Active concealment [Sec. 17(2)]
When there is an active concealment of a fact by one having knowledge or belief of the fact, that can also be considered to be equivalent to a statement of fact and amount to fraud. Active concealment is different from merely keeping silent as to certain facts. By an active concealment of certain facts, ther is an effort to see that the other party is not able to know the truth and he is made to believe as true which is in fact not so.
Illustrations
1. B, having discovered a vein of ore on the estate of A, adopts means to conceal, and does conceal, the existence of the ore from A. Through A's ignorance, B is enabled t buy the estate on an undervalue. The contract is voidable at the option of A.[Illustration (d) to sec. 19.]
A is entitled to succeed to an estate at the death of B. 'B’ dies. 'C having received intelligence of B"s death, prevents the intelligence reaching A and thus induces A to sell him his interest in the estate. The sale is voidable at the option of A.[Illustration (c) to sec. 19.]
Promise made without any intention to perform it [Sec. 17(3)1
When a person makes a promise, there is deemed to be an undertaking by him to perform it. If there is no such intention when the contract is being made, it a ounts to fraud.[Sec. 17(3).]
Thus, if a man ta es a loan without any intention to repay, or women he is insolvent, or purchases goods on credit without any intention to pay for them, there is fraud.
If, however, there is no such wrongful intention at the time of making of the co tract, but the promisor does not perform the contract, it does not amount to fraud.
Any other act fitted to deceive [Sec. 17(4)]
Clause (4) is general and is intended to include such cases of fraud which would otherwise not come within the purview of the earlier three clauses i.e. clauses (1), (2) and (3) respectively, to section 17.
Suppressing the fact of earlier marriage amounts to fraudIf wife suppresses the fact of her earlier marriage it amounts to fraud within the meaning of section 17(4) of the Contract Act.In Smt. Asha Qureshi v.Afaq Qureshi[A.I.R. 2002 M.P. 263.]the if, who married the respondent under the Special Marriage Act, suppressed material fact that she had been married earlier also and she was a widow at the time of marriage with the espondent.It was held that the wife had committed fraud within the meaning of section 17(4) of the Indian Contract Act. Under the circumstances the husband was held entitled to th degree of nullity of marriage.It was held that the wife had committed fraud within the meaning of section 17(4) of the Indian Contract Act. Under the circumstances the husband was held entitled to the degree of nullity of marriage.
Any act or emission which the law declares as fraudulent [Sec. 17(5)1
According to sec. 17(5), fraud also includes any such act or omission as the law specially declares to be fraudulent. In some cases, the law requires certain duties to be performed, fail re to do which is expressly declared as a fraud. The seller of immovable property is bound to disclose to the buyer any material defect in the property or in the seller's title thereto of which he seller is, and the buyer is not aware, and which the buyer could not with ordinary care discover,[Sec. 55(1 )(a), Transfer of Property Act, 1882.]
In Akhtar Jahan Begam v. Hazarilal.[A.I.R. 1927 All. 693.]A should some property to B stating in the sale deed that he would not be liable to B if he suffered any loss owing to A's defective title. A had, earlier to this transaction, sold this property o somebody else, but did not inform B about it. It was held that A had committed fraud and the contract was voidable at the option of B.
Wrongful intention
In order to constitute fraud, it is necessary that a person should intentionally make a false statement with an intent to deceive another party thereto to induce him to enter into the contract. If the intention to deceive the other party is absent, there is no fraud. It may, in such a ca e, be a mere misrepresentation as defined in section 18 of the Act.
In Derry v. Peek,(1889) 14 A.C. 33 .
the directors of a company issued a prospectus stating that they had got the authority to run tramways with steam or mechanical power instead of animal power. In fact, a plan had been submitted for the same and the directors honestly believed that the Board of Trade, who had to accord its sanction for the same, would so as a matter of course. The Board of Trade refuse the sanction and the company had to be wound up.The respondent, who had taken shares in the company on the fait of the representation by the directors in the prospectus, brought an action for the tort of deceit. It was held by the House of Lords that since the statement had not been made with an intention to deceive, there was no fraud.
