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PAPER–III: LAW OF CONTRACT–I

SECTION–A

1. Contract: Meaning, Nature, and Types

Meaning of Contract:

Under Section 2(h) of the Indian Contract Act, a contract is defined as:

"An agreement enforceable by law is a contract."

This means two elements must be present:

 Agreement (a promise or set of promises),

 Enforceable by law (recognized and upheld by courts).

Nature of Contract:

1. Voluntary Legal Relationship – A contract is not forced; it is entered into

willingly.
2. Binding and Enforceable – Once formed, both parties must perform their
obligations.
3. Obligation-Centric – Creates duties and rights that can be enforced in a court
of law.
4. Mutual Consent – Consent of parties must be free (not obtained through
coercion, fraud, etc.).
5. Bilateral/Multilateral – Contracts usually involve two or more parties.

Types of Contracts:

A. Based on Validity:

 Valid Contract – Fulfills all legal requirements.

 Void Contract – Not enforceable by law (e.g., unlawful object).
 Voidable Contract – One party has the option to rescind (e.g., due to
coercion).
 Illegal Contract – Forbidden by law (e.g., contract for smuggling).
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 Unenforceable Contract – Cannot be enforced due to technical reasons (e.g.,

not in writing if required).

B. Based on Formation:
 Express Contract – Terms are clearly stated in words (written or spoken).
 Implied Contract – Inferred by actions or conduct (e.g., taking a bus ride).
 Quasi Contract – Not a real contract but imposed by law to prevent unjust
enrichment (e.g., mistakenly paid money).

C. Based on Performance:

 Executed Contract – Both parties have completed their obligations.

 Executory Contract – One or both parties still need to perform.
 Unilateral Contract – One party makes a promise; the other performs an act.
 Bilateral Contract – Both parties exchange promises and perform.

2. Online Contracts, E-Commerce, M-Commerce Contracts

Online Contracts:

Contracts made over digital platforms such as websites, apps, and emails.

Types:

 Click-wrap: User agrees to terms by clicking “I Agree” (e.g., software

license).
 Browse-wrap: Terms accessible via hyperlink; no active acceptance (less
enforceable).
 Shrink-wrap: Terms inside packaging (e.g., software CD/DVD).

Legal Standing:

 Recognized under the Information Technology Act, 2000.

 Must meet all essentials of a valid contract.

E-Commerce Contracts:
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Contracts conducted over the internet for the sale of goods and services. Examples:

 Ordering on Amazon, Flipkart.

 Booking tickets online.

Features:
 Instant communication.
 Digital payment.
 Authentication through OTP/email.

M-Commerce Contracts:

Mobile-based contracts. Examples:

 Ordering food via Zomato.

 Booking a cab on Ola.
 Mobile wallet agreements (e.g., Paytm).

Legal Recognition:

 Legally binding if they fulfill all contract essentials.

 Data privacy laws and IT Act provisions apply.

3. Essentials of a Valid Contract (Section 10)

A contract must meet the following essentials:

1. Offer and Acceptance:

There must be a lawful offer by one party and lawful acceptance by the other.

2. Intention to Create Legal Relationship:

Both parties must intend the agreement to be legally binding.

Social/domestic agreements (like family dinners) are not contracts because there’s
no intent to be legally bound.
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3. Lawful Consideration:

Each party must give something of value (money, service, goods). It must not be
illegal or immoral.

4. Capacity to Contract (Section 11):

The parties must be:

 Major (above 18 years),

 Of sound mind,
 Not disqualified by law.

5. Free Consent (Section 14):

Consent must not be affected by:

 Coercion (Section 15) – Use of force or threats.

 Undue Influence (Section 16) – Influence due to dominance.
 Fraud (Section 17) – False representation.
 Misrepresentation (Section 18) – Innocent misstatement.
 Mistake (Section 20–22) – Error regarding facts or law.

6. Lawful Object:

The purpose of the contract must be legal (not against public policy).

7. Not Expressly Declared Void:

The contract should not fall under void agreements such as:
 Agreements in restraint of trade.
 Agreements in restraint of legal proceedings.
 Wagering agreements.

8. Certainty and Possibility of Performance:

Terms must be clear, and the performance must be possible.

9. Legal Formalities:
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Some contracts must be in writing or registered (e.g., property sale).

4. Formation of an Agreement: Offer and Acceptance

Offer (Section 2(a)):

An offer is the expression of willingness to enter into a contract on specific terms.

Types of Offers:

 Express Offer – In words.

 Implied Offer – Through conduct.
 General Offer – Made to public (e.g., reward for lost item).
 Specific Offer – Made to a particular person.
 Cross Offer – Identical offers made by two parties at the same time without
knowing about the other.
 Counter Offer – A reply to an offer with different terms.

Legal Rules:

 Must be communicated.
 Terms must be definite and clear.
 Offer must not contain a condition that silence is acceptance.
 Offer can be revoked before acceptance is communicated.

Acceptance (Section 2(b)):

When the offeree agrees to the terms of the offer.

Rules for Valid Acceptance:

 Must be absolute and unconditional.

 Must be communicated to the offeror.
 Must be made in the prescribed mode (if any).
 Silence does not mean acceptance.
 Once accepted, cannot be revoked.

Communication of Acceptance:
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 Complete for the proposer when it is put in course of transmission (e.g.,

posted).
 Complete for the acceptor when it comes to the knowledge of the proposer.

5. Consideration (Section 2(d))

“When, at the desire of the promisor, the promisee or any other person has done or
abstained from doing something… such act or abstinence or promise is called a
consideration.”

Essentials of Valid Consideration:

1. Must be at the desire of the promisor – Not voluntarily or by third party.

2. May move from promisee or any other person – Known as doctrine of
stranger to consideration.
3. May be past, present, or future – Past service can be good consideration.
4. Must be real and not illusory – Cannot be impossible or uncertain.
5. Must be lawful – Should not be illegal or immoral.

No Consideration, No Contract – Exceptions (Section 25):

In the following cases, an agreement without consideration is still valid:

1. Natural love and affection (if in writing and registered).

2. Compensation for voluntary service (past act done voluntarily).
3. Promise to pay a time-barred debt (must be in writing).
4. Agency agreements under Section 185 of the Indian Contract Act.
5. Completed gifts – Once a gift is given, it is valid even without consideration.

SECTION–B

1. Capacity to Contract (Section 11)

A contract is enforceable only when the parties involved are competent to contract.

Section 11: Who is competent to contract?

Every person is competent to contract who is:

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1. Of the age of majority (18 years in India),

2. Of sound mind (capable of understanding and judging),
3. Not disqualified by any law.

A. Minor’s Capacity:

 A contract with or by a minor is void ab initio (void from the beginning).

 Minor cannot ratify such contract after attaining majority.
 Minor can be a beneficiary, not a promisor.
 A minor is not liable even if he misrepresents his age.

Case Law: Mohori Bibi vs Dharmodas Ghose (1903) – Leading case on minor’s
agreement being void.

B. Person of Unsound Mind:

A person is said to be of sound mind if at the time of making the contract, they:

 Understand the terms,

 Are capable of making a rational decision.

Types of unsoundness:

 Lunatic: Occasional insanity – can contract during lucid intervals.

 Idiot: Permanent unsoundness – never capable.
 Drunken/intoxicated: Not competent if incapable of understanding the
contract.

C. Disqualified Persons:

Persons disqualified by law:

 Foreign sovereigns and ambassadors

 Convicts
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 Insolvents
 Companies acting beyond their MOA (Memorandum of Association)

2. Free Consent (Section 14)

A valid contract requires free consent of the parties.

Section 14: Consent is free when it is not caused by:

1. Coercion (Sec. 15)
2. Undue Influence (Sec. 16)
3. Fraud (Sec. 17)
4. Misrepresentation (Sec. 18)
5. Mistake (Sec. 20-22)

If consent is not free, the contract is voidable at the option of the aggrieved party.

3. Coercion (Section 15)

Definition:

Coercion means compelling a person to enter into a contract:

 By committing or threatening to commit an act forbidden by the Indian Penal

Code (IPC),
 By unlawfully detaining or threatening to detain property.

Example: A threatens to kill B if he doesn’t sell his land. B agrees. This is coercion.

Features:
 Can be against any person, not just the promisor.
 Can be physical or property-related.
 Can come from a third party.

Effect: Contract is voidable at the option of the party who gave consent under
coercion.
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4. Undue Influence (Section 16)

Definition:

Undue influence occurs when:

 One party is in a position to dominate the will of another,

 Uses that position to gain an unfair advantage.

Example: A doctor pressurizing a patient to sign an unfair agreement.

Presumed Relationships:

 Parent-child
 Guardian-ward
 Lawyer-client
 Doctor-patient
 Spiritual advisor-devotee

Burden of proof lies on the dominant party to prove that influence was not used.

Effect: Contract is voidable.

5. Fraud (Section 17)

Definition:

Fraud means intentional deception made to:

 Induce another to enter into a contract.

Acts constituting Fraud:

1. False statement made knowingly.

2. Active concealment of facts.
3. A promise made without intention of performing.
4. Any act fitted to deceive.
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5. Any such act or omission as the law declares to be fraudulent.

Example: A sells land to B saying it’s dispute-free, but hides ongoing litigation.

Effect:

 Contract is voidable.
 Aggrieved party can also sue for damages.

6. Misrepresentation (Section 18)

Definition:

A false statement made innocently or without intent to deceive which induces the
other party to enter the contract.

Types:

1. Unwarranted positive assertion.

2. Breach of duty without intent to deceive.
3. Causing a mistake about subject matter innocently.

Example: A tells B a car has run only 20,000 km believing it to be true, but it has
run 80,000 km.

Effect:

 Contract is voidable.
 No damages unless negligence is proved.

7. Mistake (Sections 20–22)

A mistake is an erroneous belief about something.

Types of Mistake:

A. Mistake of Fact:
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1. Bilateral Mistake (Section 20):

 Both parties are mistaken about a fundamental fact.

 Contract is void.
Example: A and B think a horse is alive while entering into the contract, but it was
already dead.

2. Unilateral Mistake (Section 22):

 Only one party is mistaken.

 Contract is not void, unless:
o One party is aware of the mistake,
o The mistake relates to the identity or nature of the contract.

B. Mistake of Law:

1. Indian Law:

 Ignorance of law is no excuse – contract is valid.

2. Foreign Law:

 Treated as a mistake of fact – may make contract void.

8. Legality of Consideration and Object (Section 23)

A contract is valid only if the object and consideration are lawful.

Unlawful Consideration/Object includes:

1. Forbidden by law
2. Defeats the provisions of any law
3. Is fraudulent
4. Involves injury to person/property
5. Is immoral
6. Is opposed to public policy
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Examples:

 Contract to smuggle goods = illegal.

 Contract to pay for murder = illegal.
 Contract restricting marriage = against public policy.

Effect:

Contract becomes void.

9. Void Agreements (Sections 24–30)

Void agreements are not enforceable by law from the beginning.

Key Void Agreements:

Section Void Agreement Type Explanation

Unlawful consideration/object
24 Whole agreement becomes void.
in part
Agreement without
25 Void unless exceptions apply.
consideration
Agreement in restraint of
26 Totally void.
marriage
Void (except in sale of goodwill or
27 Restraint of trade
partnership act exceptions).
28 Restraint of legal proceedings Void.
29 Uncertain agreements If terms are vague.
Betting or gambling = void (not illegal in all
30 Wagering agreements
states).

Note: Collateral transactions in wagering may be valid unless forbidden (e.g., in

Maharashtra and Gujarat, they are illegal).

✅Summary Chart:
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Concept Void / Voidable Key Effect

Coercion Voidable Can rescind
Undue Influence Voidable Can rescind
Fraud Voidable Can rescind + damages
Misrepresentation Voidable Can rescind
Bilateral Mistake Void Automatically void
Unilateral Mistake Valid Exceptionally void
Illegal Object Void No legal enforcement
Minor’s Contract Void No contract exists

SECTION–C

✅1. Contingent Contracts (Section 31–36)

📌 Definition (Section 31):

A contingent contract is a contract to do or not to do something if some event,

collateral to such contract, does or does not happen.

📌 It is dependent on a future uncertain event.

📌 Key Features:

1. Performance depends on a future uncertain event.

2. That event is collateral (not a direct part of the contract).
3. The contract becomes enforceable only if the event occurs.

📌 Examples:

 A agrees to pay B ₹50,000 if B's house is destroyed by fire. → Contingent

contract.
 Insurance contracts are classic examples of contingent contracts.
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📌 Important Sections:

 Section 32: If the event happens, the contract is enforceable.

 Section 33: If the event becomes impossible, the contract is void.
 Section 34: If the event depends on the conduct of a person, occurrence is
judged by performance.
 Section 35: If the event does not happen within fixed time, contract becomes
void.

❌Not Contingent:

 Contracts with conditions that are not collateral.

 Contracts dependent on a party’s will, not an external event.

✅2. Performance and Discharge of Contract

📌 A. Performance of Contract

When the parties fulfill their promises, the contract is said to be performed.

📌 Types of Performance:

1. Actual Performance: Parties perform obligations as agreed.

2. Attempted Performance (Tender): Offer to perform is made but not accepted.

📌 B. Who must perform?

 Promisor himself (if personal skill is involved),

 Agent (if not personal),
 Legal representatives (in case of death),
 Third party, if accepted by promisee.
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📌 C. When is performance valid?

 Must be made at proper time, place, and in proper manner.

📌 D. Discharge of Contract

Discharge means termination of the contractual relationship.

📌 Modes of Discharge:

Mode Meaning
1. By Performance Both parties fulfill obligations.
2. By Mutual Agreement Novation, Rescission, Alteration, Remission, Waiver.
3. By Impossibility Subsequent impossibility renders contract void.
4. By Lapse of Time Not enforced within limitation period.
5. By Operation of Law Death, insolvency, merger, etc.
6. By Breach of Contract One party refuses/fails to perform.

📌 Examples:

 A agrees to paint B’s house. Both complete their parts → Discharged by

performance.
 A and B mutually agree to cancel the contract → Rescission.
 A dies before he can perform his contract to sing → Discharged by
impossibility.

✅3. Breach of Contract & Remedies (Section 73–75)

📌 A. Breach of Contract

A breach occurs when a party:

 Fails to perform, or
 Refuses to perform, or
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 Performs defectively.

📌 Types of Breach:

1. Actual Breach – At the time of performance or during.

2. Anticipatory Breach – Before performance is due, one party declares they
won’t perform.

📌 B. Remedies for Breach of Contract

Remedy Explanation
1. Damages (Section 73) Monetary compensation for loss.
2. Specific Performance Court orders actual performance.
3. Injunction Court restrains a party from doing something.
4. Rescission Cancel the contract.
5. Quantum Meruit Payment for work already done.

📌 1. Damages:

 Ordinary Damages: Loss that arises naturally.

 Special Damages: Loss from special circumstances (must be informed in
advance).
 Nominal Damages: No actual loss, but legal right violated.
 Exemplary Damages: Punitive – rare in contract law.

Leading Case: Hadley v. Baxendale – Damages can be claimed only if reasonably

foreseeable.

📌 2. Quantum Meruit (As much as earned):

If a contract is discharged but work was partially done, the party can claim
reasonable compensation.
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Example: A agreed to build a wall for ₹50,000. Work stopped halfway due to B's
interference. A can claim payment for work done so far.

✅4. Quasi Contracts (Sections 68–72)

These are not actual contracts, but obligations imposed by law to prevent unjust
enrichment.

📌 Definition:

A quasi-contract is a legal obligation imposed by law in absence of a contract, to

ensure fairness and equity.

Based on the principle of equity: "No one should be unjustly enriched at the
expense of another."

📌 Important Types (Sections 68–72):

Section Provision Explanation

To people incapable of contracting (e.g.,
68 Supply of necessaries
minor). Reimbursement allowed.
A pays B’s due to protect own interest. A
69 Payment by interested person
can recover from B.
Person does lawful act, not intending it as a
70 Non-gratuitous act
gift – entitled to compensation.
Has same responsibility as bailee. Must
71 Finder of goods
return goods.
Money paid or goods delivered
72 Must be returned or repaid.
by mistake or coercion

📌 Examples:
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 Section 68: A supplies food to B, a minor. A can recover payment from B’s
estate.
 Section 70: A mistakenly delivers goods to B. B uses them. A can claim
payment.
 Section 72: A pays tax to the government by mistake. He can recover it.

📌 Summary Chart

Topic Key Point

Contingent Contracts Dependent on future uncertain events
Performance Fulfillment of contractual obligations
Discharge Termination of contract by various means
Breach Failure/refusal to perform
Remedies Damages, specific performance, etc.
Quasi Contracts Legal obligations without actual agreement

SECTION–D

✅1. Specific Performance of Contract

📌 Definition:

Specific Performance means a court order directing a party to perform their part of
the contract, rather than just paying damages.

 Governed by Sections 9 to 25 of the Specific Relief Act.

 It is a discretionary remedy, not automatic.

📌 Example: A agrees to sell his unique painting to B. A refuses. Court may order
specific performance since the item is unique.

📌 Conditions for Granting Specific Performance:

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 Valid and enforceable contract

 Plaintiff ready and willing to perform their part
 Contract must not be one that law prohibits from being specifically enforced

✅2. Recovering Possession of Property (Sections 5–8)

📌 Section 5 – Recovery of Possession of Immovable Property:

 A person lawfully entitled to possession can recover it through proper legal

procedure.
 Must prove ownership or possessory title.

Example: Owner evicted unlawfully can recover possession via civil suit.

📌 Section 6 – Protection of Possession:

 A person in peaceful possession cannot be dispossessed without due process,

even by the true owner.
 Can file a suit within 6 months of being dispossessed.
 Ownership is not required to file suit under this section.

Case: Krishna Ram Mahale v. Shobha Venkat Rao – Law protects possession even
without ownership.

📌 Section 7 – Recovery of Specific Movable Property:

 Allows the recovery of movable property by the person entitled to possession.

📌 Section 8 – Person Entitled to Possession Can Recover from Person in

Possession:

 If movable property was entrusted and unlawfully retained, legal action can be
taken.
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✅3. Contracts Which Can Be Specifically Enforced (Sections 10–13)

📌 Section 10 (Post 2018 Amendment):

 Court shall enforce specific performance by default if:

o There is no standard for ascertaining actual damage, or
o Compensation is inadequate.
 Changed from discretionary to mandatory in many cases (especially
infrastructure contracts).

✅Contracts That Can Be Enforced:

1. When compensation is not an adequate remedy.

E.g., Sale of unique goods, rare artwork, or immovable property.

2. When there is no standard for assessing compensation.

3. Contracts involving immovable property, subject to conditions.
4. Contracts where plaintiff has performed or is ready to perform essential
obligations.
5. Contracts involving trust and fiduciary obligations.

❌4. Contracts Which Cannot Be Specifically Enforced (Sections 14–16)

📌 Section 14 – Contracts Not Specifically Enforceable:

Contracts which cannot be enforced:

1. Where monetary compensation is adequate remedy.

2. Contracts of personal nature, e.g., to marry, sing, paint.
3. Contracts too vague or uncertain.
4. Determinable contracts – can be terminated by either party.
5. Contracts involving continuous duty over a long period.
6. Employment contracts – generally not specifically enforced.
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📌 Example: Contract to act in a movie – involves personal skill and performance →

Not enforceable.

📌 Section 16 – Personal Bars to Relief:

Specific performance cannot be granted to a person who:

 Has obtained the contract by fraud or misrepresentation,

 Has failed to perform their part or show willingness to perform,
 Is incapable of performing.

A person must "always be ready and willing" to perform their obligations.

✅5. Cancellation of Instruments (Sections 31–33)

📌 Section 31 – When Cancellation May Be Ordered:

 If an instrument (document) is:

o Void or voidable, and
o May cause serious injury to a person if left outstanding,

Then the person may file a suit to get it cancelled.

📌 Example: A forged sale deed made in someone's name can be cancelled under
this section.

📌 Section 32 – Effect of Cancellation:

 Court can order the instrument to be delivered up and cancelled.

 Court may direct registration authorities to note the cancellation.

📌 Section 33 – Who Can Sue for Cancellation:

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 A person interested in the instrument.

 Example: Legal heirs, co-owners, or beneficiaries.

✅6. Injunctions (Sections 36–42)

📌 Definition:

An injunction is a court order that:

 Restrains a person from doing something (prohibitory injunction), or
 Compels a person to do something (mandatory injunction).

📌 Types of Injunctions:

Type Description
Stops someone from doing an act (e.g., publishing
Prohibitory Injunction
defamatory article).
Compels performance of a positive act (e.g.,
Mandatory Injunction
removing illegal construction).
Temporary Injunction Granted during a suit to maintain status quo.
Permanent Injunction (Section
Granted after hearing both parties.
38)
Mandatory Injunction (Section
Enforces affirmative duty.
39)
Damages in Lieu of or with Sometimes, damages may be granted along with
Injunction (Section 40) or instead of injunction.
Injunction when it can be E.g., when it would cause disproportionate
refused (Section 41) hardship, or when alternate remedy exists.
Injunction to Perform Negative Stops a party from violating a negative term in a
Agreement (Section 42) contract (e.g., non-compete clause).

📌 Examples:
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 A agrees not to work for a rival company. If he tries to join the rival, court
may issue injunction.
 B constructs building on A's land. A can get a mandatory injunction to remove
it.

✅Summary Table

Topic Key Takeaway

Specific Performance Court compels actual performance instead of damages.
Legal remedies to reclaim movable/immovable
Recovery of Possession
property.
Contracts Enforceable Unique goods, land, where compensation is inadequate.
Contracts Not Enforceable Personal skill, vague, determinable contracts.
Cancellation of
Void or voidable documents can be cancelled.
Instruments
Injunctions Prevent or compel certain acts through court orders.

📌 Conclusion:

The Specific Relief Act, 1963 aims to provide specific legal remedies in cases
where monetary compensation is not sufficient. It protects:

 Property rights
 Contractual rights
 Equitable rights (fairness and justice)

Judgments

Here's a fully detailed and structured explanation of the case:

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📌 Case Name:

Ranganayakamma & Another v. K.S. Prakash (Dead) by LRs & Others

Citation: (2008) 15 SCC 673
Court: Supreme Court of India
Judges: S.B. Sinha & Cyriac Joseph, JJ.
Date of Judgment: 18 November 2008

📌 I. Background & Facts of the Case:

📌 Parties Involved:

 Plaintiffs/Appellants: Ranganayakamma and another daughter of K.

Sreenivasulu (from his first marriage)
 Defendant/Respondent: K.S. Prakash, son of K. Sreenivasulu by his second
wife

📌 Key Facts:

1. Joint Hindu Family Property was held by K. Sreenivasulu.

2. After his death, his two daughters (from first wife) and son (K.S. Prakash)
(from second wife) were legal heirs.
3. In 1982, a partition deed was executed, dividing the family properties.
4. The daughters were given a small amount (₹10,000 each or ₹1 in some
reports) as token consideration in the partition agreement.
5. This partition was later recorded through a consent decree in court (in 1983).
6. The daughters later challenged the consent decree, alleging:
o Fraud
o Misrepresentation
o Undue influence
o And that the consideration was illusory and inadequate

They filed a suit for declaration that the consent decree and partition were invalid
and sought cancellation.
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📌 II. Legal Issues Before the Court:

1. Whether the partition and consent decree executed by the daughters were
obtained through fraud, coercion, or undue influence?
2. Whether love and affection can constitute valid legal consideration under
Section 25 of the Indian Contract Act, 1872?
3. Can a consent decree be reopened years after execution without solid legal
grounds?

📌 III. Legal Provisions Involved:

 Section 25, Indian Contract Act, 1872

Deals with agreements without consideration — but provides exceptions
where love and affection, past services, or promises in writing may be valid
even without monetary consideration.
 Section 31–33, Specific Relief Act, 1963
Regarding cancellation of instruments in cases of fraud, voidability, etc.
 Civil Procedure Code (CPC) – Order XXIII, Rule 3
Governs consent decrees and their binding nature.

📌📌 IV. Observations & Judgment by the Supreme Court:

✅1. Consent Was Voluntary and Informed:

 The plaintiffs were major, legally advised, and represented by counsel.

 They were not under coercion or undue pressure at the time of signing.
 The Court emphasized the principle of "free consent" under Section 14 of the
Contract Act and found that this requirement was satisfied.

✅2. Consideration Was Valid – Love & Affection:

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 The Court upheld that token consideration in family settlements is legally

valid, especially when backed by love and affection.
 Section 25(1) of the Contract Act permits a contract without monetary
consideration if:
o It is in writing, and
o Made out of natural love and affection, and
o Between close relations.

📌 Quote from Judgment:

“A contract may not be vitiated merely because the consideration was inadequate if
it was based on love and affection in the context of a family arrangement.”

✅3. No Sufficient Proof of Fraud or Misrepresentation:

 The burden of proving fraud was on the plaintiffs.

 The Court noted that no documentary evidence or independent witness
testimony was produced to support claims of deception or force.

✅4. Consent Decree Has Binding Effect:

 A consent decree is not an ordinary agreement, but a judicially recorded

compromise.
 Once passed, it has the same force as a decree passed on merits unless set
aside by a separate, competent proceeding.

📌 The Court warned against the trend of parties challenging old decrees on vague
grounds of fraud long after execution.

✅5. Dismissal of Appeal:

 The Supreme Court dismissed the appeal and upheld the judgment of the
lower courts.
 It found the suit to be barred by limitation, without merit, and a waste of
judicial time.
 Page 27 of 42

📌 V. Legal Principles Established:

Legal Point Established Principle

Can be enforced even with nominal or no monetary
Family Settlements
consideration, if based on love & affection
Binding and have the force of a court decree; not easily
Consent Decrees
reopened
Burden of Proof in Lies on the party making the allegation; must be proved
Fraud strictly
Consent is presumed valid unless specific and proven
Free Consent
grounds for invalidity exist
Finality in Legal Courts discourage revisiting settled matters without
Proceedings compelling legal reasons

📌 VI. Case Citation Format (For Exams & Moots):

Ranganayakamma & Anr. v. K.S. Prakash (D) by LRs & Ors., (2008) 15 SCC 673

📌 VII. Important for:

 Contract Law (Section 25 – Consideration)

 Family Law (Partition & Consent Decrees)
 Civil Procedure (Consent Decrees under Order 23)
 Specific Relief (Cancellation of instruments)
 Evidence Law (Burden of proof in fraud cases)

✅Conclusion:

The Ranganayakamma judgment is a landmark ruling reinforcing the binding nature

of family settlements, especially when done through court-approved consent
decrees. It clarifies that non-monetary consideration like love and affection is
 Page 28 of 42

sufficient in family arrangements and that courts will not entertain unfounded
challenges to old agreements without strict proof.

Here’s a thorough breakdown of the landmark case Khan Gul v. Lakha Singh,
AIR 1928 Lah. 609, decided by the Lahore High Court on 2nd April 1928:

Case at a Glance

 Parties:
o Defendant/Appellant: Khan Gul (a minor who misrepresented his age)
o Plaintiff/Respondent: Lakha Singh
 Judgment Date: 2 April 1928
 Bench: Chief Justice Sir Shadi Lal, Justices Broadway, Harrison, Tek Chand,
Dalip Singh(Lexpeeps, Law Times Journal, Testbook)

Facts:
 Khan Gul, though still a minor, negotiated the sale of land to Lakha Singh,
deceptively representing himself as an adult.
 He received ₹17,500—₹8,000 in cash and ₹9,500 via a promissory note.
 Plaintiffs claimed the note had been partially settled, and they were prepared
to pay the balance, but the defendant refused to deliver possession. Plaintiffs
sought possession or recovery of the entire sum with interest (1% per month)
totaling around ₹19,000(Lexpeeps, Bench Notes).

Legal Issues:
1. Can a minor who induced a contract by falsely claiming to be a major be
estopped from asserting his minority later?
2. Can such a minor retain the benefits gained from an invalid contract?

Judgment & Key Legal Principles

1. Minor’s Lack of Capacity Trumps Estoppel

 Page 29 of 42

 The court reaffirmed the rule from Mohori Bibee v. Dharmodas Ghose (1903):
a contract entered by a minor is void ab initio, regardless of any
representation to the contrary(Drishti Judiciary, One Stop destination for DU
LLB students).
 Section 115 of the Indian Evidence Act (estoppel) does not bind minors in
contractual matters, as it would conflict with Section 11 of the Contract Act,
which explicitly bars minors from being bound(Bench Notes, One Stop
destination for DU LLB students).

2. Equitable Restitution — Return of Benefits

 Despite being able to avoid the contract, a minor who fraudulently
misrepresents his age cannot retain unjust enrichment.
 Applying principles from the Specific Relief Act, the court held that
restitution is appropriate: the minor must return benefits received—even in
void contracts obtained through misrepresentation(Laws Forum, Drishti
Judiciary, One Stop destination for DU LLB students).

3. Fairness Over Technicality

 Allowing a minor to retain benefits after defrauding another would be unjust.
Thus, equitable principles override strict contractual incapacity where fraud is
involved(One Stop destination for DU LLB students, Drishti Judiciary, Legal
Wires).

Summary Table

Legal Issue Court’s Position

Minor misrepresents age → Void, regardless of representation (Mohori Bibee
contract? principle upheld)
No—cannot prevent a minor from pleading minority
Estoppel apply to minors?
despite his misrepresentation
Can the minor retain
No—must return benefits under equitable restitution
benefits?
 Page 30 of 42

Case in Context
 Before this judgment, Mohori Bibee (1903) established that contracts with
minors are void. However, it didn’t address cases where minors
misrepresented age nor whether restitution could be required.
 Khan Gul v. Lakha Singh (1928) filled this gap, clarifying that minors are not
estopped and can reclaim benefits only if they return the gains—marking a
turning point in Indian jurisprudence on minor contracts(Drishti Judiciary,
One Stop destination for DU LLB students, Reddit).

Commissioner of Customs (Preventive) v. M/s Aafloat Textiles (I) Pvt. Ltd. &
Ors.
Citation: (2009) 4 SCALE 94; (2009) 235 ELT 587; (2009) 11 SCC 18
Court: Supreme Court of India, Bench of Justices Arijit Pasayat and Mukundakam
Sharma
Date of Judgment: 16 February 2009 (vLex, SooperKanoon)

I. Background & Procedural History

1. Import of Gold & Silver:

M/s Aafloat Textiles imported nine consignments of gold and silver using
allegedly forged Special Import Licences (SILs). The Customs Commissioner
assessed duty amounting to ₹6.69 crore, denied exemption (Notification
No. 117/94-Cus., dated 27 April 1997), and imposed penalties—equal to the
duty on the importer, ₹50 lakh on one accused, and ₹25 lakh on four others—
while refraining from confiscation due to unavailability of goods. (vLex,
SooperKanoon)
2. Importer's Defense Before CESTAT:
On appeal, CESTAT set aside the demands and penalties, primarily on
grounds that the extended limitation period under Section 28(1) (Cus Act)
couldn't be triggered as the department failed to prove that the importer had
knowledge of the forgery. (vLex, SooperKanoon)
3. Appeal to the Supreme Court:
The Customs Commissioner appealed to the Supreme Court, challenging
 Page 31 of 42

CESTAT’s limitation-based decision and seeking resolution on the merits of

fraud, duty, and associated penalties. (Casemine, Court Verdict)

II. Key Legal Issues

1. Validity of SILs:
Whether forged documents like SILs are void ab initio and, if so, whether the
extended limitation period is automatically applicable. (Casemine, Court
Verdict)
2. Buyer’s Due Diligence:
Whether the importer bears the burden to verify the authenticity of SILs
(invoking the principle of caveat emptor), and whether lack of such diligence
attracts legal consequences. (Casemine, Court Verdict)
3. Implications of Fraud in Customs Law:
How fraud impacts the enforceability of documents, the invocation of
limitation periods, and the authority to impose penalties/confiscation. (Indian
Kanoon, Casemine, Court Verdict)

III. Supreme Court’s Holding & Reasoning

A. Fraud Vitiates Everything

 The Court reaffirmed that forged documents are legally non-existent, and
fraud “vitiates every solemn act.” (Indian Kanoon, Casemine)
 Any transaction made under such documents holds no legal sanctity.

B. Extended Limitation Period Triggered by Fraud

 Since SILs were forged, the extended five-year limitation clause under
Section 28(1) (Cus Act) applies independent of the buyer’s knowledge.
 CESTAT erred by not applying it simply because they couldn’t prove
importers' knowledge. (Casemine, Indian Kanoon)

C. Role of Caveat Emptor

 Page 32 of 42

 The Court held that the onus lies with the buyer to ensure authenticity. If they
fail in due diligence, consequences follow—regardless of their knowledge or
intent. (Casemine, Court Verdict, Indian Kanoon)

D. Department’s Case Upheld

 The import duty, interest, penalties, and the potential confiscation are validly
invoked due to the fraudulent nature of licenses.
 Reliance on forgeries holds no legal defense and duty demands revert to being
sustainable.

E. Conclusion

 The Supreme Court allowed the appeal, reversing the CESTAT decision. No
order as to costs. (SooperKanoon, Casemine, Indian Kanoon, Court Verdict)

IV. Legal Principles Affirmed

Principle Application in Case

Forged SILs created no legal rights (Indian Kanoon,
Fraud vitiates all acts
Casemine)
Extended limitation Section 28(1) extended time applies even without buyer’s
period and fraud knowledge (Casemine, Indian Kanoon)
Caveat emptor in import Buyer must verify legitimacy; failure triggers legal
license contexts consequences (Casemine, Court Verdict, Indian Kanoon)

V. Impact & Academic Significance

 Precedent in Customs Law on forged licensing and inapplicability of
ignorance as a defense.
 Strong guidance to traders: due diligence is essential when purchasing
critical documents from brokers or third parties.
 Emphasis on legal accountability, reinforcing statutory objectives over
procedural technicalities in fraud detection.
 Page 33 of 42

This ruling has also led to formal advisories, like in the Kandla Commissionerate,
emphasizing adherence to authenticity checks before buying licences.
(kandlacustoms.gov.in)

Ghaziabad Development Authority v. Union of India, AIR 2000 SC 2003

Court: Supreme Court of India

Citation: AIR 2000 SC 2003

Date of Judgment: 10 May 2000

Bench: Justice S. Rajendra Babu and Justice K. G. Balakrishnan

Facts:
 The Ghaziabad Development Authority (GDA) was responsible for urban
planning and development in Ghaziabad.
 The case arose from disputes regarding payment of compensation for land
acquired under the Land Acquisition Act, 1894.
 GDA initiated acquisition of land for public purpose (development of the city)
but the landowners challenged the compensation amount.
 The issue was whether the compensation awarded by the Collector was just
and adequate and whether it should be enhanced.
 The petitioners questioned the powers and duties of authorities under land
acquisition laws and the adequacy of compensation fixed.

Issues:
1. Adequacy of Compensation: Whether the compensation awarded to
landowners under the Land Acquisition Act was just, fair, and in line with
constitutional mandates.
 Page 34 of 42

2. Power of the Courts: The extent of judicial interference in land acquisition

cases, particularly concerning enhancement of compensation.
3. Balancing Public Purpose and Individual Rights: How to reconcile the
State’s power of eminent domain with the rights of landowners.

Judgment:

 The Supreme Court reiterated that Land Acquisition Act compensation

must be “fair, just, and reasonable.”
 The State’s power of eminent domain, while absolute, must be exercised with
due regard to the rights of the landowners.
 The Court emphasized the Constitutional mandate under Article 300A,
which protects citizens from deprivation of property without compensation.
 It held that compensation cannot be a nominal amount or mere token sum;
it must be adequate enough to enable the landowner to purchase equivalent
land or compensate loss properly.
 The Court allowed the enhancement of compensation where necessary.
 It further held that judicial scrutiny of awards is essential to prevent
exploitation of landowners by State agencies.
 The judgment underlined that urban development authorities must maintain
transparency and fairness in acquisition proceedings.

Key Legal Principles:

Principle Explanation
The State can compulsorily acquire land for public purposes but
Eminent Domain
must pay compensation.
Guarantees no person shall be deprived of property except by
Article 300A
authority of law.
Just Compensation must reflect market value and be fair and
Compensation reasonable, not nominal.
Courts can and should examine compensation awards for
Judicial Review
adequacy.
 Page 35 of 42

Principle Explanation
Balance Public interest must be balanced against private property rights.

Significance:
 This case reinforced the right to fair compensation in land acquisition and
clarified the role of courts in ensuring fairness.
 It strengthened protections for landowners against undervaluation.
 It is often cited in cases dealing with acquisition for urban development and
public infrastructure.

Motilal Jain v. Ramdasi Devi, AIR 2000 SC 2408

Court: Supreme Court of India

Citation: AIR 2000 SC 2408

Date of Judgment: 18 December 2000

Bench: Justice B.N. Kirpal and Justice S.C. Srivastava

Facts:
 The case involves a dispute over inheritance and succession in a Hindu
family.
 Motilal Jain, the appellant, claimed certain rights in the property inherited
from his deceased father.
 Ramdasi Devi, the respondent, challenged the appellant’s claim on the ground
of his adoption status and other family relations.
 The primary legal question revolved around the validity of adoption and its
impact on succession rights under Hindu law.
 Page 36 of 42

Issues:
1. Whether the adoption was valid according to Hindu law.
2. Whether the appellant, as an adopted son, was entitled to inherit the property.
3. How succession rights apply to adopted children under Hindu Succession Act,
1956.
4. The effect of repudiation or rejection of an adoption.

Judgment:

 The Supreme Court held that valid adoption confers on the adopted son the
same rights as a biological son, including the right to inherit ancestral
property.
 The Court examined the requirements of a valid adoption under Hindu law,
especially Section 7 of the Hindu Adoption and Maintenance Act, 1956.
 It ruled that an adoption done without compliance with legal formalities is
invalid and does not confer inheritance rights.
 The Court held that in this case, the adoption was not valid, and therefore the
appellant was not entitled to inherit the property as a son.
 The judgment further clarified that succession rights cannot be claimed by a
person whose adoption is legally invalid.
 The Court emphasized the need for strict adherence to formalities and
conditions governing adoption under Hindu law.

Key Legal Principles:

Principle Explanation
Adoption must comply with legal formalities under
Validity of Adoption
Hindu Adoption and Maintenance Act, 1956.
Inheritance Rights of A legally adopted child has the same rights as a natural
Adopted Child child.
Adoption not complying with law is null and void, and
Invalid Adoption
does not confer rights.
Succession under Hindu Rights depend on lawful status as a son or heir.
 Page 37 of 42

Principle Explanation
Law

Significance:
 This case is significant for clarifying the legal requirements of adoption
under Hindu law.
 It reaffirms that adoption is not merely a social or family arrangement but
a legal act requiring formal compliance.
 It is a key authority on inheritance rights of adopted children and the
importance of proper adoption procedures.

M/s J P Builders & Anrs v. A Ramadas Rao & Anrs, (2011) 1 SCC 429

Court: Supreme Court of India

Citation: (2011) 1 SCC 429

Date of Judgment: 13 December 2010

Bench: Justice Markandey Katju and Justice Gyan Sudha Misra

Facts:
 The case arose out of a dispute involving a joint development agreement
(JDA) between the appellant builders (M/s J P Builders) and the respondents
(owners of the land).
 The agreement was for development of land wherein the owners agreed to
transfer possession to the builders for construction and in return, receive a
portion of the constructed flats.
 A dispute arose regarding possession and performance of contractual
obligations under the JDA.
 Page 38 of 42

 The appellants (builders) alleged that the respondents (owners) were

unlawfully withholding possession and not allowing construction.
 The question before the Court was whether the owners could withhold
possession and refuse performance of the contract.

Issues:

1. Whether the joint development agreement created enforceable rights and

obligations.
2. Whether the owners were justified in withholding possession.
3. Whether specific performance of the contract could be enforced.
4. The legal nature of possession and contractual obligations in development
agreements.

Judgment:

 The Supreme Court held that the joint development agreement is a valid
and enforceable contract.
 The Court observed that such agreements are common in real estate and have
commercial sanctity.
 It held that the owners cannot withhold possession arbitrarily and must fulfill
their contractual obligations.
 The Court emphasized that when one party is ready and willing to perform
their part (builders), the other party cannot frustrate the contract by denying
possession.
 The judgment recognized the importance of good faith and fair dealing in
contract performance.
 It ruled that specific performance is a remedy available in such contracts when
parties fail to perform.
 The Court ordered that possession must be handed over to the builders so that
construction can commence.
 The ruling reinforced the principle that contractual obligations must be
honored in spirit and letter.
 Page 39 of 42

Key Legal Principles:

Principle Explanation
Validity of Joint Development JDAs are enforceable contracts between
Agreement landowners and developers.
Owners cannot withhold possession to frustrate
Possession and Performance
contractual obligations.
Courts may order specific performance to ensure
Specific Performance
contract fulfillment.
Both parties must act honestly and fairly in
Good Faith in Contracts
executing agreements.

Significance:
 This case is a leading authority on the enforceability of joint development
agreements in India.
 It protects builders/developers against arbitrary obstruction by landowners.
 It provides clarity on remedies available for breach, especially in the real
estate sector.
 The judgment encourages parties to adhere to contractual commitments and
discourages misuse of possession rights.

Ram Niwas v. Bano, AIR 2000 SC 2921

Court: Supreme Court of India

Citation: AIR 2000 SC 2921

Date of Judgment: 25 October 2000

Bench: Justice K. Ramaswamy and Justice M. B. Shah

 Page 40 of 42

Facts:

 The case involved a dispute relating to Muslim Personal Law, specifically

concerning inheritance and maintenance rights of Muslim women.
 Bano, the respondent, was the wife of Ram Niwas.
 After the husband’s death, a question arose regarding the maintenance and
rights to property.
 The case dealt with the scope of maintenance obligations under Muslim law
and whether Muslim women are entitled to be maintained from the estate of
the deceased husband beyond the period prescribed by law.
 It also touched upon the question of whether Muslim women have a right to
inherit certain properties, given the complex personal law traditions.

Issues:
1. Whether the Muslim woman is entitled to maintenance beyond the iddat
period from the deceased husband’s estate.
2. The extent of inheritance rights of Muslim women under Muslim Personal
Law.
3. Whether the civil courts have jurisdiction to grant maintenance or inheritance
rights contrary to Muslim law.
4. Interpretation of personal laws in light of constitutional provisions,
particularly equality and non-discrimination.

Judgment:

 The Supreme Court held that under Muslim Personal Law, a widow is entitled
to maintenance only during the iddat period (usually 3 lunar months after
the husband’s death).
 Beyond the iddat period, there is no obligation on the heirs to maintain the
widow under the personal law.
 The Court clarified that Muslim women’s inheritance rights are governed by
Quranic provisions and applicable personal laws, which generally grant
 Page 41 of 42

them shares but do not equate to full inheritance rights like in the case of
males.
 It was held that civil courts cannot interfere to extend maintenance beyond
what personal law prescribes unless statutory law provides otherwise.
 The judgment reaffirmed the primacy of personal law in matters of
inheritance and maintenance for Muslims.
 However, the Court observed that Muslim women have other remedies under
general law for maintenance, such as under the Criminal Procedure Code
(Section 125) or the Protection of Women from Domestic Violence Act.
 The Court emphasized respect for religious personal laws, balanced with
protection through secular laws where applicable.

Key Legal Principles:

Principle Explanation
Maintenance Period Under Muslim law, maintenance of widow is only during
(Iddat) iddat period (~3 months).
Inheritance under Shares are prescribed by Quran; women get specific
Muslim Law shares but not full inheritance.
Non-interference by Personal law governs maintenance/inheritance; civil
Civil Courts courts respect these boundaries.
Alternative Legal Muslim women can seek maintenance under secular laws
Remedies beyond iddat.

Significance:
 This case is a key authority on the maintenance rights of Muslim widows
under personal law.
 It clarifies the limitations on maintenance obligations and the role of
personal law versus secular law.
 It provides guidance on the interaction between religious laws and
constitutional principles.
 The judgment is frequently cited in cases involving family disputes among
Muslims, especially regarding women’s rights.
Page 42 of 42