Legal importance of Act done in good faith

By | August 14, 2015

Act done in good faith

A thing is deemed to have been done in good faith where it is in fact done honestly, whether it is done negligently or not [section 3(22) of the General Clauses Act]. A person cannot be said acting in good faith where he has a suspicion that there is something wrong and does not make further inquiries. Being aware of possible harm to others and acting in spite thereof is acting with reckless disregard of consequences. It is not an act done in good faith. In deciding the question of good faith, what comes into consideration is the intention of honesty and the absence of bad faith or mala fides (Smt. S.R. Venkataraman v. Union of India AIR 1979 SC 49). Thus, an act in good faith means an act done honestly even if it is tainted with negligence. [Laxman v. CIT  [1988] 174 ITR 465 (Bom.)]. If an element of honesty is present, the requirement of good faith is satisfied. Good faith requires not indeed logical infallibility, but due care and attention [T.V.S. Employees’ Federation v. T.V.S and Sons Ltd.[1996] 87 Comp. Cas. 37 (Mad.)]


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