TORT AND TORT LAW[1]:
Tort
as a word literally translates to “wrong”, it means deviation from the laid
down or established set of conduct. In earlier times the remedy for wrongful
act was the filing of the appropriate writ, thus the remedy for a wrong was a
writ application. A tort is thus a civil wrong, remedy for which is,
unliquidated damages under common law. Tort arises when an individual commits
breach of duty imposed on him, thereby violating the rights of another
individual for which an action is maintainable.
The
law of Torts is an ever evolving and dynamic subject. It keeps growing to cover
wider base of liability. In includes large areas relating to human activities.
The law of Tort is that branch of law that regulates social behaviour of human
beings, it defines the rights, duties and liabilities available and to be
carried out by individuals of the society. Such rights, duties and liabilities
are made with due care to ensure public convenience and reasonable standards of
conduct. The law of Torts aims to provide compensation to the aggrieved through
pecuniary remedies for violation of their private rights. The law of Torts is
based on morality, wherein no individual has a right to harm another.
The
Law of Tort is a well-established law in England, its first major development
being the “appeal of felony”. It embodies maxims such as:-
(1) “He
who comes to equity must have clean hands”
Meaning,
if one seeks the help of the court it must first satisfy the court that he
himself did no wrong and behaved ethically with the defendant.
(2)
“Delay defeats equities”
A
claim must be brought forward to the court within a reasonable time period as
undue delay can render such a claim invalid. There exists a limitation period
within which the aggrieved must file a suit for injury caused.
(3) “Equity
will not provide a remedy contrary to the Law”
The
court of equity has to comply and abide by the common law of the country. It
cannot provide for remedies unavailable in common law itself.
(4) “Ubi
Jus Ibi Remedium”
It
states that where there is no writ there is no right. The foundation of tort
law in based on this maxim, as tort law provides a remedy for every wrong and
where there is a right there is a remedy. If the wrong cannot be remedied there
is no use of having the right. “Jus” means the legal authority to demand or
omit an act, “Remedium” is the right of action given by law for the recovery or
assertion of a given right. Substantial damage is not a necessary ingredient to
contend wrong. The case of Ashby v White[2], established the maxim of
“Ubi Jus Ibi Remedium”. In India, the principle of “Ubi Jus Ibi Remedium” was
established in the case of Noor Mohhammed
v Mohhammed Ziajddin[3], wherein an action was
allowed for recovery of maintenance.
(5) “Maxim
Alterum Non Laedere”
The
law of tort seeks that an individual, hurt nobody by action or deed. There
should be no unnecessary and unjustifiable injury to a person, as a consequence
of acts of another.
(6) “Res
Ipsa Louqitur”
It
literally means that things speak for itself, as the facts of the case remain
unexplained, but it can be inferred that there is negligence on someone’s part.
The principle of the maxim is referred to in exceptional cases of tort
negligence, wherein the onus of proof lies on the Defendant, because of the prima facie evidence that the accident
is due to lack of due care. The burden is placed upon the Defendant as it is of
considerable hardship to the Plaintiff to prove the same because the negligent
act committed is within the sole knowledge of the Defendant. In such special
cases, the Plaintiff can prove the injury caused but not how it was caused, and
proof of accident is sufficient to claim tortious liability as there is a
presumption of negligence as per the maxim.
The
high cost of tort litigation is a deterrent factor in the development of tort
law in India. Presently the law of torts is in the form of Civil Law which is
in reality is wholly English Law. English law is implemented as found suitable
to Indian circumstances and conditions, but applied and implemented on the
concepts of justice, equity, and good conscience. There is no codified tort law
in India, as a result whenever a need arises for tort law application,
precedence’s are relied upon. As seen in the Union Carbide Case, wherein
section 9 of the Civil Procedural Code, 1908 enabled the civil court to take
cognizance of the matter (as it extended the court’s jurisdiction to adjudge
all civil matters) and apply the principles of equity, justice and good conscience
in the same. Section 9 of the Civil Procedural Code,1908 states:-
“The Courts shall (subject to the provisions herein
contained) have jurisdiction to try all suits of a civil nature excepting suits
of which their cognizance is either expressly or impliedly barred.”
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S.No
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TORT LAW
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CRIMINAL LAW
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1.
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Belongs to the category of “Civil Wrongs”.
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Belongs to the category of “Criminal Wrongs”
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2.
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Suit initiated under the Civil Procedural Code, 1908
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Suit initiated under the Criminal Procedural Code, 1973
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3.
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Suit instituted in the name of the aggrieved
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Suit instituted in the name of the state
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4.
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Injured party seeks compensation
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State seeks punishment as relief
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Characteristic
features of tort can be summarised as follows:
(1) Tort
is a result of the operation of law and not because of consent of parties
(2) Remedy
sought for a tort is unliquidated damages
(3) Other remedies include injunction, self-help
etc.
In
order for an injury to give rise to a clam of tort, the following conditions
should be met:-
1. There
is commission of a wrongful act by an individual
2. The
commission of a wrongful act leads to damage of another individual’s legal
rights as a direct consequence
3. The
wrongful act so committed must give rise to a claim for unliquidated damages as
a legal remedy
Thus Tort =
Wrongful Act + Legal Damage
1. Wrongful
Act: The unfair violation of a legal right should be a result of a wrongful act
or an omission to act. A moral or social wrong is not a legal wrong, thus no
tortious liability arises in such wrongs. There has to be invasion of an
individual’s legal rights, for a tort to occur. Legal rights are those rights
that are enforceable in the court of law, thus are recognised and protected by
the law itself.
2. Legal
Damage: Just as every wrong is not a legal wrong, every damage is not legal
damage. For an action of damage to be maintained in tort, it must be
established to be damage in the eyes of law. A wrongful act done that does not
result in any legal damage is not a tort. A legal damage is one which violates
a legal right, the monetary loss suffered or not is immaterial. The violation
of a legal right and subsequent damage incurred, needs to be proved to the
courts satisfaction where the right infringed is not absolute, if the right
infringed is an absolute right, there is presumption of damages incurred. Legal
damage incurred rests on two principles, namely:-
1. Injuria
Sine Damno: Literally translates to injury without damage i.e. the infringement
of a legal right without actual loss, in terms of money, comfort, health, services
or the like makes the defendant is liable. E.g.: Trespass, wherein the
defendant violates a legal right without causing any loss, for which he is
liable under tort. The leading Indian case on this principle is Kaliappa
v Vayapuri[4]. Action under this principle
is allowed that violation of a statutory right must give rise to a remedy,
which is actionable without proof of damage incurred.
2. Damno
Sine Injuria: Literally translates to damage without injury i.e. actual loss
suffered in terms of money, comfort, health, services or the like, without the
violation of a legal right, for which no liability arises in tort law. E.g..
Demolition of an unauthorised building. The leading Indian case on this
principle is Anand Singh v Ram Chandra[5].Action under this
principle is not maintainable on the ground that no violation of right takes
place, damage is incurred in the lawful exercise of one’s right.
Thus
the legal injury suffered as a result of violation of a legal right is an
essential ingredient to give rise for an action of tort and not damage.
NEGLIGENCE:
Negligence
means the risk of causing damage to another person or property. The judiciary
treats negligence as the non-observation of the duty to take care. The
negligence is the breach of a duty, through the omission of an act required to
be done or through the commission of an act not required to be done, by law. An
action for negligence arises when reasonable care is owed to a person in the
ordinary course of business is not discharged and as a result the plaintiff
suffers an injury to himself or his property. There are two theories relating
to negligence in tort, namely:-
(1)
The subjective theory: According to this
theory, negligence is a state of mind, a mental attitude or a mental condition.
Supporters of this theory are Austin, Winfield, Fie and Salmond. They consider
negligence as a “faulty mental
condition”, “culpable carelessness” or “an attitude of indifference”[6].
(2) The
objective theory: According to this theory, negligence is not a state of mind,
but a type of conduct. Negligence does not involve mens rea i.e. guilt. This theory is supported by Pollock, Clark and
Lindsell. He considers negligence to be “contrary
to diligence”. Negligence is the failure to take reasonable precautions to
avoid harm to another due to one’s own actions.
The
objective theory of negligence has been approved and applied by the judiciary.
In Union of India v Hindustan Levers Ltd.[7] The court defined
negligence, as the omission to act as a reasonable and prudent man. The damage
that results from an act of negligence is a breach of duty to take care, such
duty may be imposed by a statute or a result of relations between persons.
The
burden of proof in raising a claim of negligence is one the Plaintiff. He must
establish to the satisfaction of the court, the existence of sufficient
proximity between the act of the defendant and the injury caused to him as a
consequence of such an act. The exceptions to this rule is when there is prima facie evidence of neglect on part
of the Defendant, in such cases the onus of disproving the claim of negligence
is on the Defendant. The principle followed is based on the maxim “Res Ipsa
Louqitur”. The Defendant must prove that the accident and injury caused as a
result occurred without any negligence on his part that in the ordinary course of business the
accident would not have occurred and the accident was not within the control
and management of the defendant. The rule of Res Ipsa Louqitur is not
universal, and applied only in special cases, with extreme care and caution.
The
essential conditions to raise an action for negligence are:-
(1) The
Defendant is under a legal duty to exercise due care and skill
(2) The
legal duty owed to the Plaintiff
(3) The
Defendant breached his legal duty, as he failed to exercise due care and skill
(4) There is damage incurred by the plaintiff as a
direct consequence of the Defendants breach
It
can be concluded that there must be an imposition of the duty of care on the
Defendant, for the Plaintiff to file an action of negligence. Duty of care is a
legal obligation, the non-adherence of which results in a foreseeable harm. The
duty so imposed is of a reasonable nature, to be carried out in the ordinary
course of business. Essentials of duty to care are[8]:-
(1) Foreseeability:
That non adherence of the obligation imposed can result in injury or damage to
the person or property
(2) Proximity:
Plaintiff suffered injury as a result of the close and direct relationship with
the Defendant and his duty to care
(3) Just
and reasonable imposition of the duty of care: That the duty so imposed is in
good faith, equitable and appropriate.
FRAUD[9]:
Negligent
Misstatement forms a part of negligence, but finds it company with Fraud and
Malicious Falsehood.
Fraud
is the wilful, deliberate, corrupt and calculated making of a false
representation, with the intent of inducing another to rely on the same false
representation and thereby cause undue loss to them. Fraud is a malicious,
unwarranted, deceitful and unjustifiable means to deprive another of his dues.
An action for fraud under tort law requires strict proof. The essential
ingredients of a fraudulent misrepresentation are[10]:-
1. The
fact is untrue: There is a deliberate attempt to defraud by making statements
containing untrue facts. Conduct of parties, half-truths, mere silence,
non-disclosure and the like can culminate in fraud.
2. The
defendant has knowledge of the untrue fact or is indifferent to the truth: The
party making such false statements of fact has knowledge of its falsehood.
Making statements without inquiring about its validity is also actionable. E.g.
careless statements in prospectus, mistake in announcement, representation to
induce another to act etc.
3. There
is an intention to induce the plaintiff to rely upon such fact: There is mens rea to cause loss to another, the
Defendant has the mental and physical capability to convince another to depend
upon the information provided by him.
4. The
plaintiff acts upon such fact and suffers damage or loss: There is a loss
incurred by the Plaintiff as a direct and immediate result of such false
misrepresentation.
NEGLIGENT MISSTATEMENT:
In
the judgement of Derry v peek[11],
the law laid down that, damages for an action of negligent misstatement
could be claimed as a remedy. The earlier view on negligent misstatement was
that only in a contract or in a fiduciary relationship, can a claim for
negligent misstatement be brought. However the House of Lords changed their
view in the case of Hedley Byrne &
Co. Ltd. V Heller and Partners Ltd.[12]
It was laid down that, the duty of care not to make negligent misstatement
existed even in those cases where there was no contract or fiduciary
relationship between the parties. In Hedley
Byrne & Co. Ltd. V Heller and Partners Ltd, the plaintiffs were
advertising agents, who had entered into contracts on behalf of Easipower Ltd.
In order to find out the credit worthiness of the company they sought a banker’s
reference from the Defendants, who were the bankers of the company. The
Defendants gave favourable references, relying on which the Plaintiff invested
in the company. The Plaintiff however suffered substantial losses and underwent
liquidation as a result of expenditure incurred for Easipower Ltd. The
Plaintiffs contended breach of duty of care by the defendants, as they gave
references without verification of same. The trial judge and Court of Appeal
dismissed the claim. House of Lords held that the Defendants did indeed hold a
duty of care towards the Plaintiffs, however they were not liable for loss as
the references given were expressly mentioned to be without responsibility. In
the words of Lord Reid,[13]
“the duty will exist where it is
plain that the party seeking information or advice was trusting the other to
exercise such a degree of care as the circumstances requires, where it was
reasonable for him to do that and where the other gave the information or advice
when he knew or ought to have known that the inquirer was relying on him.”
In
Caparo Industries Plc v Dickman[14],the
House of Lords laid down that the auditor’s statutory duty involved preparation
of accounts for the shareholders and board of directors to maintain control of
the company and exercise informed decisions to maintain the same. Such accounts
were not meant for outsiders or potential shareholders or the public at large
who obtained such accounts and relied on the same to invest in the company,
with a view to earn profit. The auditor did not owe any duty to such outsiders.
There must exist a close relationship between the provider and user of
information to create a duty of care on the provider for misrepresentations
made.
MISREPRESENTATION IN INDIA:
Misrepresentation
is a false statement made relating to any fact which is grossly inaccurate.
However such inaccurate statements are made in innocence. The party making such
statements, believes in its legitimacy, as opposed to fraud where in there is
an intention to deceive. Indian legislation pertaining to misrepresentation
are:-
1. The
Indian Contract Act, 1872
2. The
Companies Act, 2013
3. The
Securities Contract Regulation Act, 1956
The
Indian Contract Act, 1872 defines misrepresentation under section 18 as those
statements which are not obtained from a trustworthy source hence cannot be
relied upon. They are unwarranted. Misrepresentation is defined as:-
“(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 anyone 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 subject of the agreement”
Section
19 of the Indian Contract Act states that agreements made without consent which
are a result of fraud, coercion or misrepresentation will be voidable for all
purposes. The option of voidability is at the option of the party who underwent
such coercion, fraud and misrepresentation.
Similarly
any guarantee obtained by fraud, coercion or misrepresentation is invalid under
section 142.
Under
section 238 misrepresentations made by an agent in the course of his employment
on behalf of his principal make such a principal liable for such actions of his
agent. However if such misrepresentations are made outside the scope and
authority of the agents employment the principal cannot be held liable.
A
person aggrieved by misrepresentation can remedy the same by:-
1. Avoidance
of contract
2. Specific
performance of contract
The
Companies Act 2013, under section 66 states that any officer who with knowledge
misinterprets the debt amount, or abets any concealment or misrepresentation,
will be liable under section 447 of the Act.
Under
the Companies Act, 1956, section 65 provided for the misstatements made in a
prospectus. Statements that are untrue, misleading, calculated to mislead, out
of context or omit a material fact are misstatements. Investors or potential
investors relying on such statements are entitled to revoke, rescind, cancel or
sue for termination of an agreement entered into on the basis of such
information. Directors, promoters, experts and authorisers of misstated
prospectus can be held liable for the same. Section 62 provides for civil
liability of misstatements and section 63 provides for criminal liability of
misstatements.
Defences
available against such liability is:-
1. Non-compliance
or contravention an honest mistake
2. Lack
of knowledge of such contravention
3. Believed
the statement to be true
4. Withdrawal
of consent prior to issue of prospectus
5. Efforts
to stop such act being in contravention of the provisions of law
The
Securities Contract Regulation Act, 1956 under section 24 provides for the
offences committed by a company. It states that any employee, director,
manager, secretary or any other officer of the company commits, consents or
connives to an act that results in gross negligence shall be proceeded against
as per the provisions of the Act, and accordingly punishes and or fined.
[1] 1. Ratanlal and Dheerajlal, The law of Torts,
Lexis NexisButterworthsWadhwa, Nagpur, 26th Edition, Reprint-2012, Pgs
1-21,474-495,612-655
2. Deepu
Krishna, The law of Torts and Consumer Protection Act, Lexis Nexis Quick
Reference Guide, 1st Edition 2013, Pg 87
[2]Ashby
v White (1703) 2 LD Raym 938
[3]Noor
Mohhammed v MohhammedZiajddinAIR (1932) MP 244
[4]Kaliappa
v Vayapuri (1865) 2 MHC
[5]Anand Singh v Ram Chandra AIR 1963 MP 28
[6]Supra
31
[7]Union of India v Hindustan Levers Ltd.
AIR 1975 Punj 259
[8]Caparo
Plc v Dickman(1990) 2 AC 605
[9]
Supra 31
[10]
Derry v Peek (1889) 61 LT 265
[11]
Supra 40
[12]Hedley Byrne & Co. Ltd. V Heller and
Partners Ltd. (1964) AC 465
[13]
ibid
[14]Caparo Industries Plc v Dickman (1990) 1
All ER 568, Para 19 of Amal Bakti Sdn Bhd v Affin Merchant Bank (M)
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