RAGHUNATH PRASAD V/S SARJU PRASAD (1924) 26 BOMLR 595

Citation	(1924) 26 BOMLR 595
Date of Judgment	18 December 1923
Court	Bombay High Court
Case Type	Appeal Case
Appellant	Raghunath Prasad
Respondent	Sarju Prasad
Bench	Shaw, Carson, J Edge, A Ali, L Jenkins

BACKGROUND OF THE CASE 

Raghunath prasad v/s sarju prasad case is one of the landmark cases of the Indian contract act, 1872. This case is one of the landmark cases when it comes to ‘ free consent ‘ undue influence is one such instance where a consent is not said to be free and the party whose consent was so obtained has the option to avoid the contract hence in the case of undue influence the contract is voidable in nature in case of undue influence to prove undue influence the plaintiff has to prove that the relations between him and the defendant was such that the latter in the position to dominate the will of the former by reason of –

1. Real or apparent authority
2. Fiduciary relationship
3. Mental capacity is affected by reasons of age, illness or mental or bodily distress of the plaintiff.

FACTS OF THE CASE

The case is an appeal from a decree dated November 9, 1920. Of the high court of judicature at Patna , which varied a decree, dated September 25, 1917. Of the subordinate judge of arrah.

The defendant sarju prasad and his father the plaintiff in the case Mr.raghunath Prasad were equivalent owners of a sizable joint family property they disputed and fought regarding the holding due to this the father started criminal proceedings against his son.

The defendant mortgage his properties to the plaintiff to defend himself and acquired from the plaintiff around ten thousand rupees at a compound interest of 24 percent. In the course of eleven years. the rate of interest on the amount borrowed increased more than elevenfold , viz., Rs/- 1,12,885. The defendant’s contention was such that the lender had assumed unconscionable advantage of his mental distraint by demanding high rates of interest and therefore there should be inference of undue influence i.e. section 16 of the Indian contract act, 1872.

ISSUES

• Whether the appellant in the circumstances proved in the case fell within the protective provision of section 16(3) of the Indian contract act ?

Section 16(3) of Indian contract act:- 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 be upon the person in a position to dominate the will of the other nothing in the sub section shall affect the provisions of section 111 of the Indian contract act 1872.

RATIO DECIDENDI 

• The privy council laid down a 3 step process to determine if any case of undue influence falls in section 16(3) of the Indian contract act 1872.

1. 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.
2. Once that position is established the second stage has been reached namely the issue of whether the contract has been induced by undue influence or not.
3. After this determination a third point emerges which is that of the onus probandi if the transaction appears to be unconscionable (wrong) , then the burden of proving that the contract was not induced by undue influence in to lie upon the person who was in a position to dominate the will of the others.

• Errors are almost sure to arise if the order of these 3 steps be changed.

∆  THE LORDSHIPS ALSO TRUSTED THESE PRECEDENTS BELOW:- 

1. lord Davey in dhanipal das v/s Raja maneshar bakhsh Singh 
2. Maneshar bakhsh Singh v/s shadi lal
3. Sundar koer v/s sham krishen
4. Abdul Majeed v/s khirode Chandra pal (the LORDSHIPS dissented from this case while declaring the judgement) 

VERDICT 

The verdict of the case is given down below

” Their landships are of the opinion that the decree of the high court should be variegated by allowing compound interest on the principal at the rate of two percent, per annum from the date of the carring into action of the bond until September 25, 1917. And thereafter simple intrest at the rate of six percent per annum up to the date of realisation and that in other respects the decree of the high court should be affirmed and they will humbly counsel his majesty accordingly.

• Upheld the decree of the high court by allowing compound interest on the principal at 2% per mensen from the date of the execution of bond till September 25, 1917.
• After September 25, 1917 a simple intrest in the principal amount at a rate of six percent per year up to the time of realisation.

REFERENCES

https://lawtimesjournal.in

https://lawplanet.in

This Article is written by vaibhav vishwakarma of swami vivekananda University, Intern at Legal Vidhiya.