Section 17 of the Limitation Act, 1963 provides that:
1. Where, in the case of any suit or application for which a period of limitation is prescribed by this Act—
Image Source: deardrebit.com
ADVERTISEMENTS:
(a) The suit or application is based upon the fraud of the defendant or respondent or his agent; or
(b) The knowledge of the right of title on which a suit or application is founded is concealed by the fraud of any such person as aforesaid; or
(c) The suit or application is for relief from the consequences of a mistake; or
ADVERTISEMENTS:
(d) Where any document necessary to establish the right of the plaintiff or applicant has been fraudulently concealed from him; the period of limitation shall not begin to run until the plaintiff or applicant has discovered the fraud or the mistake or could, with reasonable diligence, have discovered it, or in the case of a concealed document, until the plaintiff or the applicant first had the means of producing the concealed document or compelling its production:
However, nothing in this Section shall enable any suit to be instituted or application to be made to recover or enforce any charge against, or set aside any transaction affecting, any property which,-
(i) In the case of fraud, has been purchased for valuable consideration, by a person who was not a party to the fraud and did not at the time of the purchase know, or have reason to believe, that any fraud had been committed; or
(ii) In the case of mistake, has been purchased for valuable consideration subsequently to the transaction in which the mistake was made, by a person who did not know, or have reason to believe, that the mistake had been made; or
ADVERTISEMENTS:
(iii) In the case of a concealed document, has been purchased for valuable consideration by a person who was not a party to the concealment and, did not at the time of purchase know, or have reason to believe, that the document had been concealed.
(2) Where a judgment-debtor has, by fraud or force, prevented the execution of a decree or order within the period of limitation, the court may, on the application of the judgment-creditor made after the expiry of the said period extend the period for execution of the decree or order-
However, such application is made within one year from the date of the discovery of the fraud or the cessation of force, as the case may be.
Section 17 of the Limitation Act applies only to suits and application but not to appeals. It applies to execution petitions. Section 17 does not apply to criminal cases; a complaint of a criminal offence is not a suit or an application.
The provision of Section 17 applies in computing the period of limitation prescribed by special or local law. Hence this Section applies to proceedings under the United Province’s Encumbered Estates Act.
The grounds for execution of the period of limitation under Section 17 are fraud, mistake and concealments and the effect thereof.
The word ‘fraud’ is not defined in the Limitation Act. It must, therefore, have its plain literal meaning. Fraud means dishonesty or grave moral culpability. It means deceit and does not include robbery. In B. Monappa v. R.S. Ramappa [AIR 1966 Mad. 184] it is stated that wherever fraud is alleged two elements are at least essential viz. first deceit or intention to deceive or, in some cases a mere secrecy; and secondly, either actual injury or possible injury or an intention to expose same person either to actual injury or to a risk of possible injury by means of deceit or secrecy.
One of the essential conditions of fraud is that there must be an intention to deceive another party. A necessary element in fraud is deception or deceit and getting somebody to believe something that is not really correct.
The term ‘concealed fraud’ means a case of designed fraud by which a party, knowing to whom the right belongs, conceals the circumstances giving that right, and by means of such concealments enables himself to enter and hold property.
In order to constitute fraud there must be some abuse of a confidential position, some intentional imposition or some deliberate concealment of facts.
In Archar v. Moss, Applegate v, Moss, [(1971) 1 All ER. 7470] it is stated that ‘fraud’ does not necessarily imply moral turpitude; it is enough if the conduct of the defendant or his agent is so unconscionable that it would be inequitable to allow him to rely on the limitation period.
Section 17 treats mistake on par with fraud by providing that the limitation runs in the case of mistake from the date when the mistake was discovered or with due diligence could have been discovered .
Mistake means an unconscious ignorance or forgetfulness of a fact, past or present, material to the contract, or a belief in the present existence of a thing material to the contract which does not exist; some intentional act, omission, or error arising from ignorance, surprise, imposition, or misplaced confidence; in a legal senses, the doing of an act under an errorless conviction, which act, but for such conviction would not have been done. Mistake is not mere forgetfulness, it is a slip made, not by design but, by mischance.
The term mistake comprises within its scope a mistake of law as well as a mistake of fact. A mistake of law occurs when a person having full knowledge of facts comes to an erroneous conclusion as to their legal effect. A mistake of fact is a mistake which takes place when some fact which really exists is unknown; or some fact is supposed to exist which really does not exist. Mistake of foreign laws is a mistake of fact.
In M. Kishore v. State of M.P [AIR 1990 SC 313] it has been held that in a suit for refund of money paid by mistake of law Section 72 of the Contract Act and provision of 17( 1 )(c) of Limitation Act 1963 will be attracted and limitation will run only from the date on which the particular law under which it was paid was declared by a competent court as invalid.
The word ‘fraud’ with reference to Section 17 of the Limitation Act is to be such fraud as is essential ingredient of the cause of action. Fraud affects limitation only where it prevented a person from knowing of his right or the title on which his claim was fraud. Fraud contemplated under Section 17 is the actual and active fraud in the means adopted to keep the person injured out of the knowledge of his right. There must be some abuse of a confidential position, some intentional imposition or some deliberate concealment of facts; a designed fraud by which a party knowing to whom the right belonged, concealed the facts and circumstances giving that right.
The fraud contemplated in Section 17 is the fraud of the defendant or same person through whom he derives his title; it does not mean the fraud of the third person. If it is alleged that the fraud was committed by the servant or agent of the defendant, it must be shown that it was committed for the general or specific benefit of the principal and not for the private purposes of the servant or agent.
The time will be extended under Section 17 of the Limitation Act only as against the —
(a) Person guilty of fraud or mistake, or fraudulently concealing document, or
(b) His agent, or
(c) Who claims through such person other than a bona fide purchaser for valuable consideration?
Section 17 of the Limitation Act can have no application where the fraud alleged by the party applying to set aside an execution sale is mere understatement of the valued of the properties in the sale proclamation.
In re, Marappa Gounder [AIR 1959 Mad.26] it has been held that under Section 17(1), the period of limitation shall not run against the plaintiff or the applicant until the plaintiff or the applicant discovered fraud or could with reasonable diligence have discovered the fraud or mistake. It follows that if the plaintiff or the applicant is aware of his right to seek relief he follows that if the plaintiff or the applicant is aware of his right to seek relief he cannot claim the benefit of Section 17.
When he was aware of his right he cannot get the benefit of the Section 17 by alleging that he was prevented by fraud of the defendant to exercise such right. What the Section 17 concerned itself with is the knowledge of the right and not the exercise of it.
Knowledge required by Section 17 is not mere suspension. The knowledge must be clear and definite knowledge of the facts constituting the particular fraud.
Under Section 17( 1) of the Limitation Act, 1963 if the suit or application is based on the fraud of the defendant or the respondent or his application is based on the fraud of the defendant or the respondent or his agent it is enough for the plaintiff or the applicant to prove the fraud.
Under Section 17( 1) of the Limitation Act, 1963 if the suit or application is based on the fraud of the defendant or the respondent or his application is based on the fraud of the defendant or the respondent or his agent it is enough for the plaintiff or the applicant to prove the fraud. If he relies upon concealment of knowledge of the right or title on which the suit or application is founded, by the fraud of the defendant or the respondent or his agent, he will have to prove fraud by the defendant or the respondent or his agent and also the concealment of the knowledge of the right or title on which his suit or application is founded by such fraud.
In Rahimbhoy v. Turner [17 Bom. 341 (PC)] it is stated that where once the fraud has been established by the plaintiff, or where the circumstances are such that fraud may be presumed, the burden is on the defendant (who sets up limitation) to show that the plaintiff had clear knowledge of the facts constituting the fraud at a time which is too remote to allow him to bring the suit.
The plaintiff or the applicant must prove the mistake initially when the suit or application is for relief from the consequence of mistake. When he proves it then the burden shifts upon the defendant or the respondent or his agent to prove that the plaintiff or the applicant had either discovered or could have discovered the mistake with reasonable diligence at a time beyond the period of limitation.
When the plaintiff or the applicant alleged that the fraud or mistake became known to him within the period of limitation and gives prima facie evidence of his case, it is for the defendants to show that he had clear knowledge or could have known it with reasonable diligence at a time beyond the period of limitation.
Under Section 17(1) of the Limitation Act, the limitation time, in the case of fraud or mistake, from the time the plaintiff or the applicant discovered the fraud or mistake, or could with reasonable diligence have discovered it. The plaintiff shall have to aver in the plaint the date on which he discovered the fraud or mistake as the case may be, and shall also have to aver that with reasonable diligence he could not have discovered it prior to that date.
In Richardson Cruddas v. H.D. Mendha, [AIR 1973 Cal. 119], it has been held that when the mistake of the officer was pleaded as a ground for invoking Section 17 of the Act, and it was found that such plea was genuine, the benefit of Section 17(1)(c) would be extended to the plaintiff and the limitation would run from the date when the plaintiff discovered the mistake.
In the case of concealed document under Section 17(1)(d), the time runs from the date when the plaintiff or the applicant first has the means of producing the document or compelling its production. In the case of a suit to recover the fee or other levy under mistake limitation starts from the date on which the declaration was made by the final court of appeal that the levy is void.
The proviso (i) of the sub-section (1) of Section 17 has made it clear that a bona fide purchaser for value without notice of the sale will be protected and the benefit of Section 17 cannot be extended to set aside the sale as against him.
In the case of mistake, under the proviso (ii) of sub-section(l) of Section 17 where the property has been purchased for valuable consideration subsequent to the transaction in which the mistake was made by a person who did not know, or have reason to believe that the mistake has been committed, Section 17 does not enable a suit to be instituted or an application made, to recover, or to enforce a charge against him or to set aside any transaction affecting such property.
In the case of concealed document under proviso (iii) of sub-section (17) of the Section 17 where the property has been purchased for valuable consideration by a person who was not a party to the concealment and did not at the time of purchase know, or have reason to believe that the document had been concealed, Section 17 does not enable a suit to be instituted, or an application made to recover, or to enforce a charge against, or to set aside any transaction affecting such property.
If a suit is on the face of it time-barred, Order VII rule 6 of the CPC requires that the plaintiff shall show the ground on which exemption from the law of limitation is claimed. Therefore, if the plaintiff claims exemption on the ground of fraud on the part of the defendant, he must prove the fraud. In such a case, it is for the plaintiff to give in the first instance clear proof of the fraud alleged by him. The court will not pressure it from the mere existence of suspicious circumstances.
In Pailee v. Krishna [AIR 1971 Ker. 331] it has been held that absence of averment of fraud is not material; what is to be proved is that fraud was actually practised by the decree-holder.
In Baikunth v. Kesor [AIR 1969 Pat. 160], it has been held that the date of knowledge is to be excluded from computation of limitation period.
The Section 17 of Limitation Act will apply to a person claiming through another guilty of fraud or accessory to it otherwise than in good faith and for valuable consideration. Under Section 17 of the Limitation Act, the fraud of the agent of the defendant or the respondent is also included.
In order to constitute fraud it is not enough that there should be merely a tortious act unknown to the injured party but that there must be some abuse of confidential position, some intentional imposition, or some deliberate concealment of facts; there must be something actually said or done which is directly intended to prevent discovery.
Section 17 of the Limitation Act is attracted only where there is an active and designed fraud and it had no application when the other party merely remains silent and does not do any act which is designed to prevent knowledge of the cause of action.
It is clear that where the right or entitlement to such relief is itself » kept concealed by reason of fraud or hoax practised of which the plaintiff becomes a victim, in those circumstances, the cause of action in law is held to arise only when the victim realises the factum of fraud perpetrated or at a point of time when the victim could have with reasonable diligence learnt or become aware of the hoax practised.
Fraud like any other charge must be established beyond reasonable doubt. A finding as to fraud cannot be based on suspicious or conjecture.
Section 17 of the Limitation Act is an enabling section which postpones the starting point of limitation for suit and application.