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CASE ANALYSIS : Dambarudhar v State of Orissa

-SANMATI RAONKA, SLS PUNE

Contract is an agreement in which two parties wilfully enters into which binds them in a civil obligation.
Therefore in order to enter into a contract the parties must agree to the same fact in the same manner.
Their decision should not be waivered by any factors like fraud, coercion, misinterpretation or mistake.
If any of the previously mentioned factors affect the decision of the parties entering into a contract then
consent is said to be not given freely. Free Consent is very important to our case as there is a scope of
misrepresentation that is one of the parties did not have or was mistaken to the material fact of the
contract. Mulla and Pollock commenting on this section have observed that the expression the same
thing appearing in this section means the whole content of the agreement, whether it consists, wholly or
in part, of delivery of material objects, or payment, or executed acts or promises.

According to section 10 of The Indian Contract Act, 1872, all agreements are contracts if they are made
by the free consent of parties competent to contract, for a lawful consideration and with a lawful object,
and are not hereby expressly declared to be void. Nothing herein contained shall affect any law in force
in India, and not hereby expressly repealed by which any contract is required to be made in writing or in
the presence of witnesses, or any law relating to the registration of documents.[1]
According to sec 2(h) of the Indian Contract Act, 1872, An agreement enforceable by law is a
contract. Therefore, though every contract is an agreement, every agreement is not a contract. Section
10 of the Indian Contract Act, 1872 lays down the essentials of the valid agreement. One of the essential
elements is that there should be free consent of parties to the contract. Section 13 of the Indian Contract
Act, 1872, says that, Two or more persons are said to consent when they agree upon same thing in the
same sense.
From Section 10 of the Indian Contract Act, it becomes clear that for creation of a valid contract, it is
required to be made with the free consent of the parties. Free consent is one of the essentials of a valid
contract.
The word consent has been defined in the Act; Section 13 provides that two or more persons are said
to consent when they agree upon the same thing in the same sense. For this purpose there must be
meeting of minds, i.e., there must be consensus ad idem. If there is no consent of the parties in the sense,
Section 13 clearly says that no agreement will be created and consequently, no contract will come into
existence and the question as to whether it is free or not, will be of no importance. For the creation of a
valid contract, thus, first there must be consent of the parties and if consent exists in the same sense it
has been taken in Section 13. Thus, it should be examined as to whether it is free or not.
Free consent, as defined in section 14 of The Indian Contract Act, 1872, is one of the most important
essential elements of a valid contract. The term free consent refers to meeting of free and fresh minds of

two parties of an agreement when two parties take and understand, purpose, subject matter and terms
and conditions of the agreement in the same sense it is free consent

FACTS OF THE CASE

Dambarudhar v State of Orissa


The government auctioned certain forest land . a part of the land was occupied by tenants. the forest
department knew this fact but did not disclose this to the purchaser. The Plaintiff was Dambarudhar .,
the defendants Khariar Division published a notice for sale of forest produce of the aforesaid coupe for
the year 1964-65. Auction was held on 25-9-64 and the bid of the plaintiff was the highest for Rs.
10,000. This bid was accepted and an agreement was executed between the D.F.O. and the plaintiff on
the same day, i.e. 25-9-64. The total extent of the coupe was 45 acres which was specified in a sketch
map and attached to the said agreement . As per the agreement, the plaintiff deposited a sum of Rs.
1,000 towards the security deposit. On 8-11-64 the plaintiff was informed by the D.F.O. to take delivery
of the coupe by 20-11-64 and to commence work after paying the first instalment of Rs. 2,500. On 112-64 the Forester of Beltukuri (P. W. 1) was directed by the Ranger, Nawapara to give delivery of
possession of the coupe, but this was not done due to the fact some people claiming to be the owners or
tenants of the property did not allow him. They claimed themselves to be the raiyats or the relations of
the raiyats in respect of more than 25 acres of the said coupe and owners of the standing trees. The
physical delivery of possession of the coupe was never given to the plaintiff and in spite of that a coupe
delivery certificate was taken from the plaintiff by the Forester, Beltukuri on 4-1-65. The plaintiff after
paying 1 st instalment commenced work in the undisputed portion of the coupe plaintiff also felled 202
trees between 5-1-65 and 9-2-65, but he could not convert those trees into logs, nor could he remove the
same as the people who were the riyat owners did not allow him to do so and endangered his life as well
as of his men. Accordingly, he was forced to stop the work At the instance of the Officer-in-charge, Jonk
P.S., the R.I. submitted a detailed report about the state of affairs, saying that more than 30 acres out of
45 acres were tenanted. On 13-3-65, the D.F.O. recommended to the Conservator of Forests to
terminate the contract with the plaintiff on the ground of non-payment of the instalment dues.
Citation
AIR 1980 Ori 188
Bench
P Mohanti J., N Das J.

Judgement
The damages sustained by the plaintiff have been clearly proved and it is also held that the damages
claimed by the plaintiff have been established. Inspite of the laches and negligence of Plaintiff the
damages claimed by him are sustainable. The contract is void and purchaser was allowed to recover damages
for loss.

ISSUES PRESENTED

Issue 1: Whether there was free consent as mandated by section 10 of Indian to have a contract.
Sub issue 1: Whether the parties had full knowledge at the time of consent
Sub issue 2: Whether the effectiveness of the contract will be in jeopardy due to the mistake of the fact.

Issue 2: Whether there was presence of misrepresentation


Sub issue 1: Whether there was any passive concealment of facts
Sub issue 2: Whether the elements of misrepresentation were present.

Issue 3: Whether the agreement was voidable at the option of one party
Sub issue 1: Whether the agreement will be termed void.
Sub issue 2: Whether the aggrieved party is entitled to damages for losses suffered

RULES
Statutes

Section 10 of Indian Contract Act states what agreements are contracts. - All agreements are
contracts if they are made by the free consent of parties competent to contract, for a lawful
consideration and with a lawful object, and are not hereby expressly declared to be void. Nothing
herein contained shall affect any law in force in 1[ India] and not hereby expressly repealed by
which any contract is required to be made in writing 2[ or in the presence of witnesses, or any
law relating to the registration of documents.
Section 13 of Indian Contract Act states that in order to enter into a contract the parties must
agree to the same thing in the same sense.
Section 14 Indian Contract Act defines " Free consent"
Consent is said to be free when it is not caused by(1) Coercion, as defined in section 15, or
(2) Undue influence, as defined in section 16, or
(3) Fraud, as defined in section 17, or
(4) Misrepresentation, as defined in section 18, or
(5) Mistake, subject to the provisions of sections 20, 21 and 22. Consent is said to be so caused
when it would not have been given but for the existence of such coercion, undue influence,
fraud, misrepresentation or mistake.

Section 18 of Indian Contract Act defines " Misrepresentation" as


Misrepresentation means and includes(1) the positive assertion, in a manner not warranted by the information of the person making it,
of that which is not true, though he believes it to be true
(2) any breach, of duty which, without an intent to deceive, gains an advantage to the person
committing it, or any one claiming under him, by misleading another to his prejudice or to the
prejudice of any one claiming under him;
(3) Causing, however innocently, a party to an agreement to make a mistake as to the substance
of the thing which is the subject of the agreement.

Section 19 of Indian Contract Act states that when consent to an agreement is caused by
coercion, fraud or misrepresentation, the agreement is a contract voidable at the option of the
party whose consent was so caused. A party to a contract whose consent was caused by fraud or
mis- representation, 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 representations made had been
true. Exception.- 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.
Explanation.- A fraud or misrepresentation which did not cause the consent to a contract of the

party on whom such fraud was practised, or to whom such misrepresentation was made, does not
render a contract voidable.
Section 56(2) of Indian Contract Act deals with Compensation for loss through nonperformance of act known to be impossible or unlawful.
Where one person has promised to do something which he knew, or, with reasonable diligence,
might have known, and which the promisee did not know, to be impossible or unlawful, such
promisor must make compensation to such promisee for any loss which such promisee sustains
through the non- performance of the promise.

ANALYSIS
Issue 1: Whether there was free consent as mandated by section 10 of Indian to have a contract.
In order to have a proper contract out of an agreement it is mandatory that consent should be given
freely according to Section 10 of Indian Contract Act, 1872. And free consent is said to be present only
when there is absence of any of the following:
(1) Coercion
(2) Undue influence
(3) Fraud
(4) Misrepresentation
(5) Mistake
Sub issue 1: Whether the parties had full knowledge at the time of consent
In this case one of the parties was fully aware of the fact that a portion of the land that was auctioned to
the plaintiff was given on rent to a party called Riyat. They did not allow the plaintiff to use the land in a
manner as was proposed to him for use while the forest authorities made the offer. Therefore the whole
reason for buying and occupying the land gets defeated. Therefore we can say one of the parties did not
have full knowledge about the fact and obviously did not agree to this in the same sense with the govt.
According to Section 13 of Indian Contract Act the parties should agree to the same thing in the same
sense1 which did not happen in this case. Therefore at the time of consent there was mistake in relation
to the facts.
Sub issue 2: Whether the effectiveness of the contract will be in jeopardy due to the mistake of the fact.
Now the question is with the absence of this required knowledge what are the chances of the contract
being effective. As cited in Krishna Prasad v. Sham Narayan Prasad that when consent to an agreement
is caused by coercion, undue influence, fraud or misrepresentation the contract will be voidable at the
option of one party2. This has been supported by statutes like Section 19 and Section 19A of Indian
Contract Act, 1872.

1 Smith v. Hughes (1871)LR 6 QB 597, (1961-73) All ER Rep 632 (DC)


2 Mangaldas Raghavji v. State of Maharashtra AIR 1966 SC 128;

Issue 2: Whether there was presence of misrepresentation


If there is presence of misrepresentation in the contract and the same has influence the decision of the
contractor then it might lead to make the contract voidable.
Sub issue 1: Whether there was any passive concealment of facts
We cannot claim active concealment of fact as there was no effort on the part of the aggrieved party to
enquire into the material fact of the contract that is the occupancy of the land. However if a forest land
or for that matter any land that is taken possession of the kind of purpose it will be used for is obvious.
Then the matter of fact regarding the present occupancy situation of the land should have been made
clear to the buyer party. This comes under rule of suppression of vital facts and can be supported by case
law like R. v. Kylsant3.
Sub issue 2: Whether the elements of misrepresentation were present.
Any breach of duty which brings an advantage to the person committing it by misleading to the other to
his prejudice is misrepresentation. This clause is thats why called constructive fraud 4. Misrepresentation
may also arise from suppression of vital fact. It will roughly fall under sub section (3) i.e. when it leads
the other party to make a mistake as to the subject matter of the agreement like in case of Asha Quereshi
v. Ashfaq Quereshi5. Here the present occupancy status of the land is a material fact of the contract
entered into and it is reasonably expected that it should have been communicated to the buyer. Therefore
we can say that there was presence of misrepresentation.

Issue 3: Whether the agreement was voidable at the option of one party
Sub issue 1: Whether the agreement will be termed void.
It is a decide fact that there was surely presence of passive concealment or suppression of material fact
regarding the contract. The agreement will be termed void because there was no proper free consent as
demanded by Section 10 read with Section 14 of Indian Contract Act. Section 10 states presence of free
3 (1932) 1 KB 442
4 Dynamics Corp. of America v. Citizens and Southern National Bank, 356 Fed Supp 991.
5 AIR 2002 MP 263

consent as a necessity to have a valid agreement which is called contract. And free consent is nothing
but consent without ones decision uninfluenced by fraud, coercion, misrepresentation or mistake as
defined in Section 14. And if such a contract is formed and it is later on discovered then such contracts
are voidable at the option of one party that is generally the aggrieved party.6
Section 19 reiterates the same that when consent to an agreement is caused by any of the factors like
coercion, fraud or misrepresentation, the agreement is a contract voidable at the option of the party
whose consent was so caused. This situation does not even fall under the exception provided in the fact
that the material fact concealed was easily discoverable. Because from the facts only we come to know
that the person went with all equipments to carry on his task to convert the trees into logs and only then
it was discovered by the plaintiff that his was not the original occupiers of the land and those who were
the actual occupiers were objecting to the work being carried out by him in the property they occupied
as well as in the areas which were in the vicinity to their property.
Sub issue 2: Whether the aggrieved party is entitled to damages for losses suffered
As per Section 56 (2) of Indian Contract Act states that Where one person has promised to do something
which he knew, or, with reasonable diligence, might have known, and which the promisee did not know,
to be impossible or unlawful, such promisor must make compensation to such promisee for any loss
which such promisee sustains through the non- performance of the promise.
Here the act of misrepresentation in the contract makes it unlawful as well as unjust to carry on with the
contract. Therefore it is justified on behalf of the party to rescind the contract and reclaim any amount or
money equivalent spent by him in an effort to execute the contract.
If we calculate a claim he will get back whatever he paid for first instalment i.e. Rs. 1000 and also the
money or money equivalent he spent before he came to know about the occupancy of the land to work
on it. This amount will be paid by the party who has wronged the aggrieved party either wilfully or
unknowingly.

6 Nokhia v. State of H.P., AIR 1985 HP 88

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