Application of Equitable Principles in Bangladesh with relevant Case Laws

Equitable principles are a set of general principles which govern the way in which equity operates. It revolves around a few legal maxims that the court of chancery ruled on. This article will explore the twelve maxims individually hereunder:

Maxim-1.   EQUITY WILL NOT SUFFER A WRONG TO BE WITHOUT A REMEDY

Equity will not allow any wrong to go un-redressed if it is capable of being remedied by courts. This maxim restates the broad legal principle ‘Ubi jus, ibi remedium’ meaning that where there is a right, there is a remedy.

Application: (a) Code of Civil Procedure, 1908

Section 9- The Court shall try all civil suits unless barred.

(b) The Specific Relief Act, 1877

Section 151- Inherent power of the Court to make orders for the interests of justice. Order XL, Rule I- Appointment of receivers, Remuneration, Duties, Enforcement of receiver’s duties

Ss. 12, 42, 52 to 57- Provides for equitable remedies like specific performance of contracts, declaratory suits, and injunction (e.g. perpetual, ad-interim) respectively.

Section 31 to 34- Rectification of instruments

(c) The Constitution of the People’s Republic of Bangladesh

Article 102- Constitutional writs and public interest litigation have broadened the scope and effectiveness of this principle.

(d) The Trusts Act, 1882 – Enforcement of trusts

Case Law: Ashby v. White [(1703) 92 ER 126]

Unable to vote, a qualified voter sued the returning officer. It was held that if the law provides a man a right, he must have the means to enforce it.

Maxim-2. EQUITY FOLLOWS THE LAW

Wherever possible, equity will align its own rules with those of the common law. Equity does not interfere with a man’s legal rights unless exercising them would be unconscionable on his behalf.

Application: (a) The Registration Act, 1908

Section 17- Compulsory registration of documents within prescribed time.

(b) The Limitation Act, 1908

Every suit in Bangladesh has to be brought within the limitation period. However, section 5 refers extension of period in certain cases.

(c) Code of Civil Procedure, 1908

Limitation must be obeyed on applicable grounds.

Case Law: Stickland v. Aldridge [(1804) 9 Ves 516]

In the case of an intestate death, the eldest son was entitled to the entire estate, excluding his siblings. This was unfair and the equity courts granted no relief. In this case, it was held that equity would have intervened and forced the son to carry out his pledge if he had influenced his father not to sign a will by promising to divide the inheritance with his siblings; because it would have been against conscience. Therefore, the son must take the property as trustee for himself and his siblings. So, if a court of law erred, equity corrected the law and followed it on the basis of conscience.

Maxim-3. WHERE THERE IS EQUAL EQUITY, THE LAW SHALL PREVAIL

When both the contestants are equally entitled to obtain help from courts of equity (because their equities are equal), the party who has law in his favor will succeed.

Application: (a) The Transfer of Property Act, 1882

Section 40- Burden of obligation imposing restriction on use of land.

Equitable doctrine of notice: Knowledge of a fact which would make a rational man act in the light of the knowledge so acquired.

Section 78- Fraud, Estoppel, or gross negligence might postpone a person’s claim to precedence of his interest.

Case Law: Tulk v. Moxhay [(1848) 41 ER 1143]

It was established that there are occasions in which equitable covenant limiting the use of a property can run with the land at the time it was made, and bind all subsequent purchasers being informed of its existence.

Maxim-4. WHERE THE EQUITIES ARE EQUAL, THE FIRST IN TIME SHALL PREVAIL

Where there are two or more competing equitable interests, and when all other tests give way but are not able to decide whose equitable interest came into being first, the test of time is the deciding factor.

Application: (a) The Transfer of Property Act, 1872

Section 48- Principle of priority/precedence: right of a party to satisfy its own claim of interest first in comparison to others.

Section 78- Postponement of prior mortgagee.

Case Law: Re Samuel Allen & Sons Ltd [(1934) St R Qd 287]

A company hired machinery from X in installments. X had the right to withdraw the machinery if the corporation missed an installment. The machinery was installed on the company’s legal premises, and then created an equitable mortgage of the premises in favor of a mortgagee. The Court decided that X’s right to remove fixture, being an equitable interest and been attached before the equitable mortgage was created, outran the mortgagee’s right.

Maxim-5. DELAY DEFEATS EQUITY

When an aggrieved party takes a long time to seek redress for a wrong that he has seemingly ignored for a long period, the court will deny him such redress on grounds of public policy.

Application: (a) The Limitation Act, 1908

First Schedule, Article 113- The equitable remedy of specific performance can be availed only if the suit is filed within one year of the incident.

(b) The Specific Relief Act, 1877

Section 56- An injunction cannot be granted- 56(h) to prevent a continuing breach in which the applicant has acquiesced; 56(j) when the conduct of the applicant on his own disqualifies him from the assistance of the court.

Case Law: Chatrabhuj v. Mansukhram [AIR 1925 Born 183]

The plaintiff allowed his land to be occupied by the defendant and this was acquiesced by him even beyond the period of limitation. On a suit, the plaintiffs claim for possession of the land was denied.

Maxim-6. EQUALITY IS EQUITY

Equity would put the litigating parties on an equal footing in terms of their rights and responsibilities. Justice Fry said, “Equality does not mean equality in its simplest form, rather what is known as proportionate equity.”

Application: (a) The Contract Act, 1872 Section 42- Presumption of tenancy-in-common

Ss. 43, 69, 70, 146- Provisions relating to contribution

(b) The Transfer of Property Act, 1882 Section 45- Joint funds & purchases Section 56- Marshalling

Section 82- Contribution to mortgage-debt

(c)    The Trusts Act, 1882

Section 27- Contribution between co-trustees

(d)      CPC, 1908 (Section 73) & The Succession Act, 1925 (Section 330) – Ratable distribution of legacies

Case Law: Lake v. Croddock [(1732) 3 P Wms 158]

Five people bought land as joint tenants but they contributed rateably. Some died, and one took no part for thirty years. The absent owner was re-admitted on principle of survivorship, and they were considered tenants in common.

Maxim-7. HE WHO SEEKS EQUITY MUST DO EQUITY

The individual seeking an equitable remedy must be willing to act fairly, and the court may compel him to do so. This maxim refers to the plaintiff’s future conduct.

Application: (a) The Transfer of Property Act, 1882 Section 35- Doctrine of Election

Section 51- Improvements made by bona fide holders under defective title entitled to compensation from rightful owner.

(b) The Contract Act, 1872

Ss. 64 & 65- Restitution of benefits on rescission of a contract.

(c) The Trusts Act, 1882

Section 62- Wrongful purchase by trustee

Section 86- Transfer pursuant to rescindable contract

(d) The Specific Relief Act, 1877

Section 38: Court may require party rescinding to do equity.

Section 41: Court may order the party cancelling instrument to compensate.

(e) CPC, 1908 – Order VIII, Rule 6- Set off

Case Law: Cheese v. Thomas [(1732) 3 P Wms 158]

This case raises the problem of determining which of two parties should shoulder loss for which neither is responsible when a contract is set aside. After a finding of undue influence, both parties are to split losses, so as to restore the parties to their original positions as near as might be.

Maxim-8. HE WHO COMES TO EQUITY MUST COME WITH CLEAN HANDS

The prior behavior of parties must not involve any type of fraud or deceit in order to succeed in equity. Equity does not demand that its suitors shall have led blameless lives;⁸ rather requires the applicant’s wrongdoing not related to the rights sought.

Application: (a) The Specific Relief Act, 1877

Ss. 17, 18 and 20- Plaintiffs unfair conduct will disentitle him to an equitable relief of specific performance of the contract.

Section 22- Discretionary jurisdiction of court to decree specific performance.

(b) The Trusts Act, 1882

Section 23- Liability of breach of trust

Case Law: Overton v. Banister [(1844), 3 Hare 503, 67 E.R. 479]

A beneficiary failed in their action against the trustees to pay her back the assets of the trust she had already received as a result of a misrepresentation of her age.

Maxim-9. EQUITY LOOKS INTO INTENT RATHER THAN FORM

This maxim reflects the equity courts’ greater flexibility in doing substantive justice rather than enforcing technical rules. Equity considers the spirit rather than the wording, the parties’ intentions rather than their terms, and the realities rather than mere appearances.

Application: (a) The Contract Act, 1872

Section 55- If time is of the essence in the contract, and it is not executed within specified time, the contract or part of it that is unperformed, is voidable. If time is not of the essence, the promisee is entitled to damages.

Section  74-  Reasonable  compensation  can  be  claimed  for  breach  of  contract  not

exceeding the amount to the penalty stipulated for.

(b) The Transfer of Property Act, 1882

Ss. 114 & 114A- Relief against forfeiture in a lease.

Case Law: Parkin v. Thorold [(1852) 16 Beav 59]

Lord Romilly MR recognized that equity will distinguish which is a matter of substance, and which is a matter of form. If they find that by insisting on the form, the substance will be defeated, they shall not allow the form to be relied upon.

Maxim-10. EQUITY LOOKS ON THAT DONE WHICH OUGHT TO BE DONE

If someone undertakes an obligation for the other, equity considers it done and produces the same outcome as if the obligation had been actually performed. This maxim is frequently applicable when land is transferred between parties but no formalities are followed.

Application: (a) The Specific Relief Act, 1877

Ss. 14 & 15- Specific performance of part of contract where part unperformed is small and large.

(b) The Trusts Act, 1882

Section 91- Property acquired with notice of existing contract to be held to give effect to the contract.

(c) The Transfer of Property Act, 1882

Section 40- Burden of obligation imposing restriction on use of land, or of obligation annexed to ownership but not amounting to interest or easement.

Section 53A- Doctrine of part performance

Case Law: Re Anstis [(1886) 31 Ch D 596]

It was held that where parties have entered into a contract that is specifically enforceable, equity will treat the contract as having been performed.

Maxim-11. EQUITY IMPUTES AN INTENT TO FULFILL AN OBLIGATION

Near fulfillment of a general obligation will be treated sufficient, unless the law mandates perfect performance, such as in the exercise of an option.

Application: (a) The Trusts Act, 1882

Section 92- Purchase by person contracting to buy property to be held on trust for certain beneficiaries.

(b) The Succession Act, 1925

Ss. 177 & 178- Doctrine of satisfaction: It may apply where the act performed, is of a different nature to that which is agreed to be performed. Where testator gives legacy, not expressing in reduction of debt, to a creditor; it is presumed by equity that the legacy is to be treated as being made in satisfaction of debt.

Section 179- No ademption:  No bequest shall be redeemed in whole or in part by a

subsequent provision made for the legatee.

Case Law: Sowden v. Sowden [(1785) 1 Bro CC 582: 29 ER 1111]

A husband covenanted to pay £50,000 to the trustee of his marriage settlement for purchase of land in area D. He never paid it, but bought the land. He died but couldn’t bring the land into settlement. Equity Court construed that he purchased the land to fulfill his obligation.

Maxim-12. EQUITY ACTS IN PERSONAM

Decrees of equity were viewed as decisions, and instructions addressed to the individual party or parties, rather than just rulings about the rights and properties in issue.

Application: (a) Code of Civil procedure, 1908

Section 16- Suits to be instituted where subject-matter situate.

Case Law: Penn v Lord Baltimore [(1750) 1 Ves Sen 444]

This was a boundary dispute seeking specific performance on settlement agreement of foreign land. The court obliged Lord Baltimore to fulfill his duties to the Penn family without interfering with colonial North American land rules. Those were the local judges’ sole domain. However, it did have a right in personam against Lord Baltimore.