Law: Contract Act (IX of 1872)

Section: 17

  Contract Act (IX of 1872)--- ----S. 17---"Fraud"---Connotation---Effect---Duty of Court in dealing with any situation where slightest allegation of fraud and collusion was raised, explained and illustrated. Fraud would vitiate the most solemn of the transactions and would render the same as voidable and a nullity in the eye of law and it was necessary to examine -the plea of fraud with a view to determine the possibility of commission of fraud by the respondents and its effect on the alleged transfer of the "common open passage" in favour of respondents. Main ingredient of fraud would be intention to deceive or to induce a person by misrepresentation to enter into a contract on a false belief. A fraud might consist of an action in suppression of what was true or of an action in representation of what was false. In order to sustain an action for deceit it must be proved that there was a statement as to a fact which was false; and secondly, that it was false to the knowledge of the person making it, or that they made it not caring whether it was true or false. When a Court was called upon to exercise its discretion in equity to set aside a decree on the ground of fraud or collusion then it would not confine itself to the narrow definition contained in section 17 of the Contract Act and all possible kinds of fraud which could come to mind would be covered by the definition of fraud. The Courts have been very careful and cautious in dealing with any situation where the slightest allegation of fraud or   collusion was raised by any of the parties to the case and, whenever any such allegations or issue was raised the Court takes upon itself to hold a thorough and complete inquiry to find out as to whether the transaction was tainted with fraud or not and, if so, then the entire proceedings of the Court as well as the proceedings prior to the Court become illegal and void if it be established that the basis of case before the Court was a forged or fraudulent document. Even a judgment/decree or an order obtained from a Court on the basis of a fraudulent statement or any other kind of fraud would lose its authenticity or sanctity and…