Undue Influence – section 16 of Indian Contract Act

Undue Influence under Section 16 of Indian Contract Act

INTRODUCTION:

Section 13 of the Indian Contract Act (ICA) characterizes consent as the meeting of mind of the parties i.e., consensus ad idem (when at least two people concur upon similar things in a similar sense). Section 14 further qualifies consent is supposed to be free if the parties enter into a contract with their free will, that implies with no pressure and not brought about by any of the following:

1. Coercion (Section 15),
2. Undue influence (Section 16),
3. Fraud (Section 17),
4. Misrepresentation (Section 18),
5. Mistake (Section 20 to 22).

A contract is void ab initio i.e., void from the beginning when there is no consent between the parties.

DEFINITION OF SECTION 16 UNDER INDIAN CONTRACT ACT:

Undue Influence is defined under Section 16 of the Indian Contract Act. At the point when one party is in a situation to dominate the desire of others and actually misuses the power or position, at that point it is an instance of undue influence, and the contract gets voidable. At the point when all the accompanying three conditions are satisfied then just the circumstance is considered as an undue influence:

1. One individual is in a situation to dominate the will of others.
2. He misuses his position.
3. He acquires an unjustifiable preferred position.

The word undue means superfluous, unwarranted, or more than required. Influence implies persuading the mind of a counterparty through altering his perspective or changing his will, however this influence should be undue i.e., it isn’t needed. Undue influence applies to a relationship which might be blood connection or some other sort of connection i.e., fiduciary or connection dependent on trust. It implies the unreasonable utilization of one’s superior position to acquire the assent of an individual who is in a frail position. For instance, A cop purchased a property worth Rs 1 lakh for Rs 5000 from Ram, a denounced under his custody. Later this agreement can be cancelled and it tends to be held as void on the grounds that there is a mental pressure on an individual.

ABILITY TO DOMINATE THE WILL OF THE OTHER:

The dominant position isn’t characterized in the Indian Contract Act but Section 16(2) gives certain conditions when an individual is in a situation to dominate the will of another. Cases, where an individual is in a situation to dominate the desire or will of others, are as per the following:

1. There should be a connection between the parties:
2. Real or apparent authority or connection in which one party can be dominated by the other party. For instance, father and son.
3. Fiduciary connection is the connection which is made upon the conviction and trust between the parties. One party should trust the other. For instance, Advocate and client, instructor and student, Doctor and patient.

Illustration of real or apparent authority:

1. Father applies undue influence upon his child to accomplish something on the will of his father. Else, he will part his connection with a child.
2. An industrial facility proprietor exerts undue influence upon his representative to settle on a specific concurrence with him. If not, he (worker) will be drawn from his work.

Illustration of fiduciary relation:

1. An advocate asks his client to give him additional cash to fight the case from his side.

2. Mental or bodily distress implies the mental ability of an individual is influenced. It very well may be either permanently or temporarily influenced. The reason for such condition can be age, ailment, mental or bodily distress.

RELATIONS WHICH INVOLVES DOMINATION:

All situations where there is a active trust and confidence between the parties and the two parties are not on equivalent balance. The principle of undue influence applies to all the situations where influence is gained and manhandled. It applies to all relations where control can be practiced by one party over another. i.e., where exists a real or apparent authority or fiduciary relationship. In the category of undue influence, the conditions under which the agreement was made is considered alongside their connections.

The presence of a dominate relation alongside its utilization is required to summon an activity. Just a dominant position doesn’t prompt undue influence. It emerges just when this position is utilized for picking up an unnecessary bit of leeway. Undue advantage implies any sort of bit of leeway which isn’t justified by conditions in which the agreement was entered. In the case of Ganesh Narayan Nagarkar Vs Vishnu Ramchandra Saraf, it was held that unreasonable favourable position is the bit of leeway or improvement which is gotten through unjust means. It appears when bargains favour an individual who appreciates influence and which proves unjustifiable to other people.

REAL OR APPARENT AUTHORITY:

Section 16(2) of the Indian Contract Act states that Undue Influence can emerge any place the donee remains in a fiduciary relationship to the contributor or donor and holds a real or apparent authority. In this sort of influence, there is a real authority like a cop or a business who utilizes his dominance for his improvement. Apparent authority is imagining as a genuine authority without its existence.

MENTAL DISTRESS:

A lone mental distress perspective doesn’t add up to undue influence until the respondent has utilized this authority to exploit from another party. Also, instigating an individual to enter into a contract who has recently attained majority adds up to undue influence under this class because of an absence of the offended party ‘s experience.

In the case of Inder Singh Vs Dayal Singh, the court stated that the undue influence emerges when one party taking the temporary or permanent advantage of another’s state of mind executes a contract. For instance, A entered into a contract with B, who is a minor and can’t comprehend the complex terms of an agreement. It will add up to undue influence except if A proves that the contract was entered in accordance with good faith and with adequate consideration of B. An instance of undue influence is set up more effectively when there is proof to build up to show that the individual affected was of weak intellectual ability or in a feeble condition of health.

BURDEN OF PROOF:

Generally, the party bringing a case has the burden of proof the truth of current facts on which the individual in question is depending. The burden of proof is on the inquirer to show that undue influence was applied by a strong party over the fragile party, and the later couldn’t practice free decision when entering the contract. Notwithstanding, this burden can be shifted to the respondent in an undue influence case if the offended party can show that a confidential relationship existed between the departed benefactor and litigant, and that suspicious condition encompassed the planning and execution of the will. At the point when this happens, the weight moves absolutely on the respondent to demonstrate that unjustifiable impact didn’t happen.

At the point when an individual is discovered to be in a situation by which he can rule the desire of the other or an exchange seems, by all accounts, to be influenced because of predominance, the burden of proof that no undue influence was practiced in the exchange lies on the party who is in a situation to rule the will of others. In the case of Diala Ram Vs Sarga, the respondent was at that point obligated to the offended party, who was town moneylender. He again took a new credit from an offended party and afterward executed a bond, wherein he consented to pay some intrigue. The court held that the agreement was unseemly and consequently, the burden of proof was on the offended party to show that there was no undue influence for this situation.

The burden of prove that the agreement was not instigated by undue influence lies upon the individual who was in the situation to dominate the will of others if the transaction gives off an impression of being unjustifiable.

PRESUMPTION OF UNDUE INFLUENCE:

There are a few cases in which the Honorable Courts of India assume the presence of undue influence between the parties:

1. Where one of the parties to a contract is in a situation to dominate the will of the other and contract is prima facie unconscionable i.e., unjustifiable, the court assumes the presence of undue influence in such cases.
2. Where one of the parties to a contract is a Pardanashin Woman, the contract is ventured to be incited by undue influence. Corresponding to Pardanashin Woman, Bombay High Court made an assessment that a lady becomes Pardanashin in light of the fact that she is completely absolved from normal social intercourse not on the grounds that she is the isolation of some degree.

CONCLUSION:

While concluding, it tends to be said that there is an inadequate assent within the sight of undue influence as characterized in section 13 of the Indian Contract Act. In this way, in a fiduciary relationship and in other such types of relationship, the party which appreciates the real or apparent authority should find out that the other party is liberated from external manifestation.

Author: PRISHITA SARAIWALA,
KIIT SCHOOL OF LAW / 2ND YEAR