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Showing contexts for: a voidable contract in Raja Rajeswara Dorai Alias ... vs A.L.A.R.E.M. Arunachellan Chettiar on 3 March, 1913Matching Fragments
27. The argument of the appellant's learned vakil, if I understood him aright, was that the law of the land does not require a judicial rescission of a contract or the judicial rescission of a registered lease deed or conveyance in order to enable the party to a contract or the executant of a conveyance to sue for reliefs flowing from the rescission of the contract or setting aside of the conveyance, as the case may be, provided that he himself repudiates the contract or the conveyance, his own repudiation, if found to be for good cause, having equal effect with a decree of Court rescinding the contract or setting aside the conveyance. In considering this question, we have to bear in mind that Courts of Equity, in England were not bound by any law of limitation so far as the distinctive reliefs granted by such Courts were concerned. Equity, no doubt, tried to follow the law as much as possible and refused to grant equitable reliefs where the plaintiff was guilty of laches. Laches took the place of limitation but the ground covered by the two was not the same in many cases. For instance, the law of limitation never took note of the fact that a plaintiff was unable to bring his suit within the period prescribed owing to poverty, but the doctrine of laches allowed poverty to be a good excuse. Expressions, therefore, quoted from several of the cases decided by Courts of Equity in England in which the effect of the repudiation by a party was not clearly distinguished from a judicial rescission, have not much force, because, where there is no question of limitation governing the power of the Court to grant a judicial rescission, repudiation for good cause by the party and judicial rescission for the same good cause by the Court when the matter comes before it can be practically put and talked of as if standing on the same footing. Again, even where the law of limitation affects the power of the Court to grant or declare a judicial rescission in favour of a plaintiff, the power of the Court to find in favour of a defendant that a proper rescission has taken place by the repudiation of the defendant for good cause and the power of the Court on such a ground to non-suit the plaintiff, seems to be much larger, as has been held in the Pull Bench case of Lakshmi Doss v. Roop Laul (1907) I.L.R., 30 Mad., 169 at p. 178 (F.B.). The defendant, though his right to bring a suit for rescission of a contract or a lease may be barred, might be permitted to defend his possession of properties by showing that the contract or lease so voidable at his instance has been repudiated by him. Section 28 of the Limitation Act is as follows: "At the determination of the period hereby limited to any person for instituting a suit for possession of any property, his right to such property shall be extinguished." This shows that it is only where a person is under a necessity to institute a suit for possession of the property to which he lays a claim (and where the time for instituting such suit has lapsed), that his title to the property is extinguished. But if he is himself in possession and it is only his right to sue as plaintiff to set aside or declare invalid the deed or title set up by another man that is barred, he could defend his possession by pleading, as defendant, the voidability of the deed or title set up by the plaintiff who seeks possession. I am not sure that even the defendant, unless he has perfected his title by adverse possession, should not be deprived of his possession if there is a registered deed (corresponding to a deed under seal in English Law), which, prima facie, has transferred title to the plaintiff, though it was voidable at the instance of the defendant, if the defendant had not brought the suit within the prescribed period to have that deed set aside. But Lakshmi Doss v. Roop Laul (1907) I.L.R., 30 Mad., 169 at p. 178 (F.B.) has decided otherwise, though the learned Judges did admit the difficult 1 nature of the question, and I do not wish to unsettle the law as fixed by that decision. A defendant who has properly repudiated a contract or a deed, might well be allowed to sit tight over his possession and defend his right to such possession by setting up, by way of plea, such proper repudiation by him, though he might be barred if he seeks positive relief as plaintiff on the basis of such repudiation. (Even a defendant could not however retain possession, if ha had only a right to obtain a title-deed from his vendor and had lost that right by limitation-see the judgment of the Full Bench in Kurri Veerareddi v. Kurri Bapireddi (1906) I.L.R., 29 Mad., 333 (F.B.). If, as the appellant's learned vakil, Mr. K. Srinivasa Ayyangar, contends, the vendor became a trustee for the purchaser as soon as the contract for sale was made, and also gave possession to the beneficiary purchaser of the property held in trust, he could not recover possession from the purchaser who had neglected to obtain the registered conveyance.) But so far as a plaintiff seeking relief is concerned, the decision in Lakshmi Doss v. Roop Laul (1907) I.L.R., 30 Mad., 169 at p. 178 (F.B.) does not help him; on the other hand, there are observations in that case to the effect that a plaintiff seeking relief cannot evade the statute of limitations like a defendant. The question is, therefore, now narrowed to this point. Is a litigant coming forward as plaintiff for a relief which he cannot get if a document executed by himself or his predecessor in title is in force on the date of suit, is such a litigant entitled to the relief of possession after the expiry of the time fixed by law for the setting aside of that document and simply on his allegation and proof that he has himself repudiated the document on proper grounds, assuming that the document is voidable at his instance? If he brings a suit for possession within the time limited by law for setting aside that document, that suit, of course, might be taken as brought for both the reliefs of possession and rescission, and there will be then no difficulty. The difficulty will arise only where the time fixed by law for a suit to set aside the document has elapsed, but the limitation for possession of the immoveable property dealt with under the document has not elapsed, and also in cases where the suit was brought after the expiry of the period fixed by law for the recovery of the property, if calculated from the date when the plaintiff became entitled to repudiate the contract, but within such period, if calculated from the date when he actually repudiated the contract or deed. However, it must be admitted that there is no Indian statute expressly laying down that a person who comes in as plaintiff claiming relief against the effect of a deed voidable at his instance, should have it judicially rescinded before or at the time of his getting that relief. But if judicial decisions have laid down the common-law of the land as requiring Such judicial rescission, and if there are implications to be found in the statute law supporting the judicial decisions as to the rules of the common-law, we are bound to follow such decisions. The common-law being founded on common sense, many of its principles will be found laid down in English cases also. And if the principles so laid down by English decisions have been adopted by the Privy Council and by the Indian High Courts, they form part of the law, binding upon Indian Courts. Hence, though I do not wish usually to refer to the English law, as numerous English decisions were referred to in the course of the arguments in this case, I shall very briefly refer to what I consider to be the result of those decisions. Isolated passages in several of those judgments can, no doubt, by ingenious interpretation, be made to support the appellant's view. I do not mean, however, to enter, upon an elaborate refutation of the arguments advanced by the appellant's learned vakil based on such passages. I shall merely refer to what Lord Halsbury in his Laws of England, volume 20, Section 1745, says on this point:
29. Now let us see whether the Indian Legislature has indicated, at least by implication, that contracts and deeds prima facie binding on the plaintiff, as entered into by himself or as executed by himself or his predecessor, ought to be judicially set aside as a necessary preliminary to the granting to the plaintiff of reliefs consequent upon the wiping out of the contract or deed. The Indian Contract Act, Section 2, Clause (1), defines a voidable contract thus:An agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of the other or others, is a voidable contract. Section 10 says: All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void." Section 14 says: Consent is said to be free when it is not caused by coercion, undue influence, fraud, misrepresentation or mistake." Reading Sections 10 and 14 together, therefore, an agreement to which consent is caused by coercion, etc., is not a contract. However, Sections 19 and 19-A loosely call an agreement caused by coercion, etc., as a contract voidable at the option of the party whose consent was so caused. Then Section 19-A is a most important section; it is as follows:
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.
Illustration.
(a) As son has forged B's name to a promissory note. B, under threat of prosecuting A's son, obtains a bond from A for the amount of the forged note. If B sues on this bond, the Court may set the bond aside.
(b) A, a money-lender, advances Rs. 100 to B, an agriculturist, and, by undue influence, induces B to execute a bond for Rs. 200 with interest at 6 per cent, per month. The Court may set the bona fide, ordering B to repay the Rs. 100 with such interest as may seem just.
30. I think this section clearly indicates that, as regards a contract voidable by the plaintiff or the defendant on the ground of undue influence, the legislature, though it calls it a voidable contract, clearly intended that, in order that the avoiding by the party might be effectual to set aside the contract, the bond, even when the defendant raises a plea in answer to the plaintiff's action on the bond, as in the first illustration, and, of course, when the obligor is the plaintiff (which seems to be the meaning of the second illustration), ought to be set aside by the Court in favour of the defendant or the plaintiff as the case may be. Chapter IV, Section 35, of the Specific Relief Act provides for the Court rescinding a contract voidable or terminable by the plaintiff, and also, where a contract of sale or lease has been made and the purchaser or lessee makes default in payment of the purchase money or the premium money after a decree for specific performance had been passed. Again, the Limitation Act prescribes a limitation of one year in Articles 11 and 11-A for suits to set aside certain judicial orders, in Article 12(a) the same period to set aside sales in execution of a decree of a Civil Court or of a Revenue Officer or held for recovery of arrears of Government revenue and so on, and in Articles 13, 14 and 15 for setting aside other similar orders of public authorities. Article 44 of the Act prescribes a period of three years for a suit by a ward (to set aside alienations by his guardian) calculated from the date when the minor attains majority. Article 91 provides a three years' limitation period for a suit to cancel or set aside an instrument not otherwise provided for. Article 95 gives again three years for setting aside a decree obtained by fraud or for other relief on the ground of fraud. Article 113 provides three years for specific performance of a contract. Article 114 provides three years for a suit for rescission of a contract. Let us take the case mentioned in Article 95. Supposing there is a decree obtained by A through fraud, declaring against B that A is entitled to retain as against B the suit land as absolute owner, though really A was only a permissive tenant of B in respect of the land, having obtained possession of the land as such permissive tenant one year before the decree was passed. B knows of the fraud two years after the decree is passed. He keeps quiet for four years and then sues for possession of the land, he being then barred from bringing a suit to set aside the declaratory decree obtained through fraud by A. It seems to me clear that fraudulently obtained decree which has not been set aside must stand in his way. Similarly, it seems to me that the other articles, including the article relevant to this case, viz. Article 91, will stand in the way of a plaintiff suing for the relief claimed by him against the tenor of the decisions or instruments, as the case may be, to which he has been a party and which are binding on him till set aside by the Court. In a very recent article in page 55 of the Madras Law Journal (February), Mr. Shephard says that Section 36 of the Specific Relief Act indicates that "rescission imports a judicial decision" and that "rescission by a person entitled to rescind means that he having resolved not to persist in demanding performance, is in a position to sue for rescission or to defend an action brought on the contract." If he allows the time (prescribed by the Indian Law of Limitation) to sue for rescission to pass, his rescission in pais cannot entitle him to sue for any other relief on the basis that the contract has been set aside though, as a defendant, he may be allowed to defend his possession in a suit brought by the other party, provided his title to the property in dispute has not passed to the other party by the effect of a registered deed under the provisions of a statute giving such effect to such a deed. Even in the latter case, if he has acquired a title by prescriptive possession, he can, of course, successfully put forward that plea.