Section 19A of the Indian Contract Act, 1872: Power to Set Aside Contract Induced by Undue Influence
Section 19A deals with the legal consequence of consent obtained by undue influence. Where undue influence causes a party to consent to an agreement, the resulting contract is voidable at the option of the affected party, and the court may set it aside absolutely or on just terms where that party has received a benefit under the contract.
What does Section 19A provide?
Section 19A - Power to set aside contract induced by undue influence.
When consent to an agreement is caused by undue influence, the agreement is a contract voidable at the option of the party whose consent was so caused.
Any such contract may be set aside either absolutely or, if the party who was entitled to avoid it has received any benefit thereunder, upon such terms and conditions as to the Court may seem just.
The provision gives the affected party a choice. The contract is not automatically void merely because undue influence is established. Instead, it is voidable at the option of the person whose consent was improperly obtained. That person may seek to avoid the contract, subject to any equitable terms that the court considers just.
Meaning of undue influence under Section 16
Section 16 of the Indian Contract Act, 1872 addresses undue influence. In substance, undue influence arises where the relationship between the parties is such that one party is in a position to dominate the will of the other and uses that position to obtain an unfair advantage.
Section 16 also deals with situations in which a person may be treated as being in a position to dominate another person's will, including certain relationships involving real or apparent authority, fiduciary relationships, or circumstances where a person's mental capacity is affected by age, illness or distress. In an apparently unconscionable transaction, the statutory burden of proof may shift in the circumstances specified by Section 16.
Legal effect of Section 19A
- Voidable contract: The affected party may elect to avoid the contract.
- Court may set it aside absolutely: Where justice requires, the contract may be cancelled without preserving its obligations.
- Restoration on just terms: If the party seeking avoidance has received a benefit, the court may impose fair terms and conditions while setting the contract aside.
- Connection with Section 16: A claim under Section 19A ordinarily requires the facts constituting undue influence to be examined under Section 16.
Illustrations under Section 19A
Illustration (a)
A's son has forged B's name to a promissory note. B, under threat of prosecuting A's son, obtains a bond from A for the amount of the forged note. If B sues on the bond, the court may set the bond aside.
Illustration (b)
A, a moneylender, advances Rs. 100 to B, an agriculturist, and by undue influence induces B to execute a bond for Rs. 200 with interest at 6 per cent per month. The court may set the bond aside and order B to repay Rs. 100 with such interest as the court considers just.
Section 19A compared with Section 19
Section 19 concerns the voidability of agreements where consent is caused by coercion, fraud or misrepresentation. Section 19A specifically deals with contracts induced by undue influence. The separate provision enables the court to set aside such a contract absolutely or, where a benefit has been received, on terms that the court considers just.
Related provisions
The concept of undue influence forms part of the broader statutory rules on consent. Section 13 defines consent; Section 14 defines free consent; Section 15 deals with coercion; Section 16 deals with undue influence; Section 17 defines fraud; and Section 18 deals with misrepresentation.
Official text and verification
For the authoritative central legislation text, see the Indian Contract Act, 1872 on India Code. Users should verify the current statutory text and any applicable amendments before relying on the provision in a legal proceeding.