NATIONAL UNIVERSITY OF STUDY AND RESEACH

IN LAW, RANCHI

CONTRACT PROJECT
UNDUE INFLUENCE – LAKSHMI AMMA V. T. NARAYANA BHATTA

SUBMITTED TO: SUBMITTED BY:

MS. SONI BHOLA NAME: SHREYANSHI SINGH

SEMESTER: I
ASSISTANT PROFESSOR LAW
SECTION : A
ROLL NO. : 1257

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 DECLARATION

I, Shreyanshi Singh, a first-semester B.A. LL.B student at the National University of Study
and Research in Law, Ranchi, hereby declare that the project named " UNDUE INFLUENCE
– LAKSHMI AMMA V. T. NARAYANA BHATTA " under the supervision of Ms. Soni
Bhola, faculty of Contract, is a unique work. I have worked hard to produce this research and
have not falsified any facts or data.

I declare that the claims I've made and the conclusions I've reached are the genuine results of
my study. I further state that, to the best of my knowledge and belief, suitable references have
been included, and that the document does not contain any work that has been submitted to
other colleges.

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Section 16 of the Indian Contracts Act, 1872 deals with ‘undue influence’. Sub section
defines it as the misuse of a trusting relationship to obtain unfair advantage. Such trusting
relationships are termed as fiduciary relationships.1 Sub-section 2 discusses the many
instances in which one party to a contract might be said to control the will of another. The
last sub-section raises a rebuttable presumption where a contract takes place between parties
in such a position and the transaction is unconscionable. Below, the section has been cited for
a better understanding of the theory.

S 16. 935. "Undue Influence" defined.—

“(1) A contract is said to be induced by "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.

(2) In particular and without prejudice to the generality of the foregoing principle, a person is
deemed to be in a position to dominate the will of another

(a) Where he holds a real or apparent authority over the other, or where he stand in a
fiduciary relation to the other; or

(b) Where he makes a contract with a person whose mental capacity is temporarily or
permanently affected by the reason of age, illness, or mental or bodily distress.

(3) Where a person who is in a position to dominate the will of another, enters into a contract
with him, and the transaction appears, on the face of it or on the evidence adduced, to be
unconscionable, the burden of proving that such contract was not induced by undue influence
shall be upon the person in a position to dominate the will of the other. Nothing in the sub-
section shall affect the provisions of section 111 of the Indian Evidence Act, 1872 (1 of
1872).” 2

The word undue denotes unneeded, unjustified, or more than required. Influence involves
convincing the mind of a counterparty through changing his thinking or changing his will,
however this influence must be undue i.e. it is not required. Undue influence applies to a
relationship which may be blood relation or some other sort of relation i.e. fiduciary or
relation based on trust. It means the unfair exploitation of one’s superior position to get the
assent of a person who is in a weak position. For example, a police officer acquired a
1
A fiduciary relationship is where one person places some type of trust, confidence, and reliance on
another person.
2
Indian Contracts Act, 1872, (Act 9 of 1872)

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property worth Rs. 1 lakh for Rs. 5000 from Ram, an accused under his custody. Later this
contract can be cancelled and it can be treated as void because there is a mental burden on a
person.

What qualifies as a trusting relationship?

It is not required that the parties should be related by blood, marriage or adoption, but that
their relations towards each other be such that one is in a superior position over the other.
Mere relationship is not sufficient for a Court to presume that one relation was in a position
to influence the will of the other. Mere near relationship between the parties cannot rise to the
suspicion of improper influence. Also simple link of kindred does not establish undue
influence.

The section is not restricted to cases where strictly or technically fiduciary relationship is
established; and it applies to all varieties of relations where the possibility of exercising
undue influence exists from confidence created or established, or relations in which
dominance may be exercised by one person over another.

Defining a dominating position

Relationships which exist between a guardian and his ward, parent and son, patient and his
medical adviser, solicitor and client, fall within the reach of sub-section 1 of this section.

The position of a person to dominate the will of another may arise not merely from the fact of
parties being relatives of each other; or from the fact that the relationship is such that one of
them relies upon the other for advice; it may also arise as a result of the circumstances in
which the contract was entered into.

A position of dominance, if demonstrated to exist, is deemed to remain till its end is

established. When once it has been proven that one party to the contract possessed a general
influence and control over the will of another, it need not be shown how in the particular
instance it was employed, and it will be considered to have been used unless opposite is
shown.

The assumption would not arise if the dominance over the will of the other is not established.

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What is meant by undue advantage?

The term "unfair advantage" must be considered with the context. They do not limit the
jurisdiction to circumstances where the transaction would be plainly unjust as between
persons trading on an equal footing. The word "unfair advantage" is used as signifying an
advantage achieved via unrighteous methods. It would exist where the bargain is in advantage
of the influencer and unjust to the other.

A mere finding that the promisee obtained an unfair advantage over the promisor is not
sufficient to demonstrate undue influence, unless it is also shown that the promisee was in a
position to dominate the will of the promisor, and did so to use that position.

In past rulings, English law required that the person affected must show evident detriment to
him, this provision requires an unfair benefit to the person exercising excessive influence.

The role of mental incapacity

Undue influence may develop where one party establishes a contract with a person whose
mental ability is temporarily or permanently affected by reason of age, sickness, or mental or
bodily anguish.

But a simple distressed state of mind of a party to the contract cannot raise a presumption of
undue influence, provided the opposite party had taken the chance to use it to obtain an unfair
benefit to himself. ​ Mere physical infirmity does not carry with it mental inability.

The fact that the individual transferring the property was in weak health and utterly blind, or
that the affected party was a simpleton and an opium addict, would not establish the
assumption of undue influence.

Exercise of undue influence was presumed where a young widow consented to an

arrangement of partition while in recent loss and illness, and without any independent advice.

Burden of Proof

The burden of showing free consent depends on the one who, being in a dominant
position, makes a transaction so greatly to his personal profit that it "shocks the conscience".
This sub-section (3) is limited in its application. It lays down the prerequisites for raising

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a rebuttable presumption that a transaction is achieved by the exercise of undue influence.
The basis for this law is that a person, who had achieved an edge over another by dominating
his will, may likewise remain in a position to suppress the required evidence in support of the
plea of undue influence.

If the transaction appears to be unconscionable, then in terms of sub-section 3, the burden of

proving that the contract was not induced by undue influence is to lie upon the person who
was in a position to dominate the will of the other. Two conditions must be proven in order
that this third sub-section function, namely, that a person was in a position to dominate the
will of another and the transaction seems on the face of it or on the facts adduced to be
unconscionable. If one of these two elements is not fulfilled, the presumption of undue
influence will not arise and burden will not shift; and proof of the actual use of the
dominating position will be required.

The case of Lakshmi Amma v. T Narayana Bhatta3 is one of the leading judgements wherein
the court held that employment of undue influence to obtain unfair advantage from a person
whose will can be dominated are considered to be null and void.

Facts of the case

The suit out of which the appeal has arisen was instituted in the name of Narasimha Bhatta
who was stated to be of weak intellect by his next friend and daughter Adithiamma for a
declaration that the will dated September 30, 1955 said to have been executed by him was
invalid and also for the cancellation of the deed of settlement dated December 13, 1955,
which had also been executed by Narasimha Bhatta in favour of the first respondent and for
other incidental reliefs.

The argument as detailed in the plaint was that the plaintiff, who was of elderly age, was
suffering from diabetes for a long time and his physical and mental health was quite weak.
Respondent No. 1 was at first unsuccessful in obtaining a will prepared by him by which he
donated virtually all his belongings to the said respondent.

In December 1955 he was led to Mangalore by respondent No. 1 and there the latter
succeeded to get executed Ext. B-3 by him. By this deed of settlement the entire possessions
which were large were granted to respondent No. 1, the plaintiff reserving just a life interest
for himself plus making modest provision for the upkeep of his wife Lakshmi Amma.

3
Lakshmi Amma v. Talengalanarayana Bhatta, (1970) 3 SCC 159

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Respondent No. 1 was able to secure benefits under the settlement instrument for himself
owing to the feeble intellect and old age of the plaintiff.

It appears that before the High Court the decision of the trial Court relating to the will was
not questioned. At any rate since the will was never presented the single question which we
are called upon to decide is whether the deed of settlement Ext. B-3 was performed in
circumstances which rendered it null and void.

It was stated that on September 30, 1955 a will had been executed by the executant but he
felt it advisable to execute a settlement deed in respect of his immovable and moveable goods
and also for the discharge of his debts etc. This, it was alleged, was being done in
supersession of the will. It was asserted that respondent No. 1 had been nursing the executant
and looking after him and hence he was conferring full rights over his properties on him
subject to the stipulated restrictions. He was to have complete right to enjoy the said
properties and collect their income till his lifetime. After his death Narayana Bhatta was
entitled to take possession of his properties and get the pattas executed in his name and he
was to have absolute and (sic) was to be maintained by Narayana Bhatta. If she found it
inconvenient to live with him he was to give to her annually till her death two candies of
Areca which was to be the first charge on the properties. If he failed to give arecanuts on the
specified dates he had to pay the price thereof at the prevailing market rate combined with
Interest @ 51/2 percent per annum. Certain debts were specified which were expected to be
paid off by the executant but if that was not done Narayana Bhatta was to dismiss them.

Key issues

The key issue of the case was whether the deed was executed in such circumstances that
rendered it null and void. A number of issues were framed on the pleadings of the parties. It
was contended that the plaintiff was a person of feeble intellect and was not in a position to
take care of himself and handle his affairs correctly on the date of the execution of the
aforesaid documents. The respondent preferred an appeal to the High Court. After hearing the
parties the High Court instructed that the evidence of three persons, two of whom were
doctors and the third was a document writer, should be recorded by the trial Court and the
record submitted to it. After the arrival of the record the appeal was again heard. During the
pendency of the appeal the plaintiff died on October 8, 1959 and his wife Lakshmi Amma
and two daughters, Adithiamma and Parameshwariamma were impleaded as legal
representatives by an order dated November 30, 1959. The High Court reversed the verdict of

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the trial court holding that the donation stated in Ext. B-3 was a spontaneous act of the
plaintiff and he had exercised an independent will in the matter of its execution. However this
judgement was later quashed by the apex court and the order of the trial court was restored.

Contentions of each party

 Appellant
That deed was registered when the executor was not in a healthy state to understand
the consequence and was weak in his body. The executor was also not consulted
before drafting the deed.
 Respondent
That the deed was prepared after the plaintiff gave the instructions to draft the
document under his signature.

Judgement
It was decided by the apex court that there was sufficient suspicion about the genuineness of
the execution of the document Ext. B-3 and. it was for respondent No. 1 to dispel the same.
The court stated that respondent No.1 totally failed to do so with the result that the appeal
must succeed. The decree of the High Court was set aside and that of the trial Court restored.

The rationale provided by the court was as follows:

 The court was satisfied that Narasimha Bhatta who was of advanced age and was in a
state of senility and who was suffering from diabetes and other ailments was taken by
respondent No. 1 taxi along with Lakshmi Amma to the Nursing Home in Mangalore
where he was got admitted as a patient.
 No draft was made with the consent or under the orders of Narasimha Bhatta nor
were any instructions given by him to the Scribe in the matter of drawing up of the
document Ext. B-3.
 Lakshmi Amma the wife of Narasimha Bhatta who was the only other close relation
present has stated in unequivocal words that the paper was got executed by applying
pressure on Narasimha Bhatta while he was of an infirm mind and was not in a fit
condition to know what he was doing.
 The hospital record was neither produced nor did the doctor who attended on
Narasimha Bhatta at the Nursing Home produce any valid data or record to

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 corroborate their evidence. Even the will was not presented by respondent No. 1
apparently because it must have contained recitals about the fragile state of health of
Narasimha Bhatta.
 The dispositions which were made by Ext. B-3, as already pointed out before, were
altogether unnatural and no valid reason or explanation has been given why
Narasimha Bhatta should have given everything to respondent 1 and even deprived
himself of the right to deal with the property as an owner during his lifetime.
 All these facts led the court to decide that the deed settlement was indeed executed
under questionable circumstances and hence the same should be held null and void.

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