Tag Archives: Void

Fraud – Meaning of

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.

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Implied Terms of Contract

Evidently before any contract will be enforced, it is essential that the terms of the contract must be clear, definite, certain and complete and the contract must be free from doubt, vagueness and ambiguity so as to leave nothing to conjecture or to be supplied by the court. See Nair Service Society v. R.M. Palai, AIR 1966 Ker 311.
Lord Hoffman in Investors Compensation Scheme Ltd. v. West Bromwich Building Society, (1998) 1 WLR 896, has summarized five principles of interpretation of contracts. These are:
1. Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge.
2. The background means “matrix of fact.”
3. The law excludes from the admissible background, the previous negotiations of the parties and their declarations of subjective intent.
4. The meaning which a document (or any utterance) would convey to a reasonable man is not the same thing as the meaning of its words.
5. The rule that words should be given their “natural and ordinary meaning reflects the common sense proposition that is not easily acceptable that people have made linguistic mistakes particularly to formal documents.”
In B.P. Refinery (Westernport) Pty. Ltd. v. Shire of Hastings, (1978) 52 PLJR 20 (PC), the Privy Council has laid down five conditions which are to be satisfied for an implied terms of contract. These are: (1) It must be reasonable and equitable; (2) It must be necessary to give business efficacy to the contract; (3) It must be so obvious that it “goes without saying”; (4) It must be capable of clear expression; (5) It must not contradict any express term of the contract. So basically, every contract involves four elements, v.iz.,
1. Competency of the Parties
2. Consensus
3. Consideration and object
4. Certainty
Thus, contracts may be classified according to:
(i) Their sunject matter;
(ii) Their parties;
(iii) Their form (whether contained in deed or in writing, whether express or implied);
(iv) Their effect (whether bilateral or unilateral, whether valid, void or unenforceable). Syed M.M. Rizvi v. Subhash Singh, 2014 (6) AWC 5751.

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Expression Void – Has Many Facets

The expression void has many facets. One type of void acts, transactions, decrees are those which are wholly without jurisdiction, ab initio void and for avoiding the same no declaration is necessary, law does not take any notice of the same and it can be disregarded in collateral proceeding or otherwise. The other type of void act, e.g., may be transaction against a minor without being represented by a next friend. Such a transaction is a good transaction against the whole world. So far as the minor is concerned, if he decides to avoid the same and succeeds in avoiding it by taking recourse to appropriate proceeding, the transaction becomes void from the very beginning. Another type of void act may be which is not a nullity but for avoiding the same a declaration has to be made. Voidable act is that which is a good act unless avoided, e.g., if a suit is filed for a declaration that a document is fraudulent and/or forged and fabricated, it is voidable as the apparent state of affairs is the real state of affairs and a party who alleges otherwise is obliged to prove it. If it is proved that the document is forged and fabricated and a declaration to that effect is given, a transaction becomes void from the very beginning. There may be a voidable transaction which is required to be set aside and the same is avoided from the day it is to be set aside and not any day prior to it. In cases where legal effect of a document cannot be taken away without setting aside the same, it cannot be treated to be void but would be obviously voidable. Ganga Prasad v. Ram Das, 2014 (5) AWC 4508.

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