Home case analysis Mahboob Khan vs. Hakim Abdul Rahim (1964)

Mahboob Khan vs. Hakim Abdul Rahim (1964)

August 21, 2024

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This article is written by Shilpi. This article contains a detailed analysis of the findings and decisions of the Rajasthan High Court in the case of Mahboob Khan vs. Hakim Abdul Rahim (1964). It discusses the rights of the heirs to revoke a gift deed after the death of the donor on the ground that the gift deed was executed under undue influence exercised by the donee. The judgement shed light on the application of Sections 16 and 19A of the Indian Contract Act, 1872, to Muslims.

Table of Contents

Introduction

Every person has free will. Every person has the right to make decisions that will affect their life in one way or another. When an individual makes any decision, whether in the scope of the legal domain or outside it, he feels happy because he has the freedom to make choices. He has the freedom to do as he wishes without someone else using him as a puppeteer or making him dance to their tunes.

Sometimes, the circumstances are such that a person falls prey to the fraud of the other party without consciously realising it. The other party executes the entire thing so subtly that the person ends up thinking he is acting at his own volition. This subtle piece of fraud goes unnoticed since it is hard to detect, and the other party benefits immensely from this. This is mostly seen in the matter of property transactions.

A case to this effect came up before the Rajasthan High Court involving appellants Mahboob Khan & Ors. and respondent Hakim Abdul Rahim. The matter revolved around the execution of a gift deed, where the appellants argued that it was void since it was executed via undue influence among others and affected the rightful claims of the heirs.

While the District Court reversed the decision of the trial court that ruled in favour of the plaintiffs, the plaintiffs filed an appeal claiming that there were specks of undue influence and fraud in the execution of the gift deed. The Rajasthan High Court examined Section 16 and 19A of the Indian Contract Act, 1872 (hereinafter referred to as “the Act”) and the applicability of Mohammadan Law in the given case.

Details of the case

The following are the fundamental details of the case:

Court: Rajasthan High Court
Appellant: Mahboob Khan & Ors.
Respondent: Hakim Abdul Rahim
Case Number: S. B. Civil Second Appeal No. 294 of 1959
Neutral Citation: AIR 1964 Raj 250
Bench: Bhargava J.
Date of decision: 14.05.1964
Relevant Act: The Indian Contract Act, 1872
Relevant Section(s) of the Act: Section 16 & 19A of the Indian Contract Act, 1872

Facts of the case

The facts of the case of Mahboob Khan & Ors. vs. Hakim Abdul Rahim (1964) are as follows:

Kalu Khan (father of the appellants) executed a gift deed in favour of the respondent. Kalu Khan was an old man of 61 years, illiterate, and had no source of income. He had three unmarried daughters, and his wife had already died. Kalu Khan relied upon the respondent (his grand nephew) for everything. Khalu Khan’s son was living separately from him because of strain in their relationship.

Kalu Khan was advised by his friends to not execute the deed. Kalu Khan told his friend that the respondent has promised to continue paying Kalu Khan Rs. 20 per month until his daughters are married and thereafter would feed him and keep him with him. Kalu Khan executed the gift deed in favour of the respondent. Entire property possessed by Kalu Khan was transferred to the respondent by virtue of the gift deed.

Kalu Khan filed a suit against the respondent, alleging that the respondent has not fulfilled his promise. During the pendency of the suit, Kalu Khan dies, and, hence, his son and daughters continued with the suit. The trial court found that there was fraud in the procurement of the gift deed; however, it decided that there was no evidence to support the presence of undue pressure.

The District Judge decided that there was no evidence supporting the claim of the presence of fraud committed by the respondent at the time of execution of the gift deed. The District Judge failed to consider the dynamics of the relationship between the respondent and Kalu Khan or the potential of the respondent to dominate the will of Kalu Khan.

The appellants filed an appeal against the decree of the District Judge before the High Court on the ground that the executed gift deed is void as it has been obtained by undue influence, fraud, and misrepresentation.

Issues raised

For adjudication of the dispute between the parties, the following issues came to be decided by the Court:

Whether the gift deed executed by Kalu Khan in favour of the respondent is void by virtue of undue influence, fraud, and misrepresentation?
Whether the respondent has rebutted the presumption of undue influence by presenting that Kalu Khan had independent advise before he executed the gift deed?
Whether the appellants (heirs of the donor) can revoke the gift deed under Section 19A of the Act despite the principle of Mohammedan Law?

Arguments made by the parties

Appellant

The appellants made the following contentions before the Hon’ble High Court:

The appellants argued that Kalu Khan was an old man of 75 years and had been suffering from diarrhoea for the last 4 years. He was illiterate, financially weak, and had a restrained relationship with his son. For his maintenance, he relied heavily on the respondent. Hence, the respondent exploited the vulnerable condition of Kalu Khan and unduly influenced him to execute the gift deed in his favour. Hence, the gift deed should be declared as void as per Section 16 of the Act.
The appellants further contended that as the heirs of Kalu Khan, the appellants have the right to revoke the gift deed under Section 19A of the Act.
The appellants submitted that in order to rebut the presumption of undue influence, it is to be proved that Kalu Khan had independent advice before executing the gift deed, which the respondent has failed to prove.

Respondent

The respondent made the following contention before the Hon’ble High Court:

The respondent contended that Kalu Khan had independent advice from his friends before executing the gift deed, which proves that he has made the decision to execute the gift deed independently.
The respondent submitted that he has been financially supporting Kalu Khan and his daughters and paid off his debts to third parties. This action of the respondent proves that there was a genuine and beneficial relationship between the respondent and Kalu Khan.
The respondent further submitted that, as per the rules of Mohammadan law, a gift can only be revoked by the donor. The heirs of the donor have no right to revoke a gift deed. Hence, the appellants have no legal right to revoke the executed gift deed.
The respondent claimed that there is no evidence to substantiate the claim that Kalu Khan executed the gift deed under undue influence or that the gift deed was executed with the intention to defraud others. In the absence of any exploitation of the condition of Kalu Khan by the respondent, the transaction (execution of gift deed) was fair.

Concepts involved in Mahboob Khan vs. Hakim Abdul Rahim (1964)

Section 16 of the Indian Contract Act, 1872

Section 16 of the Indian Contract Act, 1872, throws light on the meaning of undue influence:

When there are two parties in a contract and one party is in a superior position to the other party. The party who is in the superior position has the power to influence the will of the other party unfairly. Then, it can be stated that such a contract has been signed under ‘undue influence’.
Sub-section 2 provides the instances that can help us deduce that a person is in a position to dominate the will of another person, irrespective of the general understanding that prevails regarding the former principle.

Where the person shares a legal or ethical relationship of trust with the other person and seems to hold an explicit or implied authority over the other person.
Where the person forms a contract with another person where the latter cannot be perceived to be of sound mind since his mental capacity is affected for fleeting or everlasting duration owing to illness, age, or any bodily or mental ailment.
When two people enter into a contract, where one enjoys the position to dominate the will of the other person making the contract with him, and a transaction of any nature takes place and on the surface or owing to the evidence identified it is found that the transaction was of an unreasonable nature, the person in the position to dominate the will of the other person shall have the burden to prove that the contract does not contain the elements of undue influence.

Section 19A of the Indian Contract Act, 1872

Section 19A of the Act discusses the power to set aside a contract that has elements of undue influence in it.

When it is discovered that consent to form an agreement between the parties was not entirely ‘free’ and that it was caused by undue influence, the party whose consent was influenced by the one in a position to dominate has the power to declare the contract voidable.

A contract of such nature can be set aside either in absolute terms or where the party who consented to the agreement through undue influence has benefited from such a contract in any manner whatsoever. The court may set aside such a contract depending upon the terms and conditions as it deems fit.

Principles of Mohammedan Law

Under the Muslim Law, a gift can be defined as the transfer of property or right over the property from one person to the other. Under this law, the term used is ‘Hiba’ which reflects the unconditional transfer of a right or property ownership. It means there is no return or condition in exchange for this transfer.

A gift under Mohammedan law should fulfil the following criteria:

A gift is made voluntary and unconditionally;
It is an immediate transfer of property by the donor to the donee;
It is the transfer of specified existing movable or immovable property;
The transfer takes place without any consideration (iwaz);
The gift must be accepted by or on behalf of the donee.

Generally, as per the personal laws of Muslims, when hiba is once made as per the rules, it becomes irrevocable. The donor of hiba has an unrestricted right to revoke it before the gift becomes complete, i.e., before the possession of the property has been delivered to the donee by the donor. The Muslim Law states that if a gift is to be revoked, it can only be done by the donor in his lifetime. If the donor is deceased, his heirs do not have the right to revoke the gift given by the donor. However, if the Court passed a decree to that effect when the donor was alive, his heirs would have the right to revoke the gift even after the donor’s death.

Relevant judgements referred to in Mahboob Khan vs. Hakim Abdul Rahim (1964)

While deciding the dispute between the parties, the Hon’ble High Court referred to several judgments and books. The judgments referred to in the case are discussed as follows:

In Poosathurai vs. Kannappa Chettiar (1920), the Bombay High Court stated that for establishing undue influence it is not sufficient to prove that one party relies on the other party for advice and that the second party can control the decisions of the first party. The party has to establish that it was not ‘mere influence’ and that the other party used its position to obtain an unfair advantage. Once it has been established that the bargain made was unconscionable (something that is extremely unfair or unjust), the person who is in a position to dominate will have the burden to prove that no domination was practised.

In Raghunath Prasad vs. Sarju Prasad (1924), the Bombay High Court outlined the three-staged process to establish that there was an element of undue influence in making of a contract, which are as follows:

Firstly, it was necessary to establish that one of the parties was in a position to dominate the other.
Secondly, once it has been established, it has to be ascertained whether the contract was made through undue influence.
Thirdly, the person who is in the position to dominate the will of the other shall have the burden to prove that the contract was not induced by undue influence.

In Inche Noriah vs. Shaik Allie (1929), it was ruled that there are several ways to rebut the presumption of undue influence and that independent legal advice is one such way. However, the act of giving independent legal advice does not outrightly rebut the presumption of undue influence unless it is shown that the person who claims to have been unduly influenced had taken the advice and was well-versed with the consequences of his actions.

In Someshwar Dutt vs. Tribhawan Dutt (1934), where the case revolved around undue influence coupled with elements of fraud or coercion, the Privy Council stated that undue influence can be categorised as a subtle form of fraud where one person, who can control another, manipulates them into acting in a way that benefits the first person. While doing that, the second person must think that they are acting on their own.

Judgement of the case

It was contended by the respondent that the heirs of a Muslim have no right to revoke a contract under Section 19A of the Act. However, the High Court held that Section 19A is applicable to all persons, including Mohammadans and even his heirs. They can revoke a contract if it has been procured in the manner prescribed under Section 19A of the Act. Hence, the present case is governed by Section 19A of the Act.

The court further observed that, as per the Mohammedan Law, the right to revoke a gift is a personal right of the donor, and after his death, his heirs cannot revoke such a gift deed. The right to revoke a gift deed is a personal right of the donor, and this right dies with the death of the donor. A revocation becomes complete with a decree of a court and not the mere institution of a suit. Even when the suit was instituted by Kalu Khan (the donor), he passed away before the decree was passed in his favour. Therefore, the appellants (heirs of the donor) cannot exercise the option of revoking the gift deed.

The court observed that the respondent has paid the value of the house to Kalu Khan in cash and also defrays the expenses for maintaining Kalu Khan and his daughters. The court, on the basis of the statements of the attesting witnesses, pronounced that Kalu Khan was advised by his friends to not execute the gift deed. These witnesses were aware of the relationship between the parties. They also made Kalu Khan aware of the consequences of his transfer of the entire property to the respondent. Hence, the court held that Kalu Khan had independent advice before he executed the gift deed in the favour of the respondent.

The court was of the view that even though the respondent was in a position to dominate the will of the Kalu Khan, the gift deed was executed by Kalu Khan of his free volition. The presumption of undue influence has been fully rebutted. The Court held that the appellants have failed to prove that the gift deed in issue was executed by Kalu Khan under undue influence of the respondent; further, the appellant has no right to revoke it.

Analysis of Mahboob Khan vs. Hakim Abdul Rahim (1964)

The High Court observed that Section 19A of the Act uniformly applies to everybody, irrespective of their religion. It ensures that the law is not applied at the whims and fancies of the people. The decision of the Court that Kalu Khan had independent advice before the execution of the gift deed further strengthens the validity of the gift deed. It proved that the gift deed was executed voluntarily and without any exercise of undue influence by the respondent.

The act of the respondent paying the value of the house under the gift deed and defraying the expenses of Kalu Khan and his daughters displays that the respondent acted bona fide and discharged his part of the promise. The judgement was based on this contention, which shows that the appeal was decided in a fair manner and justified upholding the validity of the executed gift deed.

However, while applying the principle of Mohammedan law that the right to revoke a gift is the personal right of the donor, it restricts the rights of heirs of the donor to revoke the gift deed that has been executed on the basis of undue influence or coercion. When the court follows this principle and denies the rightful claim of the heirs, it unwittingly condones the fraudulent transactions that come out in light after the death of the donor. This act will infringe the rights of the heirs to have a share in the property.

Not allowing the heirs to make the gift deed void can leave the decision of the court open to criticism of disregarding the bona fide interests and rights of the heirs, as far as heirs may argue that they must have the right to contest the transaction affecting their inheritance. This judgement is likely to set a principle that would have the effect of bending the position of heirs in such matters and taking their rights away from them.

It is observed that, while certain legal principles and interpretations of law are followed, there are inconsistencies in balancing the statutory law with personal law.

Conclusion

The present case is an amalgamation of the statutory law, personal law, and the rights of the heirs of the donor of a gift where there is a suspicion of potential undue influence exercised by the donee. By deciding that Section 19A of the Act is applicable to all the religions, the Court has ensured uniform application of law. However, the doctrine of hiba as provided under the Mohammadan law can safeguard fraudulent transactions when the validity of hiba comes to light after the death of the donor. This restricts the rights of the heirs of the donor to challenge those transactions. This will furthermore deny the heirs of the donor from enjoying the fruits of their inheritance. Ultimately, in this case, the High Court dismissed the appeal while affirming that Kalu Khan executed the gift voluntarily and the burden of proving undue influence was not met by the appellants.

Frequently Asked Questions (FAQs)

What is the impact of the judgement of the High Court on the rights of Muslim heirs?

The judgement of the High Court emphasised that under the Mohammadan law, an heir cannot revoke a gift deed after the death of the donor. This will restrict the rights of the heirs in cases where the act of undue influence or coercion will be discovered after the death of the donor.

What are the key elements of undue influence under Section 16 of the Contract Act, 1872?

The key elements of undue influence under Section 16 of the Act are:

One party has a dominant position over another party;
The dominant party used his position to obtain an unfair advantage over the other party;
The non-dominant party is unable to exercise his free will due to the presence of the dominant position of the other party.

Who can be considered to be in a position to dominate the will of another party?

A person will be able to dominate the will of another party when:

He has real or apparent authority over another;
He holds a fiduciary relationship with another;
The mental capacity of the non-dominant party is affected due to illness, age, or distress.

What situations can be examples of the presence of undue influence?

In following relations, one party can exercise undue influence over the other:

A guardian and a minor;
Spiritual advisor and a devotee;
Trustee and beneficiary.

What is the effect of a contract executed under undue influence?

As per Section 19A of the Act, a contract executed under undue influence becomes voidable at the option of the party whose consent was obtained due to the exercise of undue influence.

What measures can be taken in a court to prove the presence of undue influence?

A party can present evidence to show the presence of a dominant relationship and unfair advantage to prove that the content was obtained due to the exercise of undue influence.

What are the available legal remedies to a party when the contract has been found to be influenced by undue influence?

The aggrieved party has the following reliefs:

The aggrieved party can seek to rescind the contract;
The aggrieved party can seek restitution of any benefits conferred by the contract;
The aggrieved party can seek damages if it is applicable.

What are the defences available against the claim of undue influence?

There are following defences available against the claim of undue influence:

Proving that the terms of the contract are fair and reasonable;
Proving that the party claiming the presence of undue influence took independent legal advice before executing the contract;
Proving that no unfair advantage has been gained.

What is the difference between undue influence and coercion?

The differences between undue influence and coercion are as follows:

Sl. No.	Aspect	Undue influence	Coercion
	Relevant Section under the Act	Section 16	Section 15
	Definition	The act of influencing or dominating the will of the other person	Committing, or threatening to commit, any act forbidden by the Indian Penal Code, 1860, or the unlawful detaining, or threatening to detain, any property, to the prejudice of any person whatsoever, with the intention of causing any person to enter into an agreement.
	Relationship between the parties	Fiduciary relationship between the contracting parties	Contracting parties do not share any such relationship.
	Deduction	Undue influence can be deduced if the party that is in the position to dominate the will of the other uses psychological pressure or subjects the latter to social pressure.	Coercion can be deduced through acts of threat or force, etc.
	Burden of Proof	Lies on the person who is in the position to dominate the will of the other person.	Lies on the aggrieved party

References

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Mahboob Khan vs. Hakim Abdul Rahim (1964)

Introduction

Details of the case

Facts of the case

Issues raised