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1 - 8 of 8 (0.37 seconds)Central Inland Water ... vs Brojo Nath Ganguly & Anr on 6 April, 1986
18. (a) In the decision reported in AIR 1986 SC 1571 = (1986) 3 SCC 156 (Central Inland Water Transport Corporation Ltd. v. Brojo Nath Ganguly) the Honourable Supreme Court considered the unequal bargaining power and held that unilateral power to terminate is opposed to public policy. In paragraph 90 of the Judgment, the Honourable Supreme Court held thus,
"89. Should then our courts not advance with the times? Should they still continue to cling to outmoded concepts and outworn ideologies? Should we not adjust our thinking caps to match the fashion of the day? Should all jurisprudential development pass us by, leaving us floundering in the sloughs of 19th century theories? Should the strong be permitted to push the weak to the wall? Should they be allowed to ride roughshod over the weak? Should the courts sit back and watch supinely while the strong trample underfoot the rights of the weak? We have a Constitution for our country. Our judges are bound by their oath to uphold the Constitution and the laws. The Constitution was enacted to secure to all the citizens of this country social and economic justice. Article 14 of the Constitution guarantees to all persons equality before the law and the equal protection of the laws. The principle deducible from the above discussions on this part of the case is in consonance with right and reason, intended to secure social and economic justice and conforms to the mandate of the great equality clause in Article 14. 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. It is difficult to give an exhaustive list of all bargains of this type. No court can visualize the different situations which can arise in the affairs of men. One can only attempt to give some illustrations. 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 apply where the inequality is the result of circumstances, whether of the creation of the parties or not. It will apply to situations in which the weaker party is in a position in which he can obtain goods or services or means of livelihood only upon the terms imposed by the stronger party or go without them. 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. This principle, however, will not apply where the bargaining power of the contracting parties is equal or almost equal. This principle may not apply where both parties are businessmen and the contract is a commercial transaction. In todays complex world of giant corporations with their vast infrastructural organizations and with the State through its instrumentalities and agencies entering into almost every branch of industry and commerce, there can be myriad situations which result in unfair and unreasonable bargains between parties possessing wholly disproportionate and unequal bargaining power. These cases can neither be enumerated nor fully illustrated. The court must judge each case on its own facts and circumstances."
Jai Durga Finvest Pvt. Ltd vs State Of Haryana And Ors on 5 January, 2004
15. The contention of the respondent that the petitioner is bound by the terms and conditions of the auction, which nowhere states that the petitioner as lessee can hand over possession after giving three months notice is unsustainable because of the Judgment of the Supreme Court reported in AIR 2004 SC 1484 (Jai Durga Finvest Pvt. Ltd. v. State of Haryana), wherein in paragraph 11 the Honourable Supreme Court taking note of the non-consideration of the above aspect by the High Court, after setting aside the same remitted the matter to the High Court for consideration of the matter afresh and find out as to whether the doctrine of frustration will be invoked or not. Paragraph 11 of the judgment reads thus,
"11. ....... The High Court, as noticed hereinbefore, has merely proceeded on the basis that the appellant had entered into the contract with his eyes wide open; but, the same would not, in our opinion, mean that they were bound to pay the contract amount, get its security amount forfeited, as also pay interest at the rate of 24 per cent, although it could not, by reason of acts of omission and commission on the part of the respondents, carry out the mining operation as per the terms of the agreement."
M/S. Krishna & Company vs The Govt. Of A.P. And Others on 17 March, 1992
In AIR 1993 AP 1 (Krishna & Company v. Government of A.P.) a Division Bench of the Andhra Pradesh High Curt considered similar issue and in paragraph 12 held as follows,
"12. Then the question arises as to the forum, before which it can be agitated. The respondent-Government argues that the question of frustration of contract cannot be gone into in this Writ Petition and that the amount claimed cannot be refunded and that if at all there is any right for the petitioner, the same has to be ventilated through the process of institution of a suit in a civil Court under the common law and this Court cannot entertain such a plea in exercise of its extraordinary jurisdiction under Article 226 of the Constitution of India. We are afraid, that we cannot accede to this contention, having regard to the facts and circumstances of this case. It is true, as contended by the learned Government Pleader, that ordinarily when a plea of frustration of contract is raised and consequent refund of amounts is sought for, it is the civil Court which has to entertain the lis having regard to the nature of dispute where the fact finding enquiry is necessary. But, in the instant case, no such fact finding is necessary. The petitioenr is also not claiming any relief for breach of contract so as to say the relief with regard to the breach of contract is purely contractual and that the remedy lies in a civil Court. Here is a case where the auction is held under the statutory rules, a statutory contract has been entered into and the facts leading to the stoppage of work relating to quarrying of sand by the petitioner at the instance of the persons and authority claiming through and on behalf of the Government are admitted and the petitioner is not claiming any damages so as to drive him to Civil Court for determination of the quantum after fulfledged trial. The petitioner is just seeking for refund of the amounts deposited by him after his bid was accepted and having regard to the fact that he was prevented from exercising his rights under the leases and the inaction of the respondents in setting right the matters has frustrated the contract and the respondents had absolutely no right or authority to hold up the said lease amounts aggregating to Rs.39,600/-. The petitioner is also not claiming any interest. As the contract is a statutory one, as the legal right of the petitioner to quarry was invaded by the public and governmental authorities leading to frustration of contract, as the acts leading to frustration of contract are admitted by the respondents, as there is no disputed question arises for determination of the amount claimed inasmuch as the amount claimed is neither by way of damages nor for any breach of contract, we hold that it is not justifiable for this Court to drive the petitioner to seek the common law remedy."
Article 226 in Constitution of India [Constitution]
L.I.C. Of India & Anr vs Consumer Education & Research Centre & ... on 10 May, 1995
(b) In (1995) 5 SCC 482 (LIC of India v. Consumer Protection & Research Centre) in paragraph 47 the Honourable Supreme Court considered similar issue and held as follows,
"47. It is, therefore, the settled law that if a contract or a clause in a contract is found unreasonable or unfair or irrational, one must look to the relative bargaining power of the contracting parties. In dotted line contracts there would be no occasion for a weaker party to bargain or to assume to have equal bargaining power. He has either to accept or leave the services or goods in terms of the dotted line contract. His option would be either to accept the unreasonable or unfair terms or forego the service for ever. With a view to have the services of the goods, the party enters into a contract with unreasonable or unfair terms contained therein and he would be left with no option but to sign the contract."
Smt. Kanak & Anr vs U.P. Avas Evam Vikas Parishad & Ors on 1 September, 2003
Applying the above decision of the Honourable Supreme Court to the facts in this case, we are of the view that the plea raised by the respondent with regard to maintainability of the writ petition at this stage is unsustainable and deserves to be rejected.
Kerala Samsthana Chethu Thozhilali ... vs State Of Kerala & Ors on 24 March, 2006
19. Applying the above referred principles laid down by the Honourable Supreme court and having regard to the admitted facts as narrated above, we are of the view that the order of the respondent in forfeiting the entire deposits and bank guarantee is unsustainable and the order of the learned single Judge in directing the writ petitioner to pay only three months licence fee with electricity charges and water charges from 21.1.2001 to 21.4.2001 with a direction the the respondent corporation to refund the balance amount to the petitioner is legal and valid and no exception could be taken to the said order.
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