In Jurisprudence, there is a Latin proverb, which reads as, “fraus et jus nunquam cohabitant” or “fraud and justice never dwell together”. This is the reason why in statute books the parties, who have suffered for loss or injury caused by other party’s fraud or deceit, are given special concession up to certain limits.

The term “Fraud” is categorically defined in the Indian Contract Act, 1872 (herein after referred to as “the Contract Act”. Section 17 of the Contract Act says, “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 intent to deceive another party thereto or his agent, or to induce him to enter into 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; or

(5)  any such act or omission as the law specially declares to be fraudulent.

Furthermore, Section 19 of the Contract Act provides that “When consent to an agreement is caused by coercion, fraud or misrepresentation, the agreement of a contract is voidable at the option of the party whose consent was so caused. A party to a contract, whose consent was caused by fraud or misrepresentation, may, if he thinks fit, insist that the contract shall be performed, and that he shall be put in the position in which he would have been if the representation made had been true.”

In another important procedural statute, the Limitation Act, 1963 (herein after referred to as “the Limitation Act”), the effect of fraud is incorporated for exemption of limitation to initiate legal proceedings. Section 17 of the Limitation Act says, “where it the case of any suit or application for which a period of limitation is prescribed by this Act –

a-    the suit or application is based upon the fraud of the defendant or respondent or his agent; or

b-    the knowledge of the right or title, on which a suit or application is founded, is concealed by the fraud of any such person as aforesaid; or

c-     the suit or application is for relief from the consequences of a mistake; or

d-    where any document necessary to establish the right of the plaintiff or applicant has been fraudulently concealed from him;

the period of limitation shall begin to run until the plaintiff or applicant has discovered the fraud or mistake or could, with reasonable diligence, have discovered it.

The Apex Court of India, in the case of Dalip Singh v. State of UP (2010) 2 SCC 114, observed that the truth constitutes an integral part of the justice delivery system, which was in vogue in the pre-Independence era and the people used to feel proud to tell the truth in the courts irrespective of the consequences. However, post-Independence period has brought in drastic changes in our value system.

The Hon’ble Supreme Court in the case of A.V. Papayya Sastry and Others v. Govt. of A.P. and Others (2007) 4 SCC 221, reiterated the principles propounded in the earlier judgment S.P. Chengalvaraya Naidu v. Jagannath 1994 SCC (1) 1, in which was observed the following:

“The Courts of law are meant for imparting justice between the parties. One, who comes to the court, must with clean hands. We are constrained to say that more often than not, process of this court is being abused. Property grabbers, tax-evaders, bank-loan-dodgers and other unscrupulous persons from all walks of life find the court process a convenient lever to retain the illegal gains indefinitely. We have no hesitation to say that a person, whose case is based on falsehood, has no right to approach the court. He can summarily throw out at any stage of the litigation”.