WHAT IS A FRAUD?

Fraud is a deception made intentionally for wrongful and illegal gain or to deprive the victim of his legal rights. Fraud can violate civil law where the victim is entitled to get compensatory damages. Fraud can violate criminal law where justice is served by imposing punitive damages, penalties, or imprisonment by the authority.

The purpose of Fraud can be monetary gain or other gains, for instance, by obtaining a passport, Aadhar, or other documents of false identities to attempt to qualify for a mortgage by way of false statements or to commit any offense impersonating false identity, etc. 

Fraud as A Civil Wrong

As a civil wrong in common law jurisdiction, Fraud is a tort. Although exact definitions and prerequisite to constitute Fraud varies among jurisdictions, the requisite elements of Fraud as a tort usually consist of advertent misrepresentation or concealment of an important fact by one party for a wrongful gain or to cause wrongful loss upon the other party.

Proving Fraud in a court of law can be difficult as the intention to defraud is crucial to constitute Fraud. Thus, proving that Fraud was committed has an evidentiary burden compared to other civil claims. This difficulty has even more deteriorated where some jurisdictions make it essential for the victim to prove fraud by clear and convincing evidence.

Fraud as A Criminal Offence

As a criminal offense in common law jurisdiction, Fraud is committed in different forms. For instance, generally theft by pretense or in some cases by misconduct like bank fraud, insurance fraud, forgery, etc. The prerequisites to constitute a criminal fraud primarily comprises evil intention or a guilty conscience.

For example, in theft by pretense, the deception of a victim by false representation or pretense must be committed with an evil intention to deceive the victim for wrongful gain or to cause wrongful loss.

Tersely, in Fraud, the primary intention of the perpetrator is to deceive the victim by convincing them to perform some act like lending money, giving up possession of any valuable item only to exploit the victim in the end. Similarly, the perpetrator intends to tamper with documents or impersonate someone for wrongful and illegal gain in forgery. Intention to deceive is essential in Fraud. 

Legislations Dealing with Fraud

Section 17 of the Indian Contract Act, 1872 deals with Fraud. According to the said Act, Fraud means acts committed by a party to a contract with his connivance or by his agent with intent to deceive another party or his agent or to induce him to enter into the contract. Fraud means and includes the following acts committed by a party 

1) The suggestion of a fact as something true which in reality is not true

2) The active concealment of a fact by one party having knowledge or belief of the fact

3) A promise made without any intention of performing it

4) any other act fitted to deceive;

5) any such act or omission as the law specially declares to be fraudulent. 

Section 420 of the Indian Penal Code, 1860 gives provision for Fraud. It explains Fraud as cheating and dishonestly inducing delivery of property. Whoever cheats and dishonestly induces the person de­ceived to deliver any property to any person or to make alter or destroy the whole or any part of a valuable security or anything which is signed or sealed and which is capable of being converted into valuable security shall be punished with imprisonment of either description for a term which may extend to seven years and shall also be liable to fine.