MATHAI Vs. VARKEY

JUDGEMENT

(1.) THE revision petitioner -plaintiff,sued for paid up subscriptions in a chtty conducted by the defendant,wherein he was a subscriber.He subscribed only for four instalments.By way of subscription he had paid Rs.791 -05 ps .,in cash.A sum of Rs.208 -95 ps .,was credited in his name towards veethapalisa.So the total amount due by way of paid up subscription was Rs.10,000/ -.The chitty came to a termination on 9 -9 -1970.When demand was made for the amount,the defendant offered him a cheque for Rs.491 -05 ps.He was told that after deducting foreman's commission and expenses of the chitty,he was entitled to get only Rs.491 -05 ps.According to the petitioner,the provision in the chitty variola entitling the foreman to deduct veethapalisa and foreman's commission from the amount subscribed by a defaulted subscriber is against public policy and hence unconscionable.According to his calculation he is entitled to get a balance of Rs.329 -70 ps .,excluding other sundry expenses incurred.The defendant -foreman,contended that he is entitled to realize 3% of the full amount of the chitty for initial expenses from a defaulted subscriber.The plaintiff is not entitled to veethapalisa under the terms of the variola and he is not entitled to get anything more than Rs.491 -05 ps.Which he was already paid.None of the provisions in the Chitties Act or in the Chitty variola is unconscieonable or against public policy.The learned Munsiff accepting the plea of the defendant has dismissed the suit.

(2.) THE claim regarding veethapalisa was not pressed before us.Stress was,however,laid on the deduction made under Cause 9 of Ex.D -1,Chitty variola.Clause 9 provides that in the case of defaulters of instalments up to 19,a deduction of 3% from the total amount will be made by the foreman towards initial expenses incurred by him for the starting of the chitty.3% of the total amount in the present case would come to Rs.300/ -.The plaintiff,as already stated,had subscribed for instalments 1 to 4 only,that is,Rs.791 -05 ps.in cash and Rs.208 -95 ps.by way of adjustment towards Veethapalisa.It is argued that Rs.300/ - is a substantial amount,considered in the light of the amount subscribed by the plaintiff and he will be hard hit if such a deduction is made in the amount due to him.It is also pointed out that towards expenses of the chitty,there is already provision for deduction of 1% of the prize amount at each draw and I n the light of that,the further deduction of 3% of the total amount would be a double payment.This deduction of 3% of the total collection,according to the plaintiff,can on no account be sustained as it is unconscionable and opposed to public policy.The chitty variola,it must be remembered,has been drawn up under the provisions of the Travancore Chitties Act(Act XXVI of 1120)and Rules.Section 27 of the Chitties Act provides that defaulting non -prized subscribed shall be entitled to recover from the foreman,at the termination of the chitty,his contributions subject to such deductions as may be provided for in the variola ;.A defaulting subscriber,therefore,falling under the category mentioned in Clause 9 of Ex.D -1 can claim only the amount less deductions provided for therein.The 3% of the total amount referred to in Clause 9 is towards the initial expenses of the chitty,whereas the 1% provided for under Clause 3 is towards the expenses of the individual instalments.The two deductions,therefore,would fall under two distinct categories.It would,therefore,be incorrect to treat the deduction a double payment.

(3.) WE have next to see whether the impugned provision in Clause 9 of the variola is unconscionable.An unconscionable transaction is often struck when a person already indebted to a money -lender contracts a fresh loan,on terms on the face of them unconscionable.In such a case a presumption is raised that the borrower's consent was not free.The question here is not of fraud,but of the unconscientious use of superior power.Applying the analogy to the present case,it must be established that the foreman in admitting the plaintiff to his chitty was in such a positions as to dominate the will of the plaintiff.In case of this nature,in order to succeed in the action,both the elements,viz .,that the foreman was in a position to dominate the will of the subscriber,and the bargain itself was unconscionable within the meaning of clause(3)of Section 16 of the Contract Act must be established. If people with their eyes open choose willfully and knowingly to enter into unconscinonable bargains,the law has no right to protect them.Hardship alone is not enough(Vide Pollock and Mulla's Indian Contract &Specific Relief Acts,9 th Edition page 154 ).