HIDAYATULLAH NATIONAL LAW UNIVERSITY

NAME- AASTHA CHANAKYA

CLASS & SECTION – 1st SEMESTER ‘C’

ROLL NO – 03

ENROLLMENT ID – 24/2024/3140
SUBJECT – CONTRACT I

SUBJECT TEACHER – MR. AMITESH DESHMUKH

 Declaration of Originality

‘I, Aastha Chanakya, hereby declare that, the project work entitled, ‘Role of Equity
‘submitted to H.N.L.U., Raipur is record of an original work done by me under the
guidance of Mr Amitesh Deshmukh, Faculty Member, H.N.L.U., Raipur’
 The Role of Equity in Law

Introduction:

The Latin word “acquitas,” that means “levelling,” is the source of the English term “equity.”
Legal scholars and readers generally agree that an accurate description of ‘equity law’ is
challenging. Though laws of ‘equity’ are an addition to ‘common law’, ‘common law’ is still
regarded as a complete structure. These are known by many names, including ‘equity law’ or the
law of equity, A branch of law known as "equity" developed historically in England as a
supplement to ‘common law’. It stands out due to its emphasis on conscience, justice, and
fairness. "Equity" is meant to address situations in which the strict execution of the law could
lead to unfair consequences. It provides answers and remedies that ‘common law’ does not
always provide. Because ‘equity law’ is universal, it is employed in situations where common or
civil rules are insufficient to provide legal relief. Because of the strict restrictions of ‘common
law’, ‘equity law’—a set of rules that control legal exceptions—was developed. To compensate
for the drawbacks in ‘common law’ procedure, ‘equity law’ was created. ‘Equity law’ is a
corrective legal system that can provide fair answers on an Individual basis. The ‘medieval
judicial system’ of England gave rise to equity. In the past, ‘common law’ constituted the primary
legal framework, although it wasn’t always appropriate for resolving specific types of disputes or
providing appropriate remedies. When people seeking justice approached the King, he gave the
‘Lord Chancellor’ the cases. In his ‘capacity as the king’s legate’, the ‘Lord Chancellor’ applied
justice in accordance with ‘equity’ and conscience rather than rigid legal requirements.

‘Equity as source of law’

As a ‘source of law’, ‘equity’ refers to a set of rules that reinforce and, in certain situations,
overrule the rigorous application of ‘common law’. ‘Equity’, which has its roots in the ‘English
legal system’, evolved as a way to attain justice and fairness in situations where the strict
‘common law’ standards led to unfair results.

Important features of ‘equity as a source of law’:

1.Origin: The ‘medieval judicial system’ of ‘England’ gave rise to equity. In the past, common
law constituted the primary legal framework, although it wasn’t always appropriate for resolving
specific types of disputes or providing appropriate remedies. When people seeking justice
approached the King, he gave the ‘Lord Chancellor’ the cases. The ‘Lord Chancellor’, acting as
the king’s legate, administered justice according to ‘equity’ and conscience rather than strict legal
requirements.

2.Maxims of equity: It is a collection of essential guidelines that act as the basis of ‘equity’.

These ideas offer a structure for making decisions that are fair. Some examples of these
‘maxims’ include-

• “Equity will not suffer a wrong to be without a remedy.”

• “He who comes into equity must come with clean hands.”

• “He, who seeks equity, must do equity.”

• “Equity follows the law.”

• “Equity looks to the intent rather than the form.”

• “Where equities are equal, the law shall prevail.”

• “Where equities are equal, the first in time shall prevail.”

• “Delay defeats equity.”

• “Equality is equity.”

• “Equity looks to the intent, rather to the form.”

• “Equity imputes an intention to fulfil an obligation.”

• “Equity looks on that as done which ought to have been done.”

• “Equity acts in personam.”

3.Equitable remedies: The unique remedies that ‘equity’ offers that ‘common law’ typically
does not is one of its defining features. Common equitable remedies consist of the following:
•When monetary damages are insufficient, a court may require a party to fulfil his contractual
obligations under specific performance.

•A judge may grant an injunction to stop a party from engaging in specific activities that could be
harmful.

•Rescission where court permits the termination of a contract in circumstances including

misrepresentation or fraud.

4.Flexibility: ‘Equity’ is recognized for being versatile. It enables courts to take into account the
particulars of every case and modify remedies as necessary. This versatility is especially helpful
in complicated matters or circumstances where applying common law standards strictly could
have unfair consequences.

5.Conflicts and disagreement with common law: Conflicts and disagreements between
‘common law’ and ‘equity’ have existed throughout history. The separate operations of ‘common
law’ courts and ‘equity’ courts occasionally resulted in disagreements and difficulties about
jurisdiction. Parties frequently looked for equitable remedies in order to get beyond common
law’s restrictions.

6.Fusion of ‘common law and equity’: Through the ‘Judicature Acts of 1873 and 1875’,
England enacted legal reforms in the ‘19th century’ that combined ‘common law’ and ‘equity’
into a unified court system. With this merger, the two systems’ long-standing separation was
intended to end and comprehensive remedies were to be offered under a single court system.

7. Modern influences: Despite the historical division between "common law" and "equity,"
equitable notions nevertheless influence many ‘modern legal systems’. Equitable considerations
are especially significant in the areas of trusts, property disputes, contract law, and fraud and
unjust enrichment remedies.

In conclusion, ‘equity’ is a branch of law that emphasizes justice and fairness, providing answers
and remedies that ‘common law’ might not be able to supply. Its historical development, which
included the formulation of equitable maxims, has had a significant impact on how courts in
legal systems around the world issues of justice, conscience, and customized remedies.

Nature and Scope of equity

Due to its nature and scope, ‘equity’ must first and foremost imply doing the right thing, or
justice in the strictest sense of the word. ‘Equity’ now has a very specific meaning in England.
Technically, it only contains a limited number of rules that the ‘Court of Chancery’ devised.
Although the desire to uphold morality and the passage of time may have served as the
inspiration for its establishment, ‘common law’ has always had limitations and has since
developed into a set of rules. It is no longer possible to seek justice based alone on moral
reasons; instead, one must demonstrate certain values upheld by the equity system in order for a
remedy to be provided. In the first place, ‘equity’ has upheld ‘rights’ that the ‘common law
courts’ were unable to uphold; in the second place, ‘equity’ has created new remedies outside the
‘common law’ to enable the ‘enforcement’ of ‘common law’ rights. Last but not least, the
‘Common Law Courts’’ process was flawed, particularly in that it did not require or even permit
a defendant to provide testimony and it restricted the investigation to the action. ‘Equity’ means
“right as founded on the laws of nature, fairness, and justice” in its literal sense. Some jurists’
definitions of ‘equity’ can be found below-

‘According to Aristotle’,

“Equity is the correction of the law where it is defective on account of its generality”.

‘According to Plato’,

“Equity is a necessary element supplementary to the imperfect generalization of legal rules.”

‘According to Blackstone’,

“Equity, in its true and genuine meaning, is the soul and spirit of all law; positive law is
construed and natural law is made by it. In this way, equity is synonymous with Justice, in that, it
is the true and sound interpretation of the Rule”.

‘According to Henry Levy Ulman’,

“Equity is a body of rules, the primary source of which, was neither custom nor written law, but
the imperative dictates of conscience and which had been set forth and developed in the courts of
Chancery.”

‘According to Snell’,
“Equity is a portion of natural justice which, although of a nature suitable for judicial
enforcement, was for historical reasons not enforced by the Common Law Courts, an omission
which was supplied by the Courts of Chancery.”

Incorporation of ‘equity’ under English law

Three major courts—the ‘King’s Bench’, the ‘Common Bench’, sometimes known as the ‘Court
of Common Pleas’, and the Exchequer—arose in ‘England’ by the ‘middle of the thirteenth
century’. These courts operated under a legal system known as “common law,” which was
composed of both statute law and ancient or customary law. Due to the previous common law
courts’ excessive rigidity, restricted focus, and formalism—that is, their devotion to precedents
and forms—they used to hear instances for which the ‘common law’ provided no remedy at all.
They requested to the ‘King’ in ‘Council’ in these unusual situations, requesting the use of his
exceptional judicial powers. This trend originated from the custom of sending these petitions to
the ‘Chancellor’, the head of the King’s secretariat, who was typically a bishop and was aptly
referred to by Maitland as “the King’s Secretary of state for all developments.” Edward I in
‘1349’ later confirmed this custom. Prior to ‘1947’, the ‘Chancellor’ would act in the King’s
name in Council. However, a decree was issued in his favour, allowing him to exercise his
jurisdiction on his own. This practice continued until the courts of ‘common law’ were joined by
the Chancery. It was kept on mind that the natural justice principles or his judicial conscience
was used by ‘Chancellor’ when considering these petitions. As a result equitable jurisdiction was
developed by the ‘Chancellor’s’ efforts which provided remedies when there was no common
law remedy available when petitions were brought to the ‘Chancellor’, the ‘head of Chancery’.
The two distinct sets of courts with two different jurisdictions that existed in England up until the
year ‘1873’ were the chancery courts and the common courts. But this dual justice delivery
system was found inconvenient for reason of its practicality from a point of view of litigants. As
of this, the ‘Judicature Act of 1873’ was established, by combining and reconstituting the both
courts. Following that, the courts functioned as full jurisdiction courts, acknowledging and
upholding all rights and remedies, whether they were equitable or legal. One ‘High Court of
Judicature’ was established for the administration of both law and equity by the ‘Judicature Acts
of 1873 and 1875’. In general, it was said that in situations where there was a dispute or
difference between them regarding the same issue the norms of ‘equity’ would take over the
‘common law’.

Landmark cases

‘Paragon Finance Plc v D B Thakerar & Co (A Firm)’

Facts- The conduct of several mortgage frauds involving the ‘purchase of apartments’ in ‘Vogans
Mill in Docklands’ in the latter part of ‘1990’ forms the basis of these two combined appeals. Not
a single borrower completed their mortgage payments or moved into the home. The plaintiffs
regained custody of the debt after each borrower filed for bankruptcy, and they eventually
realized their security through a sale at a substantial loss. Nonetheless, a portion of the Plaintiffs’
losses can be attributed to the collapse of the ‘residential real estate’ market at the ‘end of 1990’.
Regretfully, the Plaintiffs discovered that since the latest of the pertinent transactions was more
than six years ago, any applicable limitation period had prima facie expired.

Issue- Whether the additional claims would be subject to the same statute of limitations as the
original claims, and whether or not the plaintiffs should be allowed to modify their claims.

Court’s decision- The Thimbleby appeal was granted by the court, but the Thakerar appeal was
denied. Permission was given to the Plaintiffs to alter some, but not all, of their claims. The
Court decided that the new claims were just the equitable equivalents of the ‘common law’
claims, not distinct causes of action. The Court further determined that the claims for an account
pertaining to a fiduciary responsibility breach fell outside the authority of the statute of
limitations. The Court, however, rejected modifications that added a new cause of action that
wasn’t predicated on the same or nearly the same facts as the initial claims.

‘Boardman v Phipps’ [1967]

Facts- Mr. Boardman was a family trust’s solicitor in this instance. The trust owned a sizeable
minority interest in a business. Mr. Boardman and Mr. Phipps, a trust beneficiary, thought the
business was not being operated effectively. In order to raise the company’s performance, they
made the decision to seize control. They finally acquired control of the business by purchasing
more shares using the knowledge they had learned through the trust. The business soon started to
make a lot of money.
Issue- In this instance, the question was whether Mr. Boardman and Mr. Phipps had violated the
trust’s fiduciary duties by purchasing more shares of the business with information acquired
through the trust.

Court’s decision- It is true that Boardman and Mr. Phipps violated their fiduciary obligations.
They had profited from knowledge obtained through their positions, even though their acts had
eventually benefited the trust. They had violated their duty of loyalty to the trust by engaging in
this conflict of interest.

Incorporation of equity under Indian law

The British legal system, which was mostly based on English law, brought equity to India. Over
time, the idea of equity changed and became a crucial component of the ‘Indian legal system’.
The High Courts of Calcutta, Bombay, and Madras were important judicial institutions that
governed both ‘common law and equity’ in the British legal system. In India, courts apply the
law of ‘equity’ based on equitable principles and previous rulings by the courts rather than
having it codified. A number of laws and legal frameworks, like the ‘Indian Contract Act of
1872’, ‘Indian Trusts Act of 1882’ and the ‘Specific Relief Act of 1963’, have provisions
pertaining to equity. Indian courts has the authority to exercise equitable jurisdiction, offering
remedies that go beyond those afforded by common law. In India, equity is applied to a number
of specialized legal fields.

The ‘Indian Contract Act of 1872’s’ ‘section 28’ is principally relevant to the subject matter. The
‘Indian Contract Act’ incorporates various equitable concepts, including the ‘doctrine of
penalties and forfeiture’, contractual time limitations, and equitable remedies based on
misrepresentation, fraud, and undue influence.

As per ‘List III of the Seventh Schedule’ to the ‘Constitution’, trust and trustees are considered
concurrent subjects. So long as no State Government specifically amends or modifies the Act, it
will be applicable throughout India. In order to define the legislation regarding private trusts and
trustees, the ‘Indian Trusts Act’ was passed in ‘1882’. A trust isn’t a “legal persons.” ‘Trust
property’ is kept in the trustee’s name for the beneficiary’s benefit. The ‘Indian Trust Act’
contains the guidelines that the English Courts of Equity administer under the categories of
justice, equity, and good conscience.

The ‘Transfer of Property Act’ contains numerous equity doctrines. ‘Section 53A’ of the Act has
been designed to reflect the English idea of part performance. The equitable principles are also
the foundation for ‘sections 48 and 51’. The ‘Indian Right of Redemption’ was also formalized
as Equity of Redemption from England.

The ‘doctrine of election’ In will cases is covered under ‘sections 180–190’ of the ‘Indian
Succession Act’, and ‘section 35’ of the ‘Transfer of Property’ gives wide application to this.

The older "Specific Relief Act” of ‘1877’ was repealed in ‘1963’ when the Indian Parliament
passed the “Specific Relief Act” on the advice of the ‘Law Commission of India’. Most of
‘equitable’ ideas were ‘codified’ and declared ‘statutory rights’ under the ‘1963 Act’, which put
an end to the courts’ discretionary power to award equitable reliefs.

Landmark cases

‘M. Nagarajan v. V.M. Nagammal’ (2009)

Facts- The agreement for the property sale was the source of the disagreement. In order to buy a
plot of land, M. Nagarajan, the plaintiff, and V.M. Nagammal, the defendant, entered into an
agreement. The plaintiff stated that he was prepared and willing to finalize the purchase and that
he had already paid a significant amount of the sale money. But the defendant refused to transfer
the property as agreed upon and execute the sale deed.

Issue- Whether the ‘plaintiff’ was entitled to the ‘specific performance of the contract’ under the
‘Indian Contract Act’ and the ‘Specific Relief Act’, 1963, was the main question on the legal
ground.

Court’s decisions- The Madras High Court reviewed the provisions of the agreement as well as
the actions of both parties. It was determined that although the defendant had not carried out her
half of the agreement, the plaintiff had been prepared and willing to carry out his share of the
agreement. The plaintiff must show the court that he has been prepared and willing to fulfil his
contractual responsibilities during the duration in order to be granted particular performance. The
plaintiff, M. Nagarajan, won the case, and the court granted particular performance of the
agreement. It was ordered that the defendant, V.M. Nagammal, execute the sale deed in the
plaintiff’s favour and transfer the property in accordance with the conditions of the contract.

The M. Nagarajan v. V.M. Nagammal ruling serves as an example of how equitable principles
are applied in Indian law, specifically with reference to specific performance. The case
emphasizes that, in light of a commitment to justice and fairness, courts have the authority to
compel parties to carry out their contractual responsibilities where one is prepared and willing to
do so and the other is not.

‘Namdeo Lokman Lodhi v. Narmadabai And Others’ (1953 AIR 228)

Facts- Through adverse possession, Namdeo Lokman Lodhi, the appellant, asserted his
ownership over a plot of property. He contended that he was entitled to ownership under adverse
possession since he had been in continuously holding the land for longer than the legally
mandated period. In opposition to this assertion, Narmadabai and other respondents contended
that Namdeo’s possession was not hostile, exclusive, or continuous in a way that would have
given him the right to ownership through adverse possession.

Issue- The main question was whether Namdeo had obtained ownership of the property by
adverse possession, which necessitates continuous, open, exclusive possession that is
antagonistic to the legitimate owner’s interests for the duration of the statute of limitations.

Court’s decision- The requirements for what types of possessions qualify as adverse possession
were examined by the Indian Supreme Court. According to the court, in order for a claim of
adverse possession to be upheld, the possessor must provide concrete proof that their possession
is detrimental to the interests of the rightful owner. The court noted that unless there is an intent
to claim the land as one’s own and keep the rightful owner out, simple ownership of the land
doesnot qualify as hostile possession. In concluding that Namdeo Lokman Lodhi had not proven
adverse possession since he had not shown that his possession was hostile, exclusive, and
continuous for the required period of time, the Supreme Court decided in favour of the
defendants (Narmadabai and others).The court affirmed the original owners’ rights and rejected
the appellant’s claim of adverse possession, stressing that adverse possession must be
demonstrated by unequivocal and unambiguous proof.
The ruling In Namdeo Lokman Lodhi v. Narmadabai and Others upholds India’s stringent
requirements for demonstrating adverse possession. It emphasizes how important it is to
demonstrate hostile, unambiguous, and unmistakable possession against the rightful owner
during the duration of the statute in order to obtain ownership rights. The case continues to be
significant in determining how Indian courts apply the adverse possession theory.

Conclusion

In the justice delivery system, equity is crucial. Almost all living things in the digital age are
conversant with technology, and computers are now the best substitute for humans in most
situations, especially when it comes to judging—they can be programmed to “feed the fact and
laws into it and get a judgement with all accuracy.” ‘Equity’ was given greater weight than the
‘common law’ system. Over time, its importance increased and it was incorporated into the
‘Indian legal system’. It developed in India through several statutes that were supported by
several acts that were enacted over time. The ‘legality of equality’ has become more significant
in recent years. ‘Equity’ was instituted in England around the sixteenth century and continues to
be a legislative duty. ‘Equity’ was given greater weight than the ‘common law system’. It
developed and gained importance over the years in ‘England’, and it eventually made its way
into the ‘Indian legal system’ as well . In ‘India’, it evolved through a number of statutes, and as
of right now, a number of acts have been passed that operate on the basis of ‘equity’ principles.
Both in the past and the present, the legality of equity has significantly increased in importance.
As I have partially explained in my work, India too places a strong emphasis on ‘equity’.

Citations:

1.Boardman v. Phipps, [1967] 2 A.C. 46 (H.L.).

2.Paragon Fin. Plc v. D. B. Thakerar & Co., [1999] 1 All E.R. 400 (C.A.).v

3.M. Nagarajan v. V.M. Nagammal, (2009) 13 S.C.C. 294 (India).

4.Namdeo Lokman Lodhi v. Narmadabai, A.I.R. 1953 S.C. 228 (India)