A perusal of the definition of the word “fraud”, as defined in Section 17 of the Contract Act, would reveal that the concept of fraud is very wide. It includes any suggestion, as a fact, of that which is not true, by a person who does or does not believe it to be true. It may be contrasted with Section 18(1) of the Contract Act which, inter alia, defines “misrepresentation”. It provides that it is misrepresentation if a positive assertion is made by a person of that which is not true in a manner which is not warranted by the information which he has. This is despite the fact that he may believe it to be true. In other words, in fraud, the person who makes an untruthful suggestion, does not himself believe it to be true. He knows it to be not true, yet he makes a suggestion of the fact as if it were true. In misrepresentation, on the other hand, the person making misrepresentation believes it to be true. But the law declares it to be misrepresentation on the basis of information which he had and what he believed to be true was not true. Therefore, the representation made by him becomes a misrepresentation as it is a statement which is found to be untrue. Fraud is committed if a person actively conceals a fact, who either knows about the fact or believes in the existence of the fact. The concealment must be active. It is here that mere silence has been explained in the Exception which would affect the decision of a person who enters into a contract to be not fraud unless the circumstances are such that it becomes his duty to speak. His silence itself may amount to speech. A person may make a promise without having any intention to perform it. It is fraud. The law further declares that any other act fitted to deceive, is fraud. So also, any act or omission, which the law declares to be fraudulent, amounts to fraud. Running as a golden trend however and as a requirement of law through the various limbs of Section 17 of the Contract Act, is the element of deceit. A person who stands accused of fraud be it in a civil or criminal action, must entertain an intention to commit deception. Deception can embrace various forms and it is a matter to be judged on the facts of each case. It is, apparently, on account of these serious circumstances that fraud has on a legal relationship or a purported legal relationship that the particulars and details of fraud are required if pleaded in a civil suit or a proceeding to which the CPC applies. Electrical Rengali Hydro Electric Project v. Giridhari Sahu, (2019) 10 SCC 695.
Tag Archives: Deception
On a careful reading of Clause (c) of Section 12(1) of the Hindu Marriage Act, 1955, it will appear that both the parties, in case of adult, are obliged to divulge mutually and unequivocally the material fact or circumstances to each other before or at least at the time of marriage so much so that element of deception is ruled out. The words material facts or circumstances have not been defined or specified. It varies from one family to another, according to culture, ethos and social system in ages and situation. For example in a conservative family having attachment with puritan society in a marriage inevitable and unerring expectation is that both the bride and the groom must not have any record of prior marriage in any sense nor will have any marriage in any sense, not even any premarital affairs with other boy or girl (as the case may be). They cannot think of even marrying outside their caste and community, conversely , a family with liberal and cosmopolitan approach, thought, particularly in urban area will not mind in case of marriage even having knowledge of background of prior marriage or premarital affair with other counter sex outside their caste and community. In case of former, concealment of caste, community or background of prior marriage or premarital affairs before or at the time of marriage is obviously extremely material and it amounts to fraud in obtaining consent.
In the case of Saswati Chattopadhyay v. Avik Chattopadhyay, (2011) 3 ICC 51, the husband was not informed about the earlier marriage at the time of negotiation or at the time of solemnization of the marriage. On inquiry, the husband came to know that there had been previous marriage of the appellant with one Sudip and it was also discovered that the earlier marriage was dissolved by consent. When the matter reached to the Family Court, it came to the conclusion that there has been suppression of the relevant fact with regard to the premarital status of the appellant and such relevant fact goes to the root of the matrimonial relationship. On an appeal, the Calcutta High court endorsed the view taken by the trial court and observed that premarital status of a party is a material fact which the other party must know before imparting consent for marriage. Pradeep Kumar Maheshwari v. Smt. Anita Agarwal, 2019 (2) AWC 1369.
In Bhaurao Dagdu Paralkar v. State of Maharashtra, (2005) 7 SCC 605, it was held as under:
“By fraud is meant an intention to deceive; whether it is from any expectation of advantage to the party himself or from ill will towards the other is immaterial. The expression “fraud” involves two elements, deceit and injury to the person deceived. Injury is something other than economic loss, that is, deprivation of property, whether movable or immovable, or of money and it will include any harm whatever caused to any person in body, mind, reputation or such others. In short, it is a non-economic or non-pecuniary loss. A benefit or advantage to the deceiver, will almost always cause loss or detriment to the deceived. Even in those rare cases where there is a benefit or advantage to the deceiver, but no corresponding loss to the deceived, the second condition is satisfied.
A fraud is an act of deliberate deception with the design of securing something by taking unfair advantage of another. It is a deception in order to gain by another’s loss. It is a cheating intended to get an advantage.
Fraud, as is well known, vitiates every solemn act. Fraud and justice never dwell together. Fraud is a conduct either by letter or words, which induces the other person or authority to take a definite determinative stand as a response to the conduct of the former, either by words or letters. It is also well settled that misrepresentation itself amounts to fraud. A fraudulent misrepresentation is called deceit and consists in leading a man into damage by willfully or recklessly causing him to believe and act on falsehood. It is a fraud in law if a party makes representations, which he knows to be false, and injury ensues therefrom although the motive from which the misrepresentations proceeded may not have been bad. An act of fraud on court is always viewed seriously. A collusion or conspiracy with a view to deprive the rights of others in relation to a property would render the transaction void ab initio. Fraud and deception are synonymous. Although in a given case a deception may not amount to fraud, fraud is anathema to all equitable principles and any affair tainted with fraud cannot be perpetuated or saved by the application of any equitable doctrine including res judicata. DDA v. Bankmens Cooperative Group Housing Society Limited. (2017) 7 SCC 636.