Class Notes - 11th November, Monday, 2024

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These are the notes from the classes held on Monday, 11th November 2024 for LLB 3Y students at Padala Rama Reddi Law College, covering Contracts - 1, Family Law - 1, and Law of Torts. Classes were suspended at 12 p.m. due to the college hosting external exams.

Notes for Day 36 can be found here.

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Contracts 1

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Faculty: Dr. Radha Kumari

Consequences of Misrepresentation

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Misrepresentation in contract law refers to a false statement of fact made by one party to induce the other party into a contract. The consequences of misrepresentation are as follows:

1. Voidable Contract:

   • The contract becomes voidable at the option of the aggrieved party (the party misled by the false representation).
   • The aggrieved party can either:
     • Rescind (cancel) the contract and return to their original position, or
     • Accept the contract, insisting on being placed in the position they would have been in if the representation had been true.

2. Loss of Rescission:

   • The right to rescind may be lost under the following circumstances:
     • Affirmation: If, after becoming aware of the misrepresentation, the aggrieved party continues to take benefits from the contract or explicitly affirms it, they lose the right to rescind.
       • Example: If A buys a car from B based on B’s false claims of mileage, but A continues to use the car after learning the truth, A loses the right to rescind.
       • Example: If A (Landlord) wants to evict B(tenant) from his premises after the lease expires, he ought not to collect the rent if paid for any future period. If he accepts the rent, he is affirming the previous contract.
     • Restoration to Original Position Impossible: If it is not possible to return both parties to their original states before the contract, rescission is not allowed.
       • Example: If A buys a batch of fresh fruits based on B’s misrepresentation, but the fruits perish before A learns the truth, rescission is not possible.
     • Reasonable Time Limit: Rescission must be sought within a reasonable time. While there is no definition of reasonable period, it is required that you use your judgement and common sense when you think of reasonable period.
       • Example: If A buys a phone based on false specifications and only tries to return it after six months, A might lose the right to rescind.
     • Third-Party Rights: If a third party acquires rights in the subject matter in good faith and for value, rescission is not allowed.
       • Example: If A sells a car to B based on misrepresentation, and B resells it to C (a good-faith buyer or innocent third party), A cannot rescind the contract with B once C has acquired rights to the car.

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Fraud (Section 17)

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Fraud is a deliberate act of deception intended to secure an unfair or unlawful gain. It involves intentional misrepresentation and is distinct from innocent misrepresentation. Section 17 of the Indian Contract Act defines fraud as any act committed with the intent to deceive another party.

Situations Constituting Fraud:

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1. False Suggestion of Fact:

   • Making a suggestion that a fact is true when the person knows it is false.
   • Example: A milk seller, claiming the milk is pure despite knowing it is adulterated (he has himself added water while he was in the next lane), commits fraud.

2. Active Concealment:

   • Actively hiding a fact by a person who knows or believes the fact to be true.
   • Example: A real estate seller painting over cracks in the walls to hide structural issues is committing fraud by concealment.

3. False Promise of Performance:

   • Making a promise with no intention of fulfilling it.
   • Example: A contractor promises to complete a building within a year, but has no intention or resources to finish it, intending only to collect advance payments.

4. Any Act Fitted to Deceive:

   • Performing any act designed to deceive the other party.
   • Example: A job applicant forging their educational certificates to get a job is using fraud to deceive the employer.

5. Any Such act or omission as the law specially declares to be fraudulent:

   • Any act or omission that the law specifically declares to be fraudulent.
   • Example: Selling a vehicle with an odometer rolled back to show lower mileage is declared fraudulent under consumer protection laws.

Example Scenarios:

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• Caveat Emptor (Let the Buyer Beware):

  • If A buys a horse from B, who does not disclose the horse’s health issues of unsound mind, A cannot claim fraud if B did not actively misrepresent. Here, caveat emptor applies. This is NOT a fraud.

• Fiduciary Responsibility:

  • If A sells a horse to B, his daughter, without disclosing health issues of unsound mind, this would be fraud due to the fiduciary (trust-based) relationship.

• Specific Inquiry by Buyer:

  • If A asks B if a horse is healthy, and B knowingly omits to mention its illness of unsound mind, this omission is fraudulent since B was asked directly.

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Essential Elements of Fraud

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For fraud to be established, the following elements must be present:

1. False Representation or Assertion:

   • There must be a statement or representation, and it must be false.
   • Example: A seller claims a used bike has only done 1,000 km when it has actually covered 10,000 km.

2. Material Fact:

   • The misrepresentation must relate to an important fact that influences the contract.
   • Example: Claiming a phone has a warranty when it does not would be a material misrepresentation.
   • Example: If he claims that neighbouring lands in this area are generally getting about 100 bags of rice per year, that is NOT material fact. He is NOT referring to this particular land.

3. Timing of Representation:

   • The false representation must be made before the contract is finalized, with the intent to influence the decision.
   • Example: Before selling a plot, a seller claims it is free of any legal disputes. If the seller makes any statement after the contract is complete, it is NOT fraud. It is only fraud if it occurs before the contract is complete.

4. Knowledge of Falsity:

   • The person making the representation must know it is false, or make it without caring whether it is true or false.
   • Example: An electronics dealer selling a “new” device while knowing it has been refurbished.

5. Inducement to Act:

   • The representation must have influenced the other party to enter the contract.
   • Example: A person buys land after being told (falsely) it will soon be a commercial zone, expecting higher returns.

6. Reliance on Representation:

   • The aggrieved party must have relied upon the false statement and been deceived.
   • Example: A customer purchases health supplements after the seller claims they are clinically tested, though they are not.

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Family Law - 1

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Faculty: Dr. Sriveni

Concept of Adoption

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Historical Perspectives of Adoption in India

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• In ancient India, adoption was considered a sacrament and had significant social, religious, and practical implications.
• A son was never considered “filius nullius” (son of nobody); he always belonged to a family lineage, either through birth or adoption.

Types of Sons

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In traditional Hindu law, sons were classified into several categories based on their birth and the circumstances of their entry into a family. These categories are divided into two main groups: heirs and kinsmen.

1. Heirs and Kinsmen

   • Aurasa: The natural-born son, seen as the most legitimate heir.
   • Kshetreja: A son born to a wife by another man if the husband was impotent or deceased. This practice, though rare, was socially accepted.
   • Dattaka: The adopted son, a legitimate heir through formal adoption.
   • Kritma: A child adopted based on his intellect or ability, often chosen for his qualities rather than birth.
   • Gudhotpanna: A secretly born child, possibly illegitimate.
   • Apavinda: A castaway or abandoned son, often taken into a family due to compassion or necessity.

2. Kinsmen

   • Kanina: A son born to an unmarried girl, often seen as illegitimate in traditional society.
   • Sahodhaja: A son whose mother was pregnant at the time of her marriage; the husband of the mother would be considered the father of the child.
   • Kritaka: A son who was essentially “bought” or acquired through a transaction.
   • Paunnarbhava: A child born to a remarried woman, typically from her first marriage.
   • Svayam Datta: A self-abandoned child who offers himself for adoption.
   • Shaudra: A son born to a Brahmin father and a Shudra wife.
   • Putrikaputra: A daughter’s son, often treated as a son and heir, especially in the absence of male heirs.

Adoption as a Sacrament

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• In ancient India, adoption was treated as a sacrament, meaning it was a sacred act rather than a mere contractual arrangement.
• Restrictions on Adoption:
  • Not Allowed: Adoption of a sister’s or daughter’s son was typically not permitted.
  • Widow’s Adoption: If a widow adopted a son, the Doctrine of Relation Back was applied.
    • Example: If a widow adopted a child on 12-1-1941, but her husband passed away on 1-10-1940, the adoption would be considered effective from the husband’s death (1-10-1940).
  • Illegitimate Sons and Orphans: They were generally not taken in adoption.
  • Dattaka Homam: A religious ceremony was mandatory for a valid adoption.
  • Son-in-Law as a Son: In certain contexts, a son-in-law brought into the bride’s family was considered akin to a son. (ఇల్లరికం అల్లుడు)

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The Hindu Adoption and Maintenance Act, 1956

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• Enacted on 21st December 1956, the Hindu Adoption and Maintenance Act (HAMA) is a comprehensive statute governing adoption and maintenance among Hindus.
• The Act contains 30 sections, with Sections 1-17 specifically addressing the process and conditions of adoption.

Structure of the Act for Adoption

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1. Sections 1-5: Application, Extent, and Definitions

   • Define the scope and application of the Act, including definitions of terms related to adoption and maintenance.

2. Sections 6-11: Conditions for a Valid Adoption

   • Section 6: Requisites for a Valid Adoption

     • Highlights traditional principles like:
       • “Na Yekoputra De Yaha” - The only son should not be given in adoption.
       • “Na Jeshta Putra Deyaha” - The eldest son should not be given in adoption.
       • Doctrine of Factum Valet: Applied when formal requirements are not strictly met but the adoption is still treated as valid.

   • Sections 7 & 8: Capacity to Take in Adoption

     • Section 7: Males have the capacity to adopt.
     • Section 8: Females have the capacity to adopt, but under certain conditions.

   • Section 9: Capacity to Give in Adoption

     • Specifies who has the authority to give a child in adoption, generally restricted to biological parents or guardians with legal authority.

   • Section 10: Persons Eligible for Adoption

     • Describes who is eligible to be adopted under the Act.

   • Section 11: Other Conditions for Adoption

     • Specifies conditions such as the requirement that adoptive parents must not already have a child of the same gender, among others.

3. Section 12: Effect of Adoption

   • States that the adopted child becomes a legal heir in the adoptive family and ceases to have any rights in the biological family, except in cases of ancestral property.

4. Sections 13-17: Other Provisions Related to Adoption

   • Cover additional legal considerations and procedural requirements.

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Case Laws

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1. Lakshmi Singh v. Smt Rupkanwar

   • Facts: There was an agreement between two families to adopt a child. The child was sent to the prospective adoptive family’s house for educational purposes. However, there was no formal ceremony of “giving and taking,” which is a legal requirement for adoption.
   • Held: The court ruled that the adoption process was incomplete as the essential ritual of “giving and taking” was not performed. The court emphasized that mere transfer of custody without this formal ritual does not constitute a valid adoption under the Act.

2. Sarad Chandra v. Shanti Bai

   • Facts: This case dealt with a widow’s right to adopt a child and the legal effect of such an adoption on her deceased husband’s estate.
   • Held: The court upheld the widow’s right to adopt under certain conditions and discussed the “Doctrine of Relation Back,” which allowed the adopted child to inherit as if the adoption had taken place at the time of the husband’s death, preserving family lineage and property rights.

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Important Concepts:

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• Doctrine of Relation Back: Allows an adopted child to inherit from the date of the adoptive father’s death rather than the date of adoption.
• Doctrine of Factum Valet: Used to validate adoptions that do not strictly meet all formal requirements.
• Dattaka Homam: Traditional ritual that was historically mandatory, emphasizing the religious aspects of adoption.

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Law of Torts

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Faculty: Dr. Pavani

Rule of Absolute Liability (M.C. Mehta v. Union of India, 1987)

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Overview

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The Rule of Absolute Liability was established in the landmark case of M.C. Mehta v. Union of India (1987). This case, commonly known as the Oleum Gas Leak case, set a new precedent for handling liability in cases involving hazardous and dangerous activities. The Supreme Court of India ruled that in cases involving inherently dangerous industrial activities, the company is absolutely liable for any harm caused, regardless of fault or negligence.

Background of the Case

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The case originated from a gas leak incident in Sriram Foods and Fertilizers Industries, located in a densely populated area of Delhi. The gas leak led to severe injuries and death, raising questions about the responsibility of companies engaged in hazardous activities. M.C. Mehta, a public interest lawyer, filed a petition under Article 32 of the Indian Constitution, invoking the right to life and seeking compensation for the victims.

The Supreme Court’s Decision

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The Supreme Court of India, under Chief Justice P.N. Bhagwati, took a significant step by evolving a new rule that was suited to India’s social and economic conditions. The Court departed from the traditional Rule of Strict Liability (as established in Rylands v. Fletcher), which had certain exceptions, and established the Rule of Absolute Liability, which removes all possible exceptions in cases involving hazardous industries.

Key Observations and Principles Established

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Chief Justice Bhagwati observed that the Rule of Strict Liability from the 19th century, developed in Rylands v. Fletcher, was outdated in the modern context, given the advancements in science and technology. The new principle established by the Court stated that:

• An enterprise engaged in a hazardous or inherently dangerous industry that poses a potential threat to the health and safety of workers or residents in the surrounding area has an absolute and non-delegable duty to ensure that no harm results from such activities.
• Such industries must adopt the highest standards of safety. If any harm occurs, the company is absolutely liable to compensate, irrespective of whether it exercised all due care and followed safety protocols.

Justifications for the Rule

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The Supreme Court justified the Rule of Absolute Liability on the following grounds:

1. Social Obligation to Compensate:

   • When an activity is carried out for private profit, the enterprise has a social responsibility to compensate for any harm caused to individuals as a result of the hazardous activities. This duty arises from the enterprise’s use of dangerous materials that could potentially impact public safety.

2. Resources and Responsibility:

   • The enterprise is in the best position to prevent harm because it possesses the resources and technical expertise needed to understand, anticipate, and mitigate risks. Thus, it has a duty to ensure the safety of both employees and the surrounding community.

3. Deterrent Effect:

   • The Court emphasized that the compensation amount should be directly proportional to the enterprise’s capacity and financial magnitude. The aim is to create a deterrent effect, discouraging companies from engaging in risky practices without taking necessary precautions.

Measurement of Compensation

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The Court laid down that the compensation payable should be proportional to the magnitude and financial capacity of the enterprise. The goal is to ensure that the compensation acts as a deterrent, compelling industries to prioritize safety over profits. The higher the capacity of the enterprise, the higher the liability to compensate, as it must be sufficient to deter negligence and unsafe practices.

Key Principle Established

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The new principle established by the Supreme Court can be summarized as follows:

“An enterprise engaged in a hazardous or inherently dangerous industry, which poses a potential threat to the health and safety of persons working in the industry or residing in the surrounding areas, owes an absolute and non-delegable duty to the community to ensure that no harm results from such dangerous activity. If any harm occurs, the enterprise is absolutely liable to compensate, and no defense of due care or lack of negligence will be entertained.”

Importance of the Rule of Absolute Liability

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The Rule of Absolute Liability marked a major shift in Indian tort law by:

• Removing the exceptions previously allowed under the Rule of Strict Liability, making industries absolutely liable for damages.
• Ensuring that industries operating in India adopt the highest safety standards to protect public health and safety.
• Establishing a legal framework that aligns with India’s unique social and economic conditions, acknowledging the risks posed by hazardous industries in populated areas.

Furthermore, it is important to know that since this case was a smaller case, the result was faster. The precedent from this case was later used for the Bhopal Gas Disaster case which had a judgement later on.