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1868 Supreme(Cal) 180

CALCUTTA HIGH COURT
R.A. Pushong - Appellant
Versus
Munia Halwani - Respondent
Special Appeal No. 168 of 1868
Decided On : 09-07-1868

Headnote:

Undue Influence - Contract - [Indian Contract Act, 1872, Section 16] - The court held that a contract entered into by a legal advisor with his client is presumed to be influenced by undue influence and is liable to be set aside unless the advisor proves the fairness and reasonableness of the contract. The court emphasized that the fiduciary relationship between the advisor and client creates a presumption of undue influence, requiring the advisor to demonstrate the absence of any unfair advantage taken.

Fact of the Case:

The defendant, a legal advisor, entered into a contract with his client, the plaintiff, for the purchase of a house. The defendant had previously acted as the plaintiff's legal advisor in a property dispute, and had successfully obtained possession of the house on her behalf. The defendant claimed that the contract was valid and gave him the right to possession of the house.

Finding of the Court:

The court found that the contract was entered into under undue influence, as the defendant was in a position of trust and confidence with the plaintiff. The court also found that the terms of the contract were unfair and unreasonable, and that the defendant had taken advantage of his position to benefit himself at the expense of the plaintiff.

Issues: Whether the contract entered into by the defendant with his client was valid and enforceable. Whether the defendant had exercised undue influence over the plaintiff in entering into the contract.

Ratio Decidendi: A contract entered into by a legal advisor with his client is presumed to be influenced by undue influence and is liable to be set aside unless the advisor proves the fairness and reasonableness of the contract. The fiduciary relationship between the advisor and client creates a presumption of undue influence, requiring the advisor to demonstrate the absence of any unfair advantage taken.

Final Decision: The court dismissed the defendant's appeal and upheld the decision of the lower appellate court, finding that the contract was invalid due to undue influence. The court also directed the lower court to investigate the circumstances surrounding the contract and consider whether the defendant should be allowed to continue practicing as a legal advisor.

JUDGMENT

Phear, J. - No more unconscionable case than this certainly has it been my lot to meet with since I have sat upon the Bench of this Court. There can be no doubt that the Lower Appellate Court is entirely right in its conclusions, but it might very well have founded its decision upon higher ground than that upon which it has felt it sufficient to place it. The defendant is resisting a claim to possession of a certain house which is made by a lady who was admittedly his client, in the matter of certain proceedings in the Lower Courts, wherein he had undertaken to do his best as a mookhtear, and as a person skilled in the practice of the Courts, to recover for her the property of which this forms a portion. It seems that the proceedings, which he took as her agent, were successful, and that he got possession on her behalf; but he now seeks to keep that possession adversely to her, and to retain the house for himself. He justifies this conduct, on his part, by saying that he is entitled to hold the property as his own under a contract which he entered into with the plaintiff, preliminary to his undertaking the conduct of her affairs. But as he has met with one insuperable difficulty in making out this case, namely, that if the contract gave him, as he says it did, the right to possession which he sets up, then, the document which he tenders as the written evidence of the contract is not admissible under the stamp which its bears. Consequently there is nothing before the Court which can be looked at as evidence of his alleged light, and this of itself is sufficient to defeat the claim which it puts forward.

2. Assuming, however, that the contract was proved, we learn from the defendant's own admission that it was entered into with the lady at a time when he undertook to be her legal adviser or manager. It lay at the very initiation of a fiduciary relationship between himself and her. Now it is always held in Courts of equity that a contract of sale or conveyance entered into by any one with a person who stands relatively to him in a position of confidence or trust, is liable to be called in question by the vendor, and to be set aside at his instance if it be found that the other party made an unfair use of his advantages. So also, when the seller labours under such disabilities, or is so situated as to be peculiarly liable to be imposed upon; and bargains with widowed or single purda women fall within this class, see Rup Narayan Singh v. Gangadhur Prasad (9 W.R., 297). But especially in a case, where any person, acting as an attorney or as a skilled legal adviser, enters into a contract of purchase with his client in respect of the subject of litigation or advice, is the contract liable to be questioned by the other side at any time, and when it is questioned, every presumption is made against its being just. Undue influence is presumed to have been exerted until the contrary is proved; and it is incumbent upon the purchaser, if he relies upon the contract, to show that all its terms and conditions are fair, adequate, and reasonable. Failing that, his claim under the contract and his rights under it must go.

3. Upon the facts of this case, although in strictness, perhaps, the defendant was not actually the attorney or adviser of the plaintiff at the very moment when he made the bargain with her, still it is clear that he was so situated relative to her as to possess all the influence and advantages which belong to that relationship, and which are the foundation of the plaintiff's equity. And even, if the transaction in question does not fall exactly under the last special head, which I have mentioned, it is clear that it is within the operation of the general rule. But, moreover, looking at the conditions of the contract which the defendant in this case thought it consistent with his duty as a Mookhtear of a Civil Court, and as legal adviser of the plaintiff, to enter into with her, I do not hesitate to say, that they are suc

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