UNDUE INFLUENCE

Animesh Bordoloi
 (1) A contract is said to be induced 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
SECTION 16- to obtain an unfair advantage over the other.
(2) In particular and without prejudice to the generality of the
UNDUE foregoing principle, a person is deemed to be in a position to dominate
the will of another--
INFLUENCE (a) where he holds a real or apparent authority over the other, or where
he stands in a fiduciary relation to the other; or
DEFINED (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,
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 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 (1 of 1872).
 ESSENTIALS OF UNDUE
INFLUENCE

1 2 3
The relation between the Such person uses that Generally, these two
parties are such that one of position to obtain an unfair conditions need to be
the parties is in a position advantage over the other. established in order to
to dominate the will of the prove undue influence.
other; and
◦ Sometimes the parties to an agreement are so related to
each other that one of them is able to dominate the will
of the other.
◦ In this kind of situations, one person may have
authority over another or a relation of mutual trust and
confidence exists.
POSITION TO
◦ Parties are not on equal footing. DOMINATE
◦ Typically, this occurs when one person places trust in
another to look after his affairs and interests, and the THE WILL OF
later betrays this trust by prefering his own interest. He
abuses the influence which he has acquired. THE OTHER
◦ Example: parents and children; religious guru and
disciple, doctor and patient, police and accused, income
tax officer and an assesses etc.
SECTION 16(2)(a)
Where he holds a real or apparent authority over the other, or where he stands in a fiduciary relation to the
other
Real or apparent authority
◦ If a person has an authority over another person, then it is desirable that he would not misuse or take
advantage of such position over another person.
◦ Example- A magistrate or a police officer and an accused person, Income Tax Officer and an assessee,
employer and employee etc.
 SECTION 16(2)(a)
Fiduciary Relation
◦ Fiduciary relations could be of several kinds.
◦ It depends on mutual trust and confidence.
◦ The relationship of trust and confidence gives a very good opportunity to the person in whom confidence
is held to exploit it to his own use.
◦ Example- parents or guardians and children, spiritual adviser and devotee, husband and wife, master and
servant, principal and agent, landlord and tenant etc.
SECTION 16(2)(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.
◦ A person’s mental capacity may have been affected temporarily or permanently due to on account of his
old age, illness or mental or bodily distress.
◦ Such a person’s consent may easily be obtained to enter into a contact. It could be unfavourable for him.
◦ Example- A, a man enfeebled by disease of age, is induced, by B’s influence over him as his medical
attendant, to agree to pay B an unreasonable sum of money for his professional services, B employs
undue influence.
PRESUMPTION OF UNDUE
INFLUENCE
◦ Generally, the plaintiff needs to prove that his consent was not free.
◦ When it is shown that the defendant was in a position to dominate the will of the plaintiff it will be
presumed that he must have used his position to obtain an unfair advantage.
◦ In this situation, the burden of proof will be on the defendant to show that the plaintiff has freely
consented.
◦ This presumption is raised on the situation of unconscionable bargains.
SECTION 16 (3): UNCONSCIONABLE
BARGAIN
◦ In case of unconscionable bargain between parties on an unequal footing, the law raises the presumption
of undue influence.
◦ Where a person who is in a position to dominate the will of another, enters into a contract with him, and
◦ The transaction between the parties 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.
◦ Here, the burden is shifted to the stronger party to prove that the plaintiff’s consent was not obtained
under undue influence.
SECTION 111 OF INDIAN EVIDENCE
ACT
◦ Where there is a question as to the good faith of a transaction between parties, one of whom stands to the
other in a position of active confidence, the burden of proving the good faith of the transaction is on the
party who is in a position of active confidence.
 Subhash Chandra Mushib v. Ganga Prasad Mushib, AIR 1967
SC 878

Facts
◦ The plaintiff's father, Prasanna Kumar gifted property to his only grandson Subhash Chandra to the total
exclusion of his sons.
◦ Prasanna Kumar died four years after he had gifted the property to Subhash Chandra. At the time of
death, he was about 90 years old.
◦ Four years after his death, the other son (uncle of the grandson) questioned the validity of the gift on the
ground of undue influence.
Issue
◦ Whether Mr Prasanna Kumar had gifted the property to his grandson Mr Subhash Chandra under undue
influence?
 Subhash Chandra Mushib v. Ganga Prasad Mushib, AIR 1967 SC 878

Judgement
◦ The circumstance that a grandfather made a gift of a portion of his properties to his only grandson on
account of natural love and affection a few years before his death is not on the face of it an
unconscionable transaction.
◦ The donor was fully aware of the fact that he had transferred the property to his grandson.
 Central Inland Water Transportation Ltd. v. Brojo Nath
Ganguly, AIR 1986 SC 1571

Facts
◦ Plaintiffs worked in a company which was dissolved by Court’s order, and they were then inducted into
defendant Corporation upon latter’s T&C. 
◦ After years of serving the Corporation, plaintiffs were arbitrarily fired from the job by virtue of Rule 9(i)
of said T&C.
◦ The terms of employment of Central Inland Water Transport Corporation, allowed it to terminate an
employee with a 3-month notice, accompanied with 15-days basic pay and dearness allowance for every
completed year of service.
◦ Plaintiffs requested Court to quash Rule 9(i) on grounds of unconscionability.
 Central Inland Water Transportation Ltd. v. Brojo Nath
Ganguly, AIR 1986 SC 1571

Judgement
◦ The court ruled out Section 16 stating that it is too narrow to deal with contractual unfairness and was of
the opinion that Sections 23 is a provision that declares that any contract that is illegal, immoral or
opposed to public policy is void.
◦ It will also apply where a man has no choice, or rather no meaningful choice, but to give his assent to a
contract or to accept a set of rules as part of the contract, however unfair, unreasonable and
unconscionable a clause in that contract or form or rules may be.
◦ This principle, however, will not apply where the bargaining power of the contracting parties is equal or
almost equal.
◦ These cases can neither be enumerated nor fully illustrated.
◦ The court must judge each case on its own facts and circumstances.
 EFFECT OF UNDUE INFLUENCE
Section 19A. Power to set aside contract induced by undue influence.—When consent to an agreement is
caused by undue influence, the agreement is a contract voidable at the option of the party whose consent
was so caused.
Any such contract may be set aside either absolutely or, if the party who was entitled to avoid it has
received any benefit thereunder, upon such terms and conditions as to the Court may seem just.
 Allcard v Skinner (1887) 36 Ch D 145

◦ In 1867 an unmarried woman aged 27 sought a clergyman as a confessor. The following year

she became an associate of the sisterhood of which he was spiritual director and in 1871 she
was admitted a full member, taking vows of poverty, chastity and obedience. Without
independent advice, she made gifts of money and stock to the mother superior on behalf of the
sisterhood. She left the sisterhood in 1879 and in 1884 claimed the return of the stock.
Proceedings to recover the stock were commenced in 1885.
◦ It was held by the Court of Appeal that although the plaintiff’s gifts were voidable because of
undue influence brought to bear upon the plaintiff through the training she had received, she
was disentitled to recover because of her conduct and the delay.
Cotton LJ
There are 2 classes of cases in undue influence:
1.Where the court had been satisfied that the gift was the result of influence expressly used by the donee –
here the court intervenes to ensure that no one can retain benefit arising from a wrongful act
2.Where the relations between the donor and donee gives rise to a presumption that the donee had undue
influence over the donor – here the court intervenes on the ground of public policy to ensure no one can
retain benefit arising rom abuse of relations between parties
◦ Present case
• This case comes within the principle of second class
• At the time of the gift, C was bound to render absolute submission to D, and could not obtain independent
advice
• Cotton LJ dissented on the point that the transfer had been affirmed due to delay and acquiescence
Lindley LJ
Like Cotton LJ, he defined two classes of cases:
• In the first case there is ‘some unfair and improper conduct, some coercion from outside, some overreaching, some form of
cheating, and generally, though not always, some personal advantage obtained by a donee placed in some close and confidential
relation to the donor’
• In the second case ‘the position of the donor to the donee has been such that it has been the duty of the donee to advise the
donor, or even to manage his property for him’ i.e. a ‘ gift is made to a person standing in a confidential relation to the donor
Second case
• The burden is on the donee to prove that he has not abused his position and the gift was not made by undue influence, by
showing that the donor had independent advice and was removed from the influence of the donee when the gift was made
• However, if the gift is of a small amount, the burden of proof is on the donor to prove that the influence of the donee was
exercised, the mere existence of influence is not enough
• But if the gift is so large as not to be reasonably accounted for on the ground of friendship, relationship, charity, or other
ordinary motives on which ordinary men act, the burden is upon the donee to support the gift
Present case
• The present case falls into the latter case, the gift was made under pressure and donor did not have access to any independent
advice
• However, once out of the influence of defendant, Claimant did not obtain relief from the court by obtaining restitution but
allowed the property to remain with Defendant