RULE OF EQUITY

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This article is written by Vansh Aggarwal of 3^rd Semester of University School of Law and Legal Studies, Guru Gobind Singh Indraprastha University, an intern under Legal Vidhiya

ABSTRACT

Natural Justice is a very wide term encompassing an array of principles, rights and remedies in order to ensure that the ultimate justice is served to people. The Indian Constitution vide Article 14 and Article 21 also guarantees natural justice. This article is an attempt towards explaining the Rule of Equity along with its evolution and principles. Equity is a legal principle that ensures fairness and justice, even when the law may not provide a remedy. Equity is a separate legal system from common law, and it is often used to supplement or override common law principles when they are deemed to be unfair or unjust. The rule of equity has a long history in England, and it was first developed by the Court of Chancery in the 15th century. The Chancery Court was created to provide relief to people who had been wronged by the common law system. The rule of equity is an important part of the Indian legal system. It ensures that justice is not merely done, but is also seen to be done. Equity helps to ensure that everyone is treated fairly, regardless of their social or economic status.

Keywords: Equity, Rule of Equity, Common law system, Chancery court, Evolution of equity, Principles of Equity.

INTRODUCTION

‘Equity’ means something which is fair and just. The idea of ‘equity’ can be understood by imagining a scenario where there are two women – one literate and financially able and another who is illiterate and cannot support herself, both of them seeking a divorce. Now, if we have to settle these disputes as per ‘equality’, the law should decide a fixed liquidated amount as maintenance to be paid for both of them without taking into consideration their financial or social background but that is not the case with ‘equity’. Equity is a principle according to which, even though these two are equal before the law, the justice that is served to these two different ladies should be in such a manner that it really is justice to them and not a mere illusion. The lady who is illiterate should be provided with more maintenance as compared to the other one as she needs the same to maintain herself and lead a happy life. This is equity. Similarly, a penalty of Rs. 1,00,000 on a person and on a corporate entity will have different consequences for both of them. Equity is a principle that is omnipresent in Indian society whether it is the law or the decrees of the honourable courts present in India. Equity originates and thrives throughout this great nation with the aid of legislators, judges and other stakeholders which gives human life meaning. Equity is a system that ensures fairness and justice and ensures that no prejudice is caused to any person whatsoever.

If we look at the process which is followed by Hon’ble judges while upholding this rule of equity, we need to understand that the laws in India are very expansive, broad and elaborative in nature. However, the very nature of our society is evolutionary. The society keeps on evolving not only on the quantitative parameters but also in terms of its modus operandi, norms and several such factors. Human nature is also very complex and not at all predictable. Hence, it is practically impossible for the legislative to make laws to regulate each and every sphere of human life or conduct. There will always be absentia of law or absence of law where a wrong has been committed but the wrong is not covered by any present law. The approach adopted by the hon’ble courts, in such cases, is Equity. Whenever any such case approaches the hon’ble courts, it is the duty of a judicial officer to examine as to whether there is any violation of any fundamental right of the parties. If this analysis of the said judicial officer comes to the conclusion that a fundamental right has been violated, the officer has to direct the parties to either approach the Supreme Court or the High Court of India. However, if there is no violation of any fundamental right, the judicial officer has to examine whether any legal right on any law has been violated by the defendant. If the examination is affirmative, then the judicial officer has to set the balance right in accordance with the provision of the law. In the other scenario, if the examination is negative, then, the judicial officer has to apply the principles of ‘equity’, justice and good conscience and make sure that there is no injustice caused.

OBJECTIVES

This research article has a holistic analysis of the Rule of equity. Multiple articles and study materials are already in presence on this subject matter. Hence, this article intends to undertake a comprehensive study of equity in order to provide the reader with a basic understanding of the Rule of Equity. For the same purpose, this article includes the meaning of the rule of equity, its brief historical background both internationally as well as nationally and the principles of the rule of equity. It is pertinent to mention that the scope of this article is limited to the aforementioned topics only and the main objective is to attempt to provide the reader with a comprehensive and holistic understanding of the said topic taking into consideration the relevant law of the land as well as precedents.

DEFINITION

Equity is derived from the Latin word ‘acquitas’ which means to level. It is pertinent to understand that equity in itself is a separate legal system other than common law, for instances where applying the principles of the common law would have been unfair or unjust or too punitive. Equity is a very wide term that encompasses a vast array of remedies to ensure that the ends of justice are met to the greatest end possible. The rule of equity is present to ensure natural justice is present which in layman’s means that everyone gets the justice that they need and which really is justice for them, not merely a formal procedure where justice has more detrimental effect over litigants.

EVOLUTION

The Rule of Equity has developed organically in England over centuries with the coming up of the Court of Equity also known as the Chancery Court in the 15^th Century[1]. The reason for the establishment of these courts is in some instances, the operation of common law would have been punitive which will hamper the ends of justice and the common law system was not providing the litigants with enough remedies and this void has to be filled by some institutions which came up to be the chancery court. These were authorized courts to practice the principles of equity without any consideration paid to the law. These courts began with petitions to the Lord Chancellor in England and had extraordinary jurisdiction. It was often seen that the decisions of these Chancery courts and common law were conflicting, to address the same, In 1615, in the Earl of Oxford’s Case, the king stated if an event of conflict between common law and equity, equity should prevail. The Kings benches were used to administer justice as per common law. So, the chancery courts used to incorporate the principles and precedents laid by the common courts, avoiding deviance to the maximum extent possible unless there is some sufficient reason for rejection or modification. The Chancery courts continued their operations till 1873 when by the judicature act of 1873, the Chancery courts were abolished and the jurisdiction was transferred to a new Chancery Division of the High Court of Justice.

INDIAN EVOLUTION

In India, the doctrine and Rule of equity is followed even after decades of Independence. The Rule of Equity has been widely adopted from the courts in England and the pre-colonial practices, judgements and procedures. The British East India Company came to India with the sole intention of trading and making profits but as they gained control over markets and eventually over the nation, they introduced and established various courts in India. These courts adopted the common law principles as present in England as most of them are servants of the East India Company. They also established a system of referring to the judgements of courts of England or in India for similar cases which came to be the system of precedents. In 1757, with the victory of the East India Company in the battle of Plassey, the Indian legal system was eventually completely replaced by the British legal system in the presidencies of Bombay, Madras and Calcutta. Soon, Mayors courts were established which were eventually replaced by the High courts. All of these courts have adopted the principles of common law as well as equity principles, finding a ground between the two. Many laws and legislation, which have a colonial origin or impact also indicate the presence of principles of the Rule of Equity namely The Indian Contract Act, 1872; The Specific Relief Act, 1877; The Indian trust act, 1882; The Transfer of Property Act, 1882. For instance, The Indian Contract Act, of 1872 has various provisions and remedies under it that are based on these equity principles, like, Suit for specific performance, Suit upon quantum merit and Suit for injunction. Hence, this was the evolution of the rule of equity.

Even after the independence of India in 1947, the legislature continued to make laws based on the principles of equity to ensure that the Rule of equity is present in India and the courts are also following a common law system. Even if there are no separate courts for practising the rule of equity, the nation has found an appropriate balance between the common law system as well as the rule of equity. For illustration, In the interest of justice and equity, Lok Adalats[2] are organised to ensure a speedy resolution of disputes amicably. Also, the law of crime as well as divorce is drafted in such a manner that the discretion of the judge is to be used to award the penalties, punishment and maintenance such that the ends of equity are met to the greatest extent possible.

PRINCIPLES OF EQUITY

The rule of equity has evolved by way of precedents that are propounded by the chancery courts in England. Over time, these courts developed several principles which are mentioned and explained below:-

1. Aequitaes est correctio legis generalities latae, qua deficit – This maxim means that equity is a correction of the general law where the general is erroneous, defective or deficient. The essence of this maxim lies in another maxim, ubi jus ibi remedium which means where there is a right, there is a remedy. In the case of Ashby v. White[3], a legal voter was denied the right to vote, and it was held that an appropriate remedy should be provided to the aggrieved as he had a right, he should also have a remedy. The chancery court applied this principle to serve justice in cases where any irregularity in the common law or law is silent about the question of law involved, giving remedies and reliefs to the aggrieved parties. Hence, In case of absentia of law, principles of equity come to the forefront and serve justice. This maxim or principle is embodied in multiple Indian laws like the Specific Relief Act. Section 9, as well as Section 151 of the Code of civil procedure, gives the courts to try any case in the interest of justice unless barred which also captures the essence of this maxim.

2. Aequitas Sequitur legem – It means ‘Equity follows the law’. Equity doesn’t override the law nor it is supreme than the law itself. Equity can be better understood as an add-on to the existing provisions of the law in the form of some remedy, or any such provision. The chancery courts also tried to avoid deviance from the common law. In India, there is no substantial distinction between the administration of common law and the rule of equity. Hence, equity is subservient to the existing law and the law is the only supreme.

3. One who seeks equity, must do equity – This principle means that a person who is praying for equity must also be ready to do equity if the tables are turned between the plaintiff and the defendant. In the case of Sturgis v. Champneys[4] it was held that a party praying something by the way of equity must be ready and willing to grant the same to his opponent. This ensures that no ultimate injustice is caused under the garb of equity and the parties are reasonable in their demands. In the case of Lodge v. National Union Investment Company Limited, a lodge borrowed a particular sum of money from an unregistered moneylender and upon an action by him to recover securities, the court refused to pass an order except for the Lodge to repay the money advanced to him. Section 19A of the Indian Contract Act is also based on this maxim which states that the plaintiff must give back all the benefits conferred upon him by the way of the contract when it is rescinded.

4. Equity delights in Equality – According to this principle, the courts have to ensure that the parties are on an equal footing before the court. Equality doesn’t mean literal equality rather it means proportional equality. Equals are treated equally.

5. Vigilantibus, non-dormient bus Jura subvenient – It means that the law helps the weaker party and not the stronger. The aggrieved party can enforce their legal right at any point of time unless it is barred by any limitation. The delay in exercising the right by the aggrieved party should be reasonable and just and shouldn’t be in such a nature that the party is exercising such right to extort the other party or to fulfil its personal vendetta against the other party.

6. Legal estate prevails over the equitable estate – This principle is further an extension of the first one. According to this maxim, legal rights always prevail over equitable rights. For illustration, a person who has the legal title to a property will always be superior to a person who has a mere equitable right over the property. The text and scriptures of law are above equity and morals vis-a-vis legal title will always prevail over equitable rights.

7. He who comes to equity must come with clean hands – The doctrine is concerned with the past actions of the parties and states that a person who is approaching the court seeking equity must not be indulged in any maligned act. However, this principle is limited to the Nexus between the applicant’s wrong conduct and the right he wishes to enforce. In the case D & C Builders Ltd. v. Rees[5], a claim of the plaintiff was rejected because he had taken undue advantage of the poor financial conditions of the defendant’s builder company has not come with clean hands.

8. Equity acts in personam – In England the Chancery courts and the courts of common law were distinguished by the fact that the common law courts have jurisdiction over both people and property where as the Chancery Court has jurisdiction over people only. Hence equity acts in person and not in property. In the matter related to property, the law should prevail as it is fair and just.

CONCLUSION

In conclusion, equity has an imperative role in the justice delivery system. For instance, It is safe to say that Artificial Intelligence is the new age revolution in the industry which has the potential to replace humans, but AI will never be able to uphold the Rule of Equity as it lacks the empathetic and human approach required under the Rule of Equity. It doesn’t have the good conscience that is required to judge a case. The rule of Equity is the reason why the citizens of this nation believe in the justice dispensation system of the nation and the society is not falling apart. The Rule of Equity has evolved over centuries through the way of precedents in order to grant equitable remedies to the parties. Furthermore, there are multiple principles of equity that are evolved over time and are still in practice by the hon’ble courts. Hence, the Rule of Equity is imperative in common law countries as it is a more sensitized version of law towards the masses.

REFERENCES

1. https://lexpeeps.in/rule-of-equity/ as visited on 17 August 2023

2. https://www.legalserviceindia.com/legal/article-7437-equity-regards-that-as-done-which-ought-to-have-been-done.html as visited on 17 August 2023

3. https://legalvidhiya.com/rule-of-equity/ as visited on 17 August 2023

4. https://blog.ipleaders.in/law-equity-general-principles-equity/ as visited on 17 August 2023

5. https://legalpaathshala.com/rule-of-equity/ as visited on 17 August 2023

6.https://www.studyiq.com/articles/law-equity-indian-judiciary-free-pdf-download/#:~:text=Equity%20is%20a%20legal%20system,override%20common%20and%20statutory%20law. as visited on 17 August 2023

7. https://legalstudymaterial.com/law-of-equity-and-equitable-remedies/ as visited on 17 August 2023

8. https://www.legalserviceindia.com/legal/article-46-audi-alteram-partem.html as visited on 17 August 2023

[1] https://www.britannica.com/topic/Chancery-Division

[2] https://nalsa.gov.in/lok-adalat

[3] https://www.casebriefs.com/blog/law/torts/torts-keyed-to-prosser/civil-rights/ashby-v-white/