TMI Blog1972 (5) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... 176 tenements for industrial labour in Ahmedabad at Mithipur Khokhra Mehmedabad. 3. The record of the case reveals that the respondent Board had under taken 5 projects for constructing residential tenements for industrial labour at Ahmedabad. All the relevant details of these 5 projects are shown by the learned trial Judge in his judgment in a tabular form. Two of these projects were at Malek Shaban or Bapunagar one at Mithipur, another one at Mithipur Khokhra Mehmedabad, and one at Asarwa all situate in Ahmedabad. For the purpose of suit contracts we concerned with the 4th project at Mithipur --Khokhra -- Mehmedabad area. This project was for the construction of 784 tenements and technical sanction thereof was obtained in he month of August, bad project of 784 tenements was divided into four groups. Out of these four groups, we are concerned in this suit only with two groups namely, group ' D' and group 'F'. Group 'D' Consisted of 1l76 tenements. The appellant- plaintiff has kept the contracts for the construction of these two groups of tenements. 4. In the month of January, 1956 the respondent Bard invited tenders for different groups of 784 tenemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent terms governing these contracts Reference to these two exhibits shows that they are executed in `C' form which is used for lump sum contracts. They contain the usual printed terms. a copy of the notice inviting tenders Sch. `A' which is with regard to the materials to be supplied to the contractor by the department. estimates and details of the construction work, schedule of rates, specifications and the plan showing the details of the construction to be carried out. 7. The record of the case reveals that on 9th May, 1956 a meeting of the board was called to consider the items of agenda. as found at Ex. 200 . Items Nos. 3 and 4 thereof are relevant for the purpose of this appeal as they relate to the contracts which have been kept by the appellant firm. The contents of these two items reveal the nature of the negotiations which took place between the parties before the contracts at certain percentage less than the estimated cost shown in the notice s inviting the tenders and other papers relating to the tenders. There after on the same day the said meeting of the Board is found to have passed some resolutions as revealed form Ex. 199 which is a copy of the minutes o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estimates of cost of works to be executed which are published as such in the notices inviting tenders and other documents relating to the tender. Ex facie these published estimates convey to intending tenders some idea as regards the cost involved in execution of the contracts in question. 12. It is an admitted position that even for second Malek Shaban Project, which received technical sanction on 24th September, 1954, the original plan proposed one acqua privy to be shared by two tenements. But this plan was subsequently revised in the month of January, 1955. and it was decided to construct one acqua privy or each of the tenements. This obviously resulted in some additional work which was not covered by the original published estimate of cost,. Therefore, though the published estimate of costs of one block of 8 tenements was originally shown at the previously mentioned figure of ₹ 15,398, 50, (as mentioned with regard to the first project) the extra cost of ₹ 1,377/- per block of 8 tenements was offered to the concerned contractors by the respondent Board. 13. As stated above, there were two Mithipur Projects, the first which is at serial No 3 in the table conta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... figures of estimated costs were based on a false representation that the estimated cost of each block of 8 tenements involved the estimated cost of each block of 8 tenements was ₹ 15,793/- . According to the appellant plaintiff, this representation was false to the respondent Board and since the established practice (according to the appellant plaintiff) was to publish only the scheduled rates, multiplied by the quantity of work, to be executed, it was cost was the actual estimate of cost arrived at by the said multiplication. in plaintiff the respondent Boar deliberately and fraudulently mislead it and schedule of rates constituted the basis of the rates on which the estimate was shown . The appellant says that this was a material statement of fact on the basis of which tenders were invited. It is alleged that relying upon this statement, which is proved to b false, it entered into the suit contracts, According to appellant therefore, making and misrepresentation as regards a very material and important fact with the result that the contracts were rendered avoidable and by their execution the plaintiff suffered substantial damage. 15. Proceeding further with the cours ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 15,793/-. The appellant expressed surprise how such a wrong estimate was shown. By this letter the appellant finally intimated to the Executive Engineer of the respondent board that in order to avoid delay in the completion of the work. It proposed to proceed with the revised plan without prejudice . This letter further speak that all the payments of bills preferred by the appellant already receive and to be under ports . Correspondence between the parties thereafter ensued as found by reference to Exts. 59.60.61. 63. and 66. Reference to these documents shows that this correspondence took place between the parties form 17th December . 1956 to 13th February, 1957. It is clear by reference to this correspondence that the appellant and other contractors s had taken a specific and clear stand that they entered into the contracts under the belief that he published estimate of costs shown in the tender was correct. The officers of the respondent Board, however, did not accept these contentions of appellant. It is found that thereafter the appellant. It is found that thereafter the appellant proceeded with the work and completed the same in accordance with the plan. 17. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rates as these scheduled rates did not form the basis of the contracts. The appellant has therefore contended that by this action of the respondent. both the contracts have been turned into rate contracts, and, therefore, it was entitled to be paid on the basis of rates multiplied by the quantity of work executed. Since this is not done, the appellant has claimed different between what ought to have been paid to it according to the rates and what is actually paid to it according to the lump basis. This claim amounts to Rs, 1,22,000/- so far as 'D' group tenements are concerned. Thus, the appellant has made the total claim of ₹ 2,10,000/-. (₹ 1,22,000/-+88,000/-) described it in the plaint as on account of damages or losses sustained by it. 20. Alternatively, the appellant has claimed that the respondent Board was not entitled to make any curtailment and to make deductions on that account on the basis of scheduled rates. It is said that such deductions are of the value of ₹ 84,800/- regarding both the contracts. The appellant has therefore contended the if its claim of ₹ 2,10,000/- is not allowed, this amount of ₹ 84,800/- should be decree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ender contract discloses that the plaintiff firm was possessed of all the relevant materials such as specifications, maps and rates form which it could have reached proper and correct conclusions as regards the correct estimate of the costs of work undertaken by it. 26. The respondent has further contended in its written statement that schedules of rates which are incorporated in the tender contracts are meant only for putting valuations on additions and alteration made in the original contracts and, therefore, it was entitled to deduct the value of the curtailments on the basis of these schedules of rates. This, according to the respondent Board would not change the character of the contracts from one of lump sums to that of percentage. 27. The respondent has also contested the appellant's claims as regards office building and decorative pattas by contending that these works were covered by the contracts themselves. 28. The learned trial Judge has held that the appellant plaintiff has filed to prove the case of fraudulent misrepresentation as, in his opinion, there was no evidence to show that the members of the defendant Board or the Executive Engineer acting on be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sts. He contended that there is definite evidence to show that the false representations in question were deliberately made with a view to induce the plaintiffs and contracts, because, otherwise, the respondent Board was not in a position to carry out the contracted work within the limited of ₹ 3,000/- per tenement as per directive of Central Government which subsidised such projects. 32. As stated above though Shri Desai has not pressed the appellant's claim as regards the decorative pattas, he has pressed plaintiffs claim regarding the construction of office buildings. 33. Shri Kaji who appeared on behalf of the respondent Board, contended that there is absolutely no evidence to show that any of the officers of the Board had ever suggested or represented to the plaintiff in any manner that the amounts of published estimated costs regarding both the contracts as shown in tender notices, were arrived at as a result of any multiplication of rates and quantities. According to Shri Kaji, the fact that departmental estimates were arrived at on the basis of that multiplication was of no consequence so long as no representation was made to the plaintiff to the effect that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted into rate contracts simply because the deductions on account of curtailments were made in accordance with scheduled rates? (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 answer in affirmative, can the plaintiff claim any damages either under Section 19 of the Contract Act or under Law or Tort? If so, what? (5) Whether the plaintiff is entitled to its alternative claim of ₹ 84,800/- (6) Is the appellant plaintiff found entitled to any decree on account of the construction of office buildings? 38. Before taking up the first point for our consideration. it would be necessary to know exactly what is meant by a 'lump sum contract'. It is not in dispute that the contracts in question were governed by the different orders contained in public Works Department Manual issued by the Government of Gujarat. This Manual describes contracts of two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presents the value of work added or deducted on the basis of these rates. This being the real nature of a lump sum contract, the fact that the Board has deducted from these bills, a certain amount representing the value of curtailments in work on the basis of scheduled rates, mentioned in the contract, would not and cannot convert the intrinsic nature of that contract. In this connection, it should be noted that the schedule of rates, which accompanies the two suit contracts. specifically mentions its function as under: For regulating the amount to be added to or deducted from the fixed sum on account of additions or alterations not covered by the contract as per clause (6) of the agreement. These words thus clearly specify the function which the schedule of rates was expected to perform in execution of the contract. Clause (6) of the agreement, to which a reference is made above, relates to the power of the Executive Engineer to make additions and alterations in drawings, specifications etc. It says that such alterations would not invalidate the contract and it specifically provides that additional or curtailed work shall be carried out omitted at the rates entered in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ering into the contract. Of course the plaintiff has also made averments to show that the defendant Board has intentionally refrained from disclosing how the estimate of costs was arrived at by it. In paragraph 21. the plaintiff is found to have made the following averments : the defendant by making mala fide and misleading references in the details of construction of the said tenders to the aforesaid schedule of rates thereof, actively and fraudulently led the intending contractors including the plaintiffs into the belief that the aforesaid estimated cost as held out by the defendant Board was worked out on the basis of the said schedule of rates and further-more that the quantum of work involved in pursuance of the specifications and plan of the tender was co-extensive with the corresponding parity of the rates and the estimated costs as held out by the Board. In our opinion, these averments clearly disclose a positive case about the misrepresentation. 41. Further reference to the correspondence that took place between the parties during the course of the execution of the contract work, again shows very clearly that according to the plaintiff. it was misled by the posi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... point any more in view of these decisions. Under the circumstances, we conclude on point No. 2 that the plaintiff's case is based on a positive assertion of a fraudulent misrepresentation to which the Exception attached to S. 19 of the Act, has no application. 43. This brings us to point No. 3, which is the most important point involved in this case, and on which, the learned advocates of the parties have addressed this court at length. The point is whether the plaintiff has successfully proved that it was induced to enter into the suit contracts, by any fraudulent misrepresentation as regards the amounts of cost estimates published in tender notices as well as other papers relating to the tender contract. So far as English law is concerned. it contemplates three types of misrepresentations namely (1) misrepresentations which are fraudulent. (2) misrepresentations which are negligent and (3) misrepresentations which are innocent. The Indian law on the subject is contained in Section 17 and 18 of the Contract Act. Section 17 defines fraud while Section 18 defines misrepresentation . So far as this case is concerned. the plaintiff has made the positive allegations as regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may vary according to the gravity of the allegation to be proved. In the words of Lord Bremwell in Willaim Smith v. David Chadwick. (1884) 9 AC 187. at p. 203 An untrue statement as to the truth or falsity of which the man who makes it has no belief is fraudulent; for in making it, he affirms he believes it, which is false. 44. It is in light of these general observations as to the nature and character of legal fraud, we shall now proceed to consider the Indian law on the subject of fraud and misrepresentation. As said above, it is contained in Sections 17 and 18 of the Contract Act. For the purpose of this appeal. we are concerned with clause (1) of Section 17. the same is as under : Fraud' means and includes any of the following acts committed by a party to a contract. or with his convince. 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; Analysis of this portion of the section reveals the following ingredients : (1) There should be a suggestion as to a fact. (2) The fact sug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate must be prepared for the sanction of competent authority; this sanction is known as the technical sanction to the estimate . Then if a reference is made to paragraph 143 which comes under the heading of `Preparation of Projects', it will be found that it provides for the submission of papers and other details showing the total estimated cost of each item . It further says that all these documents together form what is called the estimate . This paragraph stipulates what the document refereed to by it should contain. Sub-para (12) thereof says that the rates entered in the estimate should generally agree with those in the schedule of rates maintained in each division as required by paragraph 379. Paragraph 379, to which a reference is made above. All these provisions are undoubtedly for the purpose of department itself but it cannot be disputed that they clearly point out to the importance which the department attaches to the estimated cost before tender notices are invited. Now, if these estimates of cost are mentioned as such in the notices, which invite tender, then it clearly follows that by stating a particular figure of the estimated cost in these notices the departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consequences thereof. As a matter of fact. If the department had not mentioned any figure as regards the estimated cost or if it had preferred to mention specifically that though the estimated cost was of a particular amount. it wanted to give contract only at a particular lump sum, the matter would, of course, have been different. But that is not the case here. Under the circumstances it must be concluded that the defendant-Board has made a suggestion in the tender notices about the fact which was most relevant and vital to the formation of the contract between the parties. This satisfies the first of the four ingredients mentioned above. 47. Now coming to the second ingredient what is required to be proved by the plaintiff is that the fact which was suggested was not true. On this point Shri Kaji contended that the case of the plaintiff is that it was understood by it that the published estimate of cost represented the correct multiplication of rates with the quantities of different items of the contracts and that it was on such an understanding that it preferred to conclude the suit contracts. He pointed out that there is no evidence to show that there was any representation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Malek Saban project. We have already stated that for this addition. the defendant Board had sanctioned the amount of Rs., 337/- per block of 8 tenements as early as 4th January, 1955. (vide Ex. 154). It is further found that thereafter the technical sanction for the first Mithipur Project, which is project No.8 in the above referred table, was accorded. However, the estimated cost remained the same. In other words. the said estimated cost did not include the costs of the extras which were added. The same was the position with regard to the suit project No. 4. We have already mentioned what were the extras to be added in the original plan during the course of the execution of the suit project. As will be clear from the discussion which follows, the value of these extras amounted to ₹ 479/- even according to the departmental calculations of the defendant-Board. But in spite of this additional work. the estimated cost per tenement remained at the same figure. namely, ₹ 2,994/- and even the published estimated cost of a block of 8 tenements did not reflect the cost of this additional items. The main point to be noted is that technical sanction with regard to the suit proj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur project of 550 tenements. But since it is an admitted fact that the work details and plans of the suit project were exactly the same. as the first Mithipur project of 550 tenements, this letter is useful even for the purpose of showing what was the additional cost in putting the extra word relating to the suit contracts. In this letter the Executive Engineer Housing Division. Ahmedabad mentioned that as per abstract sheets which he had prepared and attached along with his letter, the extra cost per tenement worked out to be at ₹ 479/-. We have already got before us the copy of the abstracts which show in detail how the estimates of the additional work have been carried out by this Executive Engineer. It further transpires from the receiving evidence that these facts were ultimately placed before the Housing Commissioner for the purpose of receiving technical sanction to the suit project. The facts relating to the above two letters Exs. 250 and 228 are found correlated in one affidavit filed by one Mr. M. K. Kiratsingh Narsinghani who was working as the Deputy Engineer of the defendant Board at that time (vide Ex. 110). It is clear from this affidavit that the Housing Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s worked out there, did not include they addition subsequently made. Therefore, this provides further evidence to show that the statement made by the defendant Board as regards the estimate of costs was not true. (d) One of the partners of the plaintiff in this case, named, Purshottam Chunilal Thakkar, has given evidence on behalf of the plaintiff. His deposition is found at Ex. 128. Reference to this deposition shows that therein he has made an attempt to prove that before entering into the suit contracts. he contacted the then Executive Engineer of the defendant-Board, one Mr. Gghamvir and made some inquiries from him as to how the estimate of costs shown in the tender notices was prepared. This witness alleges that the said Executive Engineer told him that the estimates of cost were prepared by multiplying the quantity of work of each item with the relevant rates shown in the schedule of rates. Thus. the plaintiff has made an attempt to lead positive evidence in proof of the fraudulent misrepresentation which it wants to prove. It was contended that as against this evidence of the plaintiff, the defendant has not produced any evidence to counter the same and has not preferr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not been explained by the defendant by examining persons connected with the preparation of tender papers of this scheme. Therefore, it would be reasonable to come to the conclusion that the estimated cost as shown in the tender papers for the scheme at Sr. No. 3 was wrong in point of fact as it did not take into account the cost of additional work as shown in exhibit 228 viz. ₹ 479/- per tenement. The additional cost per block at this rate would be ₹ 479 X 8 = ₹ 3832/-. Adding this to the departmental estimate of ₹ 15,818/- the total estimate cost will come to ₹ 19,650/-/ Then in para. 5. the learned Judge observes as under : S. L. Patel, Chandnani and other persons connected with the preparation of tender papers for the schemes at Sr. No. 3 were the most material witnesses if the defendant wanted to prove that the published estimated cots of ₹ 15,818/- per block included the extra cost of additional items of work the most important of them being one water closet per tenement instead of one per two tenements. And one is completely at a loss to understand why the evidence of these witnesses was withheld. In these circumstances, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of publication of notice to contractors in respect of the suit tenders. Then again in the same paragraph he observes : It is true that in connection with the scheme at sr. No. 3 i.e. Mithipur 550 tenements the Executive Engineer concerned, viz.. Mr. S. L. Patel was aware of the fact that he published estimate did not include the estimated cost of additional work which he himself estimated as extra cost at ₹ 479/- per tenement and communicated the same to the Assistant Housing Commissioner by letter Ex. 228. Therefore, with regard to him one can say with reasonable certainty that he did not believe the figure of ₹ 15,818/- per block of eight tenements as the published estimated cost to be inclusive of additional times even though the published figure did make the suggestion that it covered all items of planned work. But the fact that S. L. Patel was aware of this does not necessarily mean that Mr. Gambhir who succeeded him was also aware of this state of affairs . Thus, there is no evidence that Gambhir was aware of this discrepancy and therefore. there is no scope for holding that the person making the representation or suggestion in case of the suit contracts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tements as to the relevant circumstances of the work. In particular there was a statement as to the existence of a wall at a depth of 9 feet. The only relevance of that was that if the statement was true the cost of the work would be less. Relying on the truth of the statement the contractors had agreed to do the work for a particular sum. But subsequently they found that the statement was wholly untrue and therefore they had to incur vary much more expense. Eventually they filed an action for damages for fraud. The question which was agitated before the House of Lords was relating to the liability of the principal for the fraud committed by his agent. Earl of Halsbury is found to have observed as under with regard to this point : I do not understand the learned Judge to express any doubt as tot he liability of the principals for the fraud of their agent. if there was fraud : Cornfoot v. Fowke, (1840-6 M W 358). If it was supposed to decide that the principal and agent could be so divided in responsibility that - like the schoolboy's age game of `I did not take it. I have not got it' -- the united principal and agent might commit fraud with impunity, it would be quit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve made a fraudulent misrepresentation. There was at one time a difference of judicial opinion upon the question whether a representation made by an agent innocently on behalf of a principal can be treated as a fraudulent representation for which the principal is liable. when the principal, though having no knowledge that the representation is made. knows that it is untrue. But it has now been laid down by the House of Lords that in such a case the principal is as much liable as though he had himself made the representation knowing it to be untrue: 1907 AC 351. In that case it was said by Lord Loreburn, L. C. at page 354; that : `the principal and are one, and it does not signify which of them made the incriminated statement or which of them possessed the guilty knowledge'. 5th May. 1972 53. Proceeding further he has observed as under about the same point : The defendants are a joint stock company acting and conducting business by a staff of officers and other agents whose duty it is in many departments to manage the company's business and to look after its affairs. What is the result of this state of affairs ? The company and its agents must be regarded as one, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - and group F (176 tenements) amounting to ₹ 3,44,322/- i.e. 0.9 per cent below the estimated cost of ₹ 3,47,446/- is above ₹ 6,00,000/-. the tenders are put up to the Board for consideration. Thereafter the resolution of the Board followed as found at Ex. 199 : Resolution No. 1,003/- Resolved to accept : (i) The negotiated tender of Shri R. C. Thakkar for constructing 250 tenements in Group D amounting to ₹ 4,92,150/- i.e. 0.28 per cent below the estimated cost of ₹ 4,93,531/- and (ii) the lowest tender of Shri R. C. Thakkar for constructing 176 tenements in group F amounting to ₹ 3,44,322/- i.e. 0.9 per cent below the estimated cost of ₹ 3,47,446/-. Thus both these documents reveal not only that published estimate of costs was a very important fact relating to the contract but also that the plaintiff had taken that estimate as a correct estimate which could form a proper basis for negotiations which finally culminated into completed contracts. 56. These two documents Exs. 200 and 199 should be viewed in context of previously referred documents viz. Ex. 250 and which is the letter of Housing Commissioner dated 16-5-195 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew to make a show that the published estimate of cost was correct. (d) Lastly, he contended that the photo copy found at Ex. 164 ought to have been rejected by the learned trial Judge. According to the contents of this photo copy each tenement was likely to cost ₹ 479/- more on account of the above additions. 59. So far as the limit of ₹ 3, 000/- is concerned, we, find from the deposition of plaintiff's witness S. T. Thakkar, who was working as the Assistant Officer in the office of the Accountant General that the scheme in question was subsidised by the Central Government and the Central Government had fixed ₹ 3,000/- as ceiling of cost per each tenement for the purpose of subsidy. But nothing further is found from the evidence supplied by this witness, However, the fact remains that even in spite of the additions made in the plan regarding the tenements covered by the suit contracts, the defendant Board was expected to complete the construction within a limit of ₹ 3, 000/-. This may be a factor which might have induced the officers of the Board not to make any change in the published estimate of cost because it was prepared with regard to the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt are even otherwise found proved through the letter Ex. 227 to which we have already made a reference above. Ex. 164 seeks to prove only one fact namely, that in view of the additions to the original plan. there should be an additional estimate of cost at the rate of ₹ 479/- per tenement. Since this fact is even otherwise proved, we don't think it necessary to detain ourselves more in discussing the evidence as regards this photo-copy. 63. In our opinion, the finding that the false representation was knowingly made by the party concerned. is by itself sufficient to bring the case within the mischief of Section 17 of the Contract Act. It is, therefore, not necessary to make any further probe into the motive of the person making false representation. Even if the motive of the person indulging in deceit is very laudable, he cannot escape from the consequences of his action. In this connection it would not be out of place to make a reference to the decision given by Privy Council Motor Finance Co., v. Addison Co. Ltd.. Their Lordship came to the conclusion that the evidence given on behalf of the plaintiff was sufficient to establish that the plaintiffs relied on the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to published estimate, each tenement was costing ₹ 2994/- and a block of eight such tenements was costing ₹ 15793/- According to correct estimate each tenement would cost ₹ 2993 + ₹ 479 (being the cost of extra work) = ₹ 3473/- and each block of 8 such tenements would cost ₹ 15793 + ₹ 3832 (being cost of extra work at the rate of ₹ 479/- per tenement) = ₹ 19625/-, This shows that representation made by the published estimate was about 20% below the actual cost of the work covered by the suit contracts. The question which this aspect of the matter raises is whether the plaintiff firm. whose partners should be presumed to be possessing at least a modicum degree of business sense would agree to undertake the responsibility of execution of the suit contracts for a price which 20% below the market price? Reference to Exs. 200 and 199 shows that during the course of the negotiations between the parties the plaintiff was persuaded to reduce the lump sum amount by 0.28% with regard to `D' group and by 0.9% with regard to `F' group. If the plaintiff had known that the representation made by published estimate was already 20% l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sentations made. considered with reference to the object for which they were made the knowledge or means of knowledge of the person making them, and the intention which the law justly imputes to every man to produce those consequences which are the natural result of his acts: and secondly. he must establish that this fraud was an inducing cause to the contract . Further we find that there is some force in the appellant's contention that the concerned officers of the respondent-Board were anxious to see that the work involving the extra cost of ₹ 479/- per tenement should so far as possible be executed within the limits of ₹ 3000/- fixed by the Central Government. It appears that it was for this purpose that they did not think it proper to change the original figure of cost estimates. 70. Considering therefore. all these circumstances we find that even the fourth ingredient of Section 17(1) of the Contract Act is satisfactorily proved. 71. The foundation of the vice of fraud contemplated by Section 17 of the Contract Act manifestly is that a man making any representation which he intends another to act upon. must be taken to warrant his belief in its truth. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdships in that case insisted that there must be first some evidence to prove fraud. but. while deciding this. they have also laid down some guiding principles which may lead the Court to the conclusion that the representation in question was fraudulent. Lord Herschell has summarised this point in a very eloquent manner in the following passage extracted from his judgments. Having now drawn attention. I believe. to all the cases having a material bearing upon the question under consideration. I proceed to state briefly the conclusions to which I have been led. I think the authorities establish the following propositions: First. in order to sustain an action of deceit. there must be proof of fraud. and nothing short of that will suffice. Secondly, fraud is proved when it is shown that false representation has been made knowingly. or without belief in its truth or recklessly. careless whether it be true or false. Although I have treated the second and third as distinct cases. I think the third is but an instance of the second. for one who makes a statement under such circumstances can have no real belief in the truth of what he states. To prevent a false statement being fraudulen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iff. very likely some other contractor would have been able to conclude the suit contracts with the Board. We are of the opinion that these contentions are irrelevant at this stage for the purpose of considering the above referred provision of S. 19 of the Contract Act. What the section contemplates is to compensate the party defrauded by putting him in the same position in which he would have been if the representation which was made was true. We are therefore. not supposed to enter into field of speculation to know what would have happened had the correct representation been made in the tender notices. The only requirement of S. 19 is to consider what would have been the position of the defrauded party. had there been a correct representation. Therefore. in our opinion. the only manner in which the provisions of Section 19 of the Contract Act can be carried out. would be to consider what additional amounts the plaintiff would have paid if the representation as to estimate of cost of the suit contracts. was correctly made. We find that even if it is believed that the plaintiff should be compensated in the general principles of Torts. it would not make any difference because in Tor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d entitled to recover from the defendant. puts it in the same position in which it would have been. had there been a contract on rate basis. that is the consequence of defendant's own legal fraud and therefore. the defendant has to thank itself for the same. 77. At the fag-end of the arguments of this appeal. Shri Kaji contended that the appellant is not entitled to get any damages in view of the fact that it has certified the final bills in full payment of all its claims and even subsequent to the payment of the final bills, it has further certified at the time of the refund of security deposit that it had no claim on any count towards the contract work. He specifically drew our attention to Exhs. 138 and 139. which are the two letters written by Deputy Engineer Housing Sub-Division, Ahmedabad to Executive Engineer. as regards the refund of security deposits to the plaintiff. Ex. 138 is dated 3-11-1958 while Ex. 139 is dated 31-12-1958. Both these letters contain certificates issued by the plaintiff in the following terms: We. M/s. R. C. Thakkar certify that we have no claim on any count towards this work and contract. The contention of Shri Kaji was that in view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to examine Mr. Bhatia to contradict the above referred allegations of witness Purshottamdas. It is. therefore. found that effort of the defendant at this stage to advance a plea of waiver on the ground Exs. 138 and 139 are concerned not a single question is put to the plaintiff's partner Purshottamdas during the course of his deposition to show that these certificates have been signed by him after understanding the full implications thereof and in token of the waiving of his further claims arising out of the suit contracts. 78. Privy Council has explained in Dawsons Bank Ltd. v. Nippon Menkwa Kabushishi Kaish. the meaning of the term waiver as distinguished from estoppel. Their Lordships have held that waiver is contractual. and may constitute a cause of action. In their Lordships' opinion. waiver is an agreement to release or not to assert a right. Therefore. whenever a waiver is pleaded. it should be shown by the party pleading the same that there was an agreement between them that the person waiving a particular right should not press that right in future in consideration of some compromise from some other person. The view taken by the Privy Council in the ab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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