Andhra HC (Pre-Telangana)
Penchalapati Anakampali Hanumantha ... vs P. Sanjeeva Reddy And Ors. on 31 December, 2007
Equivalent citations: 2008(2)ALT109, AIR 2008 (NOC) 1215 (A. P.)
ORDER A. Gopal Reddy, J.
1. The respondents in the main appeal filed ASMP No. 424/2006 to recall the order passed in A.S. No. 2594/2003 and ASMP No. 2243 to 2246/2005, CMP No. 22203/ 2003 and ASMP Nos. 548/2005 to 550/2005 dt. 8-11-2005. Later, the respondents filed ASMP No. 218/2007 to convert the recall petition in ASMP No. 424/2006 into review petition as per the ratio laid down by this Court in Anita v. R. Rambilas AIR 2003 A.P. 32. Whereas appellants in the main appeal filed ASMP No. 1000/2006 under Section 148 r/w 151 CPC for enlarging the time to comply with the terms of the compromise decree passed in ASMP No. 2243/2005 in AS No. 2594/2003 dt. 8-11-2005.
2. The facts in nutshell giving rise to all these petitions are as under:
The appellants who are defendants in OS No. 7/2000 on the file of Senior Civil Judge, Gooty filed the present appeal challenging the judgment and decree passed dated 23-6-2003 whereunder the suit filed by the plaintiffs for declaration of title over items 1 and 2 of plaint schedule property; for permanent injunction restraining the defendants and their men from interfering with the plaintiffs' possession and enjoyment of items 1 and 2 of plaint schedule properties; for partition and separate possession of plaintiffs half share in items 3 and 4 of plaint schedule property, by allotting preferably southern half of items 3 and 4 to the plaintiffs was decreed declaring that they are owners of items 1 and 2 of plaint schedule properties and granting permanent injunction restraining the defendants and their men from interfering with the plaintiffs enjoyment over items Nos. 1 and 2 of the plaint schedule properties, and in the alternative the plaintiffs are entitled for possession with regard to item Nos. 1 and 2, and further they are entitled for partition and separate possession of their share with regard to items 3 and 4 of the plaint schedule property by allotting southern half share of items 3 and 4 to them.
3. Pending appeal, the appellants filed ASMP No. 2243/2005 under Order 23 Rule 1 CPC to dispose of appeal in terms of compromise memo. Respondents 7, 6 and 5 filed ASMP Nos. 2244, 2245, and 2246 of 2005 respectively to permit P. Devender Reddy to admit their signature i.e. Sarojamma-R-7, Anantharathnamma-R-6 and Penchalapati Ankampalli Lingamm-R-5 in the compromise and to represent on their behalf to admit the compromise entered by them in ASMP No. 2243/2005. Whereas CMP No. 22203/2003 was filed to suspend the judgment and decree dt. 23-06-2003 passed in OS No. 7/2000. ASMP No. 548/2005 was filed by the respondents to direct the lower court to ascertain the mesne profits in respect of items 3 and 4 of the plaint schedule property. The respondents filed ASMP No. 549/2005 seeking permission to withdraw an amount of Rs. 63,000/- and Rs. 13,000/-with interest. The respondents also filed ASMP No. 550/2005 to vacate the interim state granted in CMP No. 22203/2003. The main appeal as well as the above ASMPs were taken up together and accordingly ASMP No. 2243/2005 is allowed and the appeal was disposed of in terms of the compromise memo filed in ASMP No. 2243/2005 modifying the decree passed in terms of the compromise entered into by the parties, and the pending applications in CMP No. 22203/2003 and ASMP Nos. 548 to 550 of 2005 were also disposed of in terms of the compromise memo.
4. It is appropriate to notice the terms of compromise, which are relevant for disposal of the above applications, as under:
(a) The appellants have paid an amount of Rs. 2,00,000/- (Rupees two lakhs only) by cheque No. 413991, 413992 dated 26-12-2005 drawn on Indian Bank in favour of A. Devender Reddy. The said amount has been received by A. Devender Reddy on behalf of the other respondents/plaintiffs.
(b) The respondents/plaintiffs are entitled to receive the amounts which are lying in the revenue deposit and also in the court deposit. The appellants/defendants shall sign all necessary papers and present at all times to enable the plaintiffs to receive the amounts lying in the revenue deposit and court. The plaintiffs are entitled to the interest accrued on the amounts deposited above.
(c) In lieu of receiving the above amount, the plaintiffs/respondents are relinquishing their rights under the decree and the plaintiffs shall not claim any right over the property nor interfere with the possession of the appellants/respondents in the suit schedule property.
(d) Both the parties shall bear their own costs.
5. On disposal of the above appeal in terms of the compromise memo, the respondents (who are plaintiffs in the suit) in the main appeal filed ASMP No. 424/2006 for recalling the order passed in AS No. 2594/ 2003 stating that to have a quietus to the litigation pending for 18 years, compromise was entered into between them and on recording the compromise, the appellants/ defendants have got issued a legal notice through Sri Y. Lepakshi Naidu stating that the plaintiffs have to return the original documents and the amount would be, paid only after the receipt of original documents, which was never the subject matter in issue at the time of recording the compromise. Having known that respondents/plaintiffs in appeal are not in possession of the original document, cheques, which ere given by the appellants, have been presented in the bank and the same were returned with an endorsement stating that there are insufficient funds. After recording compromise, at the request of the appellants/defendants, the respondents/plaintiffs handed over the entire bundle to the appellants in the court premises itself on 18-11-2005 as matter was settled. Taking advantage of their innocence as they happen to be rustic villagers, the appellants/ defendants have resiled from the compromise and have not paid the amount. Though the appellants/defendants were present in court and admitted the terms of compromise they came up with a new version, therefore, they are forced to obtain copies afresh from the court to file the present application. Having succeeded in the suit, to have a quietus to the litigation, they agreed for settlement on the inducement made by the appellants/ defendants, though the terms are not favourable to them. Now the appellants/ defendants resiled from their earlier commitment and played fraud on them and have not interested to honour the terms of the compromise, therefore, the order passed in AS No. 2594/2003 has to be reviewed. Whereas the appellants/defendants filed ASMP No. 1000/2006 under Section 148 CPC stating that they have to pay Rs. 2,00,000/-to the respondents/plaintiffs and the amount deposited pending suit is exclusively belongs to them and they are always agreeable to comply with the terms of the compromise. Since original documents were not handed over by the respondent-plaintiffs coupled with the fact that the persons who promised to advance the amount did not pay the amount in time to enable them to comply with the terms of the compromise, they could not deposit the amount as agreed. On 18-1 -2006 they (appellants) have issued notices through their counsel stating that as per the compromise decree, they have not handed over the original documents and they (appellants) are prepared to pay the amount. As the time granted for payment of amount has expired and the respondents-plaintiffs had remained silent till March, 2006 they have deposited the amount in the bank and informed the same to them. Since no response is evoked from the respondents/ plaintiffs, the above application came to be filed, therefore time should be extended.
6. Sri Meherchand Noori, learned Counsel for the respondents/plaintiffs in the main appeal, who are petitioners in ASMP Nos. 424/ 2007 and 218/2007 contends that cheques dt.26-12-2005 issued by the appellants/ defendants were dishonoured followed by a notice dt. 18-1-2006 for arranging the original documents alleging that respondents agreed to deliver the original documents and on receipt of the same the amount has to be paid which is contrary to the terms of the compromise. When ASMP No. 424/2006 was filed on 1-3-2006 and another notice was issued on 27-3-2006, ASMP No. 1000/2006 was filed on 9-6-2006, which lacks bona fides and same have to be dismissed. When the appellants/defendants played fraud not only on the plaintiffs and also on the court in disposing of the matter, the order passed in AS No. 2594/2003 is liable to be recalled. As per Explanation to proviso of Rule 3 Order XXIII CPC compromise which is void, or voidable under the Indian Contract Act, 1872, shall not be deemed to be lawful, the order passed in AS No. 2594/2003 is liable to be recalled.
7. On the other hand, learned Counsel for the appellants/defendants, Sri M.V. Suresh Kumar contends that court can always enlarge time, and right if any of the plaintiffs is only to enforce the compromise decree but they cannot file a recall application or can seek a review.
8. There is no dispute with regard to the compromise entered into between the parties on 8-11 -2005. Under the terms of compromise, the defendants paid the plaintiffs Rs. 2 lakhs by way of postdated cheques dt. 26-12-2005 in favour of Devender Reddy who received the said cheques on behalf of other plaintiffs. The plaintiffs are entitled to receive the amount which was lying in the revenue deposit and also in the court deposit, for which the appellants-defendants signed all necessary papers for enable them to receive the same including the interest accrued on the said deposits. Notice issued by defendants dt. 18-1 -2006 after referring the compromise is also not in dispute, whereunder it was specifically averred that as per the terms and conditions of the compromise, the plaintiffs agreed to deliver original documents i.e., gift deed executed by Gangamma in favour of her sons and sale deed executed in favour of one Devanna by Hanumappa and on receipt of the above original documents from the plaintiffs, defendants are agreeable to pay a sum of Rs. 2 lakhs and for want of original sale deeds, the defendants have not adjusted the amount with regard to the cheques. Whereas in the affidavit filed in support of ASMP No. 1000/2006, in para 4 it is averred that as per memorandum of compromise, they have to pay an amount of Rs. 2 lakhs to the respondents-plaintiffs and the amount they have deposited pending suit is exclusively belongs to the respondents and in view of the paucity of funds, the could not deposit the amount as agreed and they deposited the amount during the month of March, 2006. It is also an admitted fact that the amount deposited to the revenue account and in the court pending suit as the plaintiffs were not in possession of the property, whereas the defendants are in possession of the property as per the judgment and decree where relief of possession of items 1 and 2 was granted in favour of the plaintiffs and also for allotting half share of items 3 and 4. When the defendants who are in possession of the property due to pendency of the appeal and as the same is likely to consume time for disposal appears to have rude the plaintiffs to give up their claim on payment of Rs. 2 lakhs, apart from the amount withdrawing the amount from the credit to the suit. It is also an admitted fact at the time of compromise, post dated cheques were issued with a promise that they will be honoured on the date of presentation but the same were dishonoured.
9. In Anita , a Division Bench of this Court held that when a consent decree has been passed, recall petition would not lie, however, review petition would be maintainable if fraud played on court. It was further held that if the evidence on record discloses that one party has played fraud, the remedy left over to the party against whom fraud is played to file a separate suit for setting aside decree obtained by fraud, but if it is proved that one of the party has played fraud on the court, then only the review petition is maintainable under Section 151 CPC.
10. In S.P. Chengalvaraya Naidu v. Jagannath , the Supreme Court held thus:
...The principle of "finality of litigation" cannot be pressed to the extent of such an absurdity that it becomes an engine of fraud in the hands of dishonest litigants. The Courts of law are meant for imparting justice between the parties. One who comes to the court must come with clean hands. We are constrained to say that more often than not, process of the court being abused. Property-grabbers, tax-evaders, bank-loan-dodgers and other unscrupulous persons from all walks of life fid the court-process a convenient lever to retain the illegal gains indefinitely. We have no hesitation to say that a person, who's case is based on falsehood, has no right to approach the court. He can be summarily thrown out at any stage of the litigation.
11. In Hamza Haji v. State of Kerala , the Supreme Court after referring to cases of fraud while concluding that High Court in exercise of its jurisdiction under Article 215 of the Constitution of India has the power to undo a decision that has been obtained by playing fraud on the court held that when Supreme Court find in agreement with the High Court exercising jurisdiction holding that order secured by the appellant is vitiated by fraud, it is obvious for the Supreme Court to decline to come to his aid by refusing the exercise of its discretionary jurisdiction under Article 136 of the Constitution of India. The Supreme Court further approved the ratio laid down by the Full Bench of the Bombay High Court in Guddappa Chikkappa Kurbar v. Balaji Ramji Dange 1918 AC 888, whereunder it was held thus:.
No court will allow itself to be used as an instrument of fraud, and no court, by the application of rules of evidence or procedure, can allow it eyes to be closed to the fact that it is being used as an instrument of fraud.
12. The Supreme Court in A.V. Papayyasastry v. Government of A.P. (case went from this court) held that a judgment, decree or order obtained by playing fraud on the court, tribunal or authority is a nullity and non est in the eye of the law and such a judgment, decree or order by the first court or by the final court has to be treated as nullity by every court, superior or inferior and it can be challenged in any court, at any time, in appeal, revision, writ or even in collateral proceedings. The Supreme Court after referring to various earlier judgments of it confirmed the recall order passed by this Court and issued a direction to the Urban Land Ceiling Authority to pass appropriate order afresh in accordance with law.
13. In Periyakkal v. Dakshyani the facts are that an application filed under Order 21 Rule 9 CPC for setting aside of sale in an execution of decree was dismissed by the executing Court. On an appeal, the sale was set aside. In second appeal before the High Court of Karnataka, parties entered into a compromise with the leave of the Court as there were some minors. The second appeal was disposed of in terms of compromise. As per the terms of compromise, the appellants agreed to deposit, which has to be made on or before November, 30, 1976 and the respondent agreed to receive a sum of Rs. 60,000/- in full and final settlement of the decree. The sale, which though confirmed by the trial court but set aside by the appellate court was to stand set aside, and the second appeal of the respondent was to stand dismissed. If the amount of Rs. 60,000/- was not deposited, the second appeal was to stand allowed and the sale was to stand confirmed. Time was stated to be the essence of the contract between the parties. On an application being filed for extension of time, as they were unable to raise necessary funds and application purporting to be under Sections 148 and 151 CPC for depositing of the amount in terms of compromise, on High Court dismissing application, the court could not extend the time where time has been stipulated by the parties. On further appeal being filed, Justice O. Chinnappa Reddy speaking for the Bench held that the time for deposit stipulated by the parties became the time allowed by the Court and this gave the court the jurisdiction to extend time in appropriate cases. Of course, time would not be extended ordinarily, nor for the mere asking. It would be granted in rare cases to prevent manifest injustice. True the court would not rewrite a contract between the parties but the Court would relieve against a forfeiture clause and where the contract of the parties has merged in the order of the Court, the Court's freedom to act to further the ends of justice would surely not stand curtailed and set-aside the judgment and remanded the matter to the High Court for fresh disposal.
14. In Pushpa Devi Bhagat v. Rajinder Singh , the Supreme Court summed up the amended provisions of Order 23 Rule 3 CPC, which read as under:
(i) No appeal is maintainable against a consent decree having regard to the specific bar contained in Section 96(3) CPC.
(ii) No appeal is maintainable against the order of the court recording the compromise (or refusing to record a compromise) in view of the deletion of Clause (m) of Rule 1 Order 43.
(iii) No independent suit can be filed for setting aside a compromise decree on the ground that the compromise was not lawful in view of the bar contained in Rule 3-A.
(iv) A consent decree operates as an estoppel and is valid and binding unless it is set aside by the court which passed the consent decree, by an order on an application under the proviso to Rule 3 Order 23.
15. The Supreme Court after summing up the amended provisions of Order 23, as extracted above, held as under:
Therefore, the only remedy available to a party to a consent decree to avoid such consent decree, is to approach the court which recorded the compromise and made a decree in terms of it, and establish that there was no compromise. In that event, the court which recorded the compromise will itself consider and decide the question as to whether there was a valid compromise or not. This is so because a consent decree is nothing but contract between parties superimposed with the seal of approval of the court....
16. Recently, the Supreme Court in A.A. Gopalakrishnan v. Cochin Devaswom Board 2007 (8) SCJ 777 : 2007 AIR SCW 5741 held that the bar contained in Rule 3-A of Order 23 will not come in the way of the High Court examining the validity of a compromise decree when allegations of fraud/ collusion are made against a statutory authority which entered into such compromise and allowed the appeal and setting aside the decree passed by the Sub-Court, Ernakulam.
17. In Kerr on the Law of Fraud and Mistake at page 419 on the point of "Consent Judgments" it is stated:
A judgment by consent is binding, but if it appear that the consent was obtained by fraud, the Court will treat the consent as a nullity. So, also, if it be made to appear that a Judge's order has been obtained by fraud or by the suppression of information which it was essential the Court should know, the order will be set aside.... A sale and conveyance cannot be held valid if procured by fraud, even if they have the coloruable protection of an order of the Court.
A voluntary settlement, accordingly, of real and personal estate, made by a man who was defendant in a suit in the Ecclesiastical Court, with the intent of withdrawing his property from the process of that Court, was set aside. Although the deed might have been executed before any right was declared, or any order for payment of money was made, yet if it appeared that the deed was executed for the purpose of defeating the right which the defendant knew the plaintiff was entitled to establish, it was considered to have been executed with the view and intention of defrauding him Blenkinsopp v. Blenkinsopp (1852) 12 Beav. 586.
18. From the facts, it is clear that the plaintiffs obtained a decree for declaration and possession of items 1 and 2 of plaint schedule properties and for partition and allotment of their share over items 3 and 4 of schedule properties, against which the appellants filed the appeal and obtained stay. Initially suit was filed before the Principal Senior Civil Judge, Anantapu on 9-10-1991, where it was numbered as OS No. 253/91. Later it was transferred to Principal Senior Civil Judge, Gooty, where it was numbered as OS No. 7/2000 on 22-1-2000. Since last 18 years, the plaintiffs were out of possession and after declaring their rights to recover possession of plaint schedule properties, the defendants filed the above appeal, in which this Court suspended the judgment on 26-9-2003, in the process the plaintiffs could not enjoy the fruits of the decree. Ultimately, the appeal was disposed of in terms of compromise, where the defendants accepted the claim of the plaintiffs and agreed to pay a sum of Rs. 2 lakhs. To have a quietus to the litigation, the plaintiffs though have not received the amount in full and final settlement accepted post dated cheques with the fond hope that they will be honoured on the due date. The terms of the compromise, as referred to above do not indicate about any title deeds, which are lying with the plaintiffs or which are with the plaintiffs to be handed over to the defendants-appellants stipulating any condition to handover them before cheques were honoured. When the cheques were presented they were dishonoured. Further by issuing notice, the defendants resiled from the terms of compromise and made it clear that the amount will be paid only on delivery of original documents as referred to above, which is not at all agreed as per the terms of compromise by the plaintiffs. The appellants/defendants also admitted that they could not deposit the amount till 10th May, 2006, by the time the plaintiffs filed ASMP No. 424/2006 for recalling the compromise decree as the same was entered by playing fraud on them. From the date of filing compromise petition till the date of deposit of the amount there is abnormal increase of the prices of agricultural land which can be taken judicial note by this court. Since there is a sudden rise in price, the defendants came forward to deposit the amount, otherwise they wanted to continue in possession and prevent the plaintiffs from taking possession of the property under the guise of compromise. Once the defendants themselves resiled from the contract and not honoured the terms of compromise, they are nor entitled to seek enlargement of time for deposit of the amount.
19. Further the plaintiffs were forced to agree with the terms of the compromise as they are not in a position to bargain with the defendants who are enjoying the usufructs of the lands and not allowing the plaintiffs to take possession since 18 years. As the matter is not likely to be decided finally in the near future, they have agreed to receive the amount to settle the matter once for all. On passing the compromise decree, the appellants/defendants put forward with certain conditions for honouring the terms of the compromise as fore mentioned only to weaken the plaintiffs as they are not in a position to bargain the terms with the appellants/defendants and to act according to the tunes of the appellants/defendants. In the process, they used the court as an instrument of oppression to perpetuate the fraud on the plaintiffs and to continue in possession depriving the plaintiffs from enjoying the fruits of the decree by resiling from the contract on untenable grounds. If the compromise decree is allowed to stand, it will cause manifest injustice to the plaintiffs. This Court in exercise of equitable jurisdiction can undo the injustice caused to the plaintiffs by recalling the order passed by this Court disposing of the appeal in terms of the compromise.
20. Having satisfied that the appellants have not made out any case for enlargement of time for deposit of the amount as agreed to by the parties amounts to rewriting the terms of the settlement in place of the terms and conditions of the compromise. The necessary corollary thereof is that ASMP No. 1000/2006 is liable to be dismissed.
21. In the result, ASMP No. 1000/2006 is accordingly dismissed. ASMP Nos. 424/2006 and 218/2007 are allowed. Consequently, compromise decree passed by this Court in AS No. 2594/2003 is recalled/reviewed.
Post the appeal for hearing before the appropriate Bench hearing the first appeals.