Contracts with unreasonable conditions imposed under undue influence are void and unenforceable, reflecting public policy principles.

JUDGMENT :

Yogendra Kumar Srivastava,J.

1. Supplementary affidavit filed on behalf of the petitioner is taken on record. The supplementary affidavit reveals that in pursuance of the order dated 22.09.2023 passed by a coordinate Bench of this Court, the petitioner has filed the bank guarantee before the respondent no.2.

2. Upon submission of the bank guarantee, the respondent no.2 has released the original certificates/documents to the petitioner.

3. Counsel appearing for the petitioner submits that the respondent no.2 is still to refund the security deposit of Rs.5,00,000/- alongwith interest which was taken from the petitioner as condition of the bond. Relying on the Division Bench decision of the Madhya Pradesh High Court in Writ Appeal No.757 of 2020 ( Ruxmaniben Deepchand Gardi Medical College Vs. Dr. Ansul Jain and others ), learned counsel further submits that the bond that was taken by the respondent no.2 is not valid and is required to be treated as null and void.

4. It is to be noted that the Division Bench of the Madhya Pradesh High Court in the aforementioned writ appeal, had affirmed an earlier judgment of a learned Single Judge in Writ Petition No.7982 of 2019 ( Dr. Anshul Jain D/o Vimal Jain Vs. State of MP and others ), which in turn had relied upon a judgment of the Gujarat High Court judgment in Shitanshu Shekhar Manoharlal Vs. State of Gujarat (P/STA/18840/2014), wherein it had been held as follows:-

"17. At this juncture, it would be relevant to mention that the Supreme Court time and again has struck down the clauses or the conditions contained in the service agreement, which were found to be unfair, unreasonable, unconscionable and opposed to the public policy. As stated earlier, pursuant to the G.R. dated 28.06.2013, the bonds are required to be executed by the students while taking the admission in PG Courses. The students have no choice but to sign in the agreement bond in the prescribed format. In the opinion of the Court such bond agreement could not be said to be have been executed by free will or consent of the students, in view of the provisions contained in the Indian Contract Act. As per Section 19A of the Indian Contract Act, when the 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. Subsection (1) of Section 16 defines "undue influence" to the effect that a contract is said to be induced by the "undue influence" where the relations subsisting between the parties are such that one of the parties is in a position to dominate the will of the other and uses that position to obtain an unfair advantage over the other. Subsection (2) of Section 16 further inter alia provides that a person is deemed to be in a position to dominate the will of another, where he holds a real or apparent authority over the other. At this juncture, it would be also relevant to refer to Sections 23 of the Contract Act. Section 23 states that the consideration or object of an agreement is lawful, unless inter alia the Court regards it as opposed to public policy. It also provides that every agreement of which the object or consideration is unlawful, is void.

18. The Supreme Court, in the case of Central Inland Water Transport Corporation versus Brojo Nath Ganguly reported in (1986) 3 SCC 156 employing the provisions of the Contract Act into the principles of reasonableness and fairness imbibed in Article 14 of the Constitution of India, has held inter alia that when the contracts are entered into by the weaker party under the pressure of circumstances, which results in inequality of bargaining power, such contracts would n