A Division Bench of Justices Vibhu Bakhru and Tara Vitasta Ganju held that ‘deliberate fraud’ does not come under the scope of the Exception to Section 19 of the Indian Contract Act, which deals with voidability of agreements without free consent.
The Exception in questions states:
If such consent was caused by misrepresentation or by silence, fraudulent within the meaning of section 17, the contract, nevertheless, is not voidable, if the party whose consent was so caused had the means of discovering the truth with ordinary diligence.
After going through precedents on the issue, the Court held,
“The ratio of the aforesaid decisions is that cases of deliberate fraud, do not come within the meaning of Exception to Section 19 of the Contract Act and where an Agreement has been procured by fraud, the contract is voidable at the instance of the party deceived, notwithstanding that the party whose consent was caused by fraudulent misrepresentation had means of discovering the truth by due diligence.”
Source: Barandbench
