Punjab-Haryana High Court
The Chandigarh Primary Cooperative ... vs The State Of Punjab And Ors. on 19 January, 2005
Equivalent citations: (2005)140PLR371
Author: S.S. Nijjar
Bench: S.S. Nijjar
JUDGMENT S.S. Nijjar, J.
1. Whether a litigant who obtained a judgment and decree in its favour by fraud, can be permitted to take the benefit of the same and claim execution thereof on the ground that the decree even if it had been obtained by fraud, had not been challenged in the appropriate forum within the stipulated period, is the significant question of law which arises for the consideration of this Court in this writ petition.
2. The petitioner is the Chandigarh Primary Cooperative Agricultural Development Bank Ltd., Ropar. In this writ petition under Articles 226/227 of the Constitution of India, the petitioner prays for the issuance of a writ in the nature of Certiorari quashing the order dated 20.11.1984 passed by the Deputy Secretary (Appeals) to Government of Punjab in the Department of Cooperation (Annexure P-5).
3. Briefly stated the facts leading to the filing of the writ petition are that the petitioner had advanced a loan of Rs. 30,000/- to respondent No. 3 for the purchase of a Tractor. On 2.3.1971, respondent No. 3 authorised the Bank to make payment of the loan amount to M/s Jacksin Auto Engineers, G.T. Road, Ludhiana-I Invoice issued by the authorised firm had been supplied to the petitioner by respondent No. 3. On the basis of the authority letter of respondent No. 3, the petitioner delivered the crossed cheque No. 58959 dated 2.3.1971 to M/s Jacksin Auto Engineers. G.T. Road, Ludhiana-I against receipt No. 11006, dated 2.3.1971. The authority letter given by respondent No. 3 had also been signed by two witnesses. The petitioner had also obtained a receipt from respondent No. 3 for the amount of loan. The petitioner claims that the loan amount was misutilised by respondent No. 3. He did not purchase the tractor. The petitioner, therefore, served a registered notice vide letter No. Loan Case/1562/356/PLMB, dated 14.8.1971. This was received by respondent No. 3. He did not, however, bother to reply to the notice, although he paid certain instalments of the loan to the Bank. Thereafter, he defaulted in making the instalments as per the agreement, The petitioner-Bank, therefore, raised the dispute under Section 55 of the Punjab Cooperative Societies Act, 1961 (hereinafter referred to as "the Act"). On receipt of the reference, Assistant Registrar, Cooperative Society, Ropar who acted as the Arbitrator, passed an award against respondent No. 3 on 14.2.1975. Respondent No. 3 filed an appeal against the award. It was accepted. The matter was remanded to the arbitrator for a fresh decision. Respondent No. 3 appeared before the arbitrator and admitted the liability for the repayment of loan. He also gave an undertaking in which he requested for instalments. On the basis of the admission of respondent No. 3, an award was passed in favour of the petitioner. It was held that the petitioner would be entitled to recover the amount with interest through Court as arrears of land revenue or out of the movable/immovable property of the principal loanee or by his arrest. This award was pronounced on 24.5.1982. No appeal was filed against the award of respondent No. 3. Under Section 68 of the Act, the limitation for filing an appeal is 60 days. Since no appeal had been filed, the award became final. Since respondent No. 3 did not make the repayments of the instalments, a proclamation for the sale of the mortgaged land was issued under Rule 91 of the Punjab Cooperative Land Mortgage Bank's Rules, 1959. The sale was fixed for 16.12.1983. At this stage, respondent No. 3 filed a revision petition No. RPR-35 of 1983 on 14.12.1983 against the award dated 24.5.1982. On the revision petition, the following order was passed:-
"Heard. Notice to the respondents for 20.2.1984. Recovery by way of sale of the land/property of the petitioner stayed meanwhile. Dasti."
4. The respondent-Bank appeared before the appellate authority and raised an objection that the revision petition is not competent, without first exhausting the remedy of appeal. Since no appeal had been filed, the award had become final. Inspite of the objection raised by the petitioner, the revisional authority has passed by the impugned order (Annexure P-5). It has been held that since respondent No. 3 had already repaid Rs. 29,7027- out of the principal amount of Rs. 30,000/-, the balance amount may be adjusted from the share money of Rs. 1,500/- outstanding in the credit of respondent No. 3.
5. Mr. Prashar, learned counsel appearing for the petitioner has vehementally argued that the order passed by the Deputy Secretary (Appeals) is without jurisdiction. The award (Annexure P-4) passed by the Assistant Registrar was appealable under Section 68 of the Act. Since no appeal had been filed, the revision petition was not maintainable. He has submitted that no injustice has been done to respondent No. 3. He had admittedly taken the loan. He had admitted the liability. He had agreed to pay the loan amount in instalments. He subsequently defaulted in making payments of instalments. Therefore, notice of recovery was issued against him to recover the loan amount as arrears of land revenue.
6. Mr. Ajay Lamba, learned counsel appearing for respondent No. 3 has submitted that a poor, innocent farmer has been defrauded of Rs. 30,000/-. The officer of the Bank had conspired with the supplier of the tractor. Neither the tractor was delivered to the petitioner nor was any loan money released to him. A poor simple farmer has been made a victim of conspiracy between the officers of the petitioner-Bank and a bogus firm. Learned counsel has further submitted that the writ petition has been filed only to save the guilty officers of the respondent-Bank as the revisional authority had passed strictures against the officers of the petitioner-Bank. The petitioner-Bank has received the entire loan amount, and therefore, no loss has been caused even though the amount was not advanced to the borrower i.e. respondent No. 3. He further submits that the writ petition deserves to be dismissed on the sole ground that the petitioner is an unscrupulous litigant and cannot be permitted to take benefit of a fraudulent decree. Even if the revisional authority had no jurisdiction, the impugned order deserves to be upheld as only justice has been done to respondent No. 3.
7. I have considered the submissions made by the learned counsel for the parties. It appears that the petitioner has been deliberately creating hurdles in the way of respondent No. 3 throughout the proceedings. The initial award was passed against respondent No. 3 on 14.2.1975, which was challenged in appeal. During the pendency of the appeal, respondent No. 3 had to make an application for transfer of the appeal. The application was allowed. The appeal was transferred and was heard by the Deputy Registrar, Cooperative Society, Ropar. By order dated 7.12.1981, the appellate authority accepted the appeal and set aside the award dated 14.2.1975. The award was set aside on the ground that no notice had been issued to any of the parties or to any of the witnesses and no evidence was recorded. The appellate authority observed that notice dated 20.1.1975 allegedly sent by the arbitrator asking respondent No. 3 to appear on 14.2.1975 does not seem to have been sent by post because neither the same is bearing postal stamps nor stamp of the Post Office. It is further observed that if the summons had been sent through some responsible person or official, then the service effected on respondent No. 3 should have been got certified from him. The arbitrator did not, therefore, follow provisions of Rule 74 of the Punjab Cooperative Societies Rules, 1963. It was also held that the award was not self-speaking. It was held by the appellate authority that the arbitrator had not applied his mind, but had only filled in a cyclo-styled form. The award was set aside and the matter was remanded to the Assistant Registrar, Cooperative Society, Ropar for a fresh decision. On remand, the Assistant Registrar heard the petitioner as well as respondent No. 3. On the basis of the record, the arbitrator came to the conclusion that respondent No. 3 had obtained a loan of Rs. 30,000/- for the purchase of tractor on 2.3.71 from the petitioner-Bank. Respondent No. 3 returned some amount towards the principal and some towards the interest. The arbitrator further held that a sum of Rs. 28,877.70 remains due as principal and a sum of Rs. 9,479.47 as interest upto 30.6.1981. It is further noticed in the award that respondent No. 3 had admitted the amount to be correct and requested that instalments may be made of this amount. Respondent No. 3 further stated that he would pay Rs. 20,000/- at the Sauni crop and Rs. 3,000/- at the Hari Crop. The balance would be paid at the next Sauni. Immediately, thereafter, the arbitrator makes the following observations:-
"....Therefore, I have come to the conclusion on the basis of the circumstances explained by Shri Sardara Singh that some fraud had been played with him about this money because of which he would not return the loan. Therefore, in this way, his request is genuine, Therefore, I order that the amount may be recovered according to the above formula from Shri Sardara Singh son of Shri Tara Singh, Village Kotla Sarmukh Singh, Tehsil and District Ropar."
8. As noticed earlier, relying on the award, the petitioner issued a proclamation for sale of the mortgaged land of respondent No. 3 which was fixed for 16.12.1983. Respondent No. 3 challenged the aforesaid proclamation by directly filing a revision before the Deputy Secretary (Appeals) under Section 69 of the Act. The revisional authority has passed a very detailed order. Some of the very significant and relevant observations made by the revisional authority are as under:-
"I am inclined to agree with the counsel for the petitioner. The philosophy behind the loan for the purchase of machinery is that with the help of machinery, the production increased and out of increased production the farmer can repay the loan. But in the present case, the tractor for which the loan was advanced to the petitioner was not delivered to him."
xxx xxx xxx xxx It is clear that a simple fraud was played upon the petitioner by the Ludhiana firm. The respondent Bank was duty bound to ensure the supply of tractor to the petitioner. The petitioner soon after the delivery of cheque to the firm made a complaint to the respondent Bank regarding non-supply of tractor to him. But instead of initiating action against the Ludhiana Firm for defrauding the petitioner of Rs. 30,000/-, the respondent Bank strangely enough initiated recovery proceedings against the petitioner. The appellate order dated 7.12,1981 also shows that the petitioner had brought it to the notice of the appellate authority that he had been defrauded of Rs. 30,000/- and that the tractor had not been supplied to him. A perusal of the appellate order shows that the appellate authority did not give any finding in this regard and left the matter for the arbitrator. It is also clear from the appellate order that first Arbitrator did not serve any notice worth the name on the petitioner and passed an exparte award. A perusal of the second award shows that the petitioner again brought it to the notice of the second Arbitrator that a fraud had been played upon him but the second arbitrator did not make a probe into this matter. I have no hesitation in holding that the second Arbitrator played a ruse upon the petitioner who is a simple fanner and obtained an undertaking for making payment in three instalments. As the undertaking was procured in dubious fashion, therefore, 1 hold that the award dated 24.5.82 is not a consent decree...
The petitioner is a simple farmer who has been defrauded of Rs. 30,0007- and the Bank has not taken any steps to retrieve Rs. 30,0007- from Ludhiana Firm which defrauded the petitioner. This silence on the part of the respondent-Bank creates strong doubts about the integrity of the officials involved in the transaction. This is a case in which the Registrar, Cooperative Societies and the management of Punjab State Cooperative Land Mortgage Bank Ltd., should hold thorough enquiry to book the guilty persons so that the interests of the farmers are safe-guarded. A copy of this order shall be sent to the Registrar Coop. Societies and the Managing Director, Punjab State Cooperative Land Mortgage Bank Ltd., Chandigarh for necessary action in the mailer."
9. The aforesaid observations make it abundantly clear that the officers of the respondent-Bank have been held to be responsible for defrauding respondent No. 3 in connivance with the firm which was to supply the tractor. But no action was taken against the officers responsible for defrauding a poor man. The entire amount has been paid by respondent No. 3 to the petitioner-Bank, although he did not receive even a penny or the loan which he had taken. The failure of the petitioner-Bank in not taking any action against the responsible officers for the fraud perpetrated on a poor hapless villager is wholly unjustified. Such a litigant is clearly not entitled to any relief under Article 226/227 of the Constitution of India. Considering a similar situation, the Supreme Court in the case of Article 226/227 has observed as follows: -
"1. KULDlP SINGH, J. :- "Fraud-avoids all judicial acts, ecciesiastical or temporal" observed Chief Justice Edward Coke of England about three centuries ago. It is the settled proposition of law that a judgment and decree obtaining by playing fraud on the Court is a nullity and non est in the eyes of law. Such a judgment/decree ....by the first court or by the highest court....... has to be treated as a nullity by every court, whether superior or inferior. It can be challenged in any court even in collateral proceedings.
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5. The High Court, in our view, fell into patent error. The short question before the High Court was whether in the facts and circumstances of this case, Jagannath obtained the preliminary decree by playing fraud on the court. The High Court however, went haywire and made observations which are wholly perverse. We do not agree with the High Court that "there is no legal duty cast upon the plaintiff to come to court with a true case and prove it by true evidence". 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 is being abused. Property-grabbers, tax-evaders, bank-loan-dodgers and other unscrupulous persons from all walks of life find the court - process a convenient lever to retain the illegal gains indefinitely. We have no hesitation to say that a person whose case is based on falsehood, has no right to approach the court. He can be summarily thrown out at any stage of litigation."
10. In my opinion, the aforesaid observations of the Supreme Court are sufficient to negative all the submissions made by the Counsel for the petitioner. I am inclined to accept the submissions of Mr. Lamba that the present petition has been filed only to show favour to the concerned officials who were involved in the transaction which has been dubbed by the revisional authority as a ruse.
11. In view of the above, I find no merit in the writ petition and the same is hereby dismissed. No costs.