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Can one escape from the stipulations of a contract signed by oneself? – An insight into the Latin maxim of Non Est Factum

Aug 24, 2023
  • Author(s) : Shailesh Poria , Shubhangi Khandelwal

    • Can one escape from the stipulations of a contract signed by oneself? – An insight into the Latin maxim of non est factum

    Ramathal v. K. Rajamani (Dead) Through LRS & Anr.[1]

    INTRODUCTION

    The Division Bench of the Hon’ble Supreme Court of India has recently rendered a noteworthy judgment related to the plea of non est factum. The term non est factum, a Latin maxim, when literally translated, means “it is not his/her deed”. The defence of non est factum emanates from contract law which can be taken by an executor or signatory of a document, to elude from the stipulations/obligations arising out of the document, when there is a mistake on the nature or character of the transaction stated in the said document.

    FACTS

    The dispute in the present case stemmed from the contents of a Power of Attorney signed between parties with respect to a parcel of land and the consequential effect on the rights of the parties. The Appellants (who were owners of the parcel of land located in a village in Tamil Nadu) were illiterate and relied upon the Respondents to develop the land after procuring permission from Government authorities. On September 5, 1986, a Power of Attorney was entered between the Respondents and Appellants  for the purpose of development of land. The Power of Attorney also contained two clauses for sale of land and endorsement for Patta transfer. On the same day, Respondent No.1 registered two sale deeds in favour of his father and younger brother which were undervalued in comparison to the prevailing market rates at the time.. Post the registration of the sale deeds, the Respondents began to interfere with the Appellants’ possession of the land. After interference with the possession of the land, the Appellants discovered the mischief committed by Respondent No.1 and filed a suit for declaration and consequential reliefs.

    The Trial Court dismissed the suit of the Appellants on the grounds that the contents of the Power of Attorney were genuine and there was no misrepresentation or mischief. Aggrieved by the order of the Trial Court, the Appellants had filed an appeal. The First Appellate Court held in favor of the Plaintiff and the suit was decreed. The order of the First Appellate Court was challenged in Second Appeal before the High Court under Section 100 of the Code of Civil Procedure, 1908. The High Court opined that the First Appellate Court made an error in deciding the suit in favor of the Plaintiff as there was no pleading or issue framed regarding the plea of non est factum. Hence, the Appellants filed an appeal before the Hon’ble Supreme Court of India.

    ANALYSIS

    The Appellants contended that the Power of Attorney was executed for the limited purpose of development of land and authorization was never given for sale or Patta transfer. Further, the Appellants argued that wrong doing on the part ofthe Respondents is evidenced from the fact that the sale deeds were executed on the same day as the Power of Attorney was executed. TheRespondents thus took advantage of the illiteracy of the Appellants. Conversely, the Respondents argued that the Appellant cannot take the defense of non est factum nor could the Appellant dispute the contents of the Power of Attorney since the execution of the same is admitted. Additionally,  the Respondents submitted that there is a presumption that a registered Power of Attorney is correct unless proven otherwise, and the Appellants cannot take a contrary stand after receipt of sale consideration and handover of possession.

    The main issue before the Hon’ble Supreme Court of India was whether the plea of non est factum would be applicable to the case in hand. After perusal of the pleadings and precedents cited by both the parties to the Appeal, the Hon’ble Supreme Court of India opined that the First Appellate Court was correct in adjudicating in favor of the Appellant and holding that the plea of non est factum has been proved. It also held thatonce a Power of Attorney has been held to be invalid, any subsequent action taken in line with the same would not be valid. The Hon’ble Supreme Court of India, with references to the judgments in the cases of Smt Bismillah v. Janeshwar Prasad & Ors[2]  and  Saunders v. Anglia Building Society[3], elucidated a three-pronged test for a successful defense of non est factum which is as follows:

    • The person pleading non est factum must belong to the category of persons who are facing difficulties in understanding the purpose of the document, due to blindness, illiteracy or some other disability. In the case of a disability, it is necessary to rely on others for advice on what to sign.
    • The signatory to the document has made a fundamental mistake, relating to the nature of the contents of the document that was executed, and this is inclusive of the effect of the document.
    • The document signed must be very different from the document that was supposed to be signed.

    In summation, the Hon’ble Supreme Court of India decided the Appeal in favour of the Appellant and observed that the plea of non est factum can be taken by the signatory to the document if the aforementioned three conditions are satisfied. The Hon’ble Supreme Court of India has therefore provided a detailed understanding on non est  factum, which gives a remedy to executors of documents who have been wrongly subjected to fraud and possible loss arising from misrepresentation on the contents and character of the document.

    ELP Comments
    Traditionally, it is a presumption that the person signing a document will be aware of the contents within the document. They will therefore not be able to claim otherwise or avoid fulfilment of contractual commitments detailed in the document. It is often difficult to prove misrepresentation on the part of a contracting party qua the clauses contained in a document and that the executor was in fact not aware of the contractual stipulations contained in such a document. Vide this judgment, the Hon’ble Supreme Court of India has clearly explained how the plea of non est factum can be applied and therefore support  the defense of a person aggrieved by the untoward consequences from an executed document ( of which the person aggrieved was genuinely mistaken as to the nature and character of the document). Thus, the well-defined test for the defence of non est factum, as given in this judgment, will allow courts across the country to effectively determine the applicability of the defense in different cases and provide an appropriate remedy to aggrieved parties.

    We trust you will find this an interesting read. For any queries or comments on this update, please feel free to contact us at insights@elp-in.com or write to our authors:
    Shailesh Poria, Partner, Email – ShaileshPoria@elp-in.com
    Shubhangi Khandelwal, Associate, Email – ShubhangiKhandelwal@elp-in.com

    References:
    [1] 2023 SCC OnLine SC 1022
    [2] 1990 1 SCC 207
    [3] 1970 3 ALL ER 961

    Disclaimer: The information contained in this document is intended for informational purposes only and does not constitute legal opinion or advice. This document is not intended to address the circumstances of any individual or corporate body. Readers should not act on the information provided herein without appropriate professional advice after a thorough examination of the facts and circumstances of a situation. There can be no assurance that the judicial/quasi-judicial authorities may not take a position contrary to the views mentioned herein.