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They were persuaded to this course by the 1st defendant company, which stood to them in a fiduciary relationship of trust and active confidence. In these transactions, they were in terrorem as far as the threats of the Bank to foreclose and to enter upon the properties were concerned, and further an actual date-line (the 15th November, 1937) had been fixed by Bank. They had no independent legal advice; in fact, they had no disinterested advice of any kind. Though the transactions were in form with the new company, the 15th defendant, it was really the 1st defendant and two or three of the directors of the old company (16th defendant) itself, who were the promoters of the vendee company, responsible for its flotation. Quite apart from any actual fraud, willful misrepresentation, or undue influence, the transactions are impeachable upon the principle of what is known as 'Constructive Fraud.' There is also a heavy burden on the 1st defendant company and the ex-directors of the old company, who associated themselves with the formation of the new company, to clear themselves in respect of these transactions; a burden which has received statutory recognition in this country in S. 111 of the Indian Evidence Act.

We might also note that in Sheridan on 'Fraud in Equity' (1957), the meaning of 'constructive fraud' is discussed at page 24 in a lucid analysis.

(26) The doctrine of 'Unjust Enrichment' has been dealt with in recent cases of this Court, such as Govindarajulu Naidu v. S. S. Naidu, 1958-2 Mad LJ 148, where a succinct history of this doctrine, particularly in relation to English and American systems of jurisprudence, will be bound set forth. Reference may also be made to the Full Bench decision in Muppudathi Pillai v. Krishnaswami Pillai, 1959-2 Mad LJ 225: (AIR 1960 Mad 1). The doctrine was originally based in English Law upon the principle of assumpsit or 'had and received,' and came to be based more and more on the doctrine of restitution. In the United States of America, the same principle evolved through concepts of assumpsit and then of quasi or implied contract, to the final form of a doctrine of restitution (American Re-statement).

For our present purposes, we may take the doctrines of 'constructive fraud' and 'unjust enrichment' as complementary to each other; if we find that, in effect and substance, the first defendant company was unjustly enriched to the extent of about two lakhs, by means of a transaction with the plaintiffs (appellants), to whom the first defendant company stood in a fiduciary capacity, even if the for of the transaction between the legal entities of the 'old company' and the 'new company,' we would be justified in piercing through these forms to the reality, and in holding that the first defendant held their shares or interest in the new company constructively in trust for the appellants.

That would be all the more so, where, as in this case, the classic signs and symptoms of 'constructive fraud' are present. That is where the fiduciary relationship is undeniable, where the context of a conflict between interest and duty is equally undeniable, where the plaintiffs (appellants had no disinterested advice, legal or private, and where the analysis of facts discloses an 'unjust enrichment' of the 'constructive' trustee.

(27) We now proceed to the next point for determination, the true nature of fiduciary relationship' and the existence or absence of it upon the dates when the impugned transaction was settled as between the parties. It is contended on behalf of the first defendant company that they were purely secretaries, not managing trustees of the estate; that they were given no wider responsibilities than those of secretaries working under the Board of Directors, and that, in respect of the attempted sale of the estate, they were not agents for sale.