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1889 Supreme(SC) 14
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD WATSON, SIR BARNES PEACOCK, AND SIR RICHARD COUCH.
PERTAB CHUNDER GHOSE - Appellant
Versus
MOHENDRA PURKAIT - Respondents
On Appeal from the High Court in Bengal.
Decided On : May. 23, 24; June 29. 1889.
Solicitors for the Appellant:Watkins & Lattey. Solicitors for the Respondents: T. L. Wilson & Co.
A contract induced by untrue representations is considered fraudulently obtained in equity and is unenforceable. Additionally, an agreement to execute a future registered document does not necessarily create an immediate interest in property and thus may not require registration.
Headnote:(A) Registration Act, 1877 - Section 17 - Admissibility of an agreement to execute a future document - An agreement where tenants promise to sign and register future rent agreements is a document creating a right to obtain another document, rather than one creating or declaring an interest in property; such a document does not require registration under Section 17, though it cannot be sued upon as the final agreement for payment of rent.
(B) Contract Law - Fraud and Misrepresentation - Where one party induces another to contract on the faith of representations that are untrue, the entire contract is considered to have been obtained fraudulently in a Court of Equity. If a party is told that specific stipulations in an agreement will not be enforced, they cannot be held to have assented to those terms, and the document cannot be treated as the real agreement between the parties.
(C) Code of Civil Procedure, 1882 - Sections 584 and 585 - Scope of Second Appeal - The power of a court in a second appeal is limited, and it should not be permitted to question the findings of fact determined by the first appellate court.
Facts of the case:
A landlord brought a suit against tenants to recover rent cesses and interest based on a registered rent agreement. The tenants contended that the agreement was obtained through misrepresentation and contained unconscionable terms, including the surrender of occupancy rights and clauses allowing ejection at the landlord's pleasure. An unregistered agreement was also produced, in which the tenants had promised to execute and register future rent agreements at specified rates.
Findings of Court:
The court found that the landlord had misrepresented the law and the effect of certain penalty clauses to induce the tenants to sign. Because the tenants were induced by untrue representations, the rent agreement was fraudulent in equity. Regarding the unregistered agreement, the court held it did not require registration as it was merely an agreement to obtain another document, but it was not the final agreement for rent. While the High Court's dismissal of the suit was correct, the court noted that the High Court had improperly reviewed findings of fact in a second appeal.
Issues: Whether a rent agreement obtained through misrepresentation and promises of non-enforcement is binding; whether an agreement to execute a future registered document requires registration; and the extent of an appellate court's power to review findings of fact in a second appeal.
Ratio Decidendi: A contract induced by untrue representations is fraudulent in equity and unenforceable. If a party is led to believe certain terms will not be enforced, those terms are not part of the actual agreement. Furthermore, an agreement to execute a future document is distinct from a document that creates an immediate interest in property.
Result: Appeal dismissed; decrees of the High Court affirmed.
Legal Category Hierarchy
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land law
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tenancy
- rent recovery
- occupancy rights
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tenancy
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contract law
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validity
- fraud and misrepresentation
- unconscionable bargains
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validity
-
practice and procedure
- registration
-
civil procedure
- second appeals
Judgement
APPEAL from two decrees of the High Court (Jan. 27, 1887) reversing decrees of the District Judge of the 24-Pergunnahs (March 31, 1886), and dismissing the Appellants suit with costs.
The suit was brought in the Court of the Subordinate Judge by the Appellant, a zemindar, against his tenants to recover rent cesses and interest to the amount of Rs.1640. It was founded upon a kabuliyat dated the 21st of June, 1881, alleged to have been executed by the Respondent Rukhit Chunder Purkait for himself and brothers and as guardian of the sons of Abhoy Churn, An ikrar was also produced in evidence by the Appellant signed by Abhoy Churn.
The Subordinate Judge held that the ikrar was proved and did not require registration, and made a decree in its terms.
The District Judge rejected the ikrar for want of registration and founded his decree on the kabuliyat.
Both Courts held that the kabuliyat had been executed as alleged. The Subordinate Judge, however, held that " the terms were so extortionate and hard," and that there was such a surrender by Rukhit without adequate consideration of all previously acquired rights, and an acceptance in their place of such " an unconscionable bargain," the details of which the Subordinate Judge gave, and such apparent want of proper legal advice, that Rukhit was not bound by the kabuliyat. And further that, as Rukhit purported to sign only for himself, and was not guardian de facto or de jure of the infant sons of Abhoy Churn, he could not bind either them or his own brothers.
The District Judge, on the other hand, held, that though " some of the stipulations in the kabuliyat were very hard and even flagrantly unjust," he, the Judge, had nothing then to do with that. But there was no reason to suppose that Rukhit Chunder was not a free agent, or was imposed on by fraud or misrepresentation, when he signed, and that he was therefore bound by the kabuliyat as to the amount of rent, and the area of the land; and that he executed it within the scope of his authority as manager on behalf of his nephews, for whose benefit it was, and that they therefore were also bound by it.
The High Court dismissed the suit, being of opinion that the Appellant had acted fraudulently in taking the kabuliyat, and that it could not be enforced against Rukhit Chunder ; that, even if binding on him, it was not binding either on his major brothers, who were neither parties to the kabuliyat nor to the suit, or on his minor nephews, whose guardian he was not, and whose manager he was not shewn to be, and for whose benefit the kabuliyat decidedly was not entered into.
Branson, and Cave (Sir Horace Davey, Q.C., with them), for the Appellant, contended that as regards the kabuliyat there were concurrent findings of the first two Courts, that it was executed by Rukhit Chunder with sufficient knowledge of its stipulations. The High Court was not justified in finding that the Appellant had acted fraudulently in taking it, or that there had been undue influence or misrepresentation, or that the contracting parties were not of one mind as to what was agreed upon. The ikrar did not require registration, see Act III. of 1877, sect. 17, clauses (b) and (h), and ought to have been taken into consideration.
Doyne, for the Respondents, contended that the ikrar was inadmissible in evidence for want of registration, having regard to the true construction of the clauses referred to. As regards the kabuliyat, that document was not binding on Rukhit Chunder, for the reasons given by the High Court. Nor was it binding on the minor Defendants, for whom he had no authority to act and to whose interests the kabuliyat was highly prejudicial. The decrees of the lower Courts affect also the interests of the brothers of Rukhit. But they were parties neither to the kabuliyat nor to the suit. The suit ought to be dismissed on the ground that the tenure in question being joint the kabuliyat nevertheless did not affect the interests of either the minors
