Anup, a heir of an estate borrowed ₹5,000 from Surya to enable him to prosecute his claim, when he was without even with the means of subsistence and gave him a bond for ₹30,000 to be paid after receiving possession of t

CS Executive · Economic and Commercial Laws · PYQS · June 2019
Anup, a heir of an estate borrowed ₹5,000 from Surya to enable him to prosecute his claim, when he was without even with the means of subsistence and gave him a bond for ₹30,000 to be paid after receiving possession of the property. Decide, whether transaction may be treated as unconscionable ? State also the meaning of unconscionable transaction.

Answer & Explanation:

Unconscionable transaction is one which makes an exorbitant profit of the others distress by a person who is in a dominant position. Merely the fact that the rate of interest is very high in a money lending transaction shall not make it unconscionable. But if the rate of interest is very exorbitant and the Court regards the transaction unconscionable, the burden of proving that no undue influence was exercised lies on the creditor. It has been held that urgent need of money on the part of the borrower does not itself place the lender in a position to dominate his will. Relying upon the meaning of unconscionable transaction, it is clear that transaction between Anup and Surya is unconscionable transaction.

Topics: Indian Contract Act, 1872

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