Q. Whether silence amounts to fraud? Explain.

_{Note: this post is a part of our important question answer series on Contract Law. You can read other questions by clicking here.}

 

Answer

 

Section 17 of Indian Contract act (here and after ICA), 1872,  consist the provisions related to fraud. The explanation part of this section categorically states that mere silence does not amounts to fraud, unless:

I.                     When there is a duty to speak and

II.                   When silence is in itself equivalent to speech.

 

I.                    DUTY TO SPEAK (Contracts Uberrima Fides)

When the circumstances of the case are such that, regard being had to them, it is the duty of the person keeping silence to speak, keeping silence in such a case amounts to fraud. When there is a duty to disclose facts, one should do so rather than to remain silent.

Some examples are given below:

A.      Fiduciary Relationship,

B.      Contracts of Insurance,

C.      Contract of marriage,

D.      Contracts of family settlement,

E.       Contract of Share Allotment.

 

In KIRAN BALA V. BHAIRE PRASAD SRIVASTAVA, first marriage of the appellant, Kiran Bala, had been annulled on the ground that she was of unsound mind at the time of that marriage. She was married to the respondent, Bhaire Prasad Srivastava, the second time. The fact of the annulment of the first marriage on the ground that she was an idiot was not disclosed to the bridegroom either by the girl or her parents. It was held that it was not the duty of the bridegroom to find out these facts, but it was the duty of the girl or her parents not to conceal these facts. Consent of the bridegroom was held to have been obtained by fraud, and the second marriage of the appellant with respondent was, therefore, annulled by a decree under section 12(1) (c) of the HINDU MARRIAGE ACT.

In P. Sarojam v. L.I.C of India (1985), it was held that when wrong answers are given in a life insurance policy, the policy would be voidable irrespective of the fact that the officer of the corporation certified the policy.

 

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II.                 Where the silence itself is equivalent to speech:

Silence itself in some situations can be considered equivalent to speech. For example:

A.   A says to B “If you do not deny it, I shall assume that the horse is sound.” A says nothing. His silence amounts to speech.

B.   If a buyer knows the property’s actual worth but conceals this fact from the seller, The seller has the option to rescind the sale as it is void.

 

In SHRI KRISHAN vs. KURUKSHETRA UNIVERSITY, the petitioner was the student of law 1st year. His attendance was short. He did not mention that fact in the admission form. Neither the Head of Department nor the university authority made proper scrutiny to discover the truth. The university authorities cancelled the candidature of the petitioner on the ground of fraud.

It was held that mere silence is no fraud. Therefore, cancellation on the ground of fraud was not sustainable.

 

 

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