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Showing contexts for: unconscionability in M.Narsiah Narsimha Reddy, 93 Others, vs Prl.Secy., Revenue Dept., La Dept. ... on 3 June, 2020Matching Fragments
84. Admittedly, there is unequal bargaining power between the State actors such as the respondents and the petitioners, who are small farmers.
85. How the courts should deal with the unconscionable contracts between parties with unequal bargaining power has been eloquently answered by the Supreme Court in Central Inland Water Transport Corpn. Ltd. v. Brojo Nath Ganguly6 saying that:
"89. ... Article 14 of the Constitution guarantees to all persons equality before the law and the equal protection of laws. ... This principle is that the courts will not enforce and will, when called upon to do so, strike down an unfair and unreasonable contract, or an unfair and unreasonable clause in a contract, entered into between parties who are not equal in bargaining power. ... For instance, the above principle will apply where the inequality of bargaining power is the result of the great disparity in the economic strength of the contracting parties. ... 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 sign on the dotted line in a prescribed or standard form 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." (emphasis supplied)
71. The sale price of the land was determined by Respondent 11 and not by the market forces. Given a choice between retaining their land or selling it to the builder for the offered price, not a single farmer would have agreed to sell it. The circumstances forced the landowners to accede to the offer made by the 11th respondent. It is a proven case of unconscionable bargain exerted through undue influence and fraud, both. The sample "agreements" on record truly reveal that illiterate/semi-literate farmers were asked to sign the documents on dotted lines forcing them to sell out most of their MSR,J & KL,J ::39:: wp_37769_2017&batch ancestral holdings. The en masse "agreements" conclusively belie the plea of need-based bona fide sales." (emphasis supplied) It held that the State cannot force the landowners to surrender their title in favour of and at a price to be dictated by a private beneficiary.
(emphasis supplied)
88. Since objectivity and transparency are essential elements of exercise of public power which are required to be followed, and we find that in the instant cases there is absence of any evidence of
(a) objective determination of the quantum of consideration and (b) transparency in the actions of respondents, we find that the exercise of public power by the respondents is in violation of the public trust doctrine and unconscionable.
89. It appears that in the instant cases too, the petitioners were given no choice or rather no meaningful choice, in view of their unequal bargaining power with the respondents, but to give their assent to a contract or to sign on the dotted line in a prescribed or standard form though it was unfair, unreasonable and unconscionable. (2010) 7 SCC 1 (2012) 3 SCC 1 (2012) 10 SCC 1 (2014) 9 SCC 516 MSR,J & KL,J ::41:: wp_37769_2017&batch
90. We thus find considerable force in the contentions of the petitioners that there has been arbitrary fixation of price of the lands of the petitioners by the respondents and possible coercion by State in obtaining their signatures for parting with their land.
91. So we declare that the agreements/consent awards entered into by the petitioners with the State are vitiated by coercion, that they are unconscionable and consequently unenforceable invoking Sec. 19 and 23 of the Contract Act, 1872. We also hold that the action of the respondents is also violative of Art.14 and 300-A of the Constitution of India. Consequently, the petitioners would be entitled to compensation as if their lands had been acquired under Act 30 of 2013.