'Fraud Vitiates Every Solemn Act': Supreme Court Upholds A Trial Court Judgment Which Declared A Registered Gift Deed Void

Fraud vitiates every solemn act, remarked the Supreme Court while it upheld a Trial Court judgment which declared a registered gift deed void on the ground of fraud and undue influence.

In this case, by a registered gift deed, one Yadunandan Mistri, who was issue-less, gifted an extent of 2.92 acres of land in favour of  the wife of his nephew, on the assumption that his nephew would take care of Yadunandan and his wife in their old age. However, he immediately sought to cancel the gift vide cancellation deed. Later, he filed a suit seeking a declaration that the gift deed was obtained by practicing fraud and undue influence and therefore, be declared to be void.

The Trial Court found that the defendant taking undue benefit of his close relation and blind trust and exercising undue influence on the plaintiff got a gift deed executed in his favour. It was also observed that the acceptance of a gift by the donee is an essential ingredient and there was no evidence at all adduced at the trial to prove acceptance of gift. The court also noticed that the deed of gift was not in possession of the  defendants rather the same was produced as an exhibit by the plaintiff.

The First Appellate Court allowed the appeal filed by defendant. Dismissing the second appeal filed by wife and other successors in interest of Yadunandan, the High Court observed that once the gift was complete, it could not be revoked. of. The High Court also observed that express acceptance is not necessary for completing the transaction of gift.

The Apex Court bench of Justices Uday Umesh Lalit, S. Ravindra Bhat and Bela M. Trivedi, taking note of the evidence on record, came to a conclusion that the gift deed was brought about as a result of fraud and undue influence.

"It is well known that fraud vitiates every solemn act . The finding rendered by the Trial Court that the gift deed was brought about by practicing fraud and undue influence is unassailable.", the court observed while allowing the appeal and restoring the Trial Court judgment.

The judgment refers to a decision in Behari Kunj Sahakari Avas Samiti vs. State of U.P. (2008) 12 SCC 306, wherein it was observed thus:

"In State of A.P. and Anr. v. T. Suryachandra Rao [2005(6) SCC 149] it was observed as follows: By "fraud" is meant an intention to deceive; whether it is from any expectation of advantage to the party himself or from the 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 and 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 call 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."

"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 includes the other person or authority to take a definite determinative stand as a response to the conduct of the former either by words or letter. It is also well settled that misrepresentation itself amounts to fraud. Indeed, innocent misrepresentation may also give reason to claim relief against 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 enures therefrom although the motive from which the representations 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 the 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. (See Ram Chandra Singh v. Savitri Devi and Ors. (2003 (8) SCC 319).

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