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PETITIONER: LADLI PRASAD JAISWAL

       Vs.

RESPONDENT: KARNAL DISTILLERY CO., LTD., & ORS.

DATE OF JUDGMENT: 17/12/1962

BENCH: SHAH, J.C. BENCH: SHAH, J.C. SINHA, BHUVNESHWAR P.(CJ) GAJENDRAGADKAR, P.B. WANCHOO, K.N. GUPTA, K.C. DAS

CITATION:  1963 AIR 1279            1964 SCR  (1) 270  CITATOR INFO :  F          1963 SC1322  (3)  R          1965 SC1442  (18)  R          1967 SC 878  (9)  R          1971 SC 658  (6)  RF         1974 SC1178  (8)  R          1974 SC2048  (2)  RF         1976 SC 163  (19)

ACT: Company-Managing   Director  appointed  on  certain   terms- Resolution   removing  Managing  Director   and   appointing another-General   Meeting  -Subsequent   resolution   passed cancelling  previous resolution-Suit by  the  Director-Fraud and  undue influence on the part of the  appellant  alleged- Whether  first appellate, court went far  beyond  pleadings- Letters Patent Appeal-Certificate under Art. 133 (1) (a)  of the   Constitution  Whether   competent-"Court   immediately below"-Courts  subordinate-Constitution of India,  Art.  133 (1) (a) and (b)Companies Act, 1956(I of 1956) s. 155 -  Code of  Civil Procedure, 1908 (Act V of 1908), ss.  100,110,0.6, r. 4-Indian Contract Act, 1872 (9 of 1872) s. 16.

HEADNOTE: The  appellant filed a suit in the Court of the  Subordinate judge  for  a declaration that certain  resolutions  of  the directors and the shareholders in a private limited  company passed  on March 3 and 28, 1946, and at the meetings of  the Directors  held thereafter were illegal and void and  for  a declaration  that the resolutions of October 16, 1945,  were operative  and in force.  The respondents resisted the  suit contesting  that  respondents  2 to 5 were  coerced  by  the appellant  who  took advantage of his  dominating  position, into passing the resolutions on October 16, 1945, and  those resolutions were not binding on the company. The Subordinate judge, held that the written statements  did not  contain sufficient particulars of the plea of  coercion and undue influence’ and that the respondents having  failed to  give  evidence in support of the plea  of  coercion  and undue  influence, the burden of proving which lay upon  them

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the  appellant’s  suit  must  be  decreed.   In  appeal  the District Court held that the appellant was in a position  to dominate  the  will  of  respondents 2  to  5  and  he  took advantage   of  that  position  and  on  that  account   the resolutions  relied upon by the appellant dated October  16, 1945, were vitiated by coercion and undue influence, and the appellant  could  not  get  a  decree  relying  upon   those resolutions.   The appellant appealed to the High Court.   A single Judge of the High Court found that the District judge  271 had  ’travelled far beyond the pleadings’ and therefore  his findings on issue of coercion and fraud could not be upheld, In  an appeal under cl. 10 of the Letters Patent a  Division Bench  of the High Court found that the appellant was  in  a position   to  dominate  and  had  obtained   unconscionable advantage  and it was for him to prove that the  resolutions of October 16,1945, were not vitiated by coercion and  fraud which burden he had failed to discharge.  They further  held that  later resolutions of the company were not  binding  on the  appellant  because no notice was issued to him  of  the meeting  of the company; but no decree could be  granted  to him since ’equity declines to lend its aid to a person whose conduct has been inequitable’.  A certificate of fitness was however  granted to appeal to this Court under Art. 133  (1) (a) of the Constitution. Before  this  Court, it was urged that the  appeal  did  not involve  any substantial quesion of law and the  High  Court was  not competent to grant the certificate under  Art.  133 (1)  (a)  and  (b).  It was submitted  that  the  expression ’Court  Immediately  below’  in  Art.  133  meant  a   court subordinate  to the High Court and a single judge not  being subordinate to a Division Bench of the High Court the ’Court Immediately below’ was the District Court. Held,  that there is nothing in the phraseology used or  the context which justified the view that the expression  ’Court immediately  below’ in Art. 133 (1) of the  Constitution  is used in two different senses according as the High Court  is trying  an  appeal in a proceeding instituted  in  the  High Court  in  exercise  of the  Original  Jurisdiction,  and  a proceeding   instituted   in  exercise  of   its   appellate jurisdiction.  The test for determining whether an aggrieved party  has  no  right  to  appeal,  other  condition   being fulfilled  is  not  whether  the  judgment  is  of  a  court subordinate,  but  whether  the  judgment  is  of  a   court immediately below.  The two expressions being different  the same  considerations do not apply in  their  interpretation. The certificate granted by the High Court under Art. 133 (1) (a) and (b) was competent because a single judge of the High Court  hearing  either a proceeding as a court  of  original jurisdiction  or in exercise of appellate jurisdiction is  a court  immediately below the Division Bench which  hears  an appeal against his judgment under the relevant clause of the Letters Patent. Toolsey  Prasad  Bhuckt v.Benayek  Misser,(1896)L.R.23  I.A. 102, referred to. Wahid-ud-din v. Makhan Lal (1944) I. L. R. 26 Lah. 242,  and Debendra Nath Das v. Bibudhendra Mansingh, (1915) I.  L.  R. 43 Cal. 90, disapproved. 272 Minna  Heatherly  v. B. C. Sen, A. 1. R. 1927 Lah.  537  and Gopal  Lal  v.  Balkissan,  (1931) 1. L.  R.  13  Lah.  338, approved. Kishanlal Nandlal v. Vithal Nagayya, I. L. R. 1955 Nag. 821, disapproved. Held,  that  a  finding that  a  particular  transaction  is

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vitiated  on  the ground of undue influence is  primarily  a finding on a question of fact. Satgur Prasad v. Har Narain Das, (1932) L. R. 59   I.  A. 147 followed. The  High  Court has no jurisdiction to entertain  a  second appeal  "on  the  ground of an  erroneous  finding  of  fact however gross or inexcusable the error may seem to be." Mussammat Durga Choudhrain v. Jawahir Singh Chowdhri, (1890) L. R. 17 I. A. 122, followed. But  a decision of the first appellate court  reached  after placing the onus wrongly resulting in a substantial error or defect in the decision of the case on the merits or based on no  evidence is not conclusive and a second appeal  lies  to the High Court against the decision. A plea of undue influence must be precise and all  necessary particulars in support of that plea must be embodied in  the pleading; if the particulars stated in the pleading are  not sufficient and specific the court should, before  proceeding with the trial of the suit insist upon the particulars. Bharat  Dharma  Syndicate v. Harish L. R. 64 I. A.  143  and Biqhandas  Narain  v.  Jagannath  [1951]  S.  C  .  R.  548, followed.

JUDGMENT: CIVIL APPELLATE JURISDICTION :No. 535 of 1960. Appeal  from the judgment and decree dated October 18,  1957 of the Punjab High Court in Letters Patent Appeal No. 100 of 1954. B.   R. Tuli, S. K. Kapur and K. K. Jain, for the appellent.  273 M.   C.  Setalvad, Attorney-General for India,A.  N.  Khanna and Harbans Singh, for the  respondents. 1962.  December 17.  The judgment of the Court was delivered by SHAH,  J.-One  Kishori  Lal Jaiswal  started  a  "distillery business’  in  the name of Kishori Lal & Sons and set  up  a factory  at  Kamal in the Punjab for  manufacturing  liquor. Kishori  Lal died in 1528 leaving him surviving three  sons, Durga Prasad, Ladli Prasad and Shanti Prasad.  Durga  Prasad who  was  the eldest surviving member became  karta  of  the Joint  Hindu family, and continued the family business.   On the death of Durga Prasad in 1934 leaving him surviving  two sons  Sajjan  Lal and Madan Lal and his  wife  Suraj  Mukhi, Ladli Prasad became the ’karta’ of the family and  continued the business.  By mutual arrangement on November 5, 1940 the joint  Hindu Family of three branches was disrupted and  the business of Kishori Lal & Sons was thereafter conducted as a partnership  concern  each  branch  having  a  third   share therein.  On March 23, 1941 a private limited company called the  Karnal Distillery Company Ltd. was  incorporated  under the Indian Companies Act, 1913, and the business of  Kishori Lal & Sons was taken over by that Company.  Under the  final allotment  of shares made by the Company on August 1,  1941- 1005  shares  were allotted to the branch of  Durga  Prasad, 1503  shares to Ladli Prasad and 1003 to Shanti Prasad.   By the Articles of Association the maximum number of  Directors was  five  and the maximum number was  two.   Ladli  Prasad, SHanti  Prasad and Suraj Mukhi were appointed as  the  first Directors  of  the  Campany.  Every year  one-third  of  the Directors  except the Managing Directors were to  retire  by rotation.  Ladli Prasad was appointed Managing Director  for ten years with the right to continue for another ten years 274

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unless a notice of fifteen days within eight years was given by  a two-third majority at a special general  meeting  held for  the purpose of terminating his appointment as  Managing Director, and that two third of the total number of  members could expel a member of the Company.  Ladli Prasad as Manag- ing Director of the Company drew an allowance of Rs. 1,800/- per month, a commission of 7 1/2 per cent on net profits  of the  Company, a motor-car allowance of Rs. 350/-  per  month with  a  right to be provided a new  motor-car  every  three years  for personal use and Rs. 30/- per day  as  travelling allowance.   The  other Directors of the Company  were  paid remuneration  at the rate of Rs. 250/- per month,  and  each Director  who attend the meeting of the Board  of  Directors was allowed in addition Rs. 25/-per day. Manifestly   there   was   great   disparity   between   the remuneration   received  by  Ladli  Prasad  and  the   other Directors,  and  this  gave rise  to  quarrels  between  the members of the family.  At an extraordinary general  meeting of  the  Company held on February 20, 1945 at  which  Shanti Prasad, Sajjan Lal, Madan Lal and Suraj Mukhi were  present, it was resolved that Ladli Prasad be removed from his office of  Managing  Director and that Shanti Prasad  be  appointed Managing  Director  instead.  But Ladli Prasad  declined  to hand over charge of the Managing Director’s office to Shanti Prasad.  A suit was thereupon filed by Shanti Prasad in  the Court  of  the Subordinate Judge, Karnal, on behalf  of  the Company  against  Ladli  Prasad  on April  10,  1945  for  a declaration that he was lawfully appointed Managing Director of  the  Company  and for  enforcing  the  resolution  dated February  20, 1945.  Ladli Prasad in his turn filed  a  suit for  a  declaration that Shanti Prasad had ceased  to  be  a Director of the Company.  In the suit filed by Shanti Prasad on  behalf of the Company,, the trial Court appointed  Suraj Mukhi and Madan Lal as joint receivers to manage the affairs 275 of  the Company for the duration of the suit.  Against  that order Ladli Prasad appealed to the High Court of  judicature at Lahore and obtained an order staying the operation of the order  appointing  receivers.On  October  16,  1945  at   an extraordinary  general  meeting of the Company held  at  the residence  of Ladli Prasad at which all the members  of  the family were present certain special resolutions were passed. The effect of the resolutions was that:-               (1)   That  each branch of the  family  should               own  1170  shares and for this  purpose  Ladli               Prasad  should transfer 167 shares  to  Shanti               Prasad and 166 to the branch of Durga Prasad.               (2)   Resolution dated February 20, 1945  pur-               porting  to  remove  Ladli  Prasad  from   the               Managing Directorship was cancelled.               (3)   Resignation of Ladli Prasad of his  post               as Managing Director was accepted, and he  was               appointed permanent Director and Chairman, and               Madan  Lal son of Durga Prasad  was  appointed               Director in place of Suraj Mukhi who submitted               her resignation.    Shanti Prasad continued to               be a  Director of the Company.               (4)   The  maximum  number  of  Directors  was               fixed   at  three  and  the  quorum   of   the               Directors’ meeting was also fixed at three.               (5)   Every decision submitted to a meeting of               the  Directors or members was to be deemed  to               be  passed  only if the decision  thereon.  be               unanimous, and the proceedings recorded  being               signed by the Chairman of the Company and  all

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             the  Directors  or the members,  as  the  case               maybe, present at the meeting.               276               (6)   Shanti Prasad was appointed Manager  for               five  years under the control of the Board  of               Directors.               (7)   Article  47 which gave power to  a  two-               third  majority  to  expel  a  member  of  the               Company was deleted.               (8)   Each Director was to be paid Rs. 900/per               month  as remuneration and Rs. 25/-  for  each               meeting  of the Board of  Directors  attended.               No  extra  remuneration to be paid  to  Shanti               Prasad  as  Manager  or  to  Ladli  Prasad  as               Chairman.               (9)   Ladli  Prasad gave up  the  remuneration               which  had  been provided for  him  under  the               Articles  of Association as originally  framed               and  he  was  discharged  in  respect  of  all               previous  accounts  which  were  ratified  and               confirmed.               (10)  All  contracts executed, business  done,               benefits  derived  by Ladli Prasad  under  the               facilities granted to him by resolution  dated               April 30, 1941 of the Board of Directors  were               confirmed  and ratified and  all  transactions               recorded  in the accounts of the  Company  for               the period April 1, 1941 till the date of  the               resolution  were ratified and it was  resolved               that  the accounts of each of the  four  years               ending March 31, 1942, 1943, 1944 and 1945  be               confirmed.                (11)  Dividend at the rate of 65 per cent  of               the face value of the share free of income-tax               was declared.               (12)  While ratifying and confirming the  con-               tracts   executed,  business  done,   benefits               derived in the name, or from the Company                277               by  any Director or the Managing  Director  of               the Company in the past, it was resolved  that               in  future  no Director of  the  Company  will               contract  in the name of the Company  for  his               personal benefit.               (13)  A   large   number   of   Articles    of               Association  of  the Company were  amended  in               order to make them consistent with the special               resolutions. Effect  was  given  to  these  resolutions.   Shanti  Prasad assumed the office of Manager of the Company and took charge of  the  Company’s  properties, assets  and  business.   Re- adjustment   in  share-holding  of  the  members  was   also effected,   Ladli  Prasad  having  transferred  the   shares according  to  the terms of the  resolution.   But  disputes started afresh.  In a meeting of the Board of Directors held on March 3, 1946, at which Shanti Prasad and Madan Lai  were present,  it was resolved to call an  extraordinary  general meeting  of  the share-holders of the Company on  March  28, 1946 to consider a requisition received from Suraj Mukhi and Madan  Lal  for cancelling some of the  special  resolutions passed  at the meeting held on October 16, 1945.  No  notice of  this meeting was given to Ladli Prasad.  At the  meeting held on March  28,  1946-in  the absence  of  Ladli  Prasad- several  resolutions  were passed to the  effect  that,  all amendments  made  in  the Articles  of  Association  by  the

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resolutions  dated October 16, 1945 do stand  cancelled  and the  original  Articles  of Association  of  the  year  1941 (including  Art. 47 which authorised the Company by a  2/3rd majority  to  expel any member) do stand restored.   It  was also  resolved that Ladli Prasad be removed from  the  dire- ctorate  and Chairmanship of the Company, and in  his  place Suraj  Mukhi  be  appointed Director of  the  Company  at  a remuneration  of Rs. 900/- per month; that Shanti Prasad  be appointed Managing Director 278 for  ten  years,  such  appointment  not  being  liable   to termination  earlier by the members; and that Shanti  Prasad do  receive in addition to his remuneration as Director  Rs. 1000/-   per  month  as  Managing  Director,  a   travelling allowance  of Rs. 30/- per day and a motor-car allowance  of Rs. 200/- per month. Coming  to know about these amendments, Ladli Prasad  called upon  Shanti Prasad and the other members of the Company  to rescind  the  resolutions,  and failing to  induce  them  to comply  with the requisition, he filed a petition on May  1, 1946 in the High Court of judicature at Lahore for an  order for  winding  up the Company.  An order for winding  up  the Company  was passed by a single judge, but was set aside  in appeal  by  the  High Court of Lahore  by  its  order  dated January 19, 1956. On November 26, 1946, Ladli Prasad filed a suit in the Court of  the Senior Subordinate judge, Karnal for  a  declaration that  the meeting and proceedings of the Board of  Directors dated  March 3, 1946, and the extraordinary general  meeting dated March 28, 1946, and all meetings of the Directors held after March 28, 1946 were illegal, ultra vires,  ineffective and operated as a fraud on the Company and the interests  of minority  members  of  the Company and  that  the  unanimous resolutions  of  the  extraordinary  general  meeting  dated October  16,  1945, continued to remain in  force  and  were still operative, and a permanent injunction restraining  the Company,  Shanti Prasad, Suraj Mukhi, Sajjan Lal  and  Madan Lal  (who were impleaded respectively as defendants I to  5) from  acting  upon or carrying into effect  the  resolutions passed  in  the meetings dated March 3, 1946 and  March  28, 1946 and all meetings held after March 28, 1946. The  defendants by separate written statements resisted  the suit contending inter alia that the defen-  279 dants  2 to 5 were coerced by Ladli Prasad taking  advantage of  his  position,  into  passing  the  resolutions  in  the extraordinary  general meeting dated October 16,  1945,  and that  the resolutions were not binding upon the Company  and the other defendants. The  Subordinate judge raised a large number of  issues  the first  of which related to the challenge to the validity  of the  resolution  dated  October  16,  1945,  raised  by  the defendants  on the ground that it was procured  by  coercion and undue influence.  Even though the burden of proving  the first issue which was substantially the central issue in the suit  was laid upon the defendants, they did not attend  the Court  for examination as witnesses.  By his judgment  dated May  25,  1953,  the Subordinate  judge  observed  that  the written   statement   did  not  contain   any   ’substantial particulars of the plea of coercion or undue influence’, and that  the defendants having failed to submit  themselves  to give evidence in support of their plea of coercion or  undue influence  despite  several  opportunities  given  in   that connection,   a   strong  presumption  arose   against   the defendants;  that  viewed in the context of  the  resolution

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dated  February 20, 1945, passed by the defendants, and  the subsequent litigation which ensured between the parties, and the  fact that the resolutions dated October 16,  1945  were acquiesced in by the defendants and were never attempted  to be  avoided  by resort to a competent court,  and  even  the allegation  that they were improperly procured was made  for the  first time in the written statement in the suit  before him,  the  plea  of undue influence  and  coercion  was  not substantiated;  and that the resolutions dated  October  16, 1945,   were  not  invalid.   He  further  held   that   the resolutions passed at the Directors’ meeting dated March  3, 1946, and at the extra-ordinary general meeting on March 28, 1946,  were  unauthorised and invalid; that by  holding  the meeting  on  March 28, 1946, in breach of  the  Articles  of Association and the resolutions dated 280 October  16, 1945, it was intended to play a fraud on  Ladli Prasad  by  committing a clear breach of the  contract;  and that the matter agitated by the plaint did not relate to the internal  management  of  the Company.   The  learned  judge accordingly granted the relief claimed by the plaintiff  for declaration and injunction. In appeal by the defendants, the District judge, Karnal held that Ladli Prasad was in a position to dominate, the will of defendants to 5 "who were in a helpless position, being hard hit by the lack of" adequate financial resources. that  they were  under pressure exercised by the plaintiff  induced  to give their consent to the resolutions in the meeting held on October  16, 1945, and on that account the resolutions  were ineffective.   He  observed  that Ladli  Prasad  took  undue advantage of his dominating position qua the affairs of  the Company  and  compelled the defendants 2 to 5  to  pass  the resolutions and thereby obtained an unfair advantage in that he  was absolved from all liability incurred by him  in  the course  of  his  management prior to  the  meeting  held  on October 16, 1945, and that he obtained -a power of veto over the  affairs  and  smooth running of  the  business  of  the Company’.   The District judge agreed with the  trial  Court that  no proper notice was served upon Ladli Prasad  of  the meetings  held  on March 3, 1946, and March  28,  1946,  and therefore the resolutions at those meetings were not binding upon  Ladli Prasad and that in any event the resolutions  of those  dates were ’a fraud on the minority rights’ and  were illegal  and ultra vires, but as the plaintiff Ladli  Prasad had  filed his suit relying on the resolution dated  October 16,  1945, which was invalid, no relief could be awarded  to him. In   appeal  against  the  decree  of  the  District   judge dismissing  the suit filed by Ladli Prasad,  Bishan  Narain, J.,  of the High Court of Punjab observed that the  findings of the District judge "travelled  281 for  beyond  the pleadings", and only two facts  which  were pleaded were proved by the evidence viz. that the High Court of  Lahore  had stayed the order of  the  Subordinate  judge appointing Receivers of the affairs of the Company and  that Ladli Prasad was the eldest male member.  The learned  judge on a review of the evidence found that Ladli Prasad was  not in a position to dominate the will of defendants 2 to 5 when the resolutions dated October 16, 1945, were passed and they were  the result of a compromise unanimously  accepted,  and were  binding on the parties.  He confirmed the view of  the trial  Court  and the District judge  that  the  resolutions dated  March  3,  1946, and March  28,  1946,  were  invalid because  no  notice  was  given  to  Ladli  Prasad  of   the

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proceedings,  and  in the light of his  findings  granted  a decree for declaration and injunction as prayed but  subject to  the proviso that the decree shall not affect the  rights and liabilities of third parties who were not members of the Company,  unless thereby the rights of the  plaintiff  Ladli Prasad, and the Company were adversely affected. Against  this  judgment  an  appeal  was  preferred  by  the defendants  with leave under cl. 10 of the  Letters  Patent. In appeal the Division Bench of the High Court reversed  the decree  passed by Bishan Narain, J., and dismissed the  suit filed by Ladli Prasad.  In the view of the High Court  Ladli Prasad  as the elder brother of Shanti Prasad and  uncle  of Sajjan Lal and Madan Lal was in a position to dominate their will  and availing himself of that position he  obtained  an unfair  advantage over them and that the failure  of  Shanti Prasad to submit himself to examination before the Court  in support of his case though improper could not be  considered as  fatal to a decision in favour of the  defendants.   They observed :               "I  feel  convinced  that  Ladli  Prasad   was               throughout   in  a  position   of   commanding               influence               282               over  his brother and younger nephews, and  in               consequence thereof, he benefited himself very               substantially.  This superiority and  position               of  vantage that he occupied continued  up  to               and even after the 16th October, 1945.   Under               the circumstances, it was for him to rebut the               presumption  that  the benefits which  he  had               thus  obtained  did not stem  from  his  undue               influence,   but   had  been  given   by   the               defendants freely and without any pressure, or               coercion." They also observed that Ladli Prasad was in the position  to dominate  the  will of defendants 2 to 5  and  had  obtained unconscionable  advantage  over them, and it was  for  Ladli Prasad  to establish that the resolution dated  October  16, 1915 was not vitiated on account of undue influence and this Ladli Prasad has failed to establish.  They summarised their conclusions on the issue of undue influence  as follows :-               "To   sum   up,   the   conclusion   of    the               District  ..Judge  on the first issue  to  the               effect that the resolutions mentioned in  para               6   of   the   plaint  and   passed   at   the               Extraordinary General Meeting. dated the  16th               October., 1945 were ineffective as having been               passed under undue influence, was a finding of               fact; and this conclusion had been arrived  at               after  a review of the evidence placed on  the               record and after having surveyed the facts and               circumstances  of the case.  This finding  was               not based either on misconception of  evidence               or  by adopting a procedure contrary  to  law.               Such  evidence as there is on the record,  the               history   of  the  business  from   its   very               inception till the final disputes between  the               parties, their relationship inter se, and  the               manner in which the plaintiff derived  benefit               for himself, and the circum-                283               stances of the case go to show :               (a)   that the plaintiff was in a position  to               dominate  the will of the defendants and  used               that  position to obtain unfair advantage  for

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             himself over the other ;               (b)   that  he  held an  authority  over  them               which  was  real and apparent by dint  of  his               being  formerly a karta and later on an  elder               brother  in  loco  parents.   He  stood  in  a               fiduciary relation to the other standing in  a               position of active confidence ;               (c)   that the plaintiff in consequence of the               resolutions passed on the 16th of October 1945               obtained for himself unfair advantage to their               serious detriment by virtue of his position to               dominance and the transactions entered into on               16th October 1945 appear to be  unconscionable               ; and               (d)   that  the  burden  of  proof  that   the               transactions   were  not  induced   by   undue               influence was upon the plaintiff, he being  in               a  position  to dominate the  will  of  others               which he failed to discharge." On  the other issues they held that the proceedings  of  the resolutions  in the meetings dated March 3, 1946  and  March 28,  1946 were not binding upon Ladli Prasad, but the  claim made by Ladli Prasad for a permanent injunction could not be entertained  because "equity declines to lend its aid  to  a person whose conduct has been inequitable in relation to the subject matter of the suit and that if the prayer 284 of  Ladli Prasad was granted, it would result in a  deadlock and the Company’s working and affairs would come to a  stand still  necessitating  the winding up of the  Company."  They suggested  that it was open to Ladli Prasad to  seek  relief available  to him under s. 155 of the Indian Companies  Act, 1956 and it was open to Ladli Prasad to invoke the powers of the  Court  or of the Central Government  under  the  Indian Companies Act, if so advised, but the High Court would  not, having regard to the apprehension of an immediate  deadlock, be  justified in issuing a permanent injunction  claimed  by him in the suit. With certificate of fitness granted by the High Court  under Art.  133  (1)  (a)  of  the  Constitution  this  appeal  is preferred.   Two  questions arise at the threshold  in  this appeal :-               (1)   Whether  it  was competent to  the  High               Court  to grant a certificate under  Art.  133               (1) (a) or (b) of the Constitution; and               (2)   Whether  in reversing the decree of  the               District  judge,  Bishan  Narain,  J.,  trans-               gressed  the  restrictions  imposed  upon  the               powers of the High Court by s. 100 of the Code               of Civil Procedure. Article 133 (1), in so far as it is material, provides  that an appeal shall lie to the Supreme Court from any  judgment, decree or final order in a civil proceeding of a High  Court in the territory of India if the High Court certifies-               (a)   that the amount or value of the subject-               matter  of the dispute in the court  of  first               instance  and still in dispute on  appeal  was               and is not less than twenty thousand rupees or               such other sum as may be                285               specified in that behalf by Parliament by  law               ; or               (b)   that the judgment, decree or final order               involves directly or indirectly some claim  or               question  respecting  property  of  the   like

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             amount or value ; or               (c)   that  the case is a’ fit one for  appeal               to the Supreme Court; and, where the judgment, decree or final order appealed from affirms  the decision of the Court immediately below in  any case other than a case referred to in sub-clause (c), if the High  Court further certified that the appeal involves  some substantial question of law. The  High Court has not certified the case under  sub-clause (c)  of  Art.  133(1).  There is also no  dispute  that  the judgment  of the High Court involves directly some claim  or question  respecting property of the value exceeding  twenty thousand  rupees.  The Attorney-General, however,  contended that  the  judgment  of the High Court  against  which  this appeal  is  preferred  affirms the  decision  of  the  court immediately  below  and  the appeal  does  not  involve  any substantial question of law and therefore the High Court was not competent to grant the certificate under Art.133(1)(a) & (b).    It is urged that an appeal against the judgment of a single judge to a Division Bench under cl. 10 of the Letters Patent  is a ’domestic appeal’ within the High Court and  in deciding whether the decree of a Division Bench in an appeal under  the Letters Patent from a decision of a single  judge exercising  appellate jurisdiction affirms the  decision  of the  Court  immediately  below, regard must be  had  to  the decree  of the Court subordinate to the High Court,  against the  decision  of  which appeal was preferred  to  the  High Court.   In other words, it is contended that in  this  case the  decision  of the Court immediately below  the  Division Bench was the deci- 286 sion  of  the District judge and not of Bishan  Narain,  J., this  it is contended is so, because the  expression  ’court immediately  below’  used in the Constitution  means  ’court subordinate. and a single judge of the High Court not  being a  court subordinate to the Division Bench qua the  Division Bench  the District Court was the court  immediately  below. But the two expressions have not the same meaning.  A  court subordinate  to  the High Court is a court  subject  to  the superintendence   of  the  High  Court.  whereas   a   court immediately  below  is  the court from  whose  decision  the appeal has been filed.  If the two expressions are  equated, the  right  of appeal against the decree of the  High  Court sitting  in  appeal  over the decision  of  a  single  judge exercising   original   jurisdiction   would   be   severely restricted for in such an appeal whether the judgment is  of affirmance  or reversal -the High Court can certify  a  case under  Art.  133  (1)  cls. (a) & (b)  only  if  the  appeal involves  a  substantial  question of  law.   The  Attorney- General, however, concedes and in our judgment properly that there  has  been  a long standing  practice  which  has  the approval of the Privy Council (see Tulsi Prasad v. Benayak : L.  R.  23  I. A. 102) that if the decree or  order  of  the Division  Bench  reverses the judgment of  a  single  ,Judge trying  a  suit  or  proceeding  in  exercise  of   original jurisdiction  of  the  High Court and the  condition  as  to valuation  is  satisfied,  an appeal lies  as  a  matter  of course,  i.e.  without  satisfying  the  condition  that  it involves  a substantial question of law.  This view  can  be justified  only if a single Judge of a High Court  trying  a suit or proceeding in exercise of the original  jurisdiction is a court immediately below the Division Bench of the  High Court which decides an appeal from his decision.  The  right to  appeal  against the judgment of a single  judge  whether exercising  original  jurisdiction or  exercising  appellate

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jurisdiction  to  a Division Bench is governed by  the  same clause of the Letters Patent.  If for certifying a case  for appeal to this Court in a pro-  287 ceeding  tried in exercise of the original jurisdiction  the judgment of a single judge is to be regarded as the decision of the court immediately below a Division Bench to which  an appeal is filed under the Letters Patent, it is difficult to discover any logical ground for holding that the judgment of a single judge in exercise of appellate jurisdiction is  not such  a  decision.  Clause 10 of the Letters Patent  of  the Lahore  High Court (which continues to apply to  the  Punjab High Court) provides, in so far as it is material:-               "’And  we  do further ordain  that  an  appeal               shall lie to the said High Court of judicature               x  x  x x x x from thejudgment  (not  being  a               judgment  passed in the exercise of  appellate               jurisdiction  in respect of a decree or  order               made in the exercise of appellate jurisdiction               by  a Court subject to the superintendence  of               the said High Court x x x x x) of one judge of               the  said  High  Court  x x x  x  x  and  that               notwithstanding anything hereinbefore provided               an  appeal  shall lie to the said  High  Court               from a judgment of one judge of the said  High               Court  x x x x x in the exercise of  appellate               jurisdiction in respect of  a decree or  order               made in the exercise of appellate jurisdiction               by  a Court subject to the superintendence  of               the  said  High  Court, where  the  judge  who               passed the judgment declares that the case  is               a fit one for appeal; x     x     x     X. Manifestly the clause confers an unqualified right of appeal to  the  High  Court from the judgment  of  a  single  judge exercising original civil jurisdiction.  Similarly there  is a right of appeal from a judgment of a single judge  hearing a  civil appeal where the judgment is not in an appeal  from an  appellate decree.  But against the judgment of a  single judge exercising powers 288 in  appeal  from an appellate decree, an  appeal  under  the Letters Patent only lies if the judge declares that the case is  a  fit one for appeal, and not otherwise.  There  is  no warrant  for  making a distinction between an  appeal  filed against  the judgment of a single judge exercising  original jurisdiction  and  a  judgment  in  exercise  of   appellate jurisdiction.   There is nothing in the context  to  support the  plea  that  the  expression  court  immediately  below’ includes  a judge of the High Court trying a  proceeding  in exercise of original jurisdiction, i. e. sitting as a  court of  first  instance, but not a  judge  exercising  appellate jurisdiction.   The Constitution in cl. (1) (a) of Art.  133 has  expressly  referred to a ’court of first  instance’  in prescribing  the  condition  relating to the  value  of  the subject- matter and if it was intended that for the  purpose of deciding whether the judgment of the High Court sought to be  appealed  against  affirmed the decision  of  the  Court immediately below, the decision of a single judge was to  be ignored,  if  it  was a judgment in  exercise  of  appellate powers, but not  when he was       exercising       original jurisdiction,  an  appropriate provision that  behalf  would have  been enacted.  In the absence of any  such  enactment, the  expression  "court immediately below’ in Act.  133  (1) must mean the court from the decision of which an appeal has been filed to the High Court, whether such court is a single

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judge  of  the  High  Court  or  a  Court  subject  to   the superintendence of the High Court. In Wahid-ud-din v. Makhan Lal (1) a full Bench of the Lahore High  Court  (Blacker, J., dissenting), held  that  for  the purposes  of  s.  110 of the Code of  Civil  Procedure  1908 (which  is in material terms identical with Art. 133 of  the Constitution) a judge of a High Court sitting to hear not an original  proceeding,  but as a court of  appeal  cannot  be considered a ’court immediately below’ the Bench hearing the Letters Patent appeal from his judgment, (1)  [1944] I.L.R. 26 Lah. 24.  289 Din  Mohammad, J., delivering the principal judgment of  the Court observed at p. 247 :               "Wherever any provision is made for an appeal                to  the High Court, it is the High  Court  as               such that is contemplated and not the Court of               any  individual  judge  or  a  combination  of               different judges.  It is only for the sake  of               convenience  facility  of disposal  that  some               cases  are required to be heard by  one  judge               and  some by more judges than one.  The  Court               accordingly  continues to be the same even  if               by any domestic arrangement an appeal from one               Judge  lies to a Bench of two judges and  must               be taken to be the High Court in either  case.               x  x  x  x  x  X.  It  is  obvious  that   the               authorities  dealing  with Judge of  the  High               Court  in the exercise of his original  juris-               diction  can  render  no  assistance  in   the               disposal  of this matter and it was  for  this               reason  that this distinction  was  emphasized               when  the  question was formulated.   A  judge               sitting   on  the  original  side  is   merely               discharging the functions of a trial Court and               to all intents and purposes, therefore, be  is               a  Court of first instance and when an  appeal               is lodged against his order, as a Court he is               immediately  below the Court which  hears  the               appeal.   Such an appeal is provided for  even               in  the Code of Civil Procedure itself  as  an               appeal   from  an  original   decree.    This,               however,  is not the case when the same  Judge               sits  on  the  appellate  side  and-  for  the               purposes  of that appeal is the High Court  in               himself.  Neither the Code of Civil  Procedure               nor  the  Punjab Courts  Act  contemplates  an               appeal to another Court from an order made  in               the  High Court whether by one judge  or  more               than  one  and consequently the  same  analogy               cannot apply."               290               The learned judge further observed:               "I  cannot  reconcile myself to  the  position               that   a   judge   sitting   alone   can    be               characterised  as a tribunal inferior  to  the               Letters Patent Bench, merely because the Bench               has  power to modify or reverse his  judgment.               It  is  not  with  an  idea  of  implying  any               Subordination of the Court of the Single judge               to  the  Letters  Patent Bench  that  such  an               appeal  is provided for by Letters Patent,  it               is  merely  with a view to provide  a  further               safeguard  in  the interests of  the  litigant               that  the  domestic rules framed by  the  High

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             Court  permit  a case to be heard by  a  judge               sitting alone."               Abdur Rahman, J., agreeing with Din  Mohammad,               J., observed               "x  x when a suit or proceeding is decided  on               the  original side, it cannot but be  held  to               have  been disposed of by the Court  of  first               instance  and  should be of the value  of  ten               thousand  rupees or upwards before  an  appeal               can  be taken to the Privy Council  under  the               first  paragraph of section 110.  It  is  this               Court of first instance which would usually be                             covered   by   the   expression   "the    Court               immediately below" used in the latter part  of               that section. x x x x Different considerations               might  prevail in construing  the  expressions               "the  Court of first instance" and "the  Court               immediately below" when "the Court immediately               below" does not happen to be the Court of  the               first  instance  but as long as they  are  the               same  the  decision  of  the  Court  of  first               instance whether it is by a Subordinate judge,               a District judge. or a judge of the High Court               on its original side, where such a side                291               exists,  must be held to have been given by  a               Court   immediately  below  the  Court   which               affirms  or  upsets that decision  on  appeal.               Viewed thus a judge of a High Court sitting on               the  original  side will be  the  Court  imme-               diately below the Court hearing an appeal from               his decision.  But the same cannot be said  of               a  Single judge sitting on the appellate  side               who  is never "a Court of first instance"  and               cannot  therefore  be correctly  described  to               have been presiding over the Court immediately               below  the  Court hearing an appeal  from  his               judgment under the Letters Patent." We  are unable to agree, for reasons already set  out,  with the view expressed by the learned judges of the Lahore  High Court.   There  is nothing in the phraseology  used  or  the context  which justifies the view -that the expression  "the Court immediately below’ is used in s. 110 of Code of  Civil Procedure  or  in Art. 133 (1) of the  Constitution  in  two dfferent senses, according as the court is trying a  procee- ding  in  exercise  of  its  original  jurisdiction  and  in exercise of its appellate jurisdiction. There  is a decision of the Calcutta High Court in  Debendra Nath Das v. Bibudhendra Mansingh (1), decided by Jenkins, C. J., and N. R. Chatterjee, J., which has expressed a  similar view.  The learned Chief justice in delivering the  judgment of the Court observed at p. 93:               "It only remains to be seen whether as regards               nature  the requirements of section I I 0  are               fulfilled. The Court of first instance as well               as the lower Appellate Court decided adversely               to  the present applicant.  On appeal  to  the               High Court, a Single judge reversed the decree               of the lower               (1)   (1915) I.L.R, 43 Cal. 90.               292               Appellate  Court.   From this  judgment  of  a               Single  judge there was an appeal to the  High               Court under clause 15 of the Charter with  the

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             result  that the judgment of the Single  judge               was  reversed  by a Bench of two  Judges.   It               will  thus be seen that the first judgment  of               the  High  Court reversed the  decree  of  the               Court   immediately  below,  but   that   this               reversal  was afterwards in  effect  cancelled               with  the  result  that  the  only   effective               judgment  of  the  High  Court  affirmed.  the               decision   of  the  Court  immediately   below               (section 110, Civil Procedure Code)." The view appears prima facie to support the contention  that in considering whether within the meaning of Art. 133 (1) of the Constitution judgment of the Court immediately below the High  Court  is affirmed, the judgment of the judge  of  the High  Court  trying the proceeding as a court  of  appellate jurisdiction must be ignored.  Any expression of opinion  by the  eminent Chief Justice would always be  considered  with the  great  deference  and respect.  It  must,  however,  be stated  that the observations of the learned  Chief  justice were  in the nature of obiter dicta, because in the view  of the Court, the test of pecuniary valuation was satisfied and in  the appeal a substantial question of law  was  involved, and on that account the Court was bound to certify the case. It was therefore strictly not necessary to consider  whether the judgment affirmed the decision of the court  immediately below.   It  must also be observed that  the  learned  Chief justice  equated  the expression "Court  immediately  below" with  the expression "Court subordinate" used in s.  115  of the  Code of Civil Procedure.  That is clear from  the  obs- ervations  made by him "that a judge sitting alone is not  a Court subordinate to the High Court, but performs a function directed to be performed by  the High   Court  (clause   36, Letters Patent). And thus no  decision of a Single judge can be revised  293 under  section  115  of the Code." But as  we  have  already pointed out the test for determining the right to appeal  is not  whether  the  judgment is of  a  Court  subordinate,but whether  the judgment is of a Court immediately below.   The two expressions being different, the same considerations  do not apply in their interpretation.  A similar view was  also expressed  in a very recent judgment by the  Andhra  Pradesh High Court decided on August 18, 1961: Vadiapatla Marayya v. Vallabhaneni Buchiramayya (which has not yet been officially reported). There  are however two earlier judgments of the Lahore  High Court which have expressed a contrary view.  Minna Heatherly v.  B. C. Sen (1) and Gopal Lal v. Balkissan (2).  In  these two cases it was held that a Single judge of the High  Court hearing  an  appeal is within the meaning of s. 110  of  the Code  of Civil Procedure 1908 a court immediately below  the Division Bench of the High Court hearing an appeal under the Letters  Patent.   The  High Court of  Nagpur  in  Kishanlal Nandlal  v. Vithal Nagayya, (3), has preferred  the  earlier view of the Lahore High Court. In  our judgment the appeal with certificate granted by  the High  Court  under Art. 133 (1) (a) and  (b)  is  competent, because  a Single Judge of the High Court hearing  either  a proceeding  as  a  Court  of  original  jurisdiction  or  in exercise  of appellate jurisdiction is a  Court  immediately below  the Division Bench which hears an appeal against  his judgment under the relevant clause of the Letters Patent. Bishan Narain J., was, it is true, hearing an appeal from an appellate  decree  and  his powers were  restricted,  for  a second  appeal lies to the High Court only on the  following

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grounds, namely:-               (a)   the decision being contrary to law or to               some usage having the force of law;               (1) A.I.R. (1927) Lah. 537.  (2) (1931) I.L.R.               13 Lah. 318.               (3) I.L.R. (1955) Nag. 821.               294               (b)   the decision having failed to  determine               some  material issue of law or  usage,  having               the force of law;               (c)   a  substantial  error or defect  in  the               procedure  provided  by this Code  or  by  any               other  law for the time being in force,  which               may possibly have produced error or defect  in               the decision of the case upon the merits. Whether a particular transaction was vitiated on the  ground of undue influence is primarily a decision on a question  of fact.   In  Satgur Prasad v. Har Narain Das (1),  the  Privy Council  held  that  in a suit to set aside a  deed  on  the ground  that it was procured by undue influence  and  fraud, the finding that it was so procured is a finding of fact and is  not liable to be re-opened if fairly tried.   Under  the Civil  Procedure Code, a second appeal does not lie  to  the High Court, except on the grounds- specified in the relevant provision  of  the Code, prescribing the right to  prefer  a second  appeal,and  the High Court has  no  jurisdiction  to entertain  a  second appeal "on the ground of  an  erroneous finding  of fact however gross or inexcusable the error  may seem  to be" (Mussummant Durga Choudhrain v.  Jawahir  Singh Choudhri (2)) . But the challenge before Bishan Narain,  J., to the decision of the District.Judge was founded not on the plea  that appreciation of evidence was erroneous, but  that there  were  no adequate particulars of the  plea  of  undue influence,  that  the particulars of facts  on  which  undue influence  was held established by the District  judge  were never  set up, that there was no evidence in support of  the finding of the District judge and that burden of proof on  a misconception of the real nature of the dispute was  wrongly placed on the plaintiff.  A decision of the first  appellate Court reached after placing the onus wrongly or based on  no evidence,  or  where  there has been  substantial  error  or defect in the procedure, producing (1) (1932) L.R. 59 I.A. 147.                 (2) (1890) L.R. 17 I.A. 122. 295 error or defect -in the decision of the case on the  merits, is not conclusive and a second appeal lies to the High Court against that decision. o.  6  r. 4 of the Code of Civil Procedure provides that  in all  cases  in  which  the  party  pleading  relies  on  any misrepresentation,  fraud, breach of trust, wilful  default, or  undue  influence,  and  in  all  other  cases  in  which particulars may be necessary beyond such as are  exemplified in  the forms in the Appendix, particulars (with  dates  and items  if necessary) shall be stated in the  pleading.   The reason of the rule is obvious.  A plea that a transaction is vitiated  because  of  undue influence of  the  other  party thereto,  gives notice merely that one or more of a  variety of  insidious forms of influence were brought to  bear  upon the  party pleading undue influence, and by exercising  such influence, an unfair advantage was obtained over him by  the other.  But the object of a pleading is to bring the parties to a trial by concentrating their attention on the matter in dispute, so as to narrow the controversy to precise  issues, and to give notice to the parties of the nature of testimony

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required  on  either  side in support  of  their  respective cases.   A  vague  or  general plea  can  never  serve  this purpose;  the party pleading must therefore be  required  to plead  the  precise nature of the influence  exercised,  the manner  of  use of the influence, and the  unfair  advantage obtained  by the other.  This rule has been evolved  with  a view to narrow the issue and protect the party charged  with improper  conduct from being taken by surprise.  A  plea  of undue influence must, to serve that dual purpose, be precise and all necessary particulars in support of the plea must be embodied in the pleading : if the particulars stated in  the pleading  are not sufficient and specific the Court  should, before  proceeding with the trial of the suit,  insist  upon the  particular,  which give adequate notice -to  the  other side of the case intended to be set up. 296 In Bharat Dharma Syndicate v. Harish Chandra (1), the  Privy Council  emphasized  the  necessity of  particulars  in  the following terms :               Their  Lordships desire to call  attention  to               the great difficulty which is occasioned  both               to   persons  charged  with  fraud  or   other               improper  conduct, and to the  tribunal  which               are called upon to ’decide such issues, if the               litigant  who  prefers  the  charges  is   not               compelled  to  place  on  record  precise  and               specific  details  of those charges.   In  the               present’  case,  the petitioner ought  not  to               have been allowed to proceed with his petition               and  seek to prove fraud, unless and until  he               had, upon such terms as the Court thought  fit               to impose, amended his petition -by  including               therein  full particulars of  the  allegations               which he intended to prove, Such cases as  the               present  will  be  much  simplified  if   this               practice  is  strictly observed  and  insisted               upon by the Court, even if, as in the  present               case,  no objection is taken on behalf of  the               parties  who are interested in disproving  the               accusations."               Similarly  this Court in Bishnudeo  Narain  v.               Seogeni Rai and Jagernath (2), in dealing with               the practice to be followed in a case where  a               plea  of  undue  influence  and  coercion   is               raised, observed at p. 656 :               "’It  is  also to be observed that  no  proper               particulars  have’  been  furnished.   Now  if               there is one rule which is better  established               than any other, it is that in cases of  fraud,               undue  influence  and  coercion,  the  parties               pleading  it must set forth  full  particulars               and  the  case  can only  be  decided  on  the               particulars   as  laid.   There  can   be   no               departure  from  them. in  evidence.   General               allegations are insufficient even to amount to               an averment of fraud of which any court  ought               to take notice however strong the               (1) (1917) 64 I.A. 146.                           (2) [1951] S.C.R. 548.                297               language in which they are couched may be, and               the  same  applies to undue  influence  and  i               coercion."               The  plea of undue influence and  coercion  by               the Company and defendants 2 to’ 5 was  raised

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             in  terms-which  were  identical.   The   plea               analysed in its component parts may be  stated               as follows:-               (1)   Because of the resolution dated  October               16, 1945 the plaintiff "’succeeded in  getting               dictatorial    powers   over   the    Company,               practically  usurping  all the powers  of  the               General  body of the shareholders and  thereby               purporting  to deprive them to  exercise  even               those   rights  which  they"  were   ""legally               entitled to exercise under the law";               (2)   "These resolutions which gave the plain-               tiff  a complete veto over the affairs of  the               Company  (which is not permissible  under  any               valid  constitution)  were  obtained  by   the               plaintiff at the point of a dagger"               (3)   "That the plaintiff was refusing to hand               over  charge  of  the moneys,  books  and  the               entire  assets  of the Company and  using  the               funds  of the Company for  ruinous  litigation               against  the defendants who on the other  hand               were  having to prosecute their cases  out  of               their  meagre funds which too  were  dwindling               fast" :               (4)   "’Taking full advantage of his  position               and  knowing fully well the resources  of  the               defendants,   the   plaintiff   succeeded   in               coercing  the defendants in submitting to  his               dictations and virtually compelled               298               them  to pass these  unconstitutional  resolu-               tions." It  may  be observed that though issue No. 1 raised  a  plea both  of  coercion  and undue  influence  as  vitiating  the resolutions, no attempt was made to rest the right to relief on a case of coercion in the Courts below and in this Court. The  first part of the case of the, defendants amounts to  a plea that by the resolutions dated October 16, 1945that plaintiff acquired a position of domination over  the affairs of the Company and over the defendants. What   the second  part  means  it is  difficult  to  appreciate.   The language  used is somewhat extravagant : it is not the  case of  the defendants that they were compelled to agree to  the resolutions  by threats of physical violence.  By the  third part it is affirmed that the plaintiff unlawfully refused to part  with the moneys, books and the assets of  the  Company and  commenced litigation with the aid of the funds  of  the Company  whereas the defendants had to rely upon  their  own resources which were limited.  Presumably this has reference to  the  refusal  of  the  plaintiff  to  comply  with   the resolution  of  February 20, 1945 and  to  litigation  which ensued between the parties after the resolution was  passed. It  is  difficult  to  regard  this  as  a  plea   precisely expressing that the plaintiff was in a position to  dominate the  will of the defendants.  The last part of the  plea  is that  taking advantage of his Position and knowing that  the position  of the defendants was precarious he  succeeded  in compelling  the  defendants to submit to his  dictation  and compelled them to pass the resolutions. The  pleading which was regarded as one of  undue  influence also suffers from a lack of particulars.  How the  plaintiff took advantage of his position as a person in possession  of the  assets of the Company and by what device  he  compelled the  299

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defendants  to  submit  to his will  has  not  been  stated. Section  16 of the Indian Contract Act,  which  incorporates the  law relating to undue influence in its  application  to contracts is but a particularisation of a larger  principle. All transactions procured in the manner set out therein, are regarded  as  procured by the exercise of  undue  influence. Section 16 of the Contract Act provides:               "(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  stands               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  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 lie  upon               the person in a position to dominate the  will               of the other. 300 Nothing  in this sub-section shall affect the provisions  of section III of the Indian Evidence Act, 1872." The’  doctrine of undue influence under the common  law  was evolved  by  the Courts in England for  granting  protection against  transactions procured by the exercise of  insidious forms  of  influence spiritual and temporal.   The  doctrine applies  to acts of bounty as well as to other  transactions in  which  one party exercising his  position  of  dominance obtains an unfair advantage over another.  The Indian enact- ment is founded substantially on the rules of English common law.  The first sub-section of s. 16 lays down the principle in  general terms.  By subsection (2) a  presumption  arises that  a  person  shall  be deemed to be  in  a  position  to dominate  the  will  of another if the  conditions  set  out therein  are  fulfilled.’  Sub-section  (3)  lays  down  the conditions  for  raising  a rebuttable  presumption  that  a transaction is procured by the exercise of undue  influence. The  reason for the rule in the third sub-section is that  a person  who  has  obtained  an  advantage  over  another  by dominating  his  will,  may also remain  in  a  position  to suppress  the requisite evidence in support of the  plea  of undue influence. A transaction may be vitiated on account of undue  influence where the relations between the parties are such that one of them is in a position to dominate the will of the other  and he uses his position to obtain an unfair advantage over  the other.It   is  manifest  that  both  the   conditions   have ordinarily to be established by the person seeking to  avoid the transaction : he has to prove that the other party to  a transaction was in a position to dominate his will and  that

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the  other party had obtained an unfair advantage  by  using that  position.  Clause (2) lays down a special  presumption that a person is deemed to be in a position to dominate  the will of another  301 where he holds a real or apparent authority over the  other, or  where he stands in a fiduciary relation to the other  or where  he  enters  into a transaction with  a  person  whose mental  capacity is temporarily or permanently  affected  by reason of age, illness or mental or bodily distress.   Where it is proved that a person is in a position to dominate  the will  of  another  (such proof  being  furnished  either  by evidence or by the presumption arising under sub-section (2) and  he  enters into a transaction with that  other  person, which on the face of it or on the evidence adduced,  appears to  be  unconscionable  the  burden  of  proving  that   the transaction was not induced by undue influence lies upon the person in a position to dominate the will of the other.  But sub-section  (3) has manifestly a limited application :  the presumption will only arise if it is established by evidence that the party who had obtained the benefit of a transaction was in a position to dominate the will of the other and that the transaction is shown to be unconscionable.  If either of these  two  conditions is not fulfilled the  presumption  of undue influence will not arise and burden will not shift. Assuming  that  in this case a plea of undue  influence  was attempted  to  be  raised by paragraph 4  of  the  Company’s written  statement and paragraph 6 of the written  statement of  the  other  defendants,  defendants  2  to  5  have  not submitted themselves for examination before the Court.   The burden  of  proving undue influence primarily lay  upon  the defendants  who  were setting up the plea.   The  manner  in which  the  case on behalf of the defendants  was  conducted reflects  little  credit upon those in charge of  the  case. The  primary issue on which the defendants sought to  defend the suit raised the plea of undue influence and coercion  in relation  to the resolution dated October 16, 1945,  and  we should  have  expected the defendants to open the  case  and lead evidence in support of their plea.  But 302 on  December  11,  1950 after the  second  defendant  Shanti Prasad produced a number of documents which he was  summoned to  produce, the plaintiff for some reason not  apparent  on the  record  opened  the case.  Counsel  for  the  plaintiff stated  that the plaintiff was at that stage to be  examined only  on the issue of which the onus lay upon the  plaintiff and  that the plaintiff would be examined in rebuttal  after the  defendants closed their case and that he  will  examine the  remaining witnesses mentioned in his list in  rebuttal. Manifestly  at that stage the evidence of the plaintiff  led expressly  on  issues other than the first  issue  of  undue influence   could   not  be  ’directed  to   rebutting   any presumption  of  undue influence, for there was  before  the Court  no evidence proving the facts on the proof  of  which alone  the presumption under sub-s. (3) of s. 16  may  arise and  the  burden  of proof shift.   After  the  plaintiff  I concluded his evidence on the issues on which the  plaintiff offered  to lead evidence, on behalf of the  dependents  two witnesses Mohan Singh and Raghu Nandan were examined.  Mohan Singh said nothing which might have a bearing on the plea of undue  influence.   Raghu  Nandan  made  certain   equivocal statements about examination of accounts ’at the meeting  of October  16,  1945 and further stated  that  the  compromise pursuant to which the resolutions were passed was arrived at about  midnight  of  October 15, at  the  residence  of  the

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plaintiff  Ladli  Prasad,  and that  to  his  knowledge  the defendants  had  no  other  source  of  income  except   the director’s  remuneration.   Beyond this he appears  to  have said  nothing which directly supported the defendant’s  case of  undue influence.  Thereafter followed a baffling  series of applications made with a view to protract the  proceeding in the suit, presumably to procure a situation in which  the principal  defendant Shanti Prasad may avoid going into  the witness  box.   By diverse applications the  proceeding  was protracted till May 1953, but neither  303 Shanti  Prasad nor the other members of the family  appeared before the Court for examination as witnesses in support  of the  defendants’  case of undue influence.   An  application submitted on April 27, 1953 after the case was set down  for judgment  for the examination of Shanti Prasad  was  rightly rejected  by the Subordinate Judge.  A bare perusal  of  the statements  and the course which the proceedings have  taken leads  to  the only conclusion that the defendants  did  not desire  to give evidence in support of their plea  of  undue influence  and to subject themselves  to  cross-examination. There  may arise cases in which even though the burden  lies on  the  defendants to prove their case of  undue  influence they may establish it from admissions made by the  plaintiff or his witnesses or from other evidence, and without  giving their own testimony, but this, in our judgment, is not  such a case. Before  directing  our  attention to  the  findings  of  the District  Judge from which undue influence was inferred,  it is  necessary to reiterate certain undisputed facts.   Ladli Prasad  was  the eldest male member in the  family  but  the family had severed its joint status in 1940 and the business of  the family was taken over by a private limited  company, in which the three branches held shares.  Under the Articles of  Association as originally framed in 1941,  Ladli  Prasad was drawing from the Company an allowance of Rs. 1800/-  per mensem,  a  commission of 7 1/2% on the net profits  of  the Company and the car allowance of Rs. 350/- per mensem and an allowance  of Rs. 30/- per day during tours together with  a new  car  every  third  year  for  use,  whereas  the  other directors  were getting only Rs. 25O./- per mensem, and  Rs. 25/- for every meeting of directors attended.  Defendants  2 to  5  revolted  against this disparity in the  scale  of  , remuneration  and  by  resolution dated  February  20,  1945 removed Ladli Prasad from the -Managing Director-ship of’ 304 the Company.  This step of the defendants led to litigation. Shanti  Prasad  claimed  to enforce  his  rights  under  the resolution,  and  Ladli Prasad sought to  retain  possession asserting  that  the  resolution was  invalid.   There  were thereafter  negotiations for settlement of the disputes,  at which  several near relations and employees of  the  Company were  present, and certain terms of compromise  were  agreed upon pursuant to which in the meeting dated October 16, 1915 held  at  the  residence of Ladli  Prasad  resolutions  were passed,,  which  had  the effect  of  equalising  the  share holding of the three branches, and the remuneration drawn by them.   Ladli Prasad was also given complete discharge  from liability for his previous dealings, resolutions of February 20,  1945  were cancelled, and amendments were made  in  the Articles of Association requiring that all decisions of  the Board  of Directors shall be unanimous.  Thereafter  by  the special  resolution  passed  in  the  extraordinary  General Meeting dated March 28, 1946, the resolutions dated  October 16,  1945  were cancelled,  the  plaintiff-Ladli  Prasad-was

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removed from his post of Chairman, and also of Director, and Shanti   Prasad  was  appointed  Managing   Director.    The resolutions   dated  October  16,  1945  were  acted   upon, equalisation  of share holding was effected by  transfer  of shares,  and Shanti Prasad assumed the office of Manager  of the Company, and presumably dividend declared at the meeting and remuneration settled were accepted.  The defendants  did not  institute  any  proceeding  to  have  the   resolutions declared  null  and void on the ground that  they  had  been secured  by  undue influence, and the plea  that  they  were invalid was set up for the first time in the suit instituted by the plaintiff. In  support  of  his conclusion  that  undue  influence  was exercised  by the plaintiff upon defendants 2, 4 and 5,  the District judge recorded the findings that the plaintiff  was the eldest male member of the  305 family, and there was no one to look after the interests  of defendants  2  to 5; that the plaintiff had taken  into  his possession all the jewellery belonging to defendants 2 to  5 and this jewellery was restored to them after the compromise of  October  16,  1945;  that after  the  joint  family  was dissolved  and the business of Kishori Lal & Sons was  taken over by the Company, plaintiff received as much as Rs.3000/- per  month as salary, daily allowance,  motor-car  allowance and  under  other  miscellaneous heads,  whereas  the  other Directors received only an allowance of Rs. 250/- per  month and a fee of Rs 25/per day for attending the meetings of the Board  of Directors; that the plaintiff had started  another Company  in  the  name of  Jagatjit  Distilling  and  Allied Industries, Hamira from- which he made large profits and had "become  a  business  magnate"  that  at  the  time  of  the compromise  the  financial position of  the  defendants  was "helpless  and miserable" and they were not doing any  other business  and  had  no other source of  income.   After  the operation  of  the order appointing Receiver passed  by  the Subordinate  judge, Karnal was stayed by the High  Court  of Lahore,  defendants 2 to 5 were not in a position to  defend their rights because of lack of financial resources and  the plaintiff took advantage of their helplessness and  dictated terms’  which  were  not fair; and that  the  plaintiff  was interested in creating a deadlock and thereby to make  large profits  from his separate concerns-the jagatjit  Distilling and  Allied  Industries.  The District Judge  inferred  from these  findings  that the plaintiff Ladli Prasad  was  in  a position to dominate the will of defendant-, 2 to 5, that he could exert undue influence upon them because "they were  in a  very  wretched position being hard pressed  by  the  lack money";  that the near relations of the family were  present at  the meeting to protect the interests of the  family  and they  could  not be expected to safeguard  the  interest  of defendants 2 to 5; and that 306 there was no evidence that defendants 2 to 5 received advice from  any one else, or that they gave their consent  to  the compromise  with free exercise of their volition.   He  held that  the plaintiff got himself absolved from all  liability to  account for his dealing with the assets of  the  company since  he commenced management as a Managing  Director,  and that  he  ’obtained by the resolution a power of  veto’  and managed to get himself appointed a permanent Director.   The learned  judge,  therefore, concluded relying  upon  the  ’- presumption  of  undue influence on account  of  the  above- mentioned facts" that the defendants 2 to 5 were induced  by the  exercise of undue influence and coercion to give  their

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consent  to the minutes of the meeting held on  October  16, 1945 and the plaintiff had failed to adduce any satisfactory evidence to rebut the presumption. In our view the conclusions of the District .Judge could not be regarded as binding upon the High Court in second appeal, for  he raised the inference of undue influence  from  facts which were never pleaded and proved, and he relied upon  the presumption   under  s.  16  (3)  without   the   conditions prescribed thereby being fulfilled.  The only facts on which the  defendants  relied in support of their  plea  in  their written statement were that the plaintiff was in  possession of  the books, and assets of the Company ; that he used  the funds  of the Company for litigation, and that  taking  full advantage  of  his  position  the  plaintiff  succeeded   in coercing  the  defendants to submit to his  dictation.   The first averment was admitted and the other two were denied by the  plaintiff.   There is no plea and no  evidence  on  the record  to  prove that there was no one to  look  after  the interest  of defendants 2 to 5 that all the jwellery of  the defendants was Prior t October 16, 1945 in the possession of the  plaintiff;  that the plaintiff had made  large  profits from  jagatjit  Distilling and Allied Industries;  that  the plaintiff  307 was interested in creating a deadlock with a view to  secure benefit  for  his  concern  Jagatjit  Distiller;  that   the financial  position  of  the defendants  was  "helpless  and miserable";  that the defendants were not in a  position  to defend their rights because of lack of financial  resources, and  the  plaintiff  on  that  account  dictated  terms   of compromise which were not fair.  Again the presumption under s. 16 (3) could not come to the aid of the "defendants.  The two  conditions on the proof of which alone the  presumption arises are that the plaintiff was in a position to  dominate the  will  of  the  defendants,  and  the  transaction   was unconscionable.   It was not pleaded by the defendants  that as  the eldest male member of the family, the plaintiff  was in position to dominate the will of the defendants; nor  was there  evidence  to show that he held any real  or  apparent authority  over the defendants on that account.   Admittedly on  February 20, 1945 the defendants had by a resolution  of the Company removed the plaintiff from the post of  Managing Director.  It is true that the plaintiff refused ’to  accept the  validity of that resolution, and declined to hand  over management  of the affairs of the Company to Shanti  Prasad; but  that  does not establish that he was in a  position  to dominate the will of the defendants.  Again the  transaction cannot be called unconscionable.  The Plaintiff Ladli Prasad was  under  the original appointment  drawing  an  allowance exceeding  Rs. 300/- per, month and held the largest  single block  of  shares  and  Occupied  the  office  of   Managing Director.  By the resolution his remuneration was reduced to Rs.  900/-,  he  was  deprived of  his  office  of  Managing Director  and  his share holding was also reduced  and  made equal  to that of the other branches of the family.   It  is true that he became Chairman of the Board of Directors,  but on  that  account  lie acquired  no  superior  rights.   All resolutions of the Board of Directors had under the  amended Articles  to be unanimous and no member could be removed  by the others.  These resolutions 308 operated as much to the benefit of the defendants 2 to 5  as of the plaintiff.  It is true that by the resolutions passed at  the meeting all previous dealings of the plaintiff  were validated  and he was absolved from-liability in respect  of

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those transactions.  The plaintiff has affirmed on oath that this  was  so because accounts were ’gone into’  before  the meeting, and the defendants have not entered the witness box to depose to the contrary, though the burden of proving that unfair advantage was obtained by the plaintiff lay upon  the defendants.   Undoubtedly  a resolution which  absolved  the plaintiff from liability for all his past dealings,  without settling  accounts, may appear prima facie unfair,  but  the District   judge  did  not  hold  that  accounts  were   not scrutinised before the resolutions of October 16, 1945  were passed.,  In  any event there is no evidence on  the  record that  accounts  were  not scrutinised and  accepted  by  the defendants 2 to 5 before the compromise which culminated  in the  impugned resolutions.  The only evidence on  behalf  of the  defendants  was of Raghu Nandan-Works  Manager  of  the Karnal Distillery.  He stated "the compromise was  finalised at about 12 and I A. M. at night.  I stayed outside for some time, but at the time of finalising of the compromise, I was present  at the place where the compromise had taken  place. The accounts were gone into at that time.  So far as I  know accounts were never sent for during the talk of  compromise. x  x x x S. P. Jaiswal insisted on seeing the accounts,  but abruptly  he signed the compromise." In crossexamination  he stated  "I do not know if parties had been carrying  on  the negotiations  about the compromise some 5 or 6  days  before same  was arrived at,but I know that they were there on  the 15th  s  x  x x I do not know when  the  compromise  (talks) started.  The compromise was finalised between the night  of the  15th  and 16th, and on the morning of the 16th,  I  was told to take office records to Karnal." The plaintiff  Ladli Prasad has  309 deposed  that  the  accounts  were  scrutinised  before  the resolutions.   It has to be remembered that in pursuance  of the resolutions dated October 16, 1945 Shanti Prasad assumed the  office  of  Manager of the Company, and  it  is  common ground  that  the books of account were  in  his  possession since  that,date.   The  books  were  originally  under  the control  of the plaintiff : since the resolutions they  were with  the  defendants and the defendants have  not  led  any evidence  to  show that in respect of his dealings  for  the period  he was in management the plaintiff Ladli Prasad  was liable to the Company. It cannot- in the circumstances be held that the High  Court was  bound by the findings recorded by the  District  judge. For reasons already mentioned the conclusion on the issue of undue  influence. was based on allegations which were  never pleaded  and proved.  Bishan Narain,J., was therefore  right in holding that the findings of the District Judge travelled beyond  the pleadings of the defendants, and  "that  besides the facts that the plaintiff is the eldest surviving brother and  the  High  Court  stayed the  operation  of  the  order appointing the Receivers, there is no evidence in support of the findings of the District Judge." On  a review of the evidence, which Bishan Narain,  J.,  was entitled in the circumstances to embark upon, he came to the conclusion  that the defendants had failed to establish  the plea  of  undue influence.  The Division Bench of  the  High Court  in appeal under cl. 10 of the Letters Patent held  on an  elaborate review of the evidence that the conclusion  of the  District  judge  on the issue of  undue  influencc  was correct.   We  must  examine the findings  recorded  by  the Division Bench, because the decision that the conclusions of the District judge were not binding upon Bishan Narain,  J., does not effectively dispose of the appeal.  This Court must

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decide whether on 310 the  pleading  of  the defendants and the  evidence  on  the record,  the conclusion of the High Court may  independently of  the findings of the District Judge, be  sustained.   The High Court observed that as the karta and elder brother, the plaintiff  Ladli  Prasad was in a position to  dominate  the will  of  the  defendants and that  he  obtained  an  unfair advantage  over  them.   In coming to  that  conclusion  the learned  judges relied upon "the Hindu Shastric  injunctions and highly cherished Hindu sentiments that an elder  brother in relation to his younger brothers or an uncle in  relation to his fatherless nephews is placed on a high pedestal  next after  parents"  and  inferred that the  plaintiff  must  be deemed  to be in loco Parent to the defendants and  that  he not  only held an authority which is both real and  apparent but  lie  stood.  in a  fiduciary  relationship  and  taking advantage of his position he  could  and  did  dominate  the will of the defendants,  The learned judges recognised  that the case of the     defendants  suffered from the  infirmity that  they  did not offer to be witnesses in the  case,  but they  observed  that "their omission in that  behalf  though improper could not be considered fatal because having regard to the circumstances, undue influence could be inferred, the plaintiff  Ladli  Prasad  having  been  in  a  position   of superiority and a position of vantage which he continued  to occupy till October 16, 1945." In our judgment, there is no evidence to support the finding that  Ladli  Prasad  was  qua  the  other  members  in  loco parentis.  The three branches of the family had separated in 1940,  and were living apart.  It is true that Ladli  Prasad was   drawing   remuneration  which  was  many   times   the remuneration drawn by the other branches but the validity of the resolutions under which he commenced drawing that  remu- neration  has never been challenged.  By February  1945  the disputes between Ladli Prasad on the one hand, and the other members had come to a head,  311 and  by the resolution dated February 20, 1945 Ladli  Prasad was removed from his office of -Managing Director.  This was an "open revolt" against whatever authority Ladli Prasad may have  once  possessed.  Shanti Prasad filed a  suit  against Ladli Prasad to secure custody of the assets of the  Company as Managing Director, and obtained an order for  appointment of  a  Receiver  of  the assets.  It  would  be  a  complete perversion of the true situation to hold in this case in the light of the circumstances that merely because Ladli  Prasad was  the eldest male member, lie was in ’loco parentis’  qua defendants  2 to 5. It may be notice, that this ground  that Ladli  Prasad  stood in the relation similar to  that  of  a parent  qua defendants 2, 4 and 5 was never pleaded  by  the defendants.   The  defendants  were  represented  by   their lawyers in the two suits which were filed since February 20, 1945  and it is difficult to accept that  though  litigating in  Court in assertion of the rights claimed by  them,  they were so much under the influence of Ladli Prasad (who at the material  time  was only about 27 years of  age)  that  they could  not secure independent advice.  For  reasons  already mentioned  the resolutions were, unless it  was  established that  the  plaintiff.  Ladli Prasad was  given  a  discharge without   scrutiny   of   accounts,   not    unconscionable. Negotiations for a compromise were carried on for more  than five  days  and several relations of the  parties  who  were obviously interested in defendants 2 to 5 were present.   If the  plaintiff had attempted to exercise his authority  over

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the  defendants  some  reliable evidence  should  have  been forthcoming  in that behalf.  The circumstance that none  of the defendants gave evidence in support of their plea,  even after  protracting the proceedings for more than  two  years raises a strong presumption against them that they  realised the  infirmity of their case and were not willing to  submit themselves to cross-examination. Raghu  Nandan who was practically the only witness  examined by the defendant to depose to what 312 transpired  at  the  negotiations  and  the  meeting   which culminated in the impugned resolutions has not said anything which may even indirectly support their case.  The case that the  plaintiff  refused to part with the  jewellery  of  the defendants,  and  on  that account was able  to  compel  the defendants,  to agree to the resolutions was  never  pleaded and no evidence was given by the defendants in that  behalf. Ladli Prasad deposed that he had some jewellery belonging to the  defendants  2  to 5, and that the  defendants  were  in possession  of his own jewellery, and after the  meeting  of October  16,  1645 the jewellery was  exchanged.   There  is again  no evidence that the defendents were at the  material time  in  financial difficulties.  Admittedly  partition  of joint  family  assets  had taken place,  and  the  different branches  had obtained their shares in severalty  except  in the  business.  Defendants have also led no evidence  as  to what their financial resources in 1945 were, and the assump- tion  made  by  the  High  Court  in  that  behalf  are  not warranted.  It  is true that because of  resolution  No.  12 requiring  every  decision of the Board of Directors  to  be unanimous,  and  deletion  of  Art.  47,  if  the  Directors quarrelled, creation of an impasse may be visualised, but by the   resolutions  the  plaintiff  acquired  no   overriding privilege.   His  rights  were  the same  as  of  the  other branches  of  the  family.   On  the  question  as  to  what transpired at and before the meeting dated October 16,  1945 there  is the evidence of Devi Prasad which may  be  briefly referred  to:  He  has deposed that he was  present  at  the meeting  and that the compromise was arrived at by the  free consent of the parties and no undue influence was  exercised ’by any party on the other.  The compromise talks had  begun a  week  earlier,  and  the  account  books  of  the  Karnal Distillery  Company  were  produced  at  the  time  of   the compromise, and the books were examined by defendants 2 to 5 and  some objections raised during the talks  of  compromise were settled after seeing the books of account.  The  313 witness  also produced a copy of the minutes of the  meeting which  had  taken place at 10-30 A.M. on  October  16,  1945 stating  that  the  same  were  typed  by  him.   There  was substantially  no cross-examination of this witness  on  the evidence  given by him that the account books were  examined during the negotiations for compromise.  The finding of  the High Court that the books of account were never examined and the  plaintiff  pursuaded  the  defendants  to  give  him  a complete discharge in respect of the liabilities incurred by him  for his transactions was never pleaded in  the  written statement,  though it was an important  particular which  if true  would  have been pleaded.  Even assuming that  on  the general  plea  of  undue  influence  it  was  open  to   the defendants  to lead evidence on this matter, the  defendants have not -chosen to lead any reliable evidence to show  that that books of account were not examined and entries were not verified,  and  the equivocal evidence made by  the  witness Raghu  Nandan has no evidentiary value at all.  It  is  true

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that  the plaintiff had started another Company in the  name of  Jagatjit  Distilling and Allied Industries but  even  if that  circumstance  has any bearing on the  issue  of  undue influence  there is again little evidence that he  had  made large profits and had acquired influence and power  thereby. The  appointment  of receivers by the Court  of  Subordinate Judge,Karnal  was stayed by the High Court, but that  single circumstance   will  not  justify  an  inference  that   the defendants were effectively prevented from prosecuting their claim.  There is no evidence to show that the plaintiff  was interested  in  creating  a deadlock so as  to  prevent  the smooth and successful business of the Company. The  only two facts viz. that the plaintiff was  the  eldest member and that he was before the resolution dated  February 20,  1945 receiving very much larger sums of money from  the Company   as  his  remuneration  in  comparison   with   the remuneration 314 received by the defendants, viewed in the light of the other circumstances  will  not  justify  an  inference  that   the plaintiff  was  in a position to dominate the  will  of  the defendants.   For reasons already stated the High Court  was in  error in relying upon the presumption under  sub-section (3)  of  s. 16, because in our view the  evidence  does  not justify the conclusion that the plaintiff was in a  position to  dominate  the  will  of  the  defendants  and  that  the resolutions   gave  an  unconscionable  advantage   to   the plaintiff.   We must add that the decisions of the  District Court  and Division, Bench of the High Court, suffered  from Serious infirmities in that they wrongly placed the onus  of proof upon the plaintiff, and reached a conclusion that  the plaintiff  failed  to prove that the  resolutions  were  not obtained by the exercise of undue influence. It  was urged that in any event, at this late  stage-sixteen years after the date on which the resolutions were passed by the  defendants  at the meeting dated  March  28,  1945-this Court would not be justified in declaring the actions of the defendants  in  pursuance of the resolutions,  invalid,  for they would affect third parties who must have dealt with the Company  on the footing that the manangement of the  Company had  authority to transact business.  But the plaintiff  has unauthorisedly been deprived of his rights by the  arbitrary conduct  of the defendants.  All the Courts below have  held that the resolutions dated March 28, 1946 are invalid.   The High Court declined to grant relief to the plaintiff, for in their   view  the  plaintiff  had  disentitled  himself   to equitable   relief  because  of  his  previous  conduct   in exercising  undue influence, and thereby securing an  unfair advantage  to  which he was not lawfully  entitled.   It  is unnecessary  to  enter  upon a discussion  of  the  question whether in the circumstances it was a sufficient ground  for depriving  the  plaintiff of relief, for we are  of  opinion that subject to the reservations made by Bishan Narain,  J., which fully protect third parties, 315 relief should be awarded.  Before the learned judge, counsel for  the  plaintiff  gave an undertaking that  he  will  not question  the dealings of the defendants qua third  parties, and requested expressly that the prayer for declaration that all  acts of the Company and the defendants  which  affected him  personally qua the members of the Company may alone  be declared   invalid.   That,  in  our  judgment,  should   be sufficient to meet any objection which may be raised by  the defendants on the score of delay. It was also submitted that the plaintiff has lost his  right

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to  the  shares since the suit was  instituted  because  the Company had enforced its lien and had sold the shares of the plaintiff in enforcement of the lien.  The validity of  that action  of  the Company has been challenged  in  a  separate proceeding, and we need express no opinion on that question. All  the Courts have come to the conclusion that  the  reso- lutions dated March 3, 1.946 and March 28, 1946 were invalid and  not  binding on the plaintiff.  Therefore,  any  action taken  by the defendants pursuant to those  resolutions  may _prima facie be regarded as ineffective. On  that view of the case, this appeal must be  allowed  and the  decree  passed by Bishan Narain, J., must  be  restored with costs in this Court and before the Division Bench. Appeal allowed. 316