section, the provision of S. 65 that when an agreement is discovered to be void any person who has received any advantage under the agreement is bound to restore it, or to make compensation for it, to the person from whom he received it. It is or should be elementary learning that a deficiency in quantity of land (or anything) sold which can be adequately dealt with by compensation does not come within this section at all.

Mistake of fact in regard to area or identification of land sold and such mistake needing rectification---Cannot be treated as a mistake on basis of which whole contract can be avoided.

Ss. 20, 56.---Contract void under S. 20--.If compensation payable under S. 56. Held: that the third paragraph of section 56, Contract Act, requiring compensation to be paid to the promisee for the failure of performance of a contract, on account of its impossibility or unlawful nature, which impossibility or unlawful nature was known, or might, with reasonable diligence, have been known to the promisor applied only where an agreement otherwise valid was rendered void by such impossibility of performance. There, compensation was not payable under section 56 in respect of non-performance of a contract which was void under section 20, Contract Act, for a mutual mistake as to matter of fact essential to the agreement.

Mutual misapprehension about contract---Party abandoning right under contract---Abandonment is ineffective. Where on account of a mutual misapprehension about a contract one of the parties abandoned his rights under it.

Held: If there was no misrepresentation and both parties had been labouring under a misapprehension that the contract had been cancelled, the abandonment of a right under the contract due to a mutual mistake, would not affect the plaintiff's rights. Under section 20 of the Contract Act an agreement based on a mutual mistake is void and the same principle will apply to an abandonment of a right under a contract.

Mistake of fact.--Contract may be avoided for, if both parties are under mistake---Cannot be avoided where one party is under mistake. Held: to avoid a contract on the ground that it is void for mistake, both parties to the contract should be under a mistake as to a matter of fact essential to the agreement, as required by section 20 of the Contract Act and, further, under section 22 of the Contract Act, a contract is not voidable because one of the parties only is under a mistake as to a matter of fact.

21. Effect of mistakes as to law. A contract is not voidable because it was caused by a mistake as to any law in force in Pakistan but a mistake as to a law not in force in Pakistan has the same effect as a mistake of fact.

After the establishment of Pakistan this section applies in relation to Central Acts made for an acceding State as it applies to law in force in Pakistan.

A and B make a contract grounded on the erroneous belief that a particular debt is barred by the Pakistan Law of Limitation. The contract is not voidable.

The general language of this section represents with approximate fidelity the current doctrine of text-books down to the time when the Act was framed, namely, that relief is not given against mistake of law. However, modern authority has shown that the doctrine in question is not acceptable without rather large qualifications which, it is apprehended, Indian practitioners cannot safely neglect. Certainly mistake of law does not universally or generally invalidate transaction in which it occurs; but neither does mistake of fact. A man cannot go back upon what he has deliberately done, not to speak of excusing himself from liability for a wrongful act or offence merely because he alleges that he acted under a misapprehension of the law. It is a citizen's business to know, by taking professional advice or otherwise, so much law as concerns him for the matters he is transacting. No other general rule is possible, as has often been observed, without offering enormous temptations to fraud. And in India it does not seem that the present section was intended to give validity to any apparent agreement not satisfying the conditions of real consent as laid down in Ss. 10 and 13. Moreover, it is to be observed that the existence of particular private rights is matter of fact, though depending on rules of law, and for most civil purpose ignorance of civil rights, a man's ignorance that he is heir to such and such property, for instance, is ignorance of fact. A man's promise to buy that which, unknown to him, already belongs to him is not to be made binding by calling his error as to the ownership a mistake of law. There seems to be nothing to prevent the Courts from following English authority in cases of this kind, as in fact the Calcutta High Court has done. A, agreed to take a lease from B, of certain lands including mineral rights for coal mining operations; it was provided that B. should make out a good title to the property. The lease was held by B on a tenure which was believed by both A and B at the date of agreement to carry with it mineral rights. A made payments in advance to B, but later when a decision of the Privy Council and a decision of the Calcutta High Court threw very grave doubts upon this understanding of the law, A refused to carry out the agreement, and sued B. for refund of advances. It was held that the case was one of a common mistake as to a matter of fact, and that the agreement was void under S. 20, and A. was entitled to a refund of the advances made by him.

Again, the section does not say that misrepresentation, at any rate willful misrepresentation, or matter of law, may not be ground for avoiding a contract under S. 17 or S. 18.

As to the second clause of the section, Indian jurisprudence has adopted the rule of the Common Law that foreign law is a matter of fact, and must be proved or admitted as such, though the strictness of the rule has been somewhat relaxed by the Evidence Act. Accordingly the statement or finding of any foreign law on which the Court proceeds in a given case is no more binding on the Court in any future case, even apart from the possibility of alternation in the law in question, than any other determination or assumption as to matters of fact.

The cases in which the present section has actually been applied have been fairly simple. Thus where a mortgage bond provided that if the mortgagor failed to redeem the mortgaged property within eight years the mortgagee should be the owner of the property, and the mortgagor, being unable to rendeem, executed an absolute transfer of the property to the mortgagee, and put him in possession, it was held that a purchaser from the mortgagor of the equity of redemption subsequent to the date of the transfer was not entitled to redeem, even though the mortgagor might have been ignorant of his right to redeem the mortgage notwithstanding the clause in the mortgage precluding him from doing so. Here there was a complete conveyance and transfer of possession from the mortgagor to the mortgagee. But if the matter had rested in contract only, and there was no transfer of the mortgaged property, the mortgagor would have been entitled to redeem the mortgage, on the principle "Once a mortgage, always a mortgage." The would have been no consideration for a promise to transfer the property to the mortgagee, and the question whether there was any mistake, and, if so, whether of fact or law, would really have been superfluous.

An erroneous belief that a widow forfeits by her remarriage the rights of an occupancy tenant under the N.W.F.P Tenancy Act, to which she has succeeded on the death of her first husband as his heir, is a mistake of law, and a contract grounded on such belief is not voidable, though the mistake may be common to both the parties to the contract, Similarly, an erroneous belief that a judgement-debtor is bound by law, to pay interest on the decretal amount, though no interest has been awarded by the decree, is a mistake of law, and a contract grounded on such belief is not voidable. Such a belief is not a belief as to a matter of fact essential to the agreement within the meaning of S. 20; the Privy Council so held in Seth Gokal Dass case. This is difficult to reconcile with a decision of the Bombay High Court that a contract founded upon the erroneous belief that a judgment-debtor is bound by law to pay interest on the decretal amount, though no interest has been awarded by the decree, was void under S. 20, as being a contract entered into under a mistake as to a matter of fact essential to the agreement. It was said in that case that such a mistake was "a mistake as to the private rights of the parties and as such a mistake of fact." That such a mistake is not a mistake of fact, but one of law, is abundantly clear from, where their Lordships said: "There was, no doubt, a mistake of law on the part of the defendants in supposing that execution could be issued for interest upon the amount decreed from the date of the decree to the date of realisation, no such interest having been awarded by the decree. But that mistake appears to have been common not only to the plaintiff and the defendants, but also to the Court which made the order of attachment."

Miscalculation of a legal right---Not a mistake contemplated under S. 21. The agreement between the parties was that they would get their shares of inheritance according to Muslim law.

Held; When the arrangement is that parties will get what they are entitled to under the law, the arrangement is not hit by section 21 just because in the calculation of the legal rights some mistake is made.

Payments made under mistake of law---When refundable. Section 21 deals only with mistakes of law which "cause a contract" or which give birth to a contract; it has nothing to do with any other kind of mistake. If therefore, a payment made under a mistake of law is not the origin of a contract such payment would be refundable under S. 72. The English common law rule that a payment made under a mistake of law is not recoverable can have no application in India where there is a statute governing the question.

	Web Paksearch.com