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H.S. Trivedi, Vs. Namdev Vishnu Kanalekar and ors. - Court Judgment

LegalCrystal Citation
CourtMumbai High Court
Decided On
Case NumberLetters Patent Appeal Nos. 125, 126 and 142 of 1983
Reported in1985(2)BomCR303
ActsContract Act, 1872 - Sections 12 and 16(2)
AppellantH.S. Trivedi, ;vithal Bhikaji Mayekar and ors. and Shankar Bhikaji Mayekar
RespondentNamdev Vishnu Kanalekar and ors.
Appellant AdvocateH. Suresh, Adv. ,i/b. Dhruve Liladhar and Co. in LPA 125 of 1983, ;U.J. Makhija, Adv. in L.P.A. No. 126 of 1983 and ;M.L. Palan and P.J. Merchant, Advs. i/b., Pravin Merchant and Co. in L.P.A. 142 of
Respondent AdvocateM.A. Rane and P.L. Naik, Advs. for respondent in L.P.A. Nos. 125, 126 and 142 of 1983, ;U.J. Makhija, Adv. for respondent No. 2 in L.P.A. No. 125 and 142 of 1983 and ;Pravin Merchant and Co. for respo
DispositionAppeal dismissed
contract - consideration - sections 12 and 16 (2) of contract act, 1872 - premises occupied by plaintiff - plaintiff had large family which was dependent upon him - lost his shop and factory on basis of two deeds purported to recite sale of his business - contentions raised that deeds were null and void - both documents were without consideration - at time of execution of documents plaintiff was effected by illness and mental distress under section 16 (2) (b) - coupled with this infirmity resulting from mental depression his relatives were in position to dominate will - plaintiff could not cast away only property which he had and which was sole source of livelihood - held, sale not legal as documents executed without consideration. - - the factory was well equipped with other.....v.v. vaze, j.1. factory premises at 164, tulsi pipe road, matunga, bombay-400 016, and two shops being nos. 16 and 5-a on the ground floor of hari niwas abutting lady jamshedji road, mahim, bombay, have been the subject matter of the present long drawn litigation. the premises at tulsi pipe road, 18' x 36' formerly belonged to one devidas and having been designed as a shed are used mainly as a factory rather than as a shop. this shed changed hands and when d. rustom ltd. were in possession of the same, namdev vishnu kinalekar (namdev) the plaintiff, took the premises sometime in 1951-52 on a monthly rent of rs. 150/-. namdev who had a mechanic's background had a large family of five sons and two daughters. he bought some shearing, metal cutting, drilling, binding machines, some hand.....

V.V. Vaze, J.

1. Factory premises at 164, Tulsi Pipe Road, Matunga, Bombay-400 016, and two shops being Nos. 16 and 5-A on the ground floor of Hari Niwas abutting Lady Jamshedji Road, Mahim, Bombay, have been the subject matter of the present long drawn litigation. The premises at Tulsi Pipe Road, 18' x 36' formerly belonged to one Devidas and having been designed as a shed are used mainly as a factory rather than as a shop. This shed changed hands and when D. Rustom Ltd. were in possession of the same, Namdev Vishnu Kinalekar (Namdev) the plaintiff, took the premises sometime in 1951-52 on a monthly rent of Rs. 150/-. Namdev who had a mechanic's background had a large family of five sons and two daughters. He bought some shearing, metal cutting, drilling, binding machines, some hand presses, a spray printing machine, an electric over and set up a factory for the purposes manufacturing electrical equipments. The factory was well equipped with other accessories like vices, jacks, blowers, embossing dies, test board etc. It was supplied with domestic and power connections, and in course of time was registered as a small scale industry. Namdev had also purchased a power punching machine 'Hunt Worth', through the scheme of the S.S.I. Corporation for which he had to pay monthly instalments.

2. Namdev had a complement of 7-8 employees in the factory but for display and sale of the finished goods he had taken on rent the nearby shop Nos. 16 and 5-A of Hari Niwas. In Shop No. 16 he set up a business of display and sale while the other shop No. 5-A was used for winding up of coils.

3. The plaintiff used to support his large family by running the factory and selling the manufactured goods through his shop. It is small wonder that Namdeo was shocked to find that he has lost not only the going concern at Tulsi Pipe Road but also his shops at Hari Niwas reducing him to a state of joblessness and irrelevancy. Two documents, he was told, have denuded him of his properties. The first bore the date 3-1-1963, Exhibit 'M' whereunder both the shops where Namdeo was carrying on business in fluorescent chokes, transformers, lightening arrest and other electrical goods in the double room No. 16 on the ground floor at Hari Niwas, were assigned to one Vishwanath Gopal Gole (Gole), residing in Ahmed Sailor Building, Govind Keni Road, Dadar. The Deed purported to recite that Namdeo the proprietor of Simplex Radio Company has agreed for the absolute sale to Gole of the business of Super Simplex Radio Company with its good-will, stock-in-trade, furniture, fixtures and fittings, articles and other things as a going concern at and for a price of Rs. 22,000/-. The deed further recites that the tenancy rights to occupy the said premises have also been transferred. As regards the consideration, it is stated that Namdeo has already received Rs. 10,000/- being the price of stock-in-trade, furniture etc. and another sum of Rs. 12,000/- has been paid to Namdeo on the date of the execution of the document. For this consideration of Rs. 22,000/- Namdeo assigned the entire estate in M/s. Super Simplex Radio Co. to Gole. The document was registered on 22nd February, 1963 before the Sub-Registrar of Bombay.

4. The second document Exhibit 'K', came to be executed by the plaintiff Namdeo on 6-2-1963 allegedly for a consideration of Rs. 15,000/- in favour of Baburao Shantaram More (More). It was in respect of shop No. 164 Tulsi Pipe Road factory. The document recites that by an earlier agreement dated 11th December, 1962 M/s. Makhija Private Ltd. were permitted by Namdeo to carry on their work on a part of the premises on the basis of leave and licence and also use the machinery lying in the premises for their purposes for a monthly compensation of Rs. 500/-. It is stated that due to ill-health Namdeo was unable to continue the business of manufacturing electrical material which he was doing under the name and style of Super Simplex Radio Co. and hence desired to dispose of the same and had asked More to take the assignment of the business together with the good-will as a going concern and with the tenancy rights. Namdeo also agreed that the machineries fixtures etc. lying in the premises and described in the schedule to the document should also the assigned along with the premises. The good-will of the business was assessed at Rs. 6,000/- while the remainder of the property at Rs. 9,000/-. The document recites that Namdeo had received the sum of Rs. 9,000/- out of the consideration on 31st January 1963 while the remainder of Rs. 6,000/- were paid to him on 6th February, 1963 i.e. the date of execution. The document was registered before the Sub-Registrar of Bombay on 7th February, 1963.

5. Namdeo filed pauper petition bearing No. 89 of 1966 which was later on converted as suit No. 7697 of 1966 in the Bombay City Civil Court for a declaration that the document dated 6-2-1963 Exh. 'K' be declared as null, void and inoperative, bad in law and not binding on him and for consequential reliefs like injunctions, appointment of a Receiver, mesne profits etc. Namdeo alleged that he was trading under the name and style of Super Simplex Radio Company at his factory at 164, Tulsi Pipe Road, Mahim and was a income-tax as well as sales-tax payer. In December 1962 he fell sick which affected his mind and he was not capable of understanding what he was doing. Taking advantage of his mental condition respondents, Vithal B. Mayekar (Vithal) who is his brother-in-law in collusion with other family members viz. Namdeo's wife, sons and daughter took possession of the factory. Namdeo further alleged that with a view to removing him from the scene Vithal prepared a bogus document in the name of More purporting to effect the sale of factory for Rs. 15,000/- in favour of More. According to Namdeo neither Vithal nor More paid any consideration for the alleged assignment and that at the time when he executed the said document he was not capable of understanding what he was doing as he was completely at the mercy of Vithal and other family members. Vithal and his two brothers Shankar B. Mayekar (Shankar) and Dattaram B. Mayekar (Dattaram) conspired to deprive him of his property consisting of two shops at Hari Nivas, Lady Jamshedji Road, Mahim and the factory at 164, Tulsi Pipe Road, Dadar, Bombay. These persons who were the brother of Namdeo's wife Sulochana conspired with her and started nagging Namdeo in all possible manner with the result that Namdeo lost his peace of mind and attention in the business. Sulochana and her two brothers practised black magic upon him with the result that Namdeo lost his power of thinking and self control. Taking advantage of the mental imbalance induced by the black magic this group removed Namdeo out of his house and kept him in confinement at various places. Namdeo remembered certain rituals which were performed in his presence but was not in a position to recollect the details. He was taken out of the house on certain occasions, made to put his signature on certain papers without making him understand the contents thereof. Namdeo alleged that he was fraudulently induced and coerced to act as per the wishes of these persons and in view of the imbalanced stated of mind Namdeo was not knowing as to what he was doing. His only recollection was that on certain occasions he was taken out of his hideout and made to put his signature on certain papers and contents whereof were not known to him. The averments of the plaint further describe that the state of mind of Namdeo persisted for about six months till September 1963. When Namdeo regained his power of thinking and when he realised that he was at the place of brother-in-law in the railway quarters at Matunga, he proceeded to his usual place of business at Hari Niwas at Lady Jamshedji Road and to his utter surprise and dismay discovered that Vithal and Shankar were in-charge of the shop. Those persons who were present at the premises told Namdeo that one Vishwanath Gole had become the owner of the premises.

6. The plaintiff then near dates that he proceeded to his factory at 164, Tulsi Pipe Road, where similar surprise was in store for him. One Babu More had taken possession of the factory and told Namdeo that he had become owner of the same under documents of title. Namdeo then realised that Vithal in collusion with others had managed to fabricate false documents in order to deprive him of his business premises at Hari Niwas as well as factory at 164, Tulsi Pipe Road, taking advantage of his unbalanced state of mind. Namdeo after realising that fraud has been committed by Vithal and others lodged a complaint at the Mahim Police Station which in due course was referred to C.I.D. for inquiry and report. As no process was issued as a result of the inquiry the plaintiff explains the filling of the suit for the declaration that the document Exh. 'K' dated 6-2-1963, has been obtained from him by Vithal and others by committing fraud coercion and undue influence.

7. Giving further details Namdeo alleged that no person in proper frame of mind could have sold a valuable factory for a paltry sum of Rs. 15,000/-.

8. An ex parte decree was passed in the suit on 5-7-1967. The defendants took out a Notice of Motion No. 3867 of 1967 on 11-9-1967 for setting aside the ex parte decree and for restoration of the suit. The notice was made absolute on 18-9-1967 and the defendants through their Advocate gave undertaking to the Court that they will not alienate, dispose of or part with the possession of the premises. B.S. More expired and his legal heirs were brought on record. The plaintiff further learnt that defendant No. 3-H.S. Trivedi (Trivedi) was in occupation of the factory and that defendant No. 4 Shankar Bhikaji Mayekar (Shankar) purported to induct him therein. The plaintiff further learnt that defendant No. 5 Kaushik A. Merchant (Merchant), the landlord of the premises purported to transfer the tenancy in the name of Tridevi. The plaintiff further learnt that Trivedi had been inducted into the premises by Shankar as his licensee and was claiming to be recognised as tenant thereof on the strength of his occupation since the year 1972. The plaintiff added Trivedi, Shankar and Merchant as defendant Nos. 3, 4 and 5, alleging that Trivedi had been inducted in the premises in breach of the undertaking given to the Court. In view of these developments the plaintiff alleged that all the defendants have in collusion with one another got the tenancy transferred to defeat the claim of the plaintiff.

9. Another Pauper Petition No. 90 of 1966 which subsequently was registered as Suit No. 7698 of 1966 was filed in the City Court at Bombay by Namdeo against Vishwanath G. Gole (Gole) and Vithal Bhikaji More (Vithal) as respects room No. 5-A and Shop No. 16 on the ground floor of Hari Niwas, Lady Jamshedji Road, Mahim. The plaintiff averred that the was managing the workshop and winding department of Super Simplex Radio Company in the shops, sometimes in December 1962 he fell sick and taking advantage of his mental condition Vithal in collusion with other family members took possession of the shops on the strength of bogus document prepared in favour of Gole. The bogus document purported to transfer the property to Gole for a consideration of Rs. 22,000/- Exh. 'M' which Namdeo attacked as being a document obtained from him by fraud and coercion and undue influence. According to Namdeo, Vithal, Shankar and Dattaram conspired to deprive him of the property consisting of two shops and the factory. The plaintiff then repeated all the averments in sister Suit No. 7698 of 1966 about the practice of black magic, the resultant loss of power of thinking and self control, performance of rituals and the manner of execution of certain documents by him. The plaintiff also averred how he gained his power of thinking and self control in September 1963, how he proceeded to the place of his business at Hari Niwas and Tulsi Pipe Road only to find that some others had taken control of the premises and were claiming that they had documentary evidence to support their title. The plaintiff then realised that Vithal in collusion with others has fabricated false documents in order to deprive him of his business premises at Hari Niwas as well as at Tulsi Pipe Road and tried to get redress from the Criminal Court by filing a complaint. But as no process was issued he filed the suit for declaration that the alleged document dated 3-1-1963 Exh. 'M' was null, void and inoperative and not binding on the plaintiff and for consequential reliefs.

10. As the allegations about the practice of black magic and the resultant incapacity of Namdeo to enter into a contract were common to both the suits the learned trial Judge with the consent of the parties recorded evidence in both the matters and disposed of both the suits by a common judgment and granted substantial prayers of the plaintiff regarding the declaration sought by him as respects the two documents Exh. 'M' and Exh. 'K'.

11. Against this judgment, First Appeal Nos. 100 of 1982, 41 of 1982 and 99 of 1982 were filed by Tridevi, Vithal and Shankar. The learned Judge of this Court dismissed the appeals and observed:---

'To wind up this part, no title passed to More under Ex. 'K' (Factory business), and therefore, defendants Nos. 2 and 4 did not get any title. Defendant No. 4 had no right or authority to pass the writing Exh. 'U' and kill the rights of Super Simplex Radio Co. defendant No. 4 had also no power to enter into the purported leave and licence agreement. Defendant No. 3, knowing that defendant No. 4 was not the proprietor of the business of Super Simplex Radio Co. and that the rent receipt was not in the name of defendant No. 4, took possession at this peril. Thus the tenancy in the name of 'Super Simplex Radio Co.' of the factory premises in suit survives and subsists.'

12. As regards defendant Nos. 3, 4 and 5 the learned Judge remarked :

'In the above discussion, I have found that defendants Nos. 3, 4 and 5 have acted in concert for the purpose of changing the rent bill of the name of defendant No. 3 with the purpose to defraud the rightful owner of the tenancy rights standing in the name of Super Simplex Radio Co. and they had thereby colluded.'

13. The present set of Letter Patent Appeals being Nos. 125 of 1983, 126 of 1983 and 142 of 1983 have been filed by Tridevi, legal heirs of Vithal and Shankar and have been heard together and this judgment will govern and dispose of all these three appeals.

14. The plaintiff has challenged the two documents Exh. 'M' and 'K' on the ground that these were without consideration and executed when the plaintiff was not capable of understanding and forming a rational judgment as to the effect of the documents on his interest within the meaning of section 12 of the Contract Act, as well as on the ground that the documents are vitiated by fraud, as defined under section 17 and undue influence as defined under section 16 of the Act.

About the plea of unsound mind.

15. The plaintiff started his business in Tulsi Pipe Road factory as well as Hari Niwas shops sometime in the year 1966. He had about 7 to 8 employees and his business was registered as small scale industry with the State Government department. According to the plaintiff his turnover was about Rs. 7000/- to Rs. 8000/- per month while his monthly disbursements to his workers came to about Rs. 1200/-. Vithal and Shankar were carrying on business as wireman in the name and style of Golden Radio Electrical Company at Miranda Chawl near Plaza Cinema, Dadar. The plaintiff used to reside in Pathare Mansion while his brother-in-law in a nearby Logi Chawl. The plaintiff used to engage advisers for income-tax, sales-tax etc. and it appears that though he had a large family to support he was doing fairly well.

16. At the turn of the year 1962, so the plaintiff claims in the witness box-his physical and mental health deteriorated. He did not feel like eating. He felt giddy occasionally, had withdrawn himself into shell and was not communicative with members of his family. According to the plaintiff this psychometric condition descended upon him as a result of constant nagging by his wife induced by her brothers who were living nearby. Vithal and Shankar used to visit his house often and poison the ears of their sister who used to quarrel with the plaintiff. The plaintiff felt that his wife used to divert monies given by him for household expenses for the benefit of her brothers and whenever the plaintiff was asking for accounts a quarrel used to ensue. In the year 1961 plaintiff's one son and one daughter were employed while the remaining children were in school. Before 1961 the entire family used to depend upon the earnings from the business for sustenance and his financial conditions was good in contrast with that of the family of Vithal and Shankar. By then Vithal's father who was working as a Deputy in the shunting yard had retired and their income had dwindled. Vithal and Shankar who were doing business in partnership were not doing well and according to the plaintiff they used to come to his house and ask for moneys from their sister even for purchasing ration for their house. The duo used to remove from his shop loud speakers and other electrical equipments in clandestine manner utilising the same for their contract business. The plaintiff remembers nostalgicallythat when his brother-in-law came over to Bombay from Valsad he used to render financial help to them in order to put their business which they had just started on the rails. The plaintiff thereafter recounts that his wife and children tried to till-treat him; would not even open the door if he came late forcing him to sleep in the gallary; not serve him food and this ill-treatment permeated into the behaviour of his children. According to the plaintiff the plaintiff the combined effect of this ill-treatment was that he lost balance of his mind and his interest in the business also flagged. The psychological trauma affected his food habits and his physical health also deteribrated. The plaintiff used to get burning feelings in his chest and used to get fits on certain occasions. Needless to say, the defendants have denied these allegations as being figments of imagination.

17. In order to fortify the plea that he was subject to epileptic fits the plaintiff has put Dr. Raut in the witness box. Dr. Raut is a Diploma holder in Ayurvedic system of medicine and is a part time lecturer in Podar Medical College. Dr. Raut was practising in the same building viz. Pathare Mansion where the plaintiff's family was residing and was their family physician. According to Dr. Raut the plaintiff was in absolute disturbed state of mind between December 1962 to January 1963 and he diagnosed the disease as 'Petit Mal'. According to Dr. Raut in that aliment which is caused by a disturbed mind a patient gets attacks and forgets everything for the time being. The plaintiff was administered hypnotise for a short while whereafter he advised the members of plaintiff's family that the patient should be taken to a specialist. Dr. Raut used to pay house visits to treat the plaintiff and explains that the patient was not always under the aliment of 'Petit Mal, and that he used to speak to him during the visits. Apart from this medical evidence the plaintiff has examined his daughter P.W. 4 Sushmavati the eldest of his children who had passed S.S.C. in the year 1957 and has been working since then. Sushmavati remembers that during the year 1961 frictions used to occur between her parents and her mother used to demand moneys from her father and that her uncles i.e. Vithal and Shankar used to tell her certain things as a result of which she was instigated and used to quarrel in the family. These quarrels were quite a strain on her father's mind who used to brood over the same for the entire day. Around 1961 her father broke down and stopped all communication in the house and would not speak even to the children. During December 1962 as his condition deteriorated the services of Dr. Raut were requisitioned. Vithal and Shankar used to visit their house, attend to the shops and report the progress of business to their sister everyday. Dr. Raut was their family physician and used to visit their house as the condition of Namdeo was not good enough and did not permit him to go outdoors. Regarding their relationship with brothers-in-law of Namdeo, Sushma says that Vithal used to put up with them as houseguest before his marriage and Shankar used to come and stay many times and that Vithal and Shankar had some partnership business of loud-speakers at Dadar. Sushma remembers that Vithal used to take away some articles from the shop, demand money from her mother which gave rise to frictions in the house. This irritated her father with the result that his physical and mental condition became weak. Even though Sushma the eldest child of the plaintiff does not specifically talk about the recurring epileptic fits to which her father was subject, we have the word of the plaintiff himself supported by the evidence of Dr. Raut that the plaintiff was suffering from fits now and then. Dr. Raut has made it clear that the plaintiff was not under the influence of fits for a long duration and that he used to talk to him during his visits and all that he did was to give him tranquilisers.

About epilepsy

18. The Supreme Court in State of Madhya Pradesh v. Ahmadulla, : [1961]3SCR583 , has recognised that a person prone to have fits of epileptic insanity can plead the same even as defence to a criminal charge but that the crux of the whole question is whether the man was suffering from epilepsy at the time he committed the act. The Supreme Court held that it is the moment of the act that is important and it will have to be shown that the person was incapable of knowing that what he was doing was wrong.

19. A plea of 'Petit Mal' epilepsy or psychomotor epilepsy was raised in a recent case of Regina v. Sullivan, 1983(3) W.L.R. 123 and the House of Lords have described the effects of psychomoter epilepsy thus:---

'The evidence as to the pathology of a seizure due to psychomotor epilepsy can be sufficiently stated for the purposes of this appeal by saying that after the first stage, the prodram, which precedes the fit itself, there is a second stage, the ictus, lasting a few seconds, during which there are electrical discharges into the temporal lobes of the brain of the sufferer. The effect of these discharges is to cause him in the post-ictal stage to make movements which he is not conscious that he is making, including, and this was a characteristic of previous seizures which Mr. sullivan had suffered, automatic movements of resistance to anyone trying to come to his aid. These movements of resistance might, though in practice they very rarely would, involve violence.'

20. The relevance of the time when the Act was done also appears in the third paragraph of section 12 of the Contract Act which reads as:---

'A person who is usually of sound mind, but occasionally of unsound mind, may not make a contract when he is of unsound mind.'

Mr. Rane, the learned Counsel for the appellant, relied on this paragraph in support of his case though Namdeo could not be described as a person of unsound mind he did have epileptic fits as a result of which he could be described as a person who developed unsound mind occasionally.

About undue influence

21. As the plaintiff has not been able to show that he was under the influence of a pre-epileptic stage when the documents were executed it would not be possible for us to hold that at the time of making the contract the plaintiff was not a person of sound mind within the meaning of section 12 of the Contract Act. But to say that Namdeo was not of unsound mind at the time of making the contract is not to say that the mental condition of the plaintiff loses its relevance for the examination of the second limb of the argument namely, that during the period when the documents were executed the plaintiff was under 'undue influence' of his brothers-in-law and other relatives. Section 16 of the Contract Act reads:---

'Undue influence defined. 'Section 16(1).--- A contract is said to be inducted 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.

(2) 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.

(3) Where a person who is in a position to dominate the Will of another entries 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.

Nothing in this sub-section shall affect the provisions of section 111 of the Indian Evidence Act, 1872.'

We were taken through a peregrination on the case law on the subject of undue influence starting from the case of Subhash Chandra Das Mushib v. Ganga Prasad Das Mushib and others, : [1967]1SCR331 , Afsar Shaikh and another v. Soleman Bibi and others, : [1976]2SCR327 and Talengala Narayana Bhatta v. Narasimha Batta and others, : AIR1965Ker189 and find that the Privy Council case of Raghunath Prasad Sahu v. Sarju Prasad Sahu, 1924 Privy Council, 60 forms the bed-rock of the other cases on the interpretation of section 16 of the Contract Act :

'By that section three matters are dealt with. In the first place the relations between the parties to each other must be such that one is in a position to dominate the will of the other. Once that position is substantiated, the second stage has been reached-namely, the issue whether the contract has been induced by undue influence. Upon the determination of this issue a third point emerges, which is that of the onus probandi. If the transaction appears to be unconscionable, the burden of proving that the contract was not induced by undue influence is to lie upon the person who was in a position to dominate the Will of the other.

Error is almost sure to arise if the order of these propositions be changed. The unconscionableness of the bargain is not the first thing to be considered. The first thing to be considered is the relations of these parties. Were they such as to put one in a position to dominate the Will of the other?'

22. The primary requirement that the relations between the parties to each other must be such that one is in a position to dominate the Will of the other has its echo in the economic power which a giant manufacturing company possesses in the consumer market. Traditionally it would have been futile for the purchaser to argue that there was inequality in bargaining power between him and the seller as a result of which he had to pay an exhorbitant price for an article simply because he was too poor or weak minded. But the opposite trend started in the sixties in Northern Ireland Courts and Canadian Courts. (See Cheshire and Fifoot's Law of Contract, Tenth Edition P. 276). It was left to Lord Denning in D. & C. Builders Ltd. v. Rees, 1965 3 A.E.R. 837 to break away from tradition and say that when a creditor is in financial difficulties and their was an accord and satisfaction under threat of non-payment, the balance of debt is recoverable by the creditor. The D & C Builders Ltd. were small time jobbing builders. The company comprised two people; one of whom was a decorator and the other of whom was plumber. They carried out work for the defendant. For months they pressed for payment and finally defendant's wife who knew that the builders were in financial difficulties offered a smaller sum in settlement of debt, saying that if that offer was not accepted nothing would be paid. The builders had no option but to accept the lower offer and a cheque of lower sum was accepted and receipt was given 'in completion of the account'. However, the builders then sued for the balance and the defendant-owner of the house pleaded accord and satisfaction. Lord Denning on the facts found that the builders because of their unfavourable financial position were coerced to accept the smaller sum in completion of the account. The builders then complained to their Solicitors who wrote to the defendant that he had extricated a receipt of some sort or the other from them. The defendant was playing on an easy wicket and flaunted the receipt given by builders to the defendant's wife as complete defence. With a document of complete discharge in his hand he ridiculed the plaintiff; 'I assure you she had no gun on her.' It looked as hopeless case for the builders as could be wished by the defendant.

23. Lord Denning recalled his earlier observations in the celebrated case of Central London Property Trust Ltd. v. High Tress House, Ltd. 1956(1) All.E.R. 256. During the war tenants went away to escape the bombs and left their houses unoccupied. The landlords accepted the reduced rent for the time they were empty. But wanted full rent after the war, which prayer was granted. On anology, the Court observed in D.C. Builders case that 'There was no true accord'. The debtors's wife had held the builders to ransom. She was putting undue pressure on the creditors and was making a threat to break the contract with the result that the builders had to comply with her demands.

24. This case was used as spring board for a fuller development of the principles of undue influence by Lord Denning in Lloyds Bank Ltd. v. Bundy 1975 Q.B. 326. Bundy was elderly framer and his only son had been a customer of the plaintiff-bank for many years. The son formed a company which venture ran aground. In the year 1966 defendant's father guaranteed the company's over draft for 1500 and charged the farm to the Bank to secure that sum. The company's overdraft increased and the Bank required further security. Son said that the father would supply the security and persuaded his father to accept the suggestion of the Assistant Manager who suggested that the father should sign further guarantee for 5000 and execute further charge for 6000. The Manager left the necessary papers with the defendant's father for his consideration. The defendant showed the papers to his solicitor who advised him that the most that the father could put his son's affairs was 5000 about half value of his assets of the house in which he lived. The defendant on that advice executed further guarantee and charge.

25. As was expected the affairs of the son and his company further deteriorated and the company's cheques bounced. Son told the Bank Manager that his father would give further security if necessary. The son again visited his father with the bank manager who wanted further guarantee and further charge on the property. The father told the bank manager that he was 100% behind his only son and signed the guarantee and further charge documents. In the trial of the suit for possession after foreclosure the Manager admitted that he knew that the defendant 'had no other assets except the house.'

26. Dismissing the suit for possession filed by the Bank it was held that there was such a relationship of confidentiality between the bank and the defendant that the Court could intervene preventing the relationship being abused. The enforcement of the guarantee of the legal charge involved the possibility that the defendant may loose his 'sole remaining assets', and be left penny less in old age. Lord Denning observed:---

'Gathering all together, I would suggest that through all these instances there runs a single thread. They rest on 'inequality of bargaining power'. By virtue of it, the English Law gives relief to one who, without independent advice, enters into a contract upon terms which are very unfair or transfer property for a consideration which is grossly inadequate, when his bargaining power is grievously impaired by reason of his own needs or desires or by his own ignorance or infirmity, coupled with undue influences or pressures brought to bear on him by or for the benefit of the other. When I use the word 'undue' I do not mean to suggest that the principle depends on proof of any wrongdoing. The one who stipulates for an unfair advantage may be moved solely by his own self-interest, unconscious of the distress he is bringing to the other. I have also avoided any reference to the Will of the one being 'dominated' or 'overcome' by the other. One who is in extreme need may knowingly consent to a most improvident bargain, solely to relieve the straits in which he finds himself. Again, I do not mean to suggest that every transaction is saved by independent advice. But the absence of it may be fatal.'

27. In the light of the above principles the evidence in the present case will have to be appreciated with a view to finding out whether any special relationship existed between the parties, whether the bargaining power of the plaintiff was grievously impaired as a result of his ignorance or infirmity and whether undue influences were brought to bear on him by his brothers-in-law and others for their own benefits.

28. As far as the mental condition of Namdeo is concerned we have already discussed his evidence as well as that of Dr. Raut who was treating him for 'Petit Mal' epilepsy. Namdeo after narrating the mental sufferings which he underwent as a result of consent nagging by his wife and children says that his mind became so weak that he was doing whatever was dictated to him. Between December 1962 and January 1963 Vithal and Shankar used to visit his house very often, do some rituals, feed him with something, and take his signatures upon some documents about which Namdeo did not have any idea have any idea. Namdeo then recollects that sometime in February 1963 Vithal and Shankar accompanied by others took him out of his house to Chunabhatti on the pretext that with environmental changes his health will improve. Namdeo was taken by car to a place at Chunabhatti and made to sleep on a cot. Next he discovered that the tenement belonged to one Matkar father-in-law of Vithal. Matkar had acquired the sobriquet of 'Matkar Buwa' as he used to perform 'Mantra Tantra'. According to Namdeo, Matkar performed some rituals on him. Namdeo stayed there for 10/12 days, during which period the outer door was always kept closed and somebody used to kept watch over him. Vithal and Shankar used to visit him and he used to move around as per their dictates. Once they took him to Fort area and obtained certain signatures. Namdeo used to sign wherever Vithal and Shankar used to ask him to do so.

29. From Chunabhatti i.e.. the residence of Matkar, Namdeo was brought to Matunga to the place of his other brother-in-law Dattaram, who was working in railways and residing near Matunga railway station. Vithal and Shankar used to visit him there and obtain his signatures on certain documents which he could not understand. Namdeo continued living with Dattaram for about six moths.

30. Plaintiff's daughter Sushmavati speaks about 'Divine cures' which Matkar used to perform and how her father went to Matkar's place for treatment. According to her, father was kept in place of Matkar because whatever treatment was to administered to him could not be done at their own place in the presence of children who would have been frightened. All that Sushmavati saw was that some Dhoop and some coconut and Lemon were brought and Mantra was uttered.

Want or inadequacy of consideration.

31. According to the plaintiff he had not received any consideration for the two documents allegedly executed by him purporting to be for considerations of Rs. 22,000/- and Rs. 15,000/-. Surprisingly in neither of these two documents any payment has been made in the presence of the Sub-Registrar. As far as the document Ex. 'M' of shops is concerned it has been recited that the assignee has already received the sum of Rs. 10,000/- before the date of execution of the document and of Rs. 12,000/- was being paid him on the date of execution i.e., 3-1-1963. As regards the second document Ex. 'K' the consideration allegedly paid at two stages one on 31-1-1963 and other on the date of execution i.e. 6-2-1963 follows the same pattern. An attempt has been made to show that the plaintiff had accumulated losses and liabilities to the tune of Rs. 80,000/- to Rs. 90,000/- and that the creditors were harassing him as a result of which he had to resort to the artifice of leaving his own house and hiding himself in the house of his relatives. According to Vithal certain decrees were passed against his brother-in-law Namdeo by the Court of Small Causes and a number of creditors were pestering him. The plaintiff has admitted that he had liabilities to the tune of Rs. 10,000/- to Rs. 12,000/- in the year 1962-63 which could be called usual liabilities of a businessman. He admits that Wani brothers had obtained decree against him for the sum of Rs. 1015/- and that he was paying the sum by instalments as fixed by the Court. The plaintiff had purchased the machinery from National Small Scale Industry on credit and was paying the instalments as fixed by the Corporation. There were tax dues of Rs. 1594/- for which notice of demand was issued. But there is absolutely no suggestion that the dues were running to the astronomical figure of Rs. 70,000/- to Rs. 80,000/- rather they could not have been more than Rs. 6000- to Rs. 7000/- as observed by the learned Single Judge. We also agree with the learned Single Judge that the liabilities could not be called unusual considering the turn over of the plaintiff's business.

Conduct of the plaintiff after recovery.

32. After the plaintiff regained his own self in September 1963 he left the house of Dattaram and went to his shops at Hari Nivas as well as the factory only to be told that he had sold both these properties. The plaintiff then realised for the first time that Vithal and Shankar had taken his signatures on certain documents and had got the properties transferred in the names of Gole and More by playing tricks on him. The plaintiff made for the Mahim Police Station and lodged a complaint. The Police understandably recorded only an N.C. complaint and directed him to the Court. The plaintiff went to his regular Advocate Premji Patel who was attending to his civil work. Patel referred the plaintiff to another Advocate Yashwant Ingle but because Ingle was not available the plaintiff contacted Mr. Tawde. Advocate Tawde wrote to Mr. S.T. Bhalekar complaining that sometime in February 1963 documents purporting to be in respect of the factory at Dadar and two shops at Hari Nivas have been got executed from his client in the office of Advocate Bhalekar. Advocate Tawade called upon Advocate Bhalekar to furnish him with the true copies of the documents since Namdeo had instructed him that Advocate Bhalekar was never instructed to prepare the documents nor were the contents explained to him nor any consideration paid to him at any time. A similar letter was addressed to another Advocate Joglekar.

33. As so reply was received to this notice a complaint was filed in the Court of the Addl. Chief Presidency Magistrate, Bombay arraigning, Vithal, Shankar and Dattaram the three brothers-in-law, wife Sulochana, Gole and More the alleged assignees. One Gopal Mandrasi, Matkar Buwa and another Shevde who was working as the Clerk of the plaintiff as the accused. Namdeo in his complaint narrated his relationship with some of the accused and how his brothers-in-law Vithal and Shankar had started small business of installing loud-speakers and electrical lights under the staircase of Miranda Chawl near Plaza Cinema, Dadar. They hatched a conspiracy to take possession of his business and shop premises, visited his wife on one or the other pretext with the result that his wife started picking up quarrels and disturbing, his peace of mind. Namdeo further alleged that Vithal, Shankar, Sulochana and Matkar used to try black magic on him with the result that he lost his power of thinking and self control. The complaint then narrates the manner in which he was taken by car to Chunabhatti, Kurla, where certain ceremonies were performed on him and he was taken to the office of Advocate Bhole near Flora Fountain and fraudulently induced to sign stamp papers. From Kurla he was removed to the residence of Dattaram at the railway quarters at Matunga where again signatures were obtained from him. Namdeo also wrote to the Superintendent of Police, complaining against defendants as well as to the Landlord and issued public warning public not to deal with the property.

34. The criminal complaint was dismissed on the ground that it was of civil nature and the criminal revision petition filed by the plaintiff in the High Court met with the same fate. The conduct of the plaintiff immediately after realising that he has been duped into executing documents and giving notices to the concerned persons who allegedly were in possession of the property was not traversed by matching assertions of title by any of the defendants. None of them ever try to meet the case of the plaintiff by explaining the transfers for consideration executed by him. As observed earlier the plaintiff was already in receipt of Rs. 500/- a month from Makhija to whom some portion of the factory was leased and the liabilities of the business could by no stretch of imagination be called extra ordinarily high. The picture depicted by defendant in the box that the plaintiff was neck deep in the debt is far from truth. Though the plaintiff has tried to put up a brave front by saying that it is a part of business tactics to pay a small debt of Rs. 1500/- by instalments, the fact remains that Government departments have encouraged entrepreneurs engaged in small scale industry to purchase goods and machinery on hire purchase and easy instalments terms. The entire consideration having been paid prior to the registration and there being not an iota of evidence to suggest how and when the amount was paid to the plaintiff. We agreed with the learned Single Judge that both these documents were executed without any consideration.

Conduct of the defendants during the pendency of the duties :

35. Ordinarily transfers of property effected during the pendency of the two suits would have been affected by doctrine of lis pendence enunciated in section 52 of the Transfer of Property Act, but for the fact that the properties were situate within the territorial limits of Greater Bombay which requires registration with the Sub-Registrar of Assurances as a condition precedent for the doctrine to be attracted if a notice of pendency of such a suit or proceeding is registered under section 18 of the Indian Registration Act, 1908. After the assignment in favour of Gole by Exh. 'M' on 3-1-1963 was made an agreement came to be entered into between Gole and Vithal on 15-5-1963 under which Gole assigned for a monthly royalty of Rs. 101/- the right to use and manage all the licences and permits of the business of Super Simplex Company situate in the Hari Nivas shop in favour of defendant No. 2 Vithal. Defendant No. 4 Shankar in the other suit and defendant No. 1 More assignee of the factory were two attesting witness. This was followed by another agreement dated 3-31968 between Gole, Vithal and Shankar under which Gole agreed to sell the two shops of Hari Niwas to Shankar and Vithal for a consideration of Rs. 15,000/- after the suit is finally decided. Gole admitted to have received Rs. 500/- as an advance and the balance of Rs. 14,500/- were to be paid in six instalments after the suit is finally decided. As regards the factory premises at Tulsi Pipe Road defendant No. 4 Shankar says that he took the same on leave and licence from More on 1-1-1968 but does not have any document to support his claim. It was on 20-12-1970 that another agreement came into being made between More and Shankar which recites that More was managing a business of Super Simplex Radio Company at Tulsi Pipe Road, Matunga; that More was badly in need of finance and approached Shankar for financial help in pursuance of which Shankar had advanced a sum of Rs. 15,000/- to More out of which Rs. 5000/- were paid and balance of Rs. 10,000/- were due to be paid by More to Shankar. The document further recites that More fell seriously ill as a result of which he had to close down his factory and requested Shankar by a letter dated 28-6-1968 to take over possession of the factory against the balance amount of Rs. 10,000/- with a promise that he would sign all the necessary documents at a later date. The agreement declares that More has surrendered all his rights regarding factory premises as well as the goodwill, the machinery rights and privileges for the consideration of right to recover amount of Rs. 10,000/- which was surrendered by Shankar. The document is signed by More and Shankar but with no attesting witnesses.

36. The document has been executed on fifteen rupee stamp paper which was issued to S.S. Bhalekar on 3-4-1955. As Mr. S.S. Bhalekar was the son of Mr. S.T. Bhalekar in whose office the document of the assignment of the factory was probably drafted and executed, Mr. Rane, the learned Counsel for the respondent has made great play of an old stamp paper being used for the document. It has been suggested by Mr. Rane that old stamp papers are freely available for a price and that by the amended section 15 of the Bombay Rents, Hotel and Lodging Houses Rates Control Act, 1947 certain licensees in occupation of premises on 1-2-1973 were deemed to have become protected licensees. Mr. Rane argued that the stamp paper of the year 1965 lent authenticity to a document executed in the year 1970 which actually was executed at a much later date but ante-dated with a view to confer protected status on Shankar as against the plaintiff. The original of Exh. 12 said to have been executed probably on stamp paper of Rs. 3/50 was not forthcoming but its copy signed by Shankar and defendant No. 3 Trivedi has been produced. Under this agreement dated 15-6-1972 leave and licence rights have been given to Trivedi for a period of three years from 15-6-1972 in consideration of the sum of Rs. 140/- per month as royalty and or compensation to be paid to Shankar. Trivedi agreed to vacate and hand over the possession of the premises at the expiry of the period of three years. All these documents taken in totality show an attempt on the part of defendants to create evidence to put the stamp of authenticity on the transaction of assignment of the factory and the shops. However, the unholy haste with which More and Gole have parted with valuable property almost for no consideration points out to well organised scheme or conspiracy amongst the defendants Vithal, Shankar, Gole and More to evict the plaintiff using More and Gole as benamidars. More and Gole had never any interest in the properties and were ready to part with them in favour of Vithal and Shankar at the earliest possible opportunity. Payment of rent by cheques was also an incident to cloth them with the garb of benamidars because in the very nature of things actions by or against all benamidar have always to be like those of a real owner so far as dealings with third parties are concerned.

37. Vithal and Shankar are real brothers and had started business of hiring loud-speakers equipment and taking contracts of electrical decorations. For sometime, they worked independently and thereafter had formed a partnership. Defendant No. 4 Vithal had attested the document Exhibit 'M'. Considering the relationship between Vithal and Shankar as well as their partnership in the electrical business it lies ill in the mouth of Shankar to say that he had no idea about the undertaking which was given by the Advocate for Vithal before the Court. The ramification of the breach of undertaking would be the subject matter of a separate proceedings before the learned Single Judge. Suffice it to say for the purposes of these appeals that the documents executed during the pendency of the suits were bogus and fabricated with a view to clothe the possession of Trivedi and Shankar with a legal title.

38. It is a general equitable principle that the property transferred as a result of contract which is voidable at the option of the one who had transferred it specifically passes to a bona fide purchaser for value. Such an innocent purchaser would acquire good title. In the present case as we have already held that the transfers were without consideration the question would not arise because the transfers would not be voidable but void ab initio. However, for arguments sake even if these transfers are held to be voidable, we find that the abovementioned subsequent assignments in favour of Shankar and Trivedi were not bona fide as these assignees had knowledge of effect of title and pendency of the suit. This would be so notwithstanding the fact that the doctrine of lis-pendence would not apply in view of the amended section 52 of the Transfer of Property Act as applicable to the Island of Bombay. Taking over all stock of the evidence in the case we find that the plaintiff though overburdened with a large family was doing fairly well with the business of electrical transformers, chokes, radios etc. He had two shops in Hari Niwas and fairly large factory in Lady Jamshedji Road. He had registered himself with the State Industrial Corporation which was giving him substantial financial support in the shape of low interest easy loans with the help of which he could purchase various sets of machinery and gadgerts. He had permitted some portion of the factory to be used by Makhija Pvt. Ltd. Company and was getting an assured income of Rs. 500/- from the licence. It would not be unrealistic to expect that apart from this income of Rs. 500/- per month he was getting a sizeable income from his shops and the factory. The plaintiff did not have any liabilities which could be branded as unusual in the type of business he was conducting.

39. In the case of Bundy referred to above the stress was on the fact that Bundy had mortgaged his only assets viz, the farm and the house in favour of the bank to afford a collateral security for the loan which the bank had advanced to his son and even such a transaction was set aside on the ground of undue influence. In Bundy's case there was no suggestion that the bank had not paid the consideration as evidenced by the documents. In the facts before us we find that both the documents Exhibit 'M' and 'K' were without consideration. Though we have found that the plaintiff could not prove that at the time of the execution of the documents he was under the spell of 'petit mal' the fact remains that the mental capacity of the plaintiff at the relevant time was temporarily or permanently affected by illness and mental distress within the meaning of Clause (b) of sub-section (2) of section 16 of the Contract Act. Coupled with this infirmity resulting from mental depression and the 'Davik Upachar' practised by Matkar Buwa, his brothers-in-law Vithal, Shankar and others were in a position to dominate the Will of the plaintiff. It is well-nigh impossible to imagine that the plaintiff would cast away to the winds the only property which he had and which was the sole source of livelihood for himself and his family consisting of eight members. All this considered, we agree with the learned Single Judge as well as the learned Trial Judge when they conclude that these two documents Exh. 'M' and 'K' were without consideration. In though premises Letter Patent Appeals Nos. 125, 126 and 142 of 1983 are dismissed with costs.

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