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Kamal Kant Paliwal Vs. Smt. Prakash Devi Paliwal and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtRajasthan High Court
Decided On
Case NumberFirst Appeal No. 149 of 1973
Judge
Reported inAIR1976Raj79; 1975()WLN429
ActsContract Act, 1872 - Sections 17
AppellantKamal Kant Paliwal
RespondentSmt. Prakash Devi Paliwal and ors.
Appellant Advocate G.C. Kasliwal and; S.M. Mehta, Advs.
Respondent Advocate Arun Kumar Bhandari, Adv. for Minor
DispositionAppeal dismissed
Excerpt:
.....if a false statement has been made.;(b) contract act - section 17--fraud literate person executing trust deed believing it as general power of attorney--held, it is not a case of fraud but that of collusion.;the plaintiff admittedly signed the document and also after it was presented before the sub-registrar, jaipur, attesting its execution. the plaintiff had all the means to know the contents of the document. that apart his father was the attests witness and it cannot be imagined that he joined hands with his wife and his brother-in-law against his son. in the circumstances i am unable to belive that any fraud was practiced. to me it lather appears that the plaintiff's suit is collusive. with a view to get the trust cancelled he has come to the court of law. - - it is upon this and..........uncle as to facilitate raising of money from the plot. he agreed. on 12th january, 1972, the trust deed in question was got executed and it was got registered. the plaintiff signed the said document without reading the same treating it as a general power of attorney. in september, 1972 he came to know that the document got executed by him on 12-1-1972 was not a general power of attorney but a trust deed. his averment is that his consent has been obtained to execute the document in question by practising fraud upon him. he has prayed for a declaration that the document of declaration of trust dated 12-1-1972 is null and void and it does not affect the plaintiff's right and title to the land covered by the trust deed.3. curiously enough smt. prakash devi defendant no. 1 admitted the.....
Judgment:

J.P. Jain, J.

1. This is a plainliff's first appeal whose suit for concellation of trust deed has been dismissed by the District Judge Jaipur City.

2. This suit is by Kamal Kant Paliwal against his own mother Prakash Devi Paliwal, his maternal uncle Jaidev Sharma and his two minor children Kumari Nidhi and Anurag his son. It has been alleged in the plaint that a plot of land situate at Moti Doongri Road Jaipur measuring 4085.5 sq. Yds. was purchased by Smt. Prakash Devi from Urban Improvement Board, Jaipur under a sale deed dated 14-4-1952 in the name of Shri Jaidev Sharma, defendant No. 2, for and on behalf of the plaintiff. It was stated that the purchase of the plot was Benami and the consideration of the plot was paid by Prakash Devi out of the funds received by the plaintiff from his grand-parents, uncles and other relations from time to time. According to the plaintiff his mother suggested to him sometime in the month of January, 72 that he should execute general power of attorney in favour of his mother and the maternal uncle as to facilitate raising of money from the plot. He agreed. On 12th January, 1972, the trust deed in question was got executed and it was got registered. The plaintiff signed the said document without reading the same treating it as a general power of attorney. In September, 1972 he came to know that the document got executed by him on 12-1-1972 was not a general power of attorney but a trust deed. His averment is that his consent has been obtained to execute the document in question by practising fraud upon him. He has prayed for a declaration that the document of declaration of trust dated 12-1-1972 is null and void and it does not affect the plaintiff's right and title to the land covered by the trust deed.

3. Curiously enough Smt. Prakash Devi defendant No. 1 admitted the allegations of fraud by her written statement dated 1-11-1972. Likewise Jaidev Sharma defendant No. 2 admitted the averments of fraud made by the plaintiff. The two minor children, defendants Nos. 3 and 4 were represented by Smt. Hansa Paliwal, their mother and wife of the plaintiff as guardian-ad-litem. She also admitted the allegation made in the plaint.

4. Plaintiff examined himself as P. W. 1 and he stated that he did not read the declaration of trust executed on 12-1-1972. Even when the Sub-Registrar asked him if he has read it and admitted the contents of documents he kept quiet and on his behalf his maternal uncle Shri Jai Dev Sharma answered him in the affirmative. Ramesh Chandra Jain Advocate of Jaipur has also been examined as P. W. 2 on behalf of the plaintiff. He supports the stand of the plaintiff that the latter did not read the document and signed the same without reading it. The learned trial Judge did not accept the version of the plaintiff that any fraud was practised upon him. He held that it did not require much care and attention to find out from the document that it was not a general power of attorney but a trust deed. He dismissed the plaintiff's suit.

5. By the document dated 12-1-1972, the validity of which has been challenged by the plaintiff on a ground of fraud, a trust has been created, for the benefit of the children of the plaintiff Kamal Kant Paliwal. The beneficiaries under the trust were Km. Nidhi aged 5 years, Ch. Anurag aged 3 years and any other child that may be born thereafter out of the wed-lock of the plaintiff and his wife Hansadevi. The trustees appointed under this deed were the plaintiff himself, his mother Smt. Prakash Devi Paliwal and Jai Dev Sharma plaintiff's maternal uncle. The property that was covered by the trust was plot No. 5 except the strip of land measuring 195' x 50'. It thus appears that the property under the trust was kept apart for the benefit of the children of Kamal Kant Paliwal. The three trustees were to look after it and they were given the following powers under the deed:

(i) to sell, mortgage, lease out or otherwise transfer, the whole or any portion of the property and utilise the sale price, mortgage money, lease money or any other consideration for the benefit of the beneficiaries above named;

(ii) to make construction over the said property and to let out, sell, mortgage or otherwise transfer the building along with the land and to utilise the consideration for purposes of the beneficiaries;

(iii) to borrow any loan on the security of the trust property for the purposes of carrying on such constructions;

(iv) to invest the surplus income of the trust or the consideration received from the transfer of the trust property and the deposits in bank, in Govt., securities or any other gilt-edged securities in construction, or purchase or first mortgage of immoveable property or any such securities, the trustees think proper;

(v) to incur expenses for the maintenance, education, betrothal and marriage of the aforesaid beneficiaries. Although the executant Shri Kamal Kant Paliwal's children are to be main and ultimate beneficiaries under the trust, the trustees shall also have power during the subsistence of the trust to incur expenses for the maintenance and education of the children of the dear and near ones of both the parents of Shri Kamal Kant Paliwal;

(vi) to co-opt more trustees but not so as to make more than seven in all;

(vii) to authorise any one or more of them to act on behalf of all the trustees;

(viii) to make rules for the proper functioning of the board of trustees and for the discharge of the trust;

(ix) to do all other things which may be necessary for carrying out the execution of the trust.

6. It is also abundantly clear that the land under the trust was not held in the name of the plaintiff. Even according to the plaintiff's case the sale certificate was in the name of Jai Dev Sharma defendant No. 2. By the document in question the defendants Nos. 1 and 2 admitted that the plot in question was held by Jai Dev Sharma Benami and the real owner of the property was Kamal Kant Paliwal.

7. It has now to be examined if there was any fraud practised on the plaintiff. According to Section 10 of the Contract Act all agreements are contracts if they are made by the free consent of parties competent to contract for a lawful consideration and with a lawful object and are not hereby expressly declared to be void. Section 11 lays down as to who are competent to contract, who is of the age of majority according to the law to which he is subject and who is of sound mind, and is not disqualified from contracting by any law to which he is subject. Section 12 further defines as to what is a sound mind for the purposes of contracting. Section 13 defines consent. According to this provision two or more persons are said to consent when they agree upon the same thing in the same sense. Section 14 deals with as to what is free consent. This section is extracted below:

'Section 14--Consent is said to be free when it is not caused by--

(1) coercion, as defined in Section 15, or

(2) undue influence, as defined in Section 16, or

(3) fraud, as defined in Section 17, or

(4) misrepresentation, as defined in Section 18, or

(5) mistake, subject to the provisions of Sections 20, 21 and 22.

Consent is said to be so caused when it would not have been given but for the existence of such coercion, undue influence, fraud, misrepresentation or mistake.'

It is, therefore, clear that consent cannot be said to be free if it is caused by fraud as defined in Section 17. In law fraud is an element which clouds the reason that the person defrauded cannot form a rational judgment of the effect of the transaction upon his interests. It is upon this and the like principles that the law enacts that consent cannot be said to be free if it has been obtained by fraud. In order to constitute fraud it is well known that the person making the statement mast have been aware of the falsity of the statement and the party defrauded remains ignorant of the correct situation. Fraud is committed where one person induces another to enter into some contract or transaction on a false belief by a representation of fact which is not true and which he does not believe to be true. The effect of fraud on an agreement so far as consent to it is procured by it may be a complete misunderstanding on the part of the person deceived as to the nature of the transaction undertaken, or the person of the other party. But if the other party has the facts before it or has the means to know cannot be said to have been defrauded even if a false statement has been made. Here it will be apt to read Section 17 of the Contract Act.

'Section 17--'Fraud' means and includes any of the following acts committed by a party to a contract, or with his connivance, or by his agent, with interest to deceive another party thereto or his agent, or to induce him to enter the contract--

(1) the suggestion, as a fact, of that which is not true, by one who does not believe it to be true;

(2) the active concealment of a fact by one having knowledge or belief of the fact;

(3) a promise made without any intention of performing it;

(4) any other act fitted to deceive;

(5) any such act or omission as the law

specially declares to be fraudulent. Explanation--Mere silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud, unless the circumstances of the case are such that, regard being had to them, it is the duty of the person keeping silence to speak, or unless his silence is, in itself, equivalent to speech.'

Underlying intent to constitute fraud is to deceive another party and to induce him to enter the contract and it must be by the suggestion as a fact which is not true or by the active concealment of a fact by one having knowledge or belief of that fact. Now in the present case it has been argued that Smt. Prakash Devi asked her son, the plaintiff in the case, that he should execute a general power of attorney in her and his maternal uncle's favour. For this the reason that has been alleged is that they wanted to raise a loan from the plot. The plot did not stand in his name and any power of attorney would not have facilitated the raising of loan from the plot. Again the averment of fraud stands negatived when it is found that the trust deed itself acknowledges the Benami nature of the plot. The plaintiff disclosed himself in his statement of 28 years of age in 1972. On the date of the purchase of the plot he was about 8 years old. If the defendants Nos. 1 and 2 wanted to practise fraud they were better placed, in owning the plot than to have declared it to be that of the plaintiff. There must have been some good reason which has not been brought on record as to why a trust was created for the benefit of the minor children of the plaintiff. A part of the plot was kept apart ostensibly for the plaintiff's use and the rest of it was kept in trust for the benefit of two minor children and any other child born thereafter to the plaintiff.

8. The learned trial Judge has rightly pointed out that the plaintiff is an educated man. The trust deed has been attested by his father Shri Tika Ram Paliwal and Shri Ramesh Chandra Jain Advocate who came in the witness-box for the plaintiff to say that the document in question was not read by the plaintiff when he signed the same. The plaintiff admittedly signed the document and also after it was presented before the Sub-Registrar, Jaipur, attesting its execution. The plaintiff had all the means to know the contents of the document. That apart his father was the attesting witness and it cannot be imagined that he joined hands with his wife and his brother-in-law against his son. In the circumstances I am unable to believe that any fraud was practised. To me it rather appears that the plaintiff's suit is collusive. With a view to get the trust cancelled he has come to the court of law. The learned trial judge has rightly stayed his hands from granting the declaration sought by the plaintiff. It might as well be noticed that the beneficiaries under the trust are two minor children, defendants Nos. 3 and 4. It shall not be in the interest of minors to set aside the trust deed on the mere asking of the plaintiff and his close relations accepting his allegations of fraud. I do not believe in the truthfulness of the plaintiff's averment.

9. The appeal fails and it is hereby dismissed.


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