Gujarat High Court
Continental Textile Mills Ltd. vs Bharat K. Patel And Ors. on 1 December, 1998
Equivalent citations: AIR1999GUJ193, (1999)2GLR1327, AIR 1999 GUJARAT 193
Author: N.N. Mathur
Bench: N.N. Mathur
ORDER N.N. Mathur, J.
1. This Miscellaneous Civil Application under Article 226 of the Constitution of India read with Order 47, Rule 1 and 115 (151)of CPC is preferred by the petitioner Continental Textile Mills Limited, a Company incorporated under the provisions of the Companies Act, 1956, having its registered office at New Delhi, to review or recall the order of this Court (Coram : S. D. Pandit, J.) dated 13-8-1998 and 28-8-1998 in Special Civil Application No. 3418 of 1998 and to restore the Special Civil Application to its original number, on the ground that the said orders have been obtained from this Court by the first respondent Shri Bharat K. Patel, Proprietor of Anmol Sales in collusion with respondent No. 2 Shri A. S. Mann, Genera! Manager, Continental Textile Mills Limited, Ahmedabad by practising and perpetuating fraud.
2. The petitioner Company engaged itself in manufacturing textiles in the city of Ahmedabad. The say of the petitioner Company is that on account of financial difficulties and market conditions in the year 1992, the Company was forced to close down its manufacturing activities and other allied business. In these circumstances the workmen employed by the Company were not paid wages, as such one Divyapal along with other workmen filed a Special Civil Application before this Court which has been registered as Special Civil Application No. 1243 of 1998 and the same is pending hearing. A recovery application was also filed by the workmen employed by the petitioner Company being Recovery Application No. 1471 of 1997. The Labour Court by order dated 27-8-1997 directed the petitioner company to pay a sum of Rs. 22.10 crores subject to adjustment of Rs. 1,00,13,602/- if recovered and or paid pursuant to the order passed in the Recovery Application No. 2545 of 1995 and 2953 of 1995. Thus, the petitioner came under a heavy financial pressure and it decided to search a person who could take over the Company by purchasing the shares of the Chairman Mr. C. L. Varma, and other directors of the Company, their friends and relatives. On 16-2-1998 the first respondent Mr. B. K. Patel approached the Company by addressing a letter. By the said letter the first respondent expressed his interest in purchasing the property of the Company. He also agreed to pay bank dues plus Rs. 3 crores in full take over of the Mill. The said letter remained under consideration of the Company for long. Mr. C. L. Varma, Chairman of the Company, addressed a confidential letter dated 3-7-1998 to the second respondent Mr. A. S. Mann, introducing the first respondent Mr. Bharat K. Patel. As the said letter has material bearing on the controversy involved in the present Special Civil Application, it would be convenient to reproduce the same in extenso.
"Continental Textile Mills Ltd. New Delhi Confidential P1/CTML 03-07-1998 Mr. A. S. Mann, Ahmedabad.
Dear Mr. Mann.
Mr. Bharat Patel had a talk with me and assured me that he will be able to successfully make settlement with the CTML workers as he is authorised to negotiate with them, in the limitation of the following terms :
1. Payment has to be settled not more than statutory 15 days gratuity and 15 days compensation up to 2nd February 1992, i.e, upto the date of closure of the Mill.
2. He will get a written agreement made with TLA and workers individually securing all workers unconditional resignations with effect from 2nd February 1992 and their confirmation that the amount agreed to be paid will be in full and final settlement and they are not entitled to or claim anything beyond 2nd February 1992.
I have agreed that subject to your satisfaction, he be issued a letter tomorrow so that he can do the needful. This letter I am giving to Mr. Patel to hand over to you if you need any further clarification, you may contact me over telephone.
Mr. Patel has agreed that he will give you a cheque of Rs. 1 crore payable on 14th at Ahmedabad without insisting on Banks endorsement (certifying for payment on 14th). In the conditions of Mr. Patel will hand over to you on Monday the 6th a bank draft payable in the name of CTML for Rs. 21 lacs which will be returned to him immediately after the cheque for Rs. 1 crore has been encashed on 14th or any of the date as per his wishes.
After he has made a written statement confirming the agreement with TLA and the resignations the date of payment will then be arranged to the workers on securing our approval.
I have some urgent meeting somewhere and have to rush. That is why I am sending this letter in hurry.
I wish you and him best of luck and success.
Yours sincerely, Sd/-
(C. L. Verma)"
3. A perusal of the letter shows that the first respondent was authorised to negotiate with the workmen of the petitioner Company to settle the dispute. The authority to negotiate was restricted by various conditions including condition Nos. 1 and 2 referred in the latter. In any case on the basis of this letter it cannot be said that the Company in any way had agreed to transfer the management or equity shares of the Company in the name of Mr. Bharat K. Patel. Even no inference can be drawn that there was any agreement to sell the property to Mr. Bharat K. Patel. It appears that in order to ascertain the bona fides of the first respondent a clause was introduced whereby Mr. Patel agreed to give a cheque of Rs. 1 crore in the name of the Company payable on 14-7-1998 at Ahmedabad. It was also agreed that Mr. Patel will hand over on 6-7-1998 a bank draft for a sum of Rs. 21 lakhs payable in the name of the Company which shall be returned to him immediately on encashment of the cheque of Rs. 1 crore on 14-7-1998 or on any other date as per his wishes. It is stated that the said cheque was dishonoured as per the communication dated 20-7-1998 of the UCO Bank. The cheque was redeposited on 8-10-1998 and it was again dishonoured as per communication of the Bank dated 12-10-1998. Reverting to the controversy with respect to payment of wages to the workmen, one Sonaji Kalaji filed a Special Civil Application which was registered as Special Civil Application No. 3418 of 1998 out of which the present Miscellaneous Civil Application has arisen. The said Special Civil Application was filed seeking direction to the Collector, Ahmedabad, to initiate and complete the recovery proceedings within a stipulated period. The say of the petitioner is that the notice of the said Special Civil Application was not served upon any of its directors or at the registered office of the Company. The Company was served through respondent No. 2 i.e. its General Manager at Ahmedabad. An affidavit was filed in the said Special Civil Application on behalf of the District Collector, Ahmedabad by one P. T. Sadhu, Mamlatdar, Arrears (Recovery), Ahmedabad, stating that on receipt of the recovery certificate of Rs. 6,63,44,602.15 ps. a notice was issued to the Company under Section 125 of the Bombay Land Revenue Code on 23-3-1998, but the same returned "unserved". He attributed the delay in recovery to the director Mr. C. L. Verma as he had gone to America for by-pass surgery. On 13-8-1998 the Collector himself appeared before this Court (Coram : S. D. Pandit, J.) and assured that proper steps would be taken for the recovery of the amount in accordance with the provisions of the Land Revenue Code. Thus, the Court passed an order on 13-8-1990 wherein it was made clear that under the provisions of the Land Revenue Code, it will be open for the Collector to attach and sell the portion of the property which is sufficient to recover the amount under the certificate. It was however stated by Mr. A. S. Mann on behalf of the Company that the employees are trying to negotiate and trying to get maximum price for the property. Considering all facts and circumstances of the case the Court directed the Collector to take appropriate steps to see that there is recovery and payment of all dues under the certificate to the workmen within eight weeks. The Court gave liberty to the employer to approach the Collector and satisfy him that whatever proposal they have got. The Court fixed eight weeks time for the recovery.
4. On 20-8-1998 Textile Labour Association popularly known as TLA, Ahmedabad, filed a Miscellaneous Civil Application which was registered as Misc. Civil Application No. 1542 of 1998 seeking direction to recall the order dated 13-8-1998 or to modify the order by issuing direction to respondent No. 2 Company not to disburse the amount till the application Annexure-C pending with the Labour Court is decided or not to confine the disbursement only to 600 workmen but to 2200 workmen. It is also stated inter alia in the said Misc. Civil Application that the said applicant Union represents 2200 employees of the Continental Textile Mills, but the certificate pertains to only 600 workmen. The recovery application with respect to 2200 workmen was still pending before the Labour Court. The matter was adjourned to 29-8-1998. On the said date the learned counsel appearing for the TLA made a statement that, a settlement between the petitioner Union, other workmen and the industry has been arrived in accordance with the provisions of Section 2(p) of the I. D. Act. This fact was not disputed by any of the parties appearing in the said Misc. Civil Application. The first respondent Mr. Bharat K. Patel was also allowed to join as party in the said proceedings. He was also personally present in the Court. Mr. A. S. Mann, General Manager of the Mill was also present. Both Mr. Bharat K. Patel and Mr. A. S. Mann gave undertakings to make payment as per the said settlement by filing their separate affidavits. The Court accepted the undertakings given by Mr. Bharat K. Patel and Mr. A. S. Mann. In view of the settlement arrived at between the . parties and upon the undertaking furnished by Mr. Bharat K. Patel and Mr. A. S. Mann this Court substituted the order dated 13-8-1998 by the terms of the settlement on record. The Court also recorded that the parties to the settlement shall abide by the terms of the settlement. The settlement is signed by Mr. A. S. Mann, Mr. Bharat K. Patel, Mr. Sonaji Kalaji, petitioner in Special Civil Application, Mr. Vasavda, advocate for TLA petitioner and Mr. Mukul Sinha, Advocate.
5. The settlement inter alia provides that Mr. Bharat K. Patel and his nominees have agreed to purchase all the equity shares held by the existing directors, their relatives and their associates. It also says that an agreement for the transfer of the management by transferring all the equity shares of the Company has already been executed between them. A reference has also been given to the affidavits filed by Mr. Bharat K. Patel and Mr. A. S. Mann dated 25-7-1998 in the Special Civil Application. It was agreed that Mr. Bharat K. Patel shall make the payment to the workmen on behalf of the Company in four instalments.
6. On 16-10-1998 the Continental Textile Mills filed a suit for injunction to restrain the defendant Mr. Bharat K. Patel from removing the plant and machinery demolishing the suit property and removing any material lying and stored in the suit premises. It was stated therein that in pursuance of the offer giving by the defendant Mr. Bharat K. Patel, some negotiations took place between him and the company. At the initial stage of the talks Mr. Patel had agreed to give a bank draft of Rs. 21 lakhs on 6-7-1998 and a cheque of Rs. 1 crore payable on 14-7-1998. The cheque was deposited twice with the bank i.e. on 14-7-1998 and on 8-10-1998 but the same remained uncleared. It is also stated that during the negotiation talks it was worked out that the defendant will pay Rs. 11.08 crores. It was also agreed that the defendant will pay all the liabilities of the workers. It was complained that with-
out making any "payment the defendant is taking away parts of the machinery from first week of September, 1998. The Chamber Judge, City Civil Court, issued notice returnable on 9-11-1998 and granted interim relief in terms of para 15(B) which reads as follows :--
"The Hon'ble Court may be pleased to appoint a Court Commissioner for making a detailed inventory of the plant and machinery and the condition of the constructed premises of the plaintiff company at the suit property and to carry out inventory of the things that may be pointed out at the time of inventory."
The said suit was withdrawn on 19-10-1998 by submitting a pursis under the signature of Mr. A. S. Mann. It is stated in the application that The defendant has now agreed to open a separate account to deposit sale proceeds received by him from the transaction of material on demolition of building and sale proceeds of the plant and machinery as per his pursis dated 29-10-1998 and therefore it is not necessary to proceed with the suit.
7. It appears that the second respondent Mr. A. S. Mann sent a fax message on 26-10-1998 in reference to letter from the Head Quarters dated 23-10-1998. He explained that he has given undertaking before the Court introducing Mr. Bharat Patel as party who has taken over the Mill keeping in view of the fact that at the moment it was utmost necessary to keep the things settled. He however admitted that he was not authorised to file such affidavit. He has also referred to the suit filed by him. He has stated that he wanted to inform the Chairman Mr. C. L. Verma about the development but he could not do so as the latter was not keeping good health and never wanted to disturb him. The second fax message was given on 27-10-1998 wherein he stated that approximately 60 per cent material has been removed. He expressed his unawareness with respect of the agreement signed between Mr. Bharat Patel and other merchants.
8. On 3-11-1998 the date on which the present Miscellaneous Civil Application was filed by the Continental Textile Mills through Mr. S. S. Macker, Vice President, a suit also came to be filed in the name of Continental Textile Mills through Executive Director Mr. Bharat K. Patel, in the City Civil Court which has been registered as Civil Suit No. 5372 of 1998. In the said suit defendant No. 1 is Continental Textile Mills through its Chairman, Mr. C. L. Verma. Curiously his New Delhi address has not been given. Defendant No. 2 is Continental Textile Mills through Mr. A. S. Mann, General Manager. Defendant No. 3 is Mr. S. S. Macker. The plaintiff sought the notices to defendant Nos. 1 and 3 i.e. Mr. Verma and Mr. Macker to be served through respondent No. 2 i.e. Mr. Mann. The said suit is still said to be pending before the Civil Court.
9. Mr. Bharat K. Patel has filed affidavit-denying the allegations. He has admitted the fact of tendering affidavit dated 25-7-1998 and also furnishing the undertaking before the Court on 29-8-1998. With respect to removal of machinery etc. from the premises of the Mill it is stated that in view of the arrangement made by the Court by accepting the terms of settlement he was merely executing the Court's order. He has said that the petitioner has encashed the demand draft of Rs. 21 lakhs. He has also stated that amount of first and second instalment has been paid to the workmen.
10. Respondent No. 2 Mr. A. S. Mann, General Manager, of the petitioner Company has filed two affidavits dated 10-11-1998 and 18-11-1998. It is stated that he joined service with M/s. Continental Textile Mills Limited in 1962 wherein Mr. C. L. Verma was the Chairman of the Company. He had been working with Mr. C. L. Verma on responsible post. The petitioner took over the running concern of Bharat Vijay Mills in or about September, 1986. The Mill started manufacturing cotton and synthetic etc. There were 2200 employees. With effect from 20-10-1988 he joined as General Manager of the Mill. Full power to run and manage the Mill and take proper decisions in the best interest of the Company was given to him. In February, 1992 the Mill became victim of the crisis in Textile Industry and faced financial crisis, on account of which the Mill practically stopped production. The workers engaged the Company in various litigations in different Labour Courts. One group of the employees obtained order from the Labour Court for payment of about Rs. 6,63,00,000/-. There were huge liabilities of the Company and the Collector was proceeding with recovery. On many occasions the persons who wanted to purchase the assets of the Company had contacted him and through him negotiations took place with Mr. C. L. Verma but they could not be materialised for one or the other reasons. Respondent No. 1 Mr. Bharat K. Patel also contacted him with a proposal to take over the management of the Company by purchasing shares and by taking over all liabilities of the Company. He talked to Mr. C. L. Verma in New Delhi and a meeting was arranged in Mumbai on 11-6-1998 between Mr. C. L. Verma, himself and Mr. Bharat K. Patel. The meeting was held at Hotel Taj in Mumbai. Negotiations between Mr. C. L. Verma and Mr. Bharat K. Patel were held in his presence. Mr. Bharat Patel had shown his interest to take over the management of the Company together with its liabilities by purchasing shares of the applicant company held by Mr. C. L. Verma and other relatives. After protracted negotiations it was agreed that firstly the labour problem shall have to be resolved by making payment of their dues and attachment upon the assets of the applicant company should be lifted. He arranged another meeting between Mr. C. L. Verma and Mr. Bharat Patel in Delhi on 3-7-1998. He did not attend the said meeting. However, he was conveyed by both of them that the arrangement is worked out to resolve the labour problems and he was instructed to co-operate with Mr. Bharat Patel in respect of resolving the labour problem. It was also negotiated between them about transfer of share on part payment towards consideration for sale of the shares. He was also instructed by Mr. Verma to give full cooperation to Mr. Patel in resolving the entire matter amicably. As per the confidential letter dated 3-7-1998 respondent No. 1 hadagreed to give a cheque of Rs. 1 crore payable on 14-7-1998 and the draft of Rs. 21 lakhs was to be returned to respondent No. 1 after the cheque of Rs. 1 crore has been encashed. The cheque of Rs. 1 crore was dishonoured when it was deposited on 14-7-1998. It is further submitted that it was conveyed to him that arrangement was made between the petitioner company through Mr. C. L. Verma and respondent No. 1 thereby respondent No. 1 had agreed to pay Rs. 11 crores to Mr. Verma and his associates and relatives for handing over the assets and management of the Company and respondent No. 1 had also agreed to take all responsibilities of the petitioner company including the liabilities of the workers in addition to the said payment. It is further stated that as per the settlement respondent No. 1 made payment of about Rs. 2.6 crores in the first instalment and Rs. 70,00,000/- in the second instalment. It is further stated that at one point of time there were problems and therefore he had to immediately file suit No. 5192 of 1998 seeking injunction against respondent No. 1 from removing any material, machineries and demolishing the building of the Mill Company. However, later on respondent No. 1 agreed to abide by the terms of the settlement and to deposit the sale proceedings in the separate bank account and the suit was withdrawn by purshis on 29-10-1998. It is further asserted that these facts were informed to the Chairman and Managing Director of the petitioner company. He exercised the power and authority of the General Manager as per the letter dated 3-7-1998 issued by the Chairman and Managing Director bona fide and in the best interest of the Company. In spite of the fact that necessary information was given to the management of the petitioner company including Mr. C. L. Verma, Chairman, deliberately the actual conversations, dialogues and instructions on telephone have been suppressed. Mr. Mann states that Mr. C. L. Verma does not want to stick to his instructions given to him from time to time on telephone or otherwise.
11. During the course of arguments it has been brought to my notice that the petitioner company has filed a complaint under Section 138 of the Negotiable Instruments Act against respondent No. 1 wherein it is clearly stated that respondent No. 1 had agreed to pay all the accrued liabilities of the Continental Textile Mills plus Rs. 11 crores for taking over the said Mill and also stated that Rs. 21 lakhs by way of demand draft towards earnest money deposit were paid as per the letter dated 3-7-1998. Mr. S. S. Macker, Vice President of the petitioner company, has filed an affidavit stating that the said statement was made in the complaint as advised by the lawyer. It is staled that as per the legal advice unless consideration was shown for issuance of cheque. The complaint may not be entertained by the learned Magistrate. It is further stated that he had discussed with the advocate that there was no firm and concluded contract but that fact was mentioned for the limited purpose under the legal advice.
12. It is contended by Mr. Arun H. Mehta, learned advocate that the letter dated 16-2-1998 and the confidential letter dated 3-7-1998 would clearly show that the offer of the first respondent was never accepted by the petitioner company and/or its chairman and other directors whose shares were sought to be sold. Respondent No. 1 Mr. Patel was only authorised to negotiate with the workmen of the petitioner company to settle their disputes and for no other purpose. It is further pointed out that in fact the authority to negotiate with the workers were restricted by various conditions including condition No. 1 and 2 referred in the said letter. Deliberately a false statement was made by first and second respondent which led the court to pass the order dated 29-8-1998. Thus, according to Mr. Mehta the said order has been obtained by fraud. It is further submitted that this Court has inherent power to recall the order which has been obtained by fraud or by making deliberate false statement.
13. On the other hand, Mr. N. D. Nanavati, learned Sr. Advocate appearing for the first respondent submitted that there exists no ground to recall the order. It is also submitted that a sum of Rs. 21 lakhs was paid as part of the consideration. He further submitted that the settlement has been acted upon and accordingly payment has been made to the workmen in the first and second instalments. The third and fourth instalments shall be paid very shortly. It is also submitted that the petitioner has not come with clean hands. In spite of the fact that the cheque of Rs. 1 crore was dishonoured on 14-7-1998 and on resubmission it was again dishonoured on 8-10-1998 but the present Misc. Civil Application has been filed on 3-11-1998. Mr. Nanavati has also submitted that the present review application is not maintainable as the original petition was under Article 226 of the Constitution of India and the same has been disposed of by the order dated 13-8-1998. The order dated 29-8-1998 is for the modification/ substitution of the order dated 13-8-1998. At this stage Mr. Arun H. Mehta submits that he confines his prayer for quashing of order dated 29-8-1998 and not 13-8-1998.
14. Mr. Dave, learned counsel appearing for Mr. A. S. Mann has taken me through two affidavits filed by Mr. Mann and contended that his client has acted bona fide under the instructions of Mr. C. L. Verma. It is submitted that most of the instructions were given on telephone but unfortunately Mr. Verma has suppressed all the conversations and dialogues between him. He has pointed out that in fact Shri Verma was aware of the entire settlement and he has filed the present Miscellaneous Civil Application mala fide after cheque of Rs. 1 crore was dishonoured and he was not being paid Rs. 11 crores as agreed by respondent No. 1.
15. Mr. Mukul Sinha appearing for respondent No. 4 submits that the petitioner company did not show any interest for payment of wages to the workmen till the impugned order was passed by the Hon'ble Court. He submits that the workmen are suffering as they have not been paid salary for last number of years.
16. Mr. Vasavada, learned advocate, appearing for respondent No. 3 Textile Labour Association (TLA) has supported the submission made by Mr. Sinha and has invited my attention to a decision of the Division Bench of this Court in the case of Textile Labour Association v. State of Gujarat reported in (1995) 1 Guj LH 12. The said petition was filed by TLA in the same matter against the same petitioner company claiming payment of salary to the workers for the period they had actually worked. The Court held that since right to livelihood and a bare necessity of human dignity is guaranteed by Fundamental Rights, under Article 226 of the Constitution of India, writ can be issued for any purpose. The Court observed thus :--
"The question involved in this petition is of right to life and livelihood of 2700 workmen and their families. The Court cannot be oblivious of the fact that on account of closure of numerous mills in Ahmedabad, utterly miserable conditions have resulted for the families of the unemployed workmen. There have been instances of suicides because of utter economic hardships on account of unemployment of such milt workers. There have been cases of lack of economic support, medical treatment and medicines. Many other undesirable consequences follow even driving the people to criminal activities including prostitution. In such miserable circumstances, if right to livelihood and a bare necessity of human dignity cannot be enforced, though guaranteed by the Constitution, the Court cannot justify its existence for the enforcement of Fundamental Rights. Article 21 guarantees at least that minimal."
17. I shall first deal with the preliminary objection raised by Mr. Nanavati with respect to the maintainability of the present Miscellaneous Civil Application. It is contended that no review application is maintainable against the final order of this Court passed in exercise of power under Article 226 of the Constitution of India. It is further submitted that as to whether the order has been obtained by fraud or not is a disputed question of fact which can be properly dealt with under the Civil Law by filing Civil Suit and not by a Miscellaneous Civil Application for review under Order 47, Rule 1 or Section 151 of the Civil Procedure Code. The learned counsel has placed reliance on various authorities, viz. State of U. P. v. Brahm Datt Sharma reported in AIR 1987 SC 943, Himachal Pradesh Road Transport Corporation v. Balwant Singh reported in AIR 1992 SC 2201, Kewal Krishan v. Shiv Kumar reported in AIR 1970 Punj and Har 176 and Hip Foong Hong v. H. Neotia and Company reported in AIR 1918 PC 184. In State of U. P. v. Brahm Datt Sharma (supra) the writ petitioner, an Executive Engineer in the Irrigation Department challenged the order of dismissal unsuccessfully before the service Tribunal. The learned single Judge of the High Court by order dated 10-8-1984 set aside the order of the Tribunal and quashed the State Government's order of dismissal from service. The petitioner had retired from service during the pendency of the petition. The State Government however issued a notice dated 29-1-1986 to him calling upon him to show cause as to why orders for forfeiture of his pension and gratuity be not issued. The notice contained allegations of misconduct against the writ petitioner regarding the financial irregularities committed by him. He filed Miscellaneous Civil Application before the High Court in the matter which was disposed of on 10-8-1984. By order dated 11-7-1986 the learned single Judge of the High Court held that since the departmental proceedings taken against the respondent had already been quashed, it is not open for the State Government to issue notice on the very allegations which formed charges in the disciplinary proceedings. The learned Judge accordingly quashed the show cause notice. On appeal filed by the State Government, the apex Court held that no Miscellaneous Application could be filed in the writ petition to revive the proceedings on the basis of subsequent events.
The Court further held that if the writ petitioner was aggrieved by the notice dated 29-1-1986 he should have filed a separate petition under Article 226 of the Constitution challenging the validity of the notice as it provided a separate cause of action to him. In my view this authority is of no help to the respondent for the reasons that the present Miscellaneous Civil Application has not been filed on a fresh cause of action but the categorical case of the petitioner is that the order dated 29-8-1998 has been obtained by perpetuating fraud.
18. In the case of Himachal Pradesh Road Transport Corporation v. Balwant Singh (AIR 1992 SC 2201) (supra) the writ petitioner a clerk-cum-typist on daily wages challenged the order of termination by filing writ petition before the High Court. The petition was allowed and the order of termination was quashed by the judgment dated 31-7-1989. After two years on 8-5-1991 the writ petitioner filed an application in the disposed of writ petition praying for further relief. He claimed monetary compensation also for the period during which he had not actually worked for the Corporation as a result of the termination of his service. The High Court granted the said relief. On appeal by the employer the apex Court held that the High Court was not justified in entertaining an additional claim filed in a disposed of matter. This authority is also of no help to the petitioner as no additional relief has been claimed in the present Miscellaneous Civil Application.
19. In Kewal Krishan v. Shiv Kumar (AIR 1970 Punj & Har 176) (supra) the Court held that in order to set aside a consent decree on the ground that the consent was obtained by coercion, the proper remedy is to file a separate suit and not an appeal or an application for review. The Court further held that the party cannot employ the procedure of review for making out a contentious case of fraud on this ground.
20. In Hip Foong Hong v. H. Neotia & Co. (AIR 1918 PC 184) (supra) the Court held that in all applications for a new trial the fundamental ground must be that there has been a miscarriage of justice. Further if no charge of fraud or surprise is brought forward, it is not to show that there was further evidence that could have been adduced to support the claim of the losing parties; the application must go further and show that the evidence was of such a character that it would so far as can be foreseen, have formed a determining factor in the result.
21. At this stage it is to be borne in mind that the present Miscellaneous Civil Application cannot be strictly said to be under provisions of O. 47, Rule 1 or under Section 151 of C. P. C. Even in a disposed matter when a Miscellaneous Civil Application is filed seeking review it is essentially an application under Article 226 of the Constitution of India and there is nothing in Article 226 of the Constitution of India which excludes the High Court from exercising the power of review. The Court has a plenary jurisdiction to review the order to prevent the miscarriage of justice by correcting the grave error committed by it. 1 am fortified in my view by the decision of the apex Court in the case of Shivdeo Singh v. State of Punjab reported in AIR 1963 SC 1909, In the case of Indian Bank v. Satyam Fibres (India) Pvt. Ltd. reported in (1996) 5 SCC 550 : (AIR 1996 SC 2592) Justice Saghir Ahmad, speaking for the Court, has quoted the observation of Lord Denning in Lazarus Estates Ltd. v. Beasley reported in (1956) 1 QB 702 as follows :--
"No judgment of a Court, no order of a Minister, can be allowed to stand if it has been obtained by fraud. Fraud unravels everything."
After quoting Lord Denning their Lordships further observed that judiciary in India also possesses inherent power, specially under Section 151 of C. P. C. to recall its judgment or order if it is obtained by fraud on Court. The Court observed thus :--
"These powers spring not from legislation but from the nature and the constitution of the Tribunals or Courts themselves so as to enable them to maintain their dignity, secure obedience to its process and rules, protect its officers from indignity and wrong and to punish unseemly behaviour. This power is necessary for the orderly administration of the Court's business."
22. Thus, since fraud affects the solemnity, regularity and orderliness of the proceedings of the Court, any order obtained by fraud amounts to abuse of process of the Court. The Court has inherent power to recall order obtained by fraud or misrepresentation.
23. In the instant case the petitioner has sought review of the order dated 29-8-1998 on the ground that the order dated 29-8-1998 has been obtained by stating wrong facts which amount to abuse of process of the Court. In order to prevent the abuse of process of the Court, in fit case inherent powers to do justice, which every Court possess must be exercised. The preliminary objection raised is, thus, rejected.
24. Now the question arises for consideration is as to whether the order dated 29-8-1998 has been obtained by perpetuating fraud. In this connection it would be apt to read the order dated 29-8-1998. For the convenience para 2 from the order is extracted as follows :--
"It is stated by the learned advocate appearing for the respective parties that the parties have arrived at the said settlement voluntarily. They further state that the parties had signed the said settlement in their presence and they had also countersigned the said settlement. One Mr. Bharat Patel is allowed to join as party in this proceeding. He is A. S. Mann, General Manager of Continental Textile Mills Ltd. had given an undertaking to make payment as per the said settlement by filing their separate affidavit. The said undertakings given by Mr. Bharat Patel as well as Mr. A. S, Mann are being accepted by this Court."
25. It would be seen that the first respondent Mr. Bharat Patel was not a party to the main Special Civil Application when the matter was taken up on 29-8-1998. On a Miscellaneous Application filed by TLA Mr. Bharat Patel also applied to join him as a party in the proceedings. The prayer was granted. He remained personally present before the Court. Shri Bharat Patel and Shri Mann had given the undertaking to make payment as per the said settlement by filing their separate affidavits. A copy of the settlement has been placed on record at page 71. Paras 4 and 5 of the settlement read as follows :--
"Para 4 -- One Mr. Bharat K. Patel, and his nominees have agreed to purchase all the equity shares held by the existing directors/their relatives/their associates and an agreement for the transfer of the management by transferring all the equity shares of the company in already executed between them, accordingly.
Para 5 -- For the purpose of settling the claims of the employees of the Respondent Mills an affidavit has been filed by said Mr. Bharat K. Patel in Special Civil Application No. 3418 of 1998 dated 25-7-1998 agreeing to pay the dues of the employees in the manner enumerated therein. In support of the said affidavit filed by said Mr. Bharat K. Patel, two affidavits are filed by Mr. A. S. Mann, the General Manager of the Continental Textiles Mills viz. one is Special Civil Application No. 3148 of 1998 and another is Special Civil Application 1243 of 1995 both dated 25-7-1998 confirming the agreement of transfer of the management of the company to said Mr. Bharat K. Patel and his nominees by way of transfer of all the equity shares of the Company."
26. In para 4 it is not only stated that Mr. Bharat Patel was agreed to purchase all the equity shares held by the existing directors but a false statement has been made that the agreement for the transfer of the management by transferring all the equity shares of the Company is already executed between them. No such agreement has ever been executed between the parties. In paragraph 5 a reference has been given to the affidavit filed by Mr. Patel and Mr. Mann dated 25-7-1998 confirming the agreement of transfer of management of the Company to said Mr. Bharal Patel and his nominees by transfer of all the equity shares of the company. This fact is again false. The application is signed by Mr. Patel and Mr. Mann as well. Therefore both of them have made false statements before the Court. Mr. A. S. Mann in his affidavit-cum-undertaking dated 28-8-1998 has stated as follows :--
"I submit that Mr. Bharat K. Patel has purchased all the Equity Shares held by the Existing Directors/the Relatives/their Associates and agreement for the transfer the Management by transferring all the equity shares of the Company is already executed between Bharal K. Patel and his nominee and a Company. I, therefore further say that the Mill has been sold to Bharat K. Patel in pursuance of the agreement. I further say that the Mill Company and Bharat K. Patel will comply with the terms of the settlement."
27. Mr. Bharat K. Patel has also filed his Affidavit-cum-undertaking dated 28-8-1998. This clearly shows that his Lordship Mr. Pandit, J. while passing the order dated 29-8-1998 had proceeded on the basis of the settlement in which a clear averment has been made with reference to the agreement transferring all equity shares of the company in favour of Mr. Bharat Patel. A categorical statement has been made by Mr. Mann that the Mill has been sold to Mr. Bharat Patel in pursuance of the agreement. It is thus abundantly clear that but for the clear averment in the settlement and the two affidavits-cum-undertaking i.e. of Mr. A.S. Mann and Mr. Bharat K. Patel his Lordship Mr. Pandit J. would not have passed the order dated 29-8-1998. In view of this I hold that the order dated 29-8-1998 has been obtained by making false statement of fact with respect to actual status of the Mill, which amounts to abuse of process of the Court.
28. At this juncture it would be necessary to deal with the conduct of Mr. C.L. Verma, Chairman of the Company as well. It is difficult to believe that he is as innocent person as he has tried to project himself in this Miscellaneous Application. M. Verma had sent a letter dated 3-7-1998 to Mr. Mann introducing the first respondent Mr. Bharat Patel. As per the understanding between Mr. Patel and Mr. Verma the first respondent issued a cheque dated 14-7-1998 for a sum of Rs. 1 crore. The cheque was dishonoured as per the communication of the Bank dated 20-7-1998. But Mr. Verma did not react thereon. Not only this in order of this Court dated 13-8-1998 a liberty was obtained by the employer to approach the Collector and satisfy him whatever proposal they have. Just after few days on 29-8-1998 the settlement was produced and the impugned order was passed. There was no activity for the entire month of September, 1998, in spite of clear statement made that the Mill has been sold to Mr. Patel. Again on 8-10-1998 the cheque of Rs. one crore was resubmilled which was dishonoured and an information in that regard was received on 12-10-1998. Mr. Verma deliberately concealed the circumstances which led him to resubmit the cheque on 8-10-1998. In a complaint filed under Section 138 of the Negotiable Instruments Act, first time it is stated on behalf of the Company that there was a consideration of Rs. 11 crores. This fact has not been stated in this Miscellaneous Civil Application. Of course Mr. S.S. Macker, Vice President of the Company in his affidavit has stated that the fact has been stated in the complaint as per the legal advice. This speaks in volumes of the conduct of Mr. Verma and his officers that they can make false statements with impunity if they are so advised by their legal advisers. It is further interesting to notice that in spite of the fact that the impugned order was passed on 29-8-1998 the present Miscellaneous Civil Application has been filed as late as on 3-11-1998. It is difficult to conceive that Mr. Verma was completely ignorant of happening during the period 20-7-1998 to 29-8-1998 and subsequent thereto. After all he is a matured business man. Even if he was sick, the company must be having its network of communication. Somebody from the Head Office must be in contact with the officers of the Mill. There appears to be some truth in the statement of Mr. Mann that he had been in telephonic contact with Mr. Verma and there were verbal instructions on the basis of which he acted. In saying so, I have not entered into the disputed question of fact as to whether the statement of Mr. Mann is correct or not which could be properly adjudicated in a proper forum. But so far as the present Miscellaneous Civil Application is concerned, it appears that there was a live link between Mr. Verma, Mr. Mann and Mr. Patel. Mr. Verma has chosen to deliberately conceal certain material facts. Suffice it to say that Mr. Verma has not come before this Court with clean hand. Even if it is assumed that he was ignorant of the activities of Mr. Mann still he is guilty of omission on his part to know what was happening in his factory office, which gave opportunity to respondent Nos. 1 and 2 to abuse the process of the Court. If he would have been little vigilant, he could save himself, workmen and the valuable time of the Court. Thus, Mr. Verma is also responsible by his act or omission for permitting the process of the Court being abused.
In view of the aforesaid, this Miscellaneous Civil Application is allowed and the order of this Court dated 29-8-1998 passed in Misc. Civil Application No. 1452 of 1998 is recalled and the order dated 13-8-1998 is restored. Rule made absolute with cost payable by Mr. C.L. Verma and respondent No. 1 Shri Bharat Patel which is quantified as Rs. 40,000/-. Each of them shall deposit Rs. 20,000/- before this Court latest by 31-1-1999.