Ragunath Prasad vs. Sarju Prasad
(1924) 26 BOMLR 595
Case Summary
FACTS
In this case, the Sarju Prasad (defendant) and Raghunath Prasad, father and plaintiff here, are part of the Joint Hindu Family (JHF).Both the father and son had dispute over the property and father had filed a criminal proceeding against the son.To defend himself, the defendant mortgaged his property for the sum Rs 10000 @ 24% compound interest with the plaintiff but during eleven years, the interest was increased by 11 times. The defendant contended that the plaintiff has taken the undue advantage of the defendant’ mental condition to increase the interest rate and therefore Section 16 of the ICA should be applied here.
ISSUES
Whether the plaintiff would be protected under Section 16(3) of the ICA?
Whether the contract between the parties is induced by undue influence?
RELEVANT PROVISIONS
Section 16(3) of the ICA: In Raghunath Prasad v. Surju Prasad (1924), the court examined undue influence in contracts, particularly in money-lending transactions with excessively high interest rates. Section 16(3) states that when a person in a dominant position influences another to their disadvantage, the contract is presumed to be induced by undue influence unless proven otherwise. The court ruled that since the lender held a superior bargaining position, the burden of proof lay on him to show the contract was fair, reinforcing the protection of weaker parties in contractual dealings.
JUDGEMENT
The court, in Raghunath Prasad v Sarju Prasad, in considering the issue of undue influence, emphasised that the relationship between the parties must be such that one has the ability to dominate the will of the other. Lord Shaw, referring to sub-section (3) of Section 16, outlined the sequential process: establishing the dominating relationship, determining if the contract was influenced by undue influence, and addressing the burden of proof.The burden of proving that the contract was not induced by undue influence lies on the party in a position to dominate the other’s will. The court in Raghunath Prasad v Sarju Prasad highlighted the importance of recognising the relationship before assessing the unconscionableness of the agreement.
In Raghunath Prasad v Sarju Prasad, the borrower failed to demonstrate that the lender could influence his will. The only established relationship was that of lender and borrower, insufficient to prove domination of will. The court cited precedents, including Lord Davey in Dhanipal Das v. Raja Maneshar Bakhsh Singh, Maneshar Bakhsh Singh v. Shadi Lal, Sundar Koer v. Sham Krishen, and dissented from Abdul Majeed v. Khirode Chandra Pal.
-Kush Kuthiala
Himachal Pradesh National Law University.
Comments