DEVELOPMENT OF EQUITY

Equity historically was an important source and it still plays a part today with many of our legal concepts having developed from equitable principals. The word equity has a meaning of fairness and this is the basis on which our law operates, when adding to our law. Equity developed because of problems in the common law of which there were several: the main one being the method by which the cases had to be started in the common law courts. This was known by obtaining a document known as a writ. Before 1258 it was possible to ask for a writ to be drawn up to cover any situation, but the Provisions of Oxford 1258 restricted the issue of writs for new types of action. This meant that to start a case in the common law courts, the would be litigant had to be able to fit his claim into one of the existing types of writ – if this could not be done then there was little chance of justice. To get around this technical difficulty, the judges did develop ‘fictions’ which allowed some cases to proceed. In other words they assumed certain facts for the case, even though those facts were not true.

The historical creation of Equity arose from the need to mitigate the harshness of the decisions of the common law developed after 1066. Whilst the royal courts and assizes produced the benefits of a widely available legal system applying a consistent set of rules and procedures, they also became rigid and inflexible, ignoring justice in the quest for legal certainty. By the thirteenth century, aggrieved litigants began to petition the Chancellor, as the ‘keeper of the king’s conscience, in an effort to find a more just solution to their problem. As a consequence of the growth of these petitions, the Court of Chancery developed, where decisions were made on the basis of fairness and reason and so the notion of equity was founded. The body of rules and principles developed by the Lord Chancellors became known as equity because they were based on the concepts of fairness and justice. They were applied in a special court of the Lord Chancellor known as the Court of Chancery, which began to recognize and enforce new rights and duties thus providing an alternative system of justice to that of common law courts.

Initially, the two court systems operated in parallel, with equity being regarded as a gloss upon the common law. Where the law failed to provide remedy equity could operate to “fill the gap”. However, as both systems become more developed, the situation became one of conflict rather than assistance. Equity began to be criticized by some for its unpredictability and it increasingly found a remedy opposing that offered by the common law. This culminated in the Earl of Oxford’s Case (1615), in which James I decided in favour of equity as the prevailing rule in the case of conflict.

Equity was now free to develop. It created its own set of rights and remedies, which are still in force today. It was an equitable development, along with many other areas of property law such as the equitable mortgage, the rules of probate, will and succession. Remedies were also created to support these rights. The injunction has its foundations in the early development of equity. It served then, as now, as an addition to common law award of damages.

Alongside these developments, equity also created its own set of rules, the ‘maxims of equity’, to guide the judge in the use of his Discretion in matters of equity. Whilst one of the attractions of equity was that it was based on the judge’s discretion and therefore flexible, the maxims led some to criticize equity for becoming as rigid as the common law. Nevertheless, the work of the Chancery courts expanded as equity widened its scope through the late 1700s and 1800s. By the middle of the nineteenth century it was realized that the two systems could no longer operate as separate bodies and the review of the system was needed.

This reform was achieved by the Judicature Act 1873-75. This legislation provided for procedural fusion of the two systems into one court hierarchy, which is the basis of the modern divisions of today’s High Court. Rather than eliminating equity, the Acts it is submitted, strengthened and confirmed its place in the future. A litigant could now bring his proceedings in one court which would apply both the rules of common law and equity and Judicature Acts confirmed that in the case of conflict, equity would prevail.

It would be easy to assume that having provided these foundations, the importance of equity as a developing body of law ceased after 1875. However, this is clearly not the case when one examines the many twentieth century developments of equity. The rights and remedies created before 1873 continue to operate today. Furthermore, they have been refined added to by modern judges and legal developments. The now established principle of “promissory estoppel” in contract owes its existence to the judgment of Lord Denning in the High Trees case10. The contractual license, constructive trust and doctrine of part performance are all creations of the judge’s equitable discretion. The rights of the deserted spouse, an essential part of modern matrimonial property law are creations of equity, reinforced by statute.

The development of new and more complex remedies has been as active as that of rights. The order of specific performance is still vital. The injunction is perhaps more widely used than ever before, having a place in many areas of modern, such as intellectual property rights, as well as more traditional role. Anton Filler orders and Merava injunctions have only been created in the last thirty years and they are now an essential part of many legal proceedings11. The appointment of receivers and orders to account are similarly important parts of modern legal practice which owe their existence of equity.

So the significance of equity in the modern legal system can be clearly illustrated. However one concept that has perhaps changed is the historic notion of equity as flexible and fair. Whilst the reasoning behind many modern developments is the need to provide a solution, which is appropriate to the facts and the changing demand of society, the wealth of guidelines that go with the discretion can be as rigid as any common law rules. For example, to be granted an injunction one must satisfy the complex requirements of the American Cyanamid Rules12. Anton Filler orders and Merava injunctions have been criticized by some judges as harsh and draconian and a set of rigid procedures aimed at safeguarding against abuse has developed alongside these two injunctions.

Therefore, equity as a source of law remains as current and as vital a part of the English Legal System as ever, although the conscientious Lord Chancellors who first gave life to the idea may wonder at its role today.

So the result of this was that the common law tradition of relying previous decisions gradually brought about systematization in the application of conscience and the introduction of the idea of equity as a body of set of rules and doctrines existing side by side with the common law.

2.2 Relationship between Common Law & Equity:

Common law and equity developed to some extent in conflict with one another until 1875 when the Judicature Act finally resolved the conflicts. The difficulties arose out of the fact that the courts of equity would provide a remedy where the common law courts would not. This had the effect of omitting the common law courts jurisdiction. In the Earl of Oxford’s case13, James I decided in favour of equity as the prevailing rule in case of conflict. Gradually the courts of equity became undisputed courts of law and a clear body of rules emerged which were applied there.

At last the Judicature Act 1873-75 finally fused the two systems of law, common law and equity, and provided that both were available in all law courts. Thus today both common law and equity are English law, both rely on the doctrine of precedent, both are applied in all courts and both have been partly embodied in statutes. Where a principle of equity conflicts with one of common law, equity prevails under Judicature Act. In fact the Judicature Act helped to stop the conflict between common law and equity and definitely express the supremacy of equity and a lawful and definite relationship between the two.

Among the historical differences of common law and equity it is well seen that common law system was founded mainly by Henry II in the twelfth century but the notion of equity was founded in the thirteenth century by the Lord Chancellor of king. Early common law was totally depend on writ system and soon became very rigid but equity had not such system, it was developed basing upon fairness and good conscience. Common law failed to give a justified result very often and as a result to ensure justice equity originated.

In the early time the popularity of common law was decreasing but the popularity of equity was increasing rapidly. Besides, common law system was expensive and burdensome in comparison with equity. Equity developed with many remedies which the common law failed to make .Even today the judges first try to give the result basing upon common law and if it is not justified and the litigant asked for equity then he goes on to equity. Though there are some differences they have more similarities today. They both are now English Law.

3.1 Introduction

The Indian subcontinent consists of several countries with a total population of over one billion, making up 20% of the population of the world14. The first British outpost in Indian subcontinent was established in 1619 on the northwestern coast. Later in the century, the East India Company opened permanent trading stations at Madras, Bombay, and Calcutta, each under the protection of native rulers. The British expanded their influence from these footholds until, by the 1850s, they controlled most of present-day India, Pakistan, and Bangladesh. In the late 1800s, the first steps were taken toward self-government in British India with the appointment of Indian councilors to advise the British viceroy and the establishment of provincial councils with Indian members; the British subsequently widened participation in legislative councils. Beginning in 1920, Indian leader Mohandas K. Gandhi transformed the Indian National Congress political

party into a mass movement to campaign against British colonial rule. The party used both parliamentary and nonviolent resistance and non-cooperation to achieve independence. On August 15, 1947, India became a dominion within the Commonwealth, with Jawaharlal Nehru as Prime Minister. And create East and West Pakistan, where there were Muslim majorities. India became a republic within the Commonwealth after promulgating its constitution on January 26, 1950. On 26th March 1971, East Pakistan became a independent country named Bangladesh within the Commonwealth.

From the twelfth to the sixteenth centuries principles and rules of Roman Law spread over Western Europe and influenced, in different degrees, the legal systems all over the world. Similarly in Indian subcontinent, the concepts, principles and rules of the English Law initially spread over a few provinces and gradually over all the states in India, and influenced the whole of subcontinent. As is well known, the British came to India, to advance themselves, to establish themselves as traders and acquired power and having acquired power, to consolidate themselves as rulers of the whole country. Some of those who were sent out from England to guide the destinies of India were actuated by the loftiest of motives while others were disinterested in the petty squabbles between individuals. They, in effect; evolved an efficient system of administration of justice in as we shall see, was always pragmatic even in their own country and necessarily so in India.

Instructions were given to the English administrators and judges to decide cases according to justice, equity and good conscience, for which no rule was clearly laid down in the Acts of Parliament or regulations or customary law of India. “Under the name of justice, equity and good conscience, the general law of British India, save so far as the authority of native law was preserved, came to be so much of English law as was considered applicable or rather was not considered inapplicable to the conditions of Indian society.”15 According to Rankin, “the influence of the Common law in India is due not so much to a “reception”, though that has played no inconsiderable part, as to a process of codification carried out on the grand scale…”16 But in fact the English law in Indian subcontinent like the Roman law in Mediaeval Europe, “enjoyed a persuasive authority as being an embodiment of written reason, and impressed its own character on a formally independent jurisprudence.”‘7

As pointed out by Professor Holdsworth the English Law was “received” in Indian subcontinent, exactly for the same reasons as the Roman law was received in Europe. These reasons are, firstly to solve the problems of the more advanced stage of civilization and secondly to adapt it to new environment . As observed by Setalvad “the expectation has come true.”19The manner in which this permeation of English law took place was altered, but its extent was in no way diminished when in the nineteenth century the law was codified in Indian subcontinent.

It is a paradox in history that the law and judicial system which the British had fostered in India should have helped Indians to obtain their freedom from Britain. This strangely fascinating story of the transformation of the English Common law into Indian subcontinent jurisprudence forms the main theme of this chapter.

3.2 Reasons for the development of Equity and equitable Principles in Indian Sub continent:

The system broke down in Indian subcontinent due to various causes and so there was an opportunity for English Law to influence Indian Subcontinent Law. It will not be out of place to have a review of the causes of this failure. Causes of failure of above attempts are:20

(a) Difficulty of ascertaining the Native Law for various religions.

(b) Defects in the Native Law where they were ascertainable.

These defects had to be supplied by English Judges and Magistrates from their remembrance, often imperfect, of principles of English Law which were supplied under the name of Justice, Equity and Good Conscience.

(c) Native Laws often embodied rules repugnant to the traditions and morality of the ruling race. An English Magistrate could not enforce, and the English Government could not recognize, the degenerate criminal law in Indian Mohammedanism.

Thus the Native Law was beaten at every point by English case law and by Regulations of the Indian Legislatures.

3.3 Maxims of equity and their application and recognition in Indian subcontinent:

“Maxims are the proverbs of the law. They have the same merits and defects as other proverbs, being brief and pithy statements of partial truths. They express general principles without the necessary qualifications and exceptions, and they are therefore much too absolute to be taken as trustworthy guides to the law. Yet they are not without their uses. False and misleading when literally read, these established formulae provide useful means for the expression of leading doctrines of the law in a form which is at the same time brief and intelligible.” According to Justice Stephen: “They are rather minims than maxims, for they give not a particularly great, but a particularly small amount of information. As often as not the exceptions and qualifications are more important than the so-called rules, which while they mostly serve as good indexes to the law, are mostly bad abstracts of it.” There are twelve such maxims but the overlapping is so much so that “it would not be difficult to reduce them all under the first and the last”. The maxims give a clue to just and reasonable interpretation.

The twelve maxims are individually discussed hereunder:

1. EQUITY WILL NOT SUFFER A WRONG TO BE WITHOUT A REMEDY
2. Meaning – Where there is a right, there is a remedy. This idea is expressed in the Latin maxim ubijus ibi remedium. It means that no wrong should go unredressed if it is capable of being remedied by courts. This maxim indicates the width of the scope and the basis on which the structure of equity rests.
3. Recognition in Indian subcontinent – The Trusts Act, Section 151 of the Civil Procedure Code and the Specific Relief Act in Indian subcontinent has incorporated the above principles. The Civil Procedure Code entitles a civil court to entertain all kinds of suits unless they are prohibited. The Specific Relief Act provides for equitable remedies like specific performance of contracts, rectification of instruments, injunctions and declaratory suits. It can be said that the writ provisions hi the Constitution, the Administrative Law and the Public Interest Litigation devices have now extended the scope and effective working of this maxim.
4. EQUITY FOLLOWS THE LAW
5. Meaning – The maxim indicates the discipline which the Chancery Courts observed while administering justice according to conscience. Equity had come not to destroy the common law but to fulfill it.
6. Recognition in Indian subcontinent – Equity rules in Indian subcontinent, cannot override the specific provisions of law. As for example, every suit in India has to be brought within the limitation period and no judge can create an exception to this or can prolong the time-limit or stop the rule from taking effect on principles of equity21. Similarly no court can confer rights which can be acquired only by registration of a document, on a party, without getting the document registered.

In Appa Narsappa Magdum case, it was contended that the provisions of Land Reform Acts being welfare, legislation enacted for the benefits of tenants should be construed in a liberal manner. This was rejected by the Supreme Court of India holding that, the provisions of law regarding the period within which tenant must exercise right to purchase land of widow landlady being clear, relief cannot be granted on the basis of Equity. Where law is clear no equitable relief is warranted.

3. HE WHO SEEKS EQUITY MUST DO EQUITY
4. Meaning —The maxim means that to obtain an equitable relief the plaintiff must himself be prepared to do “equity”, that is, a plaintiff must recognize and submit to the right of his adversary.
5. Recognition in Indian subcontinent – There are some sections of The Contract Act, The Transfer of Property Act, Specific Relief Act and Trusts Act, Civil Procedure Code are based on this maxim.
6. HE WHO COMES INTO EQUITY MUST COME WITH CLEAN HANDS
7. Meaning—Equity, as it was based on good faith and conscience, demanded fairness, uprightness and good faith not only from the defendant but also from the plaintiff.
8. Recognition in Indian subcontinent – This maxim also has recognition in Indian Subcontinent. In Section 23 of the Trust Act, Section 22,24,25,26,28,56 of the Specific Relief Act are based on this maxim.
9. DELAY DEFEATS EQUITIES
10. Meaning – Where an injured party has been slow to demand a remedy for a wrong which he has for a long time regarded with apparent indifference, the court will decline to give him that remedy on grounds of public policy. In the famous words of Lord Camden, L.C., “a court of equity has always refused its aid to stale demands, where a party has slept upon his right and acquiesced for a great length of time. Nothing can call forth this court into activity, but conscience, good faith and reasonable diligence; where these are wanting, the court is passive, and does nothing.”
11. Recognition in Indian subcontinent – This doctrine has no general application to India but has only a limited scope.
12. EQUALITY IS EQUITY
13. Meaning – The maxim expresses the object of both law and equity in order to effectuate a distribution of property and losses, proportionate to several claims and liabilities of the parties concerned. Equality therefore means proportionate equality.
14. Recognition in Indian subcontinent – The maxim have been recognized in India under various enactments – Contract Act, Section 42, illustrates tenancy in common as regards devolution of liabilities, Section 43 illustrates that one of a number of joint promisors who has performed the promise is entitled to compel the other promisors to contribute equally with him, Sections 69 and 70 illustrate the doctrine of marshalling, Sections 146 and 147 explain that co-sureties are liable to contribute equally, Under the Transfer of Property Act, Section 56 illustrates the doctrine of marshalling, Section 82 speaks about contribution to mortgage debt by    co-mortgagors, Section 330 of the Succession Act incorporates and illustrates the principle of rate able distribution of assets explaining that the legacies abate rate ably, (viii) Under the Indian Trusts Act, Section 27, there is contribution also as between co-trustees, Section 73 of the Civil Procedure Code, Section 45 of the Transfer of Property Act also illustrates the incorporation and application of this principle.
15. EQUITY LOOKS TO THE INTENT RATHER THAN THE FORM
16. Meaning – It means it looks to the intention of parties and not to the words, and it looks to the realities rather than to mere appearances.
17. Recognition in Indian subcontinent – This maxim has been recognized in Sections 55 and 74 of Contract Act and Sections 114 and 114-A of Transfer of Property Act.
18. EQUITY LOOKS ON THAT AS DONE WHICH OUGHT TO BE DONE
19. Meaning – As between two persons, where one of them has incurred an obligation and undertaken upon himself to do something for the other, the equity courts look on it as done and as producing the same results as if the obligation or undertaking had been actually performed.
20. Recognition in Indian subcontinent – The principle contained in the maxim has been recognized in the following enactments, Section 40 of the Transfer of Property Act, Section 12 of the Specific Relief Act, Section 53-A of the Transfer of Property Act, Section 91 of the Trust Act.
21. EQUITY IMPUTES AN INTENTION TO FULFIL AN OBLIGATION
22. Meaning – Equity courts came into existence to do justice. They firmly believed that a person must be prepared to do what is right and fair. As the old saying goes, one must be just before one professes to be generous. It is on this accepted dictum that equity considered estimated and construed acts of parties.
23. Recognition in Indian subcontinent – Sections 177, 178 and 179 of the Succession Act make a deliberate departure from the English doctrine of satisfaction. Section 92 of the Trust Act puts into practice the principle of this maxim.
24. WHERE THERE IS EQUAL EQUITY, THE LAW SHALL PREVAIL
25. WHERE THE EQUITIES ARE EQUAL, THE FIRST IN TIME SHALL PREVAIL These two maxims relate to the question of priority.
26. EQUITY ACTS IN PERSONAM
27. Meaning – Courts of equity, described as courts of conscience, operate primarily in personam binding the conscience of a person and thus bringing an individual’s conscience under its sway. Its decrees were regarded not merely as decisions concerning the rights and properties in dispute but as decrees, decisions, and directions, positive or negative, addressed to the individual party or parties. Thus on one side an individual’s conscience was sought to be bound and on the other, the Chancellor exercised his jurisdiction guided according to his own conscience. This maxim being descriptive of the Equity Courts’ procedure covers a large portion of its procedural and remedial action.
28. Recognition in Indian subcontinent – According to opinions of many learned text writers22no such jurisdiction is recognized by Indian courts while according to some, the courts in India have but limited powers of making a decree in personam. The opinions are thus divided. The Civil Procedure Code, Section 16 does not deal with this problem; it explains the division of jurisdiction of the municipal courts only. Till now we have no such decisions bearing directly on this issue. Though courts in India have limited powers of making a decree in personam. Equity may act in personam in India too. The proviso to Section 16 of the Civil Procedure Code is thus an application, though in a highly modified form, of the maxim “equity acts in personam”.23

3.4 Application of English equity to the laws of Indian Sub continent

1. Cases wherein it was successfully applied – On the basis of the principles of Justice, Equity and Good Conscience the Courts successfully applied the principles of English law in the following cases.

In the first case a Muslim created a charge on his property by deposit of title deeds in favour of an Armenian. After some time the Muslim transferred the property in favour of a Hindu who in turn transferred it to a British subject. The Armenian filed a suit against all in the S.D.A. of Madras but the court dismissed it holding that the doctrine of constructive notice was not applicable in India. However the Privy Council, in appeal, held that direction to act according to Justice, Equity and Good Conscience required that the principles of English law so that right created by deposit of title deeds could be deprived only by a subsequent bonafide purchaser for value without notice should be applied. The decision of the S.DA. was therefore reversed.24The Bombay High Court followed this decision and applied the principle in Dada Honaji v. Babaji25. In Waghela Rajsanji v. Shekh Masluddin26 a question was raised whether a guardian was competent to make covenants on behalf of the ward so as to create a personal liability on the ward. Applying the principles of English law on grounds of Justice, Equity and Good Conscience the Privy Council held that it would be improper to uphold the validity of such a covenant. In one case27 the land was washed away by Ganges and later it was formed again. Applying the principles it was held that the land regained belonged to the owner. In the famous case of Ram Coomar v. Macqueen28 the Privy Council applied the principle of estoppel by holding out. The principle is-that where a person who is the real owner of property allows another to hold himself as the owner and that when a third person purchases the property believing that the apparent owner is the real owner, the latter was debarred to assert his undisclosed or secret title, in the absence of the knowledge on the part of the purchaser about the title of the real owner. In yet another important decision the Privy Council recognized the right of the Crown to escheat the property of a deceased Brahmin.29 According to Hindu law this could not be done but that principle was excluded. Besides the principle of the clog on-the equity of redemption66 and restriction on alienation of property to strangers, and that transfer should be only to any one of the relatives were held valid and applied.30

1898. Statutes or Acts wherein it was successfully applied – Statutory recognition of the principles Of equity is found in the The Specific Relief Act, 1877, The Transfer of Property Act, 1882, The Law of Contract, 1872 , Guardian and Wards Act, 1890, The Trust Act, 1882, The Code of Civil Procedure, 1908, The Code of Criminal Procedure, 1898. In these Acts which principles of equity are applied is discussing bellow –

The Specific Relief Act, 1877 – The provisions of the Act regarding Sections 12-44, 52 -57, recognize, the principles of equity to a large extent, such as, which contract can be specifically enforced (section 12 – 20), which contract cannot be specifically enforced (section 21 – 30), Rectification of Instrument (section 31 – 34), Rescission of contract (section 35 -38), Cancellation of instrument (section 39-41), Declaratory suit (section 42), Result of Declaratory suit (section 43), Appointment of receiver (section 44), Preventive relief (section 52 – 57).

The Transfer of Property Act, 1882 – This Act has also included many doctrines of equity. Apart from such doctrines Sections 48 – 51 of the present Act is based on the principles of equity. The English equitable doctrine of part performance has also been drawn in section 53A of the Act. Doctrine of Election (section 35), Feeding the grant by estoppel (section 43), Fraudulent transfer (section 53) also accepted from equity.

The Law of Contract, 1872 – There are certain equitable doctrines which have been imported in the Act and some of the important doctrines relating generally to the law of contract are the doctrine of penalties and forfeitures, stipulation as to time in a contract, equitable relief on ground of misrepresentation, fraud and undue influence. Section 64 and 65 of this Act is nothing but the codified form of the maxim, He who seeks equity must do equity.

Guardian and Wards Act, 1890 – hi some sections of this Act import principles of equity.

The Trust Act, 1882 – This Act mainly the creation of equity. The rules contained in this Act are substantially the same which were administered at the time by English courts of equity under the name of justice, equity and good conscience.