Effect of misrepresentation: Whether renders a document void or voidable?

Misrepresentation as to content

Section 19 of the Indian Contract Act makes an agreement consent to which is caused by misrepresentation voidable at the option of the party whose consent was so caused. A party to contract, whose consent was caused by misrepresentation, retains the option to 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.

Misrepresentation as to character/ nature

However the agreement obtained by misrepresentation as to the character or the nature of the transaction/document stands on a distinct footing and is considered void or non est.

Raison-d'etre

An agreement obtained by misrepresentation as to the character or the nature of the transaction/document is treated as void and nullity (and not merely voidable), since in such cases there is no consent at all. It is absence of consent, rather than misrepresentation as to contents of the document that makes it still born and non-existent.

Evolution of the legal position

The effect of misrepresentation as to character of document was pointed out in Thoroughgood's case[1], an English case, in sixteenth century.  In the said case it was held that if a deed is falsely read over to an illiterate man and he executes the deed relying on the false reading as being the true substance of the transaction, his act is wholly void.

In a later decision in Foster v. Mackinnon,[2] considering a case where the defendant had purported to endorse a bill of exchange which he was told was a guarantee, the English Court held that defendant’s signature not being intended as an endorsement to a bill of, exchange was wholly inoperative. The reasoning of the court being:

“It seems plain, on principle and on authority, that, if a blind man, or a man who cannot read, or who for some reason (not implying negligence) forbears to read, has a written contract falsely read over to him, the reader misreading to such a degree that the written contract is of a nature altogether different from the contract pretended to be read from the paper which the blind or illiterate man afterwards signs; then, at least if there be no negligence, the signature so obtained is of no force. And it is invalid not merely on the ground of fraud, where fraud exists, but on the ground that the mind of the signer did not accompany the signature; in other words, that he never intended to sign, and therefore in contemplation of law never did sign, the contract to which is name is appended."

Back home, the Calcutta High Court took similar view[3] in a case where it was established that the plaintiff by defendant's misrepresentation was induced to execute a deed of sale believing the same to have been a deed of a different kind. The transaction was held to be void and not merely voidable.

In another decision,[4] the Calcutta High Court held the instrument to be invalid when the executrix thought that she was executing a power-of-attorney when she was actually executing a deed of gift.

The Supreme Court of India also accepted the position as aforesaid[5] when it noticed the distinction between fraudulent misrepresentation as to the character of the document and fraudulent misrepresentation as to the contents thereof. It held that with reference to the former, transaction is void, while in the case of the latter, it is merely voidable.

Void versus voidable: implication

One may ask how does it matter whether misrepresentation makes the document voidable or void. The answer is, it does make material difference as to nature and time frame of remedy available under law. For instance:

i)  In case of a voidable document, the document is prima facie valid. Its effect thereof can be avoided only by obtaining a decree to set aside/cancel such document by proving coercion, undue influence, misrepresentation or fraud. On the other hand a document without consent being null and void, the same have no existence in the eyes of the law and the plea about its invalidity can be raised in any proceedings and no separate declaration may be necessary[6].

ii) A suit to set aside or cancel a document is required to be instituted within prescribed period of limitation of three years. In case of instruments which are presumptively invalid/void, such period of limitation may not apply[7]. 

iii) In case of a suit to set aside or cancel a document, the plaintiff is usually required to pay substantial amount as ad valorem court fee (based on applicable state legislation on court fee). Whereas to seek a declaration that a document is void/non-est, a nominal/fixed court fee may be required to be paid.

iv) Further, for recovery of possession of property when defendants claims right based on void document, a suit for possession simpliciter could be filed by pleading that thee document is a nullity and therefore can be ignored.[8] However in the case of a voidable document it would be necessary to set it aside before recovering possession.

Conclusion

Keeping in view the materially distinct consequences of misrepresentation as to content or the character of the transaction, the legal recourse against the same must be advised /adopted accordingly.