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1972 (5) TMI 76 - HC - Indian Laws

Issues Involved:
1. Whether the suit contracts ceased to be lump sum contracts and were converted into rate contracts due to deductions on account of curtailments.
2. Whether the plaintiff's case as regards fraud is based on non-disclosure of a material fact or on a positive assertion of a fraudulent misrepresentation.
3. Whether the plaintiff has successfully proved that it was induced to enter into the suit contracts by fraudulent misrepresentation as regards the amounts of estimated costs.
4. If the above point is answered in the affirmative, can the plaintiff claim any damages either under Section 19 of the Contract Act or under Law of Torts? If so, what?
5. Whether the plaintiff is entitled to its alternative claim of Rs. 84,800.
6. Is the appellant plaintiff entitled to any decree on account of the construction of office buildings?

Detailed Analysis:

1. Lump Sum vs. Rate Contracts:
The court examined whether the deductions on account of curtailments converted lump sum contracts into rate contracts. The contracts were governed by the Public Works Department Manual, which specifies that lump sum contracts include a schedule of rates for additions and alterations. The court concluded that the deductions made on the basis of scheduled rates did not change the intrinsic nature of the contracts from lump sum to rate contracts.

2. Basis of Fraud Claim:
The court analyzed whether the plaintiff's case was based on non-disclosure or positive misrepresentation. It found that the plaintiff had made a positive assertion of fraudulent misrepresentation regarding the estimated costs. The court referenced specific paragraphs from the plaint and correspondence between the parties, concluding that the plaintiff's case was based on a positive assertion of misrepresentation and not merely on non-disclosure.

3. Proving Fraudulent Misrepresentation:
The court examined the elements required to prove fraudulent misrepresentation under Section 17 of the Contract Act:
- Suggestion of Fact: The court found that the defendant Board made a representation regarding the estimated cost of the work in the tender notices and during negotiations.
- Falsity of Fact: The court agreed with the trial court that the representation was false, as the published estimate did not include the cost of additional work.
- Knowledge of Falsity: The court disagreed with the trial court's finding that the responsible officers were unaware of the falsity. It held that the officers knew the published estimate was incorrect.
- Intention to Deceive or Induce: The court found that the misrepresentation was intended to induce the plaintiff to enter into the contracts, as evidenced by the negotiations and the importance of the published estimate.

4. Claiming Damages:
The court held that under Section 19 of the Contract Act, the plaintiff was entitled to be put in the position it would have been if the representation had been true. This meant compensating the plaintiff for the additional cost of Rs. 479 per tenement. The court calculated the total damages for groups 'D' and 'F' tenements, arriving at a total of Rs. 2,02,960.00.

5. Alternative Claim of Rs. 84,800:
The court found that the deductions made by the respondent Board for curtailments were proper, as they were evaluated based on the scheduled rates attached to the tender contracts. Therefore, the plaintiff's alternative claim of Rs. 84,800 was dismissed.

6. Claim for Office Construction:
The court held that the plaintiff was not entitled to additional payment for the construction of office buildings beyond the fixed rate of Rs. 3 per sq. ft. stipulated in the contract. The claim for additional payment based on scheduled rates was dismissed.

Conclusion:
The court allowed the appeal partly, awarding the plaintiff a decree for Rs. 2,02,960.00 as damages resulting from fraudulent misrepresentation, along with proportionate costs and interest at the rate of 6% from the date of the suit till payment. The claims for the alternative amount of Rs. 84,800 and additional payment for office construction were dismissed.

 

 

 

 

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