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Equity, Common law and its Appliance in India: a Study
--- By Vivek Jain B.B.A.LL.B. (Hons.), III Semester National Law University, Orissa
1. Introduction
“The system of equity includes that portion of natural justice which is judicially enforceable but which for various reasons was not enforced by the courts of common law.”^1 “EQUITY is that system of justice which was developed in and administered by the high court of chancery in England in the exercise of its extraordinary jurisdiction. This definition is rather suggestive than precise; and invites inquiry rather than answers it. EQUITY, in its technical and scientific legal sense, means neither natural justice nor even all that portion of natural justice which is susceptible of being judicially enforced. It has, when employed in the language of English law, a precise, definition and limited signification, and is used to denote system of justice which was administered in particular court – the nature and extent of which system cannot be defined in a single sentence, but can be understood and explained only by studying the history of that court, and the principles upon which it acts. In order to begin to understand what equity is, it is necessary to understand what the English high court of chancery was, and how it came to exercise what is known as its extraordinary jurisdiction. Every true definition of equity must, therefore, be, to a greater or lesser extent, a history.” 2 “In its technical sense, equity may be defined as a portion of natural justice which, although of a nature more suitable for judicial enforcement, was for historical reasons not enforced by the common law courts, an omission which was supplied by the court of chancery. In short, the whole distinction between equity and law is not so much as a matter of substance or principle as of form and history.”^3
(^1) Historical Outlines of Equity, http://www.unlockingthelaw.co.uk/samples/trusts_ch01.pdf. (^2) George T. Bispham, The principle of Equity vol. 1-2(Joseph D. McCoy 11th (^) ed. 1931). (^3) R.E. Megarry, Snell‟s Principles of Equity vol. 2(23rd (^) ed. 1947).
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2.1 Origin and Development of Equity:
Equity is that system of justice which was administered by the High Court of Chancery in England in the exercise of its extraordinary jurisdiction. ... Every true definition of equity must, therefore, be, to a greater or less extent, a history. Bispham, Principles of Equity, at 1, 2.
“Prior to William the conqueror, there were the old Anglo-Saxon courts. They used to sit in the open air meetings of freeman. Slowly these folk courts were replaced by itinerant justices appointed by the crown or by the king‟s court (curia Regis). William the conqueror made several changes and appointed a chief judiciary to preside over the trials of suits. This led to the origin of common law tribunals throughout the England. The hardship caused by the king was removed by the „Magna Carta‟ which provided that „the common pleas shall no longer follow the king „. Through this charter disputes‟ regarding lands, and other civil matters known as common pleas was established at Westminster. During the period the judicial officials became the Court of Exchequer and officials were related to the cases of revenues and later enlarged through the use of legal fictions. Slowly the chancellor presiding over the Court of Exchequer became personal advisor and representative of the crown. The court continued its process until new act came into the force on 2nd^ November 1875, consolidating it into the “supreme court of judicature”^4 “Two distinct systems of law were administered by different tribunals at the same time in England till the year 1875. The older system was the common law and it was administered by the King‟s Benches. The more modern body of legal doctrine developed and administered by the chancellor in the court of chancery as supplementary to and coercive of the old law was the law of Equity. The two systems of law, as mentioned above, were by and large identical and in harmony leading to the maxims that „ equity follows the law’. In other words, the rules already established in the old Courts were adopted by the Chancellor and incorporated into the systems of equity, unless there was some sufficient reason for their rejection or modification. In case of conflict, the rule of Chancery prevailed, because if a common law action was
(^4) C.M RAO, law of injunctions(Delhi: University Law Publishing Co. Pvt. Lt, 2007),445-
2.4 Development of equity in Britain
“Two technical terms of great importance that are likely to puzzle the novice are „common law „and „equity‟. The law of England may be said to be composed of three great elements: common law, equity and legislature. the most important kind of legislature is the act of parliament(otherwise called a statue), though nowadays what is called delegated legislature, like the many government orders generally known as stator instruments, which come to be great important as well. Even a layman is not likely to experience difficulty in understanding the meaning of legislature. In the middle ages, the courts of common law failed to give redress to certain types of cases where it was most needed and how the litigants petitioned the king, who was the “foundation of justice” for extraordinary relief; and then the king with the help of chancellor set up the special courts i.e. the courts of chancery to deal with the petition and the rules applied by the court of chancery hardened into law and become regular part of the law of land. the most important branch of equity is the law of trusts, but equitable remedies such as specific performance and injunction are also much need in the case of “conflict or variance” between the rules of common law and the rules of equity , equity came to prevail. Suppose A brought an action against B in one of the common law courts and in the view of the court of chancery the action of inequitable. B‟s proper course was to apply to the court of chancery for an order, called a common injunction, directed to A and ordering him not to continue his action if A defied the injunction of the court than this will put him in the prisons for the contempt of court. Equity does work “behind the scenes” of the common law action.”^7 Lawyers are familiar with the proposition that the judicature act, although it fused the administration of law and equity but it did not fused law and equity themselves. “The two streams have met and now run in the same channel, but their water do not mix”^8
(^7) Glanville Williams, learning the law (Delhi: University Law Publishing Co. Pvt. Lt, 2009), 24-29. (^8) Owing to the prevailing ignorance of legal history, modern courts sometimes express the heretical option that law and equity have become fused, so that common law remedies are available to enforce equitable rights. International factors v. Rodriguez[1979]Q.B. at 358A
2.5 Growth of Equity
“A dual system of rights and interests, namely – legal and equitable, came to the fore due to the double system of the administration of justice in England before the Judicature Act, 1873
a) Why was equity important in the development of English law?
Equity was important in the development of English law because it resolved some of the defects of the common law, which might otherwise have led to a loss of public confidence in the legal system - since the hallmark of a civilized society is a proper legal system. 10 As these Chancellors had no formal legal training, and were not guided by precedent, their decisions were often widely diverse. However, in 1529 a lawyer, Sir Thomas More, was appointed as Chancellor, marking the beginning of a new era. After this time, all future Chancellors were lawyers, and from around 1557 onwards, records of proceedings in the Courts of Chancery were kept, leading to the development of a number of equitable doctrines. Criticisms continued in the court.
b) Evils of the Common Law
The inflexibility of the writ system, and the consequent expense - if a writ had a minor drafting error, it would be thrown out, for example, in Pinnel's Case,^11 where Pinnel won as a result of Cole's drafting error, even though Cole was legally in the right.
Many cases were lost on technicalities. The common law did not allow oral evidence. There was no power of enforcement. If a person had a debt by way of a bond and if pay the debt, but neglected to have the bond cancelled, the common law courts would force them to pay it again. It was easy to avoid the consequences of one's actions. The wager of law system was unfair. There was no recognition of trusts. The common law did not recognize security for loans (mortgages) or rights of third parties in general.
(^9) Karnwal Megha, “Law of Equity”. http://jurisonline.in/2008/11/law-of-equity/. (^10) http://members.lycos.co.uk/lawnet/EQUITY.HTM
(^11) (1602) 5 Co Rep 117a
with pleading technicalities. If a complaint was not dismissed, relief was often denied based on little more than the lack of a controlling statute or precedent. Frustrated plaintiffs turned to the king, who referred these extraordinary requests for relief to a royal court called the Chancery. The Chancery was headed by a chancellor who possessed the power to settle disputes and order relief according to his conscience. The decisions of a chancellor were made without regard for the common law, and they became the basis for the law of equity.^13
2.6 Remedies Discovered by the Chancellors
The Chancellor developed new remedies that were able to compensate plaintiffs more fully than the Common Law remedy of damages.
- Injunction
- Specific performance
- Account of profits
- Rescission
- Declaratory relief
- Rectification
- Estoppels
- Certain proprietary remedies, such as constructive trusts or tracing
- Subrogation
- In very specific circumstances, an equitable lien There were four main remedies known as injunctions, specific performance, rescission and rectification. Injunction was a court order that asked a person to do or refrain from doing something. Specific performance was an order that a contract should be carried out as agreed. Rescission was where the parties are returned as far as possible to their pre-contract position. Rectification was where the court will order that a document should be altered to reflect the parties' intentions. There were also two other remedies known as trusts and mortgages. An account of profits is usually ordered where payment of damages would still leave the wrongdoer unjustly enriched at the expense of the wronged party.
(^13) Black's Law Dictionary,8th (^) ed. edited by GARNER BRYAN A. (USA: west publishing co, 2005), 579-
3. General Principles of Equity
The intervention of the court of equity over the centuries may be reduced into the following Maxims. The importance of the maxims ought not to be overstated: they are far from being rigid principles, but exist as terse sentences which illustrate the policy underlying specific principles.^14
1. Aequitaes est corectio legis generalities latae, qua parte deficit: i.e., Equity is a
correction of the general law in the part where it is defective.
For a long time, the English Courts were guided by the doctrine ubi remedium ibi jus (where there is a remedy there is a right) but with the development of the Court of Chancery in England, this doctrine gave way to a more pragmatic and just doctrine called ‘ubi jus ibi remedium’ (where there is a right there is a remedy). The subject matter of the equity can be grouped around some legal maxims which embody the principles.
2. He who seeks equity must do equity
This maxim put a mandate on the seeker of equity. A litigant, claiming something by way of equity, must, himself be ready and willing to grant to his opponent, that which the opponent is entitled. Chappell v. Times Newspapers Ltd,^15 where workers wanted an injunction against their dismissal for going on strike refused to agree not to strike if the injunction were to be granted, and thus the injunction was not granted. A party claiming equitable relief is required to act fairly towards his opponent. For example, a tracing order would not be obtained in equity if the effect would be to promote injustice.
3. Aequitas sequitur legem i.e. Equity follows the law
The view originally taken by the Court of Equity was that deliberate and carefully considered rules of common law would be followed. Equity only intervened when some important factor became ignored by the law. Thus, in the early stages of the development of the law of trusts, the Lord Chancellor and, subsequently, the Court of Chancery acknowledged the valid existence of the legal title to property in the hands of the feoffee (or trustee). The acquisition
(^14) Historical Outlines of Equity, http://www.unlockingthelaw.co.uk/samples/trusts_ch01.pdf.
(^15) [1975] 1 WLR 482
Wroth v. Tyler,^19 specific performance was refused, since it would have forced Tyler to sue his own wife. Equitable damages were awarded instead, in lieu of specific performance. Patel v. Ali,^20 specific performance was refused, since to grant the decree would have evicted a defendant whose leg had been amputated through bone cancer and had given birth to two children, and would have caused great hardship if the defendant had had to move away from her relatives
8. Where the equities are equal, the first in time prevails
Where two persons have conflicting interests in the same property, the rule is that the first in time has priority at law and in equity: qui prior est tempore potior est jure. – In the absence of a legal estate in the matter and the contest is among the equitable estate only, the rule is that the person whose equity attached to the property first will be entitled to priority over other or others e.g., if A enters into a contract for the sale of his house with B and then with C, the interest of B and C both being equitable, B will have priority over C because his attached to the property first.
9. Vigilantibus, non dormientibus jura subvenient Delay defeats equity (equity aids the
vigilant and not the indolent)
Where a party has slept on his rights and has given the defendant the impression that he has waived his rights, the court of equity may refuse its assistance to the claimant. This is known as the doctrine of laches.
10. Equity looks at the intent rather than the form
The court looks at the substance of an arrangement rather than its appearance in order to ascertain the intention of the parties. For example, a deed is not treated in equity as a substitute for consideration.
(^20) [ 1984 ] 1 All ER 978
11. Equity imputes an intention to fulfill an obligation
The principle here is based on the premise that if a party is under an obligation to perform an act and he performs an alternative but similar act, equity assumes that the second act was done with the intention of fulfilling the obligation.
12. Equity regards as done that which ought to be done
If a person is under an obligation to perform an act which is specifically enforceable, the parties acquire the same rights and liabilities in equity as though the act had been performed.
13. Equity acts in personam
Originally, equitable orders were enforced against the person of the defendant, with the ultimate sanction of imprisonment. A later equitable invention permitted an order to be attached to the defendant‟s property, i.e. in rem. Today this maxim has lost much of its importance.”^21
(^21) Historical Outlines of Equity, http://www.unlockingthelaw.co.uk/samples/trusts_ch01.pdf.
The Indian Trusts Act was passed in 1882 to define law relating to private trusts and trustees. A trust is not a 'legal person'. Property of trust is held in name of trustee for benefit of beneficiary. The rules administered by the English Courts of equity under the head of justice, equity and good conscience are contained in the Indian Trust Act.”^28 Many doctrines of equity are contained in the Transfer of Property Act. The English doctrine of part performance has been drawn in section 53A^29 of the Act. Section 48^30 and section 51^31 are also based on the equity principles. Equity of redemption in England was codified to Right of redemption in India 32 as in the case of Gangadhar v. Shankar Lal^33 and Prithi Nath Singh v. Suraj Ahir^34 the codified law was followed. Section 180-190^35 of the Indian Succession Act^36 deals with doctrine of election in cases of will and section 35^37 of the Transfer of Property give effect to this doctrine in general.
(^28) General law Primer, Indian trust act, 1882. http://www.dateyvs.com/gener06.htm. (^29) Every transfer of immovable property made without consideration with intent to defraud a subsequent transferee shall be voidable at the option of such transferee. For the purposes of this sub-section, no transfer made without consideration shall be deemed to have been made with intent to defraud by reason only that a subsequent transfer for consideration was made. 30 Where a person purports to create by transfer at different times rights in or over the same immovable property, and such rights cannot all exist or be exercised to their full extent together, each later created right shall, in the absence of a special contract or reservation binding the earlier transferees, be subject to the rights previously created. 31 When the transferee of immovable property makes any improvement on the property, believing in good faith that he is absolutely entitled thereto, and he is subsequently evicted therefrom by any person having a better title, the transferee has a right to require the person causing the eviction either to have the value of the improvement estimated and paid or secured to the transferee, or to sell his interest in the property to the transferee at the then market-value thereof, irrespective of the value of such improvement. (^33) AIR 1958 SC 770 (^34) AIR 1963 SC 1041 (^35) It deals with election : 180-Circumstances in which election takes place 181-Devolution of interest relinquished by owner 182 -Testator's belief as to his ownership immaterial 183 -Bequest for man's benefit how regarded for purpose of election 184 -Person deriving benefit indirectly not put to election 185 -Person taking in individual capacity under will may in other character elect to take in opposition 186 -Exception to provisions of last six sections 187-When acceptance of benefit given by will constitutes election to take under will 188-Circumstances in which knowledge or waiver is presumed or inferred 189 -When testator's representatives may call upon legatee to elect 190 -Postponement of election in case of disability 36 37 Dasureddi vs. M. Venkatasubbammal^ (1934) 2 MLJ 650 Where a person professes to transfer property which he has no right to transfer, and as part of the same transaction confers any benefit on the owner of the property, such owner must elect either to confirm such transfer or to dissent from it; and in the latter case he shall relinquish the benefit so conferred, and the benefit so relinquished shall revert to the transferor or his representative as if it had not been disposed of, subject nevertheless, where the transfer is gratuitous, and the transferor has, before the election, died or otherwise become incapable of making a fresh transfer, and in all cases where the transfer is for consideration, To the charge of making good to the disappointed transferee the amount or value of the property attempted to be transferred to him.
It is important to bring to the notice for the researcher that though the English rules of equity have been substantially incorporated by the Indian Legislature, yet, there are many other rules of English Equity are either not been followed in India or are adopted only in a modified form, keeping in view the different ground realities of the country.”^38. The statutory recognition of the principles of equity in the Specific Relief Act is regarding injunction, specific performance, cancellation, rectification and recession etc. “In India the common law doctrine of equity had traditionally been followed even after it became independent in 1947. However it was in 1963 that the "Specific Relief Act" was passed by the Parliament of India following the recommendation of the Law Commission of India and repealing the earlier "Specific Relief Act" of 1877.^39 Under the 1963 Act, most equitable concepts were codified and made statutory rights, thereby ending the discretionary role of the courts to grant equitable reliefs. The rights codified under the 1963 Act were as under; Recovery of possession of immovable property (ss. 5 - 8) Specific performance of contracts (ss. 9 - 25) Rectification of Instruments (s. 26) Recession of Contracts (ss. 27 - 30) Cancellation of Instruments (ss. 31 - 33) Declaratory Decrees (ss. 34 - 35) Injunctions (ss. 36 - 42) With this codification, the nature and tenure of the equitable reliefs available earlier have been modified to make them statutory rights and are also required to be pleaded specifically to be enforced. Further to the extent that these equitable reliefs have been codified into rights, they are no longer discretionary upon the courts or as the English law have it, "Chancellor's foot" but instead are enforceable rights subject to the conditions under the 1963 Act being satisfied. Nonetheless, in the event of situations not covered under the 1963 Act, the courts in India continue to exercise their inherent powers in terms of Section 151^40 of the Code of Civil Procedure, 1908^41 , which applies to all civil courts in India. There is no such inherent power
(^38) Karnwal Megha, “Law of Equity”. http://jurisonline.in/2008/11/law-of-equity/. (^39) An Act to define and amend the law relating to certain kinds of Specific Reliefs. (^40) Nothing in this Code shall be deemed to limit or otherwise affect the inherent power of the Court to make such orders as may be necessary for the ends of justice or to prevent abuse of the process of the Court. 41 The Code of Civil Procedure, 1908 (Act No. 5 of 1908) of India is an act to consolidate and amend the laws relating to the procedure of the Courts of Civil Judicature.
English rules and decision to the relation which existed between the court of chancery and the courts of common law in England were very different from those between the high court‟s and mofussils courts in India 50 as they were also the respective powers and functions of these courts. In India, in view of its large cultural diversity, and for various social circumstances, different factual circumstances may warrant circumstances for protection. The broad principles of the English decisions may apply, particularly those based on equity, though the ratio itself may not act as a binding precedent”^51
(^50) Moran v river steam navigation [1964] S.C.R. 333 (^51) C.M RAO, law of injunctions(Delhi: University Law Publishing Co. Pvt. Lt, 2007),445-
5. Conclusion
The scope of this paper was to trace the history and development of equity and also its current relevance primarily for Indian legal system. It seeks to specifically determine the reasons if any, for the failure of the common law courts in bringing about social change and suggests certain important methods of overcoming the impediments. Changing attitudes of people towards common law which led to the formation of the law of equity where king would prescribed over the matters, in the cases where plaintiff were not satisfied with the decision given to them. In doing so this paper examines the origin, development and its application and relevance in Indian legal system. In India too certain laws has derived like Transfer of Property Act and more which had a reasonable effect in the working of Indian legal system. Finally and most importantly, by way of examining the development of equity, this paper seeks to demonstrate the principle that any development in any legal system which seeks to bring a change to the social values can be a success only if socio economic cultural situation in the society is made conducive for the operation of the law i.e. the law in isolation can never be successful in bringing about a social change unless backed by various socio economic and cultural factors.
Bibliography
George T. Bispham, The principle of Equity vol. 1-2(Joseph D. McCoy 11th^ ed. 1931).
