Debi Bakchand and Another vs Barakatunissa

Das, J.—This appeal arises out of a suit instituted by the appellants to enforce payment by sale of the mortgaged properties of a sum of money owing on a mortgage bond, dated the 11th November 1912, executed by the defendant in favour of plaintiff No. 1 in the farzi name of plaintiff No. 2. By this mortgage-bond, the principal sum secured was Rs. 7,500 with the rate of interest at Re. 1-4-0 per cent. per month with yearly rests. The learned Subordinate Judge has come to the conclusion that the mortgage-bond was not read and explained to the defendant who is a pardanashin lady of rank and position and that the transaction was induced by undue influence within the meaning of Section 16 of the Contract Act. He also held that the mortgage-deed was not attested in the manner required by Section 59 of the Transfer of Property Act. He found, however, that full consideration was paid by the plaintiffs to the defendant; and, in that view, while refusing to give the plaintiffs a mortgage-decree, he has given them a decree for the principal sum advanced with interest at as. 12 per cent. per month. The main appeal in this Court is on behalf of the plaintiffs who contend that the learned Subordinate Judge should have given them a mortgage-decree in accordance with the mortgage-bond of the 11th November 1912. The defendant has presented a cross-appeal and the point raised in the cross-appeal is that the learned Subordinate Judge erred in holding that consideration passed in respect of the transaction. The cross-appeal has, however, not been pressed before us and we are only concerned with the main appeal filed on behalf of the plaintiffs.

I will first consider the question whether the mortgage bond was attested in the manner required by Section 59 of Transfer of Property Act. That section lays down that, where the principal money secured is Rs. 100 or upwards, a mortgage can be effected only by a registered instrument signed by the mortgagor and attested by at least two witnesses. The learned Subordinate Judge has taken the view that as the defendant is a pardanashin lady of a rich Muhammadan family, it is improbable that the witnesses examined on behalf of the plaintiffs could have actually seen her executing the document. The plaintiffs have examined three witnesses on the point; Chhedi Ram, their Gomasta, Ram Lal, who was their Gomasta but who is now an independent trader, and Sudama Ram. Their evidence is to the effect that they knew the defendant as they had had occasion to sell cloth to her. It ought to be pointed out that the plaintiffs are cloth dealers and had occasion to sell cloth to the defendant, and that part of the claim in this suit arises out of transactions in cloth between the parties. The evidence of Chhedi Ram is as follows: "I know defendant for the last 15 or 20 years. She is not pardanashin woman to me. Since my childhood I went to sell cloth to her from Chainsukh''s shop on her requisition and she always took cloth from me and spoke to me and appeared before me." It seems to me that this evidence is inherently probable. It is not disputed before us that Chainsukh Mull, the father of plaintiff No. 1, had a cloth business and that he did send cloth to the defendant for sale and that the defendant did purchase cloth from Chainsukh''s shop from time to time. His evidence is perfectly clear that he was present when defendant put her seal on the document. He says that Baratu, the son of the defendant, signed her name in the mortgage-bond at her request and that the defendant herself put her seal to the mortgage-deed and he adds that these were done in his presence and in the presence of the other attesting witnesses. Ram Lal says that he was a Munib (gomasta) of the plaintiff''s firm and that the defendant used to appear before him from behind a parda and that she could be seen behind the parda and that he knew her by sight. His evidence is that Baratu signed the name of the defendant at her request and that the defendant put her thumb-mark in his presence with her own hand. The evidence of Sudama Ram is to the same effect. It seems to me that the learned Subordinate Judge has rejected the evidence of these witnesses on grounds which appear to me to be speculative. Upon the finding that the consideration-money was actually paid to the defendant, there is no reason to assume that the plaintiffs who are men of business should not take care to have the mortgage-bond attested in accordance with law, and it seems to me that there is no reason to reject the testimony of these witnesses. The learned Subordinate Judge thinks that there are some contradictions in the evidence given by these witnesses. The mortgage-bond was executed so far back as 1912 and the case was heard in 1920. Such contradictions as there are in the evidence of these witnesses are only to be expected; but they do not, in my opinion, throw any doubt upon the question which is at issue between the parties, namely, whether the mortgage-bond was attested in accordance with law. I hold that the plaintiffs are entitled to succeed on this point.

The next question is, whether this mortgage-bond was procured by undue influence exerted by the plaintiffs on the defendant. In order to determine this question, it is necessary to deal with certain antecedent events. It appears that on the 7th November 1906 the defendant borrowed Rs. 2,760 from Chainsukh Mal, the father of plaintiff No. 1, and executed a zerpeshgi lease in his favour Rs. 2,500 out of the total sum advanced carried interest at the rate of 12 per cent. per month; the balance did not carry any interest. The term was from 1315 to 1323. The evidence shows that upon the death of Chainsukh Mal the plaintiffs found it difficult to manage the properties of which they were in possession under the ticca patta of the 7th November 1906. The defendant wanted a further loan, first, in order to satisfy a decree which had been obtained against her by one Gendan Singh; and secondly, for other purposes. The plaintiffs were willing to advance the further sum required provided the defendant agreed to take into her possession the properties covered by the licca patta of 1906 and paid interest on the sum that was already due to the plaintiffs and the further sum to be advanced at the rate of Rs. 1-8-0 to 2 per cent. per month. After certain negotiations it was settled that the properties which were the subject-matter of the ticca patta should be surrendered to the defendant and that she should pay interest to the plaintiffs at the rate of � per cent. per month. The consideration-money in respect of the mortgage-bond is made up as follows:

Rs. 2,478-15-0 already due to the plaintiffs in respect of the advance of 1906.

Rs. 2,374 paid to Gendan Singh in satisfaction of a decree obtained by him against the defendant.

Rs. 2,647-1-0 paid to the defendant at the time of the registration of the mortgage bond.

The defendant raised a wholly false defence in so far as she denied that she ever received any money either from Chainsukh Mal or from the plaintiffs; but the learned Subordinate Judge has found that the full consideration-money was in fact paid to the defendant.

The question of undue influence arises in this way; it is suggested that the defendant was in need of money. There was a decree against her for the sum of Rs. 2,374 and she wanted money for other purposes, and it is contended that, taking advantage of her position, the plaintiffs induced her to execute a bond in their favour agreeing to pay interest at the rate of Re. 1-4-0 per cent. per month. The main objection is as to the rate of interest and compound interest provided by the mortgage-bond; but it must be remembered that Chainsukh Mal charged a very low rate of interest because he was to have possession of certain valuable properties. No doubt, after the death of Chainsukh Mal, plaintiff No. 1 who is a minor and plaintiff No. 2 who is a pardanashin woman found it impossible to manage the properties and it suited them to deliver up possession of those properties to the defendant. The matter was one of bargain between the parties and the question of undue influence must, in my opinion, be decided on the terms of Section 16 of the Indian Contract Act. The first paragraph of the section lays down the principle in general terms and runs as follows:--"A contract is said to be induced by ''undue influence'' where the relations subsisting between the parties are such that one of the parties is in a position to dominate the will of the other and uses that position to obtain an unfair advantage over the other." The second and the third paragraphs of the section define the presumptions by which the Court is enabled to apply the principle. The second paragraph runs as follows:

In particular and without prejudice to the generality of the foregoing principle, a person is deemed to be in a position to dominate the will of another.

(a) Where he holds a real or apparent authority over the other, or where he stands in a fiduciary relation to the other; or

(b) Where he makes a contract with a person whose mental capacity is temporarily or permanently affected by reason of age, illness, or mental or bodily distress.

The third paragraph runs as follows:

"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." It has been held by the Judicial Committee that urgent need of money on the part of the borrower does not of itself place the lender in a position to dominate his will within the meaning of Section 16 of the Contract Act. See Sundar Koer v. Rai Sham Krishen (1907) 34 Cal. 150. It has also been held that the mere fact that the rate of interest is exorbitant, (which it is not in this case) is no ground for relief unless it be shown that the lender was in a position to dominate the will of the borrower. It is unnecessary to discuss the various cases which have been decided u/s 16 of the Indian Contract Act. It is sufficient to point out that the borrower will not be entitled to any relief unless he proves, first, that the lender was in a position to dominate his will, and secondly, that the bargain was unconscionable within the meaning of Clause (3) of Section 16 and, as has been pointed out, that it is only the concurrence of these two elements that can justify the Court in granting relief to the borrower.

Now, were the plaintiffs in a position to dominate the will of the defendant? As I have pointed out, urgent need of money on the part of the borrower does not of itself place the lender in a position to dominate his will within the meaning of Section 16 of the Contract Act. On what circumstances are we to hold in this case that the plaintiffs were in a position to dominate the will of the defendant? Obviously, there is no fiduciary relationship between them. It is not a case where they held a real or apparent authority over the defendant. It is not suggested that the mental capacity of the defendant was temporarily or permanently affected by reason of age, illness or mental or bodily distress. The only ground suggested is that the defendant was already indebted to the plaintiffs and that she wanted to borrow a further sum of money, and it is contended that upon these facts, it ought to be held that the plaintiffs were in a position to dominate the will of the defendants. Illustration (c) upon which reliance is placed is as follows:--"A being in debt to B, the money-lender of his village, contracts a fresh loan on terms which appear to be unconscionable. It lies on B to prove that the contract was not induced by undue influence." In order to make out a case under the illustration, it must be proved that the loan was contracted on terms which appear to be unconscionable.

[His Lordship held that the mortgage bond had not been procured by undue influence and after dealing with other matters not material to our report allowed the appeal].

Ross, J.

[His Lordship concurred in the above judgment].