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Shravan Goba Mahajan Vs. Kashiram Devji - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies;Contract
CourtMumbai
Decided On
Case NumberFirst Appeal No. 108 of 1925
Judge
Reported inAIR1927Bom384; (1927)29BOMLR115
AppellantShravan Goba Mahajan
RespondentKashiram Devji
DispositionAppeal dismissed
Excerpt:
.....that argument is unfounded. by english law it is clearly settled that not only in equity may a party to a contract himself bring a suit to set it aside, but also that his legal representatives may do so after his death. 5. in the well-known case of allcard v. 11. in saying this we are well aware of the maxim in english law actio personalis moritur cum, persona. 181): since the facts of this case as found by the lower courts clearly bring if within the scope of section 88 of the indian trusts act, we affirm the decree declaring the sale deed to be null and void. 16. accordingly, in the view we take it is not strictly necessary to give a decision as to whether, if the case did not fall within the above section of the indian trusts act, the suit would be maintainable under the sections..........for the appellants that this is in effect a suit to set aside a document on the ground of fraud or undue influence within the moaning of the indian contract act, section 16, 17 or 18, and that as dashrath is dead, the right to sue does not devolve on his personal representatives, as the relief given by sections 19 and 19a must be confined to the actual party, who has been defrauded, or on whom the undue influence has been exercised. in support of that proposition, certain cases were cited which, i think, are all, or nearly all, distinguishable on this simple ground, viz., that the party alleged to have been defrauded had, by his own conduct in his own life-time, put it out of his power to bring a suit to set aside the document in question, and that, accordingly, his legal representatives.....
Judgment:

Amberson Marten, C.J.

1. [His Lordship first examined the question of fact and agreed with the trial Court in its conclusions that the sale-deed in suit was nominal and that it was obtained by defendant No. 1 by misrepresentation and next dealt with the law point as follows.-] That being then our finding on the question of fact, what is the position in law Now here it has been strongly urged upon us by counsel for the appellants that this is in effect a suit to set aside a document on the ground of fraud or undue influence within the moaning of the Indian Contract Act, Section 16, 17 or 18, and that as Dashrath is dead, the right to sue does not devolve on his personal representatives, as the relief given by Sections 19 and 19A must be confined to the actual party, who has been defrauded, or on whom the undue influence has been exercised. In support of that proposition, certain cases were cited which, I think, are all, or nearly all, distinguishable on this simple ground, viz., that the party alleged to have been defrauded had, by his own conduct in his own life-time, put it out of his power to bring a suit to set aside the document in question, and that, accordingly, his legal representatives could be in no better position.

2. Thus, the first case cited by Diwan Bahadur Rao was an unreported case before Sir Basil Scott and Mr. Justice Batchelor in Mahmed Allibhai v. Udesingji (1917) First Appeal No. 254 of 1915, decided by Scott C.J. and Batchelor J., on August 29, 1917 (Unrep.). That was a case where the defence to an agreement of March 7, 1873, was that it had been obtained by undue influence practised on one Ganpatsingji. But the judgment points out that Ganpatsingji, for at least twenty-five years after this particular document, was paying money under it, and took no steps whatever to endeavour to set it aside. It is consequently not surprising that the Court in that case refused to allow his sons after his death to set up any case of that description. Speaking for myself, I cannot accept a stray sentence or two in that judgment as meaning that if Ganpatsingji had died, say, within a week after his agreement, his representatives could not have brought a suit to have it set aside on the ground of undue influence.

3. Rangnath Sakharam v. Govind Narasinv I.L.R. (1904) 28 Bom. 639 was a case before Sir Lawrence Jenkins and Mr. Justice Aston. There the Court pointed out that, under the Indian Contract Act, a fraud rendered a contract voidable but not void. That, of course, is a proposition which we accept. But with reference to the case of Jugaldas v. Ambashankar I.L.R. (1888) 12 Bom. 501 which was there cited (a decision of Sir Charles Sargent and Mr. Justice Nanabhai), that was a case where a tenant tried to set up a defence to a suit which his landlord by his own conduct was barred from raising. The landlord had sold the land in question to the plaintiffs but afterwards complained that the sale was fraudulent. Consequently at that date he knew the facts entitling him to bring a suit for rescission of the conveyance, He did nothing. Years passed by, and the landlord's claim was barred by limitation. Naturally, therefore, the appellate Court held that as the landlord himself was barred, the tenant, a mere third party and at most claiming through the landlord, could be in no batter position than the landlord. That case also is no authority for the proposition that a contract can only be set aside by the actual party to it.

4. Then, an argument was put forward to us founded on Halsbury's Laws of England, Vol. VII, p. 357, viz., that under English law only the party affected could bring an action to set aside a contract or conveyance on the ground of undue influence or fraud. As regards English law, one may say at once that it is perfectly plain that that argument is unfounded. By English law it is clearly settled that not only in equity may a party to a contract himself bring a suit to set it aside, but also that his legal representatives may do so after his death. This principle also applies to moneys obtained by undue influence.

5. In the well-known case of Allcard v. Skinner (1887) 36 Ch. D. 145 Lord Lindley says (p. 187) :-

A right to have a gift set aside for fraud or undue influence does not cease on the death of the donor but passes to his representatives ; and if in Mitchell v, Homfray (1881) 8 Q.B.D. 587 the donor had been entitled when he died to have his gift set aside, his executors would have succeeded to his rights, and would have obtained the relief they sought.

6. So, too, in Morley v. Loughnan [1893] 1 Ch. 736 the executors of the man defrauded or over whom undue influence had been practised, succeeded there in obtaining a decree against the defendant in respect of gifts of a large amount of . 1,40,000 obtained by the defendant by divers discreditable means from the deceased Morley.

7. There are also two cases cited by Mr. Shingne for the respondent, viz., Gresley v. Mousley (1859) 4 De G. & J. 78 and Holman v. Loynes (1854) 4 De G.M. & G. 270 both of which were cases in which sales by clients to their solicitors were set aside after the death of the clients.

8. There is yet one other useful case, so far as the English law is concerned, of Twycross v. Grant (1878) L.R. 4 C.P.D. 40where Brett L.J. says (p. 46):-

Wherever a breach of contract or a tort has been committed in the lifetime of a testator, his executor is entitled to maintain an action, if it is shewn upon the face of the proceedings that an injury has accrued to the personal estate.

9. Lord Justice Cotton said (p. 47) :-

It has been argued that this is an action to recover damages : in one sense that is true ; but it is an action for a wrong done, not to the intestate himself, but to his property ; therefore the right to sue upon his death was transmitted to his personal representative.

10. Now that was a case brought by the plaintiff' to recover from the promoters of a company the pries paid by the plaintiff for shares which had proved valueless, on the ground that the pro- spectus issued by them in breach of the Companies Act omitted to disclose certain contracts which ought to have been specified therein. There, after judgment and pending an appeal to the House of Lords, the plaintiff died. It was held that the plaintiff's interest in the action survived and could be continued by his personal representatives.

11. In saying this we are well aware of the maxim in English law actio personalis moritur cum, persona. Lord Bramwell in that very case deals with the maxim in its origin, and explains how by various Statutes down from the reign of Edward III that maxim has been gradually modified in English law. But we think it clear that, as regards modern English law, an action for damages for fraud or a suit in equity to set aside documents on the ground of undue influence and so on can undoubtedly be brought by the representatives of the party injured, where you find that there is a direct injury to the estate of the deceased.

12. Then the case of Govind Ramaji v. Savitri, I.L.R.(1918) 43 Bom. 173 before Sir Basil Scott and Mr. Justice Hayward, was relied on by the appellants. But there the actual decision of the Court was that a suit cloud be maintained by the representatives of a deceased person on the ground that the case fell within Section 88 of the Indian Trusts Act, No doubt, the Court there did deal with an argument very similar to that which Diwan Bahadur Rao has presented to us, and at p. 179 Sir Basil Scott said :-

This argument might be pertinent and require serious consideration if we wove dealing with a ease of a contract effected by undue influence in which the parties were not in a fiduciary relation to each other and in which the influencing party had not acquired possession of property of the party influenced. When property has been acquired by a party by using for his own advantage his fiduciary position the case falls under Section 88 of the Indian Trusts Act, which runs as follows.

13. Then the learned Chief Justice sets it out, and the judgment proceeds (p. 181): -

Since the facts of this case as found by the lower Courts clearly bring if within the scope of Section 88 of the Indian Trusts Act, we affirm the decree declaring the sale deed to be null and void.

14. In the present case when once one accepts in substance the story told by Mharu, then we have here an elderly man and a relation obtaining the property on the statement or representation that he would manage it for the young man, and keep it out of harm's way, surely in a case such as that the elderly relative puts himself in a fiduciary position towards the young man. I wish to make it quite clear that I am not basing my judgment on this that he stood in any fiduciary position before the date of this deed. But I do say that once it was agreed that the elderly man was to manage the property and for that purpose to have the nominal sale-deed executed in his favour, then he became in law a trustee for the young man--if not express at least implied -having regard to the relative positions of the parties, the one to the other. Moreover, in this case defendant No. 1 did not obtain possession of the property until after the death of Dashrath.

15. So, on this view of the case it closely resembles the one before the appellate Court, in Govind Ramaji v. Savitri. And one may go further and state that the argument presented to the Court in that case does not really apply hero because Dashrath had indicated his election to avoid the contract by reason of the not ce, Exhibit 84, which he had given. It may be said that he afterwards repudiated that notice by the subsequent action which he took. But nevertheless we find that at one time he gave a notice to that effect.

16. Accordingly, in the view we take it is not strictly necessary to give a decision as to whether, if the case did not fall within the above section of the Indian Trusts Act, the suit would be maintainable under the sections of the Indian Contract Act, But as the point has been argued, I have no hesitation in expressing my individual opinion that, having regard to the subsequent sections in the Ind an Contract Act which- clearly contemplate that in certain eases the benefit and burden of promises shall devolve on legal representatives, that would also be the case as regards the right given by Section 19 or 19A. I refer in particular to Sections 37, 42 and 45. In this connection it may be pointed out that the appellant is forced in argument to go to this length that the legal representatives cannot take advantage of either branch of Section 19. The result, therefore, would be that if a man was defrauded or induced to enter into a contract by fraud and died the next day, his representatives could not avoid the contract under the first part of Section 19. Nor could they even under the second branch insist that the contract should be performed on the basis that the representations made were true. On what principle of justice or equity that construction should be put on Section 19 or on the corresponding Section 19A I entirely fail to see. No authority going to this length has been cited to us, and speaking for myself, I decline to bo the first Judge to adopt what seems to me a forced, unnatural, and unjust construction of this Act.

17. Accordingly, in our view this suit is maintainable by the representatives of the deceased. It is not suggested to us that the terms of the order were in any way wrong having regard to the view which the learned Judge took of the facts and the law. Accordingly, the appeal from that decision, which, we think, was the right decision, will be dismissed with costs.

Patkar, J.

18. [After setting out the facts his Lordship proceeded.-] The next point argued by Diwan Bahadur Rao is that even though this document was voidable on account of misrepresentation or fraud by defendant No. 1, the plaintiffs as the heirs of Dashrath cannot impugn it. He relied on the decisions in Mahmad Allibhai v. Udesingji, (1917) First Appeal No. 254 of 1915, decided by Scott C.J. and Batchelor J. on August 29, 1917 (Unrep.) Rangnath Sakharam v, Govind Narasinv I.L.R. (1904) 28 Bom. 639 and Govind Ramaji v. Savitri I.L.R. (1918) 43 Bom 173. The case in Mahmad Allibhai v. Udesingji can be easily distinguished on the ground that the heirs who sued were disabled on account of laches and acquiescence from disputing the transaction because the persons who were parties to the document had acted upon it for a long time. The case of Rangnath Sakharam v. Govind does not directly deal with the point under consideration. The case of Govind Ramaji v. Savitri is more in favour of the respondents, if defendant No. 1 be considered to have acquired the property by using his fiduciary position for his own advantage.

19. The law is clearly laid down in Halsbury's Laws of England, Vol. XV, p. 106, para. 209, and the cases therein cited bear out the contention that a suit can bo brought by a legal representative to set aside a document which has been induced by fraud or undue influence. I may refer to the cases of Gresley v. Mousley (1859) 4 De G. & J. 78; Holman v. Loynes (1854) 4 De G.M. & G. 270; Morley v. Laughnan [1893] I Ch. 736 and Allcard v. Skinner (1887) 36 Ch. D. 145. To the same effect is the case of Twycross v. Grant. (1878) L.R. 4 C.P.D. 40 I think that Section 35 of the Specific Belief Act also supports this contention. Section 35 says: 'Any person interested in a contract in writing may sue to have it rescinded, and such rescission may be adjudged by the Court.' The wording of the section is not that a party to a contract may sue to have it rescinded, but any person who is interested in a contract in writing may do so. I think the heir is a person interested in a contract in writing which is sought to be set aside.

20. I think, therefore, that the suit lies in this case at the instance of the plaintiffs who are the heirs of Dashrath. On the merits of the case we have reached the conclusion that Mharu is a reliable witness and that the sale-deed was passed by Dashrath on the false representation of defendant No. 1. We, therefore, think that the view of the lower Court is correct, and that this appeal should be dismissed with costs.

Amberson Marten, C.J.

21. I wish to add that I agree in particular with what Mr. Justice Patkar has said with reference to the Specific Relief Act. I had intended to refer to that Act.


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