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Kopparthi Venkataratnam and anr. Vs. Palleti Sivaramudu and anr. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai
Decided On
Reported inAIR1940Mad560; (1940)1MLJ314
AppellantKopparthi Venkataratnam and anr.
RespondentPalleti Sivaramudu and anr.
Cases ReferredHarilal Dalsukhram Sahiba v. Mulchand I.L.R.
Excerpt:
- - not only did the first defendant fail to disclose this fact to the vendee, but he represented to her that she could take immediate possession and cultivate the lands. if the comma after the word 'silence' is to be ignored, the expression 'fraudulent' within the meaning of section 17 might well apply to 'silence' exclusively and not to 'misrepresentation'.this interpretation is strengthened by the circumstance that the legislature had used the preposition 'by' twice, i......the indian contract act. section 19 says that when consent to an agreement is caused by coercion, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused. the exception reads as follows:if such consent was caused by misrepresentation or by silence, fraudulent within the meaning of section 17, the contract, nevertheless, is not voidable, if the party whose consent was so caused had the means of discovering the truth with ordinary diligence.3. the appellants' case is that inasmuch as the lease which their father had granted to the third party was a registered one the fact that he had fraudulently represented to the vendee that she was in a position to take possession of the property at once made no difference, because if she.....
Judgment:

Alfred Henry Lionel Leach, C.J.

1. This Letters Patent Appeal arises out of a suit filed by the respondents' mother in the Court of the District Munsif of Nellore for a decree setting aside a conveyance on the ground of fraud. The respondents' mother was an ignorant cultivator and she bought from the first defendant in the suit, the appellants' father, certain wet lands in the Nellore District. The first defendant had granted a lease of these lands for seven years to a third party. Not only did the first defendant fail to disclose this fact to the vendee, but he represented to her that she could take immediate possession and cultivate the lands. This amounted to a fraudulent misrepresentation and as this is the finding of the District Judge on first appeal it cannot be challenged in this Court. The District Munsif held that there was no fraud, but granted the plaintiff a decree for damages based on the amount of two years' mesne profits. The District Judge reversed this decision and decreed the suit as prayed. There was a second appeal to this Court which was heard by Horwill, J. The learned Judge accepted the decision of the District Judge, but granted a certificate under Clause 15 of the Letters Patent.

2. The appeal turns upon the interpretation to be placed upon the words in the exception to Section 19 of the Indian Contract Act. Section 19 says that when consent to an agreement is caused by coercion, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused. The exception reads as follows:

If such consent was caused by misrepresentation or by silence, fraudulent within the meaning of Section 17, the contract, nevertheless, is not voidable, if the party whose consent was so caused had the means of discovering the truth with ordinary diligence.

3. The appellants' case is that inasmuch as the lease which their father had granted to the third party was a registered one the fact that he had fraudulently represented to the vendee that she was in a position to take possession of the property at once made no difference, because if she had used ordinary diligence she would have made a search in the registration office, and if she had done so, she would have discovered that there was a registered lease which precluded her from taking possession. It is accepted that where a vendor has deliberately made a false statement with the object of concealing the true position with regard to property the vendee under English Law is not put upon enquiry, but it is said that the exception to Section 19 was intended to place the Indian Law on a different basis.

4. The meaning to be placed upon the words used in the exception was fully discussed by the Allahabad High Court in Niaz Ahmad Khan v. Parshotam Chandra I.L.R. (1930) 53 All. 374 and I consider that the position was correctly stated in the following passage in the judgment:

The difficulty is caused mainly by the punctuation, namely, a comma after the word 'silence', which seems to indicate that the words 'fraudulent within the meaning of Section 17' apply both to 'misrepresentation' and to 'silence'. But as observed by their Lordships of the Privy Council in the case of Maharani of Burdwan v. Murtunjoy Singh and Pugh v. Ashutosh Sen (1928) 56 M.L.J. 517 : L.R. 56 IndAp 93 : I.L.R. 8 Pat. 516 , the punctuation is not part of the statute and a Court of law is bound to interpret the section without the comma inserted in the print. If the comma after the word 'silence' is to be ignored, the expression 'fraudulent' within the meaning of Section 17 might well apply to 'silence' exclusively and not to 'misrepresentation'. This interpretation is strengthened by the circumstance that the legislature had used the preposition 'by' twice, i.e., both before 'misrepresentation' and also before 'silence'. If the expression 'fraudulent within the meaning of Section 17' qualifies 'misrepresentation', the result would be that due diligence would be required in the case where misrepresentation became fraudulent, but would not be required when the misrepresentation fell within Section 18 and was just short of fraud, for the Exception would be confined to the former kind only, This would be a startling result.

5. There is no reason whatsoever for thinking that the Legislature intended to depart from the English Law when it inserted the exception. It would be lamentable if a person who is guilty of deliberate fraud could benefit, by his fraud because the victim accepted his statements as being true. The judgment of the Allahabad High Court was also accepted as embodying the correct statement of the law by the Calcutta High Court in John Minas Apcar v. Louis Caird Malchus I.L.R. (1939) 1 Cal. 389.

6. This Court considered the effect of Section 19 of the Contract Act in Morgan v. The Government of Hyderabad I.L.R.(1888) 11 Mad. 419, a case very similar to the one now before us. A vendee had deliberately-concealed from a purchaser the fact that he had already granted a lease of the property sold, but the buyer if he had been diligent could have ascertained this. The Court held that the case was not within the exception to Section 19 and the absence of exercise of diligence by the plaintiff was not a defence open to the defendant who had concealed the fact of the execution of the lease in order to deceive the plaintiff and had induced him to enter into the contract. This is the position here.

7. The only decision contrary is that of the Bombay High Court in Harilal Dalsukhram Sahiba v. Mulchand I.L.R.(1928) 52 Bom. 883. The Bombay High Court merely based its decision on a reading of the exception and did not consider whether the punctuation was correct or whether the Legislature intended to make what would be a startling departure from accepted principle.

8. I am of opinion that the appeal should be dismissed with costs.

Krishnaswami Aiyangar, J.

9. I concur.


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