AMITY LAW SCHOOL, NOIDA

RESEARCH PROJECT
ON

RULE OF EQUITY- A LEGAL

STUDY

BY NEHA SACHDEVA A3256119078

BY RITIKA WAHI A3256119077
 Acknowledgement

Development of this project was a meticulous job and requires lot of

commitment. It is a pleasure for us to express our thanks and heartiest
gratitude to all those who help us directly or indirectly during the
development of this challenging project. We would like to take this
opportunity to thank them all.
While we cheerfully share the credit for the accurate aspect of this
project report. The mistakes and omissions we have to claim as are
our alone. Please bring them to our attention.
We would like to thank DR DEVENDRA SINGH for providing us
the required useful information and guiding us through this project. We
would also like to express our sincere gratitude to Amity Law School,
Noida in general, for providing excellent study material, with all
facilities for project development.
INTRODUCTION

Rule of equity is a separate system of law from common law. It has

different rules, principles and remedies. Equity proceeds in the
principle that a right or liability should as far as possible be equalized
among all interested. In other words, two parties have equal right in
any property, so it is distributed equally as per the concerned law.

Thus, to understand the principles on which the rule of equity is

based, we must understand the system of law, that is, its origin and
the reasons for its necessity despite the presence of common law.

Common Law is the body of customary law that originated in the

Curia Regis (King’s Court), London. English Common Law was
developed primarily by judges and was based on judicial decisions
and precedents.
Origin of rule of equity in India

In India, rule of equity has its origins from the relevant ancient Hindu
period, when some famous legal experts defined the old law and laid
down new rules for better solutions in case of any conflict arising
between the rules of various laws.

Hindu law has never been unstable and has accordingly introduced
similar principles to meet the requirements of time. The earliest
attempt was to compile the law. In which Smriti Karas (author of
Smriti) has actually considered the principle of law.
It was said that decisions should not be based exclusively on
scriptures, there should be principles based on reasons. These cause-
based theories qualify with the term equity .
Need for rule of equity

The country saw the need for a law of equity for two main reasons: –

• Under the common law, only one remedy was available, i.e.
damages. Thus, a just and reasonable measure cannot always
be given through the common law, where monetary
compensation was not appropriate. This remedy did not
always yield significant conclusions in cases.

• A civil action under the common law can only be initiated

through a writ which was a legal document where it was
written as to why and on what legal grounds a person is being
prosecuted. The problem arose when a case was not covered
by a writ. The making of writs with every new case was
stopped in the 13th century and this meant that if a case was
not already covered by the writ, it was not carried forward.
Principles of rule of equity

The body of the rule of equity is preserved in the following twelve

maxims. These maxims are the general principles adopted to conduct
justice and fairness. They rule over the Equity of Law and are
discretionary.

1. Equity without a remedy will not be wrong: – This maxim,

in Latin, is “Ubi Jus Ibi Remedium” which means “where
there is a right there is a remedy”. Maxim states that in
situations in which the common law acquires a right, it also
have remedies for the violation of the right. It should be kept
in mind that this principle only applies where the jurisdiction
of the court has both rights and measures.

2. Equity follows Law: – This proverb is also expressed

as “aequitas sequitur legem“. This maxim abolishes that
equity supplement law and does not supersede it. The
discretion of the court is governed by law and equity which
are subject to each other. Wherever the law can be followed, it
should be followed. In cases where the law is not specifically
applicable, this maximum limit is limited. But in modern
England and Wales, the law follows equity. Section 49 (1) of
the Senior Courts Act, 1981 clearly specifies that in case of
conflict between the law and the rule of equity, equity will
prevail.

3. He who seeks equity must do equity: – This maxim states

that the plaintiff is also subject to the powers of the court and
is thus bound to perform his duties by obeying the principle of
equity. The concern of this maxim is the conduct of the
plaintiff’s future. Thus, this maxim applies to the party who
 seeks equal relief because it determines that the plaintiff must
also recognize and present his opponent’s authority.
o Section 19A of the Indian Contract Act: – The
plaintiff must restore all benefits arising out of the
contract which has been cancelled by him.
o Section 35 of the Transfer of Property Act: – The
doctrine of election states that a benefit should be
adopted under a legal instrument with all the
provisions and obligations under such an instrument.
o Order 8, CPC Rule 6, Principles of Set-Off: – In case
of mutual debt between two litigation parties, the
amount due to one party will be determined by the
same party which is due to the other party and only
the residual amount will be claimed.

4. One who comes in equity should come with clean hands:

– This principle relates to the past conduct of the parties and
states that a person who comes to court to demand equity
should not involve himself in an unequal act in the past. This
saying is concerned with the past behavior of the plaintiff.

5. Delay defeats equity: – The Latin maxim for this principle

is “Vigilantibus non dormientibus aequitas
subvenit” which means that equality supports vigilance and
not those who sleep for their rights. Unreasonable delay in
bringing forth a claim is called headache. There may be
consequences. Thus, a party must claim the action within a
reasonable period of time. There are certain situations where
the statute of limitations is expressly enforced, in such cases,
there is a special legal situation where a time period is clearly
set, has expired and the party are barred from bringing the suit
of action.

6. Equality is equity: – This principle is expressed by the Latin

maxim “Aequitas est quasi aequalitas” which means that
equity is equality. There is a saying that equity litigation, as
far as possible, seeks to keep the parties at an equal level and
 equalize their rights and responsibilities. Ordinary law may
give advantage to one party over the other, but the court
places the parties on the same footing wherever possible.

7. Equality looks at intent rather than form: –This principle

is enshrined in the provision of relief against penalties and
penalties stating that the purpose of the contract is to execute
it and not compensation, thus the damage must be
proportionate to the punishment and the receiver should not
benefit (Section 74 of the Indian Contract Act provides for
claiming reasonable compensation). In the case of a contract
for the sale of land, if the party fails to complete it within a
specified period of time, the equity gives the party a
reasonable time to complete it.

8. Equity makes the beneficiary as the true(final) owner:

– Due to the limitation in the old common law, there was no
remedy for beneficiaries if, for example, a trustee ran away
with the trust property. To ensure this and to protect the
recipients of the trust property, equity treated the beneficiary
as the true (final) owners of the trust property.

9. Equity acts in personam: – It has been said that rule of

equity applies on a person rather than property. In England,
the Court of Common Law and the Chancery Courts were
distinguished by the fact that the former had rights over the
individual as well as property, but the latter acted only over
the people. His authority to contempt the court and punish
accordingly arose a tremendous power of the Equity Court.
Since the rule of equity was applicable to individuals and not
to property, it could also apply to property outside a
jurisdiction, provided the person was within the jurisdiction.

10. The law prevails, where the equity are treated as equal:
– When two parties want the same thing and the court cannot
 in good conscience say that one object has better rights than
the other, the court will leave it where it is. For example, a
company that was collecting sales tax and handing it over to
the state government found that it was over 2 percent and
overpaid. Company applied for a refund from the other party,
but the state refused his application. The court upheld the
state on the basis that the money actually belonged to the
company’s customers.

11. Where the equities are equal, the first in time prevails:
– When each of the two parties has the right to hold
something, the one who has previously earned interest must
prevail in equity. For example, a man advertises a small boat
for sale in the classified section of a newspaper. The first
person who see the ad first and offers him $ 20 which is less
than the asking price, and the other man also accepts it. The
person says he will pick up the boat or pay it on Saturday.
Meanwhile another person arrives, giving the man more
money, and the man takes it. Now question, arises who is the
owner of the boat. Law of equity and Law of contract states
that the first buyer is the owner of the boat and the second
buyer should get his/her money back.

12. “Equity abhors a forfeiture“: – A forfeiture means to do

something as required necessitates a total loss of right or
authority. A total loss is usually a harsh penalty. Unless a
penalty is justified with respect to the severity of the mistake,
it is very harsh. In fairness and good conscience, a court of
equity will refuse to allow undue unfair expenditure. This
premise has a particularly strong application to the ownership
of land, an interest for which the law shows great respect.
Remedies under law of equity

There are some remedies available to the plaintiff primarily by the

court of law to compensate for the loss he has suffered, some of them
are: –

1. Injection: – It is a type of remedy in which the court provides

a certain law and order on which the parties are pressured or
restrained to perform a specific act.
2. Specific performance: – In these types of remedies, the court
passes a statement in favor to complete certain functions that
are interlinked or already a part of the contract.
3. Recession: – This remedy alternatively takes the parties back
to their normal position before entering into a contract.
4. Rectification: – In such a measure the court orders correcting
or making some changes to the written document to reflect
what is actually said on the first page
Case laws
1. Penn vs. Lord Baltimore
In this case, the court gave the order for a specific
demonstration was made for the plaintiff who brought a case
of a border dispute to an English court, yet the land was
located in Maryland, USA. The jurisdiction of the Court
applied to the parties as they were both in English and resided
in England. Court order the plaintiff to take case to the
jurisdiction of the case.

2. D&C Builders Ltd vs. Rees

Where the plaintiff’s claim of enforcing the plaintiff’s
application was rejected because it took undue advantage of
the poor financial condition of the defendant’s builder
company and thus did not come with clean hands.

3. Ashby vs. White

In this case, qualified voter was not allowed to vote and thus
court sued the Returning Officer, the matter relates to the
principle of law or rule of equity that if a person is
empowered with a right, he is also provided with a remedy.