267 



and inequitable contracts, the High Court of Allahabad has 

 held that Courts of Justice in India as courts of equity and 

 good conscience have, notwithstanding the repeal of usury 

 laws, power to set aside contracts, where the extortionate 

 character of the terms imposed on the debtor, taken in con- 

 junction with his helplessness and ignorance, lead to the 

 presumption that undue influence, amounting to fraud, has 

 been exercised upon him. This seems all the remedy that 

 the nature of the case requires in this presidency.^^® 



93. All the plans mentioned above had special reference 

 to the condition of the ryots in the 

 teJaS^tTog'ssT/e'"" Bombay-Deccau and were based on the 

 supposition that certainty of tenure, fixity 

 of the Government tax, and freedom to the ryot to raise 

 on the land such crops as he finds most profitable and to deal 

 with his possessions, in the way of transfer or mortgage, 

 according to his necessities and requirements without being 

 subjected to constant official interference, had worked to 

 the disadvantage not merely of the idle and improvident 

 who are found more or less in every community, but of the 

 agricultural classes as a whole who are not fitted by edu- 

 cation and hereditary training to receive the boons con- 

 ferred on them, and that the remedy lies in reverting to 

 the old systems of administra,tion under which these classes 

 were maintained in a state of serfdom.^^^ I have no know- 



"^ The Allahabad case referred to is Lalli versus Ram Prasad decided in 1886 (Indian 

 Law Reports, IX, Allahabad, pp. 74-85). In that case an extortionate bond under 

 which an original debt of Rs. 97 due by an agriculturist to a Mahajan had grown in 

 ten years to Rs. 991, after Rs. 157 had been paid, was set aside. Mr. Justice Mahmood 

 said : " I am aware that a general notion prevails in the mofussil that ever since the 

 repeal of the usury laws, the Courts of Justice are bound to enforce contracts as to 

 interest regardless of the circumstances of the case, the relative conditions of the parties, 

 and irrespective of the unconscionableness of the bargain. Courts of Justice in India 

 exercise the mixed jurisdiction of the Courts of Law and Equity, and in the exercise of 

 that jurisdiction, whilst bound to respect the integrity of private contracts, they must 

 not forget that cases which furnish adequate grounds for equitable interference must be 

 so dealt with, not because such a course involves any the least contravention of the law, 

 but because by reason of undue advantage having been taken of the weak and ignorant, 

 the contract itself is tainted with fraud in the broad sense in which that term is under- 

 stood in the Courts of Equity in England and America — a remark which seems to me 

 fnlly justified by the rule of justice, equity and good conscience, which we are bound to 

 administer in such cases." No case of a similar kind has come before the High Court of 

 Madras, and, therefore, it is difficult to say whether the Allahabad decision will be 

 followed in this presidency ; but if it is, it will fully meet cases of a really usurious and 

 extortionate type. The large powers given to the Courts to set aside contracts deliber- 

 ately entered into would need to be exercised with great discrimination and discretion, 

 but as there has been of late years very great improvement in the moral tone and legal 

 knowledge of the Native Judges before whom the cases are likely to come in the first 

 instance, there is considerable security for the powers being properly exercised. 



^'^ The ryots in the Bombay-Deccan must indeed be a remarkably idle, ignorant and 

 unthrifty race, for otherwise it is difficult to account for the fact that in some of the 

 writings of NatiVe politicians on the Bombay side the " culture system " adopted by the 

 Dutch in Java is recommended as a model for imitation by the British Government. 

 A description of the system is printed as appendix VI,-C. (8), and it will be seen from it 



