Fraud, undue influence, doctrine of restitution

Shourya Tanay (Querist) 06 June 2015 This query is : Resolved
Hello Sir,
I have a case on which i need your help.

case is:

Mrs. Aruna S. v. Abhinav Agrawal and others

Aruna S. and Abhinav Agrawal both were classmates and very good friend during their law course in the University. Both were very good friend and also planning to get marry. However due to some family and other reasons they could not marry. Abhinav, after completing LL.B started helped his father in his real estate business and latter on established his own company. Aruna got her LL.B. degree in the year 1992 but before she could join bar, she got married with Mr. Ashok K. At the time of marriage Aruna’s father gifted her plot of 4 acre, lying somewhere in the heart of the city.

Due to many family and other economic compulsions she stayed as housewife and maintained her family. Both husband and wife with their two children were happy family till 2006. However, in March 2006 they trapped into deep trouble and financial crisis. Apart from many reasons one reason of all these troubles was bad habits of her husband such as drinking, betting and clubbing with locals. Though her husband is a MBA but because of his bad habits he could not manage any stable business or a permanent job for himself.

In March 2006 he was arrested while possessing some country made liquor. He was prosecuted and to fight all this litigations, Aruna borrowed one lakh rupee from Mr. Abhinav Agrawal. Abhinav, who by the time came closer to her husband. As a security for the return of this money she mortgaged her gifted land in the name Abhinav Agrawal with possession. Mr. Agrawal use to give lot of financial and other supports to Ashok K and once Ashok confessed to his wife that he owe almost more than 20 laks rupees to Abhinav.

When Ashok came out from all this litigation he met with Abhinav and both agreed to do joint business. For that Ashok borrowed some 20 laks rupees. For this a contract deed was prepared.

Aruna’s younger daughter, aged 6, was suffering from brain fever and on 10th of Jan 2009 she was admitted in a hospital where she stayed for 11 days. Her condition was very serious. On 20th of Jan 2009, Ashok came to hospital and told Aruna about this settlement. She only cautioned him about new business tactics. Next day Abhinav and Ashok both came to hospital and contract was signed. Accordingly Ashok received 20 laks rupees and started new business.

In between Aruna’s father helped this troubled family by gifting one lak rupees and by this help Aruna redeemed mortgaged property on December 2009 by paying one lak rupee and got back her gifted property. In December 2009 Aruna thought to establish a CLAT coaching centre and thus planned to construct building on the plot. She was taken aback when suddenly police arrived on the scene with Abhinav and ordered to stop any construction work. Abhinav shown to them a stay order from local civil court and also produced a ‘sale deed’ signed by her in favour of Abhinav.

She challenges this stay order and filed a civil suit for cancellation of alleged sale deed. She files suit against both Abhinav and Ashok for playing fraud and misrepresenting him regarding the contract. She claimed that when she signed this deed she was under impression that she is just a surety for this contract and her husband also assured her that she is surety to this contract only. She also contended that the contract is not only a misrepresentation but also affected by undue influence.

Mr. Abhinav, though admitted that Aruna was not informed about details of contract but one of the reason was that since her husband was himself responsible for this contract so his nothing to do with any fraud or misrepresentation. He also argued that since she is a literate lady and also a lawyer she must know nature of every document she is signing. He also argued on the basis of declaration clause which was there in the contract which declares that “I undersigned hereby declare that I have gone through with the terms and conditions of contract and understand the very nature of contract and any liability there under.” Mr. Ashok did not appear in the court and ex-parte proceeding was ordered against him.

Court prepared following issues;

• Whether Plaintiff (Aruna) was misrepresented as to nature of contract and liability under the contract deed?
• Whether any fraud was played with the plaintiff as to nature of contract and liability under the contract deed?
• Whether contract was entered by exercising undue influence against plaintiff?
• Whether in the given circumstances, restitution can be ordered?

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