Punjab-Haryana High Court
Punjab Beverages Pvt. Ltd. vs G.T. Agencies on 30 May, 2008
Equivalent citations: (2008)151PLR496
Author: Ranjit Singh
Bench: Ranjit Singh
JUDGMENT Ranjit Singh, J.
1. Closely related family members, who were working together in a concern known as 'Coca Cola' are litigating in this case, one of which has got an ex-parte decree in his favour for recovery of an amount approximately Rs.five crores. The petitioner would cry foul and say that this has been obtained by a fraud which is apparent on the face of the record and the same would need to be rectified immediately by this Court while exercising jurisdiction under Article 227 of the Constitution of India, Values in our society have undergone a sea-change and it is money which seems to have foremost consideration. It matters not if in the bargain one puts at stake close relatives, like brother, sister or in-law.
2. A simple application seeking direction for the court, which is dealing with an issue of setting-aside ex-parte decree and judgment, has led to an interesting and a significant debate in regard to scope of Article 227 of the Constitution of India specially in the background where allegations of fraud are made.
3. The facts when noticed in the case would bring out the alleged aspect of greed involved in this case, which the petitioner has termed as a fraud on the part of the respondent.
4. At issue is an ex-parte decree dated 23.12.2005 passed in favour of respondent M/s G.T. Agencies, a registered partnership firm having its office at Show Room No. 51, Sector 26, Madhya Marg, Chandigarh for recovery of Rs. 5,67,54,376-29P. Petitioner alleges that this decree has been obtained by fraud and would refer to the facts here-in-after noticed in support of the allegations. The petitioner on coming to know about the same has filed an appeal against this ex-parte decree through which recovery of above-noted amount of more than Rs. 5-1/2 crores is allowed. Petitioner claims that the appeal is filed within thirty days of acquiring the knowledge about the decree and thus this appeal is instituted within time. It is stated that as a matter of abandoned precaution, the petitioner has filed an application under Section 5 of the Limitation Act seeking condonation of delay of 455 days, though the appeal is otherwise within a period of limitation from the date of knowledge of the decree. On 24.8.2007, District Judge, Chandigarh has framed issue whether there is sufficient ground to condone delay in filing the appeal and fixed the case for evidence. The petitioner felt aggrieved against the same and has invoked the jurisdiction of this Court under Article 227 of the Constitution for setting-aside of the order dated 24.8.2007 as referred to above. The grievance is that the application seeking condonation of delay filed under Section 5 of the Limitation Act would not need any oral evidence for the purpose of being decided as according to the petitioner, the facts in this case are so glaringly apparent from the record indicating fraud and which are not in much dispute and so would not require any adjudication but an order condoning the delay paving way for deciding the appeal on merits.
5. Shortly after framing the issues and when the case was listed on 24.9.2007, the respondent herein filed an application for framing an additional issue regarding the competency of a person filing the application under Section 5 of the Limitation Act. The court, after receiving reply to this application, viewed that issue about the locus of Ajit Singh son of late Shri Daljit Singh to file the application and appeal would arise and accordingly framed an additional issue in this regard. Further directions were issued in the said order on an application moved by the respondent that the minutes book of applicant-company since July 1992 till May, 2007 may also be brought by applicant-Director Ajit Singh at the time for cross-examination of the witness, if these are available with the petitioner. This order perhaps has ignited the cause and grievance of the petitioner for them to challenge the same as* well as the order dated 24.8.2007. To properly appreciate the background in which the allegations of fraud are made, it will be essential to make a brief reference to the suit which led to passing of this ex-parte decree.
6. Respondent, a partnership firm, filed a suit No. 43 of 2005 on 5.5.2005 before Civil Judge, Chandigarh for recovery of the amount noted in the foregoing paragraphs along with interest against the petitioners, who are arrayed as defendants. It is pleaded in the suit that defendant-company had taken a loan from the plaintiff firm and had secured the same by deposit of title deeds with respect to Plot No. 179, Industrial Area-I, Chandigarh by way of equitable mortgage. Respondent-partnership consists of Lt. Col. A.S. Smt. Surinder Ajit Judge, Smt. Nagina, Smt Shah E. Naaz and Kuljeet Singh Sehgal. Apparently, it is a family partnership concern of Col. A.S. Judge. Smt. Surinder Ajit Judge, being his wife, and Smt. Nagina and Smt.Shah E Naaz, his two daughters. The petitioner has placed on record the copy of Form 'A', which gives particulars of the partnership firm and the same is dated 4.5.2005. One day after registration, suit is filed on 5.5.2005, Col. A.S. Judge is also the General Manager of petitioner-company, i.e., M/s Punjab Beverages Pvt. Ltd. Respondent partnership concern sued the petitioner-company at three addresses mentioned in the suit and these are Friends Colony, New Delhi, Administrative Office at 8/32, Kirti Nagar, New Delhi and Factory at Plot No. 180, Industrial Area, Chandigarh. The summons in this suit was effected upon the petitioner-company, which is defendant in the suit, through its General Manager, who is none other than Col. A.S. Judge, managing partner of the respondent-plaintiff partnership concern. He accepted the summons and engaged a counsel Shri D.V. Mehta, who appeared on behalf of the petitioner-company in the suit. Shri D.V. Mehta, Advocate filed his Vakalatnama and entered appearance on behalf of the petitioner-company in the said suit on 16.7.2005. The petitioner has placed on record a typed copy of Vakalatnama executed by Lt. Col. A.S. Judge in favour of Shri D.V. Mehta authorising him to appear on behalf of the petitioner-company. This document is on record as Annexure P-3. After appearing in the case on 2.8.2005, Advocate D.V. Mehta absented and did not appear on the next date of hearing, i.e, 20.8.2005. The petitioner company, accordingly was proceeded ex-parte.
7. What a way to get decree in a suit?.
8. Col. A.S. Judge is the managing partner of respondent-partnership concern, which had filed this suit. He gets a notice issued on to himself and engages a counsel, who appears on one day and thereafter abstain and does not even appear. The trial court holds an ex-parte proceeding and decrees the suit vide judgment and decree dated 23.12.2005. Col. A.S. Judge makes no effort to inform the court that he is a managing partner of the plaintiff concern and has himself engaged a counsel on behalf of the defendant. The court has also made no efforts to acquaint itself with such a glaring infirmity.
9. These facts are not in much dispute. The respondent concern now relies on one technicality or the other, whereas the petitioner would loudly proclaim it to be a clear case of fraud, which is writ large. The petitioner would call for immediate intervention and correction of this fraud.
10. It is not disputed that the summons in this case was not served on the defendant company (petitioner) but only on the General Manager, who himself is a plaintiff in the suit. The petitioner never learnt about this decree and statedly came to know of it on 17.3.2007, when some real estate agent approached the petitioner for information in respect of a plot No. 179-80 Industrial Area, Chandigarh. From the agent, Mr. Ajit Singh Director of the petitioner-company learnt that property was being sold in pursuance to the execution proceedings pending before Civil Judge, Chandigarh. The petitioner-company immediately rushed and filed an application under Order 9 Rule 13 CPC before the trial court seeking setting aside of the ex-parte judgment and decree. The petitioner-company also filed an appeal within a period of thirty days from the date of obtaining knowledge and as a matter of precaution, as already noticed, filed an application under Section 5 of the Limitation Act. It is, thus, pleaded by the petitioner-company that fraud is writ large in this case and there is no requirement of framing issue or receiving evidence. The ex-parte decree would require immediate setting-aside and the suit is required to be properly adjudicated as per law. According to the petitioner, rather than appreciating this fact the Appellate Court had framed an issue in regard to the locus of Ajit Singh in filing this appeal and the application.
11. The plea of the petitioner as projected is stoutly opposed by the respondent. As already noticed, the respondent would base its case on pure technicalities. It is first submitted that the prayer made in the petition is limited and is to the effect that there is no requirement of receiving oral evidence for setting-aside the ex-parte order and accordingly the order framing additional issue and directing the petitioner to produce minutes of meeting etc. need not to be set aside. Mr. Aggarwal, counsel representing the respondent would say that the prayer made in the revision being limited prayer, issues agitated can not be gone into. Mr. A.S. Chandhiok, representing the petitioner, on the other hand, would plead that the fraud in this case is so apparent and clear from the record itself and hence this would be a fit case to exercise jurisdiction under Article 227 of the Constitution, so that this fraud is set right to enable the petitioner to prosecute their respective lis afresh in the suit.
12. This ensued a debate in regard to scope of Article 227 of the Constitution between the parties. Mr. Chandhiok would plead that scope of this Article is so wide, even wider than Article 226, and hence on detection of fraud, the court should suo moto interfere to set right this fraud. In response, Mr. Aggarwal would say that no such objection was made before the courts below and accordingly there cannot be a suggestion that court has not considered any such submission which was made. The counsel seems to be contending that the petitioner did not plead before the Appellate Court that the application be decided on the basis of fraud as alleged and that no issue in this regard be framed. Mr. Aggarwal would further say that he is expected to answer the prayer made in the petition and that the scope of this petition cannot be enlarged as suggested by Mr. Chandhiok. He would further say that if it is required to be done, then the respondent has to be put to notice and till that is not done, the respondent is not obliged to answer the pleas as are being raised. Of course, Mr. Chandhiok in answer would draw attention of the court to various documents and the orders passed to show that the respondent is on a proper notice concerning the allegation of fraud and he is now wanting to escape from the inevitable which is directly staring at him. As per the learned Counsel, the respondent's hands are smeared with a fraud and he would not deserve any hearing as this Court would have ample power to interfere and set right this fraud so as to avoid justice being polluted.
13. No doubt, the prayer made in the present petition is for setting-aside the ex-parte order dated 24.8.2007 on the ground that in the facts and circumstances of the case, the issue regarding condonation of delay does not require leading of any oral evidence. Prayer further is for setting-aside the ex-parte order dated 24.9.2007. Prayer also is to call for the record of civil appeal and that of a suit and dispose of the application under Section 5 of the Limitation Act on the basis of documents available before the trial court on record. It is in this context that debate about the scope of Article 227 ensued when Mr. Chandhiok pleaded that this Court must set right the fraud to convey a clear message that a person who approaches the court to practice fraud cannot be allowed to take advantage thereof.
14. To justify the action of the petitioner in filing application under Order 9 Rule 13 CPC for setting aside the ex-parte decree and simultaneously filing the appeal against the said ex-parte decree, (the counsel for the petitioner has referred to the decision of Supreme Court in the case of P. Kiran Kumar v. A.S. Khadar and Ors. . As per the law laid down in this case, prior to the date of explanation added under Order 9 Rule 13, a defendant burdened with an ex-parte decree could apply under Order 9 Rule 13 for setting aside ex-parte decree and could also file an appeal under Section 96 against the said ex-parte decree. It is also observed that mere fact of filing the appeal did not take away the jurisdiction to entertain and dispose of an application for setting aside an ex-parte decree and that only in the cases in which the trial court decree merged with the order of the appellate court by reversal, confirmation or varying it, the trial court was precluded from setting aside the ex-parte decree. It has now been viewed that the legislative attempt incorporating the Explanation to Order 9 Rule 13 is to confine the defendant to either one of the remedies available to him and not both. In this regard, a reference is also made to the case of Rani Choudhary v. Lt. Col. Suraj Jit Choudhary and to Bhanu Kumar Jain v. Archana Kumar and Anr. , where it is held that it is permissible to a party against whom an ex-parte decree is passed to file an application under Order 9 Rule 13 and appeal under Section 96 CPC apart from filing a review petition and a suit for setting aside the ex-parte decree on ground of fraud. It is further held that if appeal against an ex-parte decree is dismissed, then in view of the Explanation to Order 9 Rule 13, the application under Order 9 Rule 13 would not be maintainable. As observed by the Hon'ble Supreme Court, the converse though is not true, that is, dismissal of the application under Order 9 Rule 13, does not imply that the appeal against the ex-parte decree would not be maintainable. Further if the application under Order 9 Rule 13 is dismissed, then the defendant can file an appeal there against under Order 43 Rule 1(d).
15. In regard to the sweep and scope of Article 227 of the Constitution, the counsel would first refer to the case of Roshan Deen v. Preeti Lal . It is viewed by the Hon'ble Supreme Court that purpose of powers conferred on the High Court under Articles 226 and 227 of the Constitution is to advance justice, not to thwart it. It is further observed that even where justice is the by-product of an erroneous interpretation of law, the High Court ought not to wipe out such justice in the name of correcting error of law. This is a case where a person has claimed compensation for Rs. 7 lakhs before the Commissioner of Workmen's Compensation, who had received injuries in his neck, hands and legs while operating machine and he got trapped in the shaft. While the case was being prosecuted before the Compensation Commissioner, it was stated by the respondent concerned that an agreement has been reached and the workman would not be appearing. The Commissioner allowed the application and dismissed the claim as settled and withdrawn. The workman thereafter filed an application stating that the deception had been carried out and that he had never entered into any agreement with the management. Strangely, the respondent management also denied if there was any agreement which was against the earlier stand taken by it and thus the Commissioner set-aside his own order for deciding the matter on merits. Against this order, the respondent concerned approached the High Court, which set aside the order passed by the Commissioner by holding that he had recalled and re viewed his own order, which is not be permissible. The workman had then gone the Hon'ble Supreme Court, which felt so concerned and observed that it made very telling observation by expressing itself as follows:
We are greatly disturbed by the insensitivity reflected in the impugned judgment rendered by the learned Single Judge in a case where judicial mind would be tempted to utilize all possible legal measures to impart justice to a man mutilated so outrageously by his cruel destiny. The High Court non-suited him in exercise of a supervisory and extraordinary jurisdiction envisaged under Article 227 of the Constitution. Time and again this Court has reminded that the power conferred on the High Court under Articles 226 and 227 of the Constitution is to advance justice and not to thwart it (vide State of U.P. v. District Judge, Unnao,). The very purpose of such constitutional powers being conferred on the High Courts is that no man should be subjected to injustice by violating the law. The lookout of the High Court is, therefore, not merely to pick out any error of law through an academic angle but to see whether injustice has resulted on account of any erroneous interpretation of law. If justice became the by-product of an erroneous view of law the High Court is not expected to erase such justice in the name of correcting the error of law.
16. In case of Surya Dev Rai v. Ram Chander Rai and Ors. , the court has gone into the effect of amendment carried out in Section 115(1) of CPC on Articles 226 and 227 of the Constitution and has held that the amendment cannot and does not in any manner affect the jurisdiction under Articles 226 and 227. It is further held that being part of the basic structure it cannot be tampered, not even by a constitutional amendment much less by any Act of legislature. It is, thus, held that the party can, therefore, seek such writ of certiorari or invoke power of superintendence of High Court notwithstanding the amendment carried out of Section 115 of CPC. In this case only, the Supreme Court has gone in detail in regard to differences in jurisdiction under Articles 226 and 227 of the Constitution. Talking about the scope of Article 227, the Hon'ble Supreme Court has observed that this Article is administrative as well as judicial, and is capable of being invoked at the instance of any person aggrieved or may even be exercised suo moto. According to the Supreme Court, the paramount consideration behind vesting such wide power of superintendence in the High Court is paving the path of justice and removing any obstacles therein. It is further viewed that power under Article 227 is wider than the one conferred on the High Court by Article 226 in the sense that power of superintendence is not subject to those technicalities of procedure or additional fetters which are to be found in certiorari jurisdiction. The Hon'ble Supreme Court has then noticed that differences in jurisdiction between Articles 226 and 227 to note that writ of certiorari is an exercise of its original jurisdiction, whereas exercise of supervisory jurisdiction is not an original jurisdiction in that sense and it is akin to appellate, revisional or corrective jurisdiction. It is further noticed that in exercise of supervisory jurisdiction, the High Court may not only quash or set aside the impugned proceedings, judgment or order, but it may also make such directions as the facts and circumstances of the case may warrant, may be by way of guiding the inferior court or tribunal as to the manner in which it would now proceed further or afresh as commended to or guided by the High Court. The power available with the High Court to be exercised in appropriate cases while exercising supervisory jurisdiction to substitute such a decision of its own in place of the impugned decision, as the inferior court or the tribunal should have made is also recognised by the Hon'ble Supreme Court. It is in this context it is observed that supervisory jurisdiction is capable of being exercised suo moto as well, whereas jurisdiction under Article 226 is capable of being so exercised on a prayer made by aggrieved party.
17. Reference has also been made to the case of B.C. Chaturvedi v. Union of India and Ors. and to the observations made that mere fact that there is no provision parallel to Article 142 relating to the High Courts can be no ground to think that they have not to do complete justice, and if moulding of relief would do complete justice between the parties, the same cannot be ordered. It is held that absence of provision like Article 142 is not material. The High Courts too can exercise power of review, which inheres in every court of plenary jurisdiction. Power to do complete justice also inheres in every court, not to speak of a court of plenary jurisdiction like a High Court. My attention has also been drawn to case of Ashok Kumar Gupta and Anr. v. State of U.P. and Ors. in this regard, to urge that the phrase "complete justice" engrafted in Article 142(1) is the word of width couched with elasticity to meet myriad situations created by human ingenuity or a cause or a result of operation of statute law or a law declared under Articles 32, 136 and 141 of the Constitution and cannot be cribbed or cabined within any limitations or phraseology. It has rightly been observed by the Hon'ble Supreme Court that each case needs examination in the light of its backdrop and the indelible effect of the decision. In the ultimate analysis, it is for the court to exercise its power to do complete justice or prevent injustice arising from the exigencies of the cause or matter before it. Mr. Chandhiok would also refer to the observations made by the Hon'ble Supreme Court in the case of Balwinder Kaur v. Hardeep Singh . In this case, High Court dismissed the appeal filed by appellant-wife against the order of divorce passed in favour of her husband, which according to the wife, had been obtained by pratising fraud on the wife. The High Court dismissed the appeal summarily by saying that if any fraud has been pratised on the applicant, the present appeal is not the appropriate remedy. It was observed that the remedy was with the civil court. The Hon'ble Supreme Court while interfering in this case observed that while doing so, the High Court has also failed to exercise its power of superintendence under Article 227 of the Constitution. The High Court should have seen if the proceedings before the District Judge were in accordance with the procedure prescribed and as per the law applicable. To direct the appellant in this case to file a separate suit for setting aside the decree of divorce on the ground of fraud was observed to be hardly a solution to the case. In Pepsi Foods Limited v. Special Judicial Magistrate , the Hon'ble Supreme Court observed that the nomenclature under which the petition is filed is not relevant and petition under Article 226 can be treated as one under Article 227 or Section 482 Cr.P.C. It was further observed that the power of the court to discharge the accused at the time of framing of charge or existence of remedy of appeal and revision would not be a bar to invokethe jurisdiction of the High Court under Article 227 and Section 482 Cr.P.C. In this case only, it is observed that the powers conferred on the High Court under Articles 226 and 227 of the Constitution and under Section 482 of the Code have no limits but more the power more due care and caution is to be exercised while invoking these powers.
18. Prayer of Mr. Chandhiok, thus, is that this Court would have ample power to exercise suo moto jurisdiction to set right the advantage obtained by the respondent by playing fraud with the court and the petitioner. The learned Counsel has referred to large number of judgments to highlight the legal maxims that fraud and justice never dwell together and fraud and deceit defend or excuse no man. In this regard, reference is made to the observation of Division Bench of Delhi High Court in case of Kuldip Gandotra v. Union of India and Ors. to highlight that the courts have always exercised their inherent power whenever it is brought to their notice that the fraud has been practised as the fraud strikes at the very root of an order/judgment and effects solemnity, and the Rule of Law. Reference can here be made to the case of Hamza Haji v. State of Kerala and Anr. 11 , where the entire case law on the subject of fraud has been examined and considered in detail. Talking about the fraud on court and remedy in regard thereto, the Hon'ble Supreme Court has observed that when a decision is vitiated by fraud, the proper course would be to approach the court which had rendered the decision for re-dressal but not always. The order/decision in the Haji's case was obtained by the appellant from a Forest Tribunal by fraud and the appeal against the same was dismissed by the High Court at the stage of admission. The order/decision of the Tribunal, thus, had merged with the order/decision of the High Court. When the review of the order of the Tribunal was sought, the same was dismissed by the Tribunal on the ground that the order sought to be reviewed had merged with the judgment of the High Court. The petition filed before the High Court for review of the decision was dismissed on the ground of delay of eight years. The order of dismissal was again sought to be challenged. Besides, a body of citizens also filed a writ petition. It is in this context it is observed by the Hon'ble Supreme Court that in such a situation, the High Court could either quash the decision/order of the Tribunal or set-aside its own order/decision passed in appeal and vacate the order of Tribunal by allowing the appeal or it could exercise its jurisdiction as a court of record under Article 215 and set-aside the decision obtained by fraud. The High Court had exercised its jurisdiction under Article 215 and the Supreme Court declined to interfere under Article 136, which was sought to be invoked by the appellant. The Hon'ble Supreme Court went on to observe that the approach of the High Court cannot be thwarted on the plea that the second review was not maintainable or High Court could not ignore its earlier orders dismissing the appeals at the admission stage or on the ground of delay. Mr. Chandhiok would, thus, say that an order or a decree obtained by fraud would need to be corrected dehors any technicalities and that is essential to ensure unpolluted delivery of justice.
19. In Hamza Haji's case, reference is made to various judgments and commentaries to bring home the effect of fraud played on the court.
It is observed in R. v. Duchess of Kingston that:
Fraud' is an extrinsic, collateral act, which vitiates the most solemn proceedings of courts of justice. Lord Coke says it avoids all judicial acts, ecclesiastical and temporal.
20. Any judgment which is based on fraud has to be treated as nullity. Reference can here be made to Kerr on Fraud and Mistake, which is:
In applying this rule, it matters not whether the judgment impugned has been pronounced by an inferior or by the highest court of judicature in the realm, but in all cases alike it is competent for every court, whether superior or inferior, to treat as a nullity any judgment which can be clearly shown to have been obtained by manifest fraud.
21. The fact that a judgment was obtained through fraud or collusion is universally held sufficient reason for opening or vacating such judgment either during or after the term at which it was rendered. In some jurisdictions statutes confer power on the courts to vacate judgments on the ground of fraud and regulate its exercise but generally courts of record possess an inherent power in this behalf which is not dependent on any statute.
[See para 269, Corpus Juris Secundum]. It is further noticed in this para:
Fraud or collusion in obtaining judgment is a sufficient ground for opening or vacating it, even after the term at which it was rendered, provided the fraud was extrinsic and collateral to the matter tried and not a matter actually or potentially in issue in the action.
22. While talking about the nature of fraud, it may be observed that the fraud must be extrinsic and collateral to the matter tried, and not a matter which was actually or potentially in issue in the action. Thus, the instances in which the judgment may be vacated are those in which the party is prevented from having a fair trial of the real issue by reason of the fraudulent contrivance of his adversary. Moreover, as further observed at para 269 of Corpus Juris Secundum, "Fraud practised on the court is always ground for vacating the judgment, as where the court is deceived or misled as to material circumstances, or its process is abused, resulting in the rendition of a judgment which would not have been given if the whole conduct of the case had been fair."
23. So a judgment may be vacated for misrepresentation or tricks practised on defendant to keep him away from the trial or to prevent him from claiming his rights or from setting up an available defence or in case of collusion between some of the parties to action or between the counsel in the case.
24. What is to be done when fraud is noticed or observed by a court?
Reference can here be made to para 825, American Jurisprudence 2nd Edn. Vol. 46 in this regard. It is observed that:
There are many cases in which equitable relief from a judgment may be obtained because of fraud by which the court has been impressed upon, has been made an instrument of injustice and has been misled into a false or improper judgment. Indeed, the connection of fraud with a judgment constitutes one of the chief causes for interference by a court of equity with the operation of a judgment. The power of courts of equity in granting such relief is inherent, and frequent applications for equitable relief against judgments on this ground were made in equity before the practice of awarding new trials was introduced into the courts of common law.
Where fraud is involved, it has been held, in some cases, that a remedy at law by appeal, error, or certiorari does not preclude relief in equity from the judgment. Nor, it has been said, is there any reason why a judgment obtained by fraud cannot be the subject of a direct attack by an action in equity even though the judgment has been satisfied.
25. It may need a mention here that not every fraud is sufficient to move a court of equity to grant relief for a judgment. Equity must have jurisdiction over the subject matter. For obtaining such relief, it must appear that the fraud was practised in the very act of obtaining the judgment and it was extrinsic or collateral and not intrinsic fraud. Fraud is regarded as extrinsic or collateral where it is one having effect preventing a party from having a trial or a real contest or where it operates upon matters pertaining not to the judgment itself, but to the manner in which it is procured. Ordinarily equitable relief for a judgment may be obtained where fraud is committed by a successful party. This relief may also be claimed where successful party has done so in connivance with other persons or other person has done so at his instigation. Thus, where an attorney fraudulently pretended to represent a party but actually connived at his defeat, would be a ground for equitable relief.
26. It may be observed, as stated by Hon'ble Supreme Court, that the law in India is not different. Section 44 of the Evidence Act enables a party otherwise bound by previous adjudication to show that it was not final or binding because it is vitiated by fraud. In Paranjpe v. Kandade I.L.R. (1882)6 Bombay 148, it is observed that it is always competent for any court to vacate any judgment or order, if it be proved that such judgment or order was obtained by manifest fraud.
27. In Manindra Nath Mittra v. Hari Mondal A.I.R. 1920 Cal. 126, it is held that where the court has been intentionally misled by the fraud of a party and a fraud has been committed upon the court with the intention to procure its judgment, it will vitiate its judgment. This position was reiterated in Nemchand Tantia v. Kishinchand Chellaram (India) Ltd. , where it was held that it must be shown that the fraud was practised in relation to the proceedings in the court and decree must be shown to have been procured by pratising fraud of some sort upon the court. Distinction was also drawn between cases where the court was simply mistaken or misled by fraud. A decree can be reopened by a new action when the court was misled by fraud and may not be so reopened when the court is mistaken in passing the decree. In S.P. Chengal-varaya Naidu v. Jagannath, it is held that judgment or a decree obtained by playing fraud on the court is a nullity and non est in the eyes of law. The Hon'ble Supreme Court went on to observe that 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 and it can be challenged in any court even in collateral proceedings.
28. One would often hear loud calls in the corridors of the Courts that those who come to the court must come with clean hands. The courts are meant for imparting justice. A person, who has obtained advantage by misusing the process of the court or abusing the process of the court, cannot be allowed to retain his illegal gains indefinitely. In S.P. Chengalvaraya Naidu's case (supra), the Hon'ble Supreme Court made observations in this regard by saying:
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 the litigation.
29. Even in A.V. Papayya Sastry and Ors. v. Government of A.P. and Ors. , the Hon'ble Supreme Court has clearly observed that it is well settled principle of law that if any judgment or order is obtained by fraud, it cannot be said to be a judgment or order in law. Chief Justice Edward Coke, as already noted, has proclaimed long ago that "fraud avoids all judicial acts, ecclesiastical or temporal.
30. While defining fraud, it may be observed that it is an act of deliberate deception with the design of securing some unfair or undeserved benefit by taking undue advantage of another. In fraud one gains at the loss of another. Even most solemn proceedings stand vitiated if they are actuated by fraud. Fraud is, thus, is an extrinsic collateral act which vitiates all judicial acts, whether in rem or in personam. In India Bank v. Satyam Fibres (India) Pvt. Ltd. while referring to Lazarus Estates and Smith v. East Elloe Rural District Council (1956)1 A11.E.R. 855, it is observed that the judiciary in India also possess inherent powers, specially under Section 151 CPC to recall its judgment and order if it is obtained by fraud on the court. In the case of fraud on a party to a suit or proceedings, the court may direct the affected party to file a separate suit for setting aside the decree obtained by fraud. Inherent powers are powers which are resident in all courts, especially of superior jurisdiction. These powers spring not from legislation but from 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.
31. Mr. Chandhiok made elaborate submissions to urge that Article 227 of the Constitution would give an almost unfettered and sweeping power to the court to exercise jurisdiction either on being moved by a person or suo moto to advance justice and not to thwart it. It would, however, emerge from the submission made that the exercise of such power under Article 227 of the Constitution would almost be a legal necessity when allegations of fraud are made. Mr. Aggarwal, however, would join issue in this regard. He would refer to the same very observation made by the Hon'ble Supreme Court in Surya Dev Rai's case (supra) to say that supervisory jurisdiction is of the nature of appellate, revisional or corrective jurisdiction. He accordingly would say that the court would be bound by limitation, may be self imposed one, while exercising jurisdiction under this Article and has to confine itself as is generally done by courts exercising appellant, revisional or corrective jurisdiction.
32. I am not inclined to accept the narrow view canvassed by Mr. Aggarwal in regard to sweep of the jurisdiction available under Article 227 of the Constitution. While saying that such jurisdiction should be in the nature of appellate, revisional or corrective, the counsel, in my view, is not appreciating the word 'akin' used by the Hon'ble Supreme Court while describing the nature of the jurisdiction under Article 227 of the Constitution. It has been so described as akin to such jurisdiction but cannot be so termed as same or similar. Obviously, the appellate, revisional or corrective jurisdiction may be akin to this supervisory jurisdiction and it is only to describe it that the Hon'ble Supreme Court appears to have referred it so. Article 227 of the Constitution confers an extraordinary discretionary constitutional remedy and cannot be confined to other jurisdiction exercised by the High Court. A fraud, as noticed above, would vitiate everything and in such cases even the self imposed restriction, if any, would lose significance as the aim would be to correct undue fraud practised on the court. It is not without reason that the Hon'ble Supreme Court has observed that an order or a decree obtained by playing fraud on the court is a nullity and non east and has to be treated so by all courts superior or inferior. Any judgment and decree which is obtained by fraud cannot be allowed to stand is also the view which would not meet any objection. Reference in detail has been made to a settled view that an extrinsic fraud is open to be challenged in exercise of equity jurisdiction.
33. As to what would constitute a fraud on the court may need some deliberation. Mr. Aggarwal though made detail submission that the respondent is not put to notice in regard to the allegation of fraud, but never seriously contested the averments and assertions made in the petition and highlighted by the counsel for the petitioner. Thus, it is not disputed before me that Col. A.S. Judge is the managing partner of the respondent concern. This fact is also not in dispute that he filed a suit on behalf of the respondent company and got a notice issued on himself as a General Manager of petitioner. It is not disclosed anywhere in the proceedings by him that he ever informed the head office about filing of this suit. He is the one who had engaged a counsel on behalf of the petitioner concern. What for and under what circumstances that counsel absented himself is not explained from the facts and circumstances on record. There is something in the fact highlighted by the counsel for the petitioner that this partnership concern was got registered on 4.5.2005 and the suit was filed on the very next date, i.e., on 5.5.2005. Was this done to file the suit as is alleged by the petitioner? The facts that would emerge from the record, thus, would clearly show that Col. A.S. Judge was the one who is instrumental in filing this suit, it being a family concern and had not been fair to the court in disclosing that service has also been effected on him on behalf of the petitioner company and that he had engaged the counsel without any intimation to the petitioner concern. Can he, thus, be said to have approached the court with clean hands?. The answer of-course would be emphatic 'No'. He is, thus, seen to have committed fraud on the court and rather has abused the process of the court while obtaining this exparte decree in his own favour as it is in favour of a concern which is none else but his family concern. He having obtained this decree is now wanting to retain this gain indefinitely by sticking on to technicalities.
34. Then what is the call of justice?. Is it to make order in routine confined to traditions and look for the relief claimed and pass an order limiting to the said relief or it is such a case where judicial mind should feel tempted to use all possible legal measures to impart justice. It has been noticed that power under Art.227 or 226 of the Constitution is to advance justice and not to thwart it. In Surya Dev Rai's case (supra), Hon'ble Supreme Court has held that the High Court in exercise of supervisory jurisdiction may not only quash or set aside the proceedings, judgment or order but may also make such directions as the facts and circumstances of the case may warrant may be by way of guiding the inferior court or tribunal as to the manner it would proceed further or afresh. It can even substitute such a decision of its own in place of the impugned decision. The High Court, even in the absence of power parallel to Article 142, can mould relief to do complete justice between the parties. As already noticed, phrase "complete justice" can not be cribbed or cabined within any limitation.
35. Present one is a case where ex-parte decree is obtained through fraud which is extrinsic or collateral. It would thus vitiate the most solemn proceedings of courts of justice. It is an universally acceptable and sufficient reason to vacate such a judgment obtained by fraud. By act of this fraud practised by respondent, the petitioner was prevented from having a fair trial of the real issue. It is a case of fraud in very act of obtaining the judgment. Equity jurisdiction being exercised must thus be allowed to come in play. This judgment and decree would certainly be open to direct attack by an action in equity.
36. As already noticed, fraud has been defined as an act of deliberate deception with the design of securing some unfair or undeserved benefit. The facts in the present case would fit in the definition of fraud as stated. In a case of this nature where there is a gross miscarriage of justice, High Court even can interfere suo moto. Col. Judge and his partnership concern has definitely secured an unfair or undeserved benefit through this ex-parte decree to the tune of Rs. 5-1/2 crores. Should the party defrauded be made to contest for setting aside of this decree obtained by defrauding the court? Should this litigation be tried to develop into a combat between parties, who are otherwise closely related when the allegations of fraud are more than made out? The case for exercising jurisdiction, thus, is clearly made out to set right the effect of this fraud. Thus, the Appellate Court would need to be guided in the manner it should proceed in this case.
37. The submission by Mr. Agarwal that he has not been put to notice of fraud, cannot be accepted. In fact on the very first day when this Court issued notice, the submissions were made and noticed that Col. Ajit Singh Judge in this suit is a fraud and, therefore, decree is not sustainable. Even otherwise, reference has been made to various pleas raised in this revision petition and the suit, which definitely would put the respondent and Col. Ajit Singh Judge to a notice of fraud. If there had been anything contrary to what is alleged in the petition, he was bound to come out clean before this Court voluntarily when more than insinuatory allegations are being made against him alleging fraud. His silence may speak volumes. Should this Court still hold its hand back by not interfering and stand on technicalities to say that it would not undo the effect of fraud, prayer made in the petition being of restrictive nature?
38. Though there was some lively debate in regard to nature and power of this Court to interfere while exercising revisional jurisdiction under Article 227, yet it was not urged that this Court would not have jurisdiction to suo-moto interfere, specially so when fraud is alleged and to an extent is made out from the record. The observation of the Hon'ble Supreme Court in Indian Bank's case (supra) on the basis of the case of Lazarus Estates and Smit (supra) would be a guideline that the judiciary in this country possesses inherent power, specially under Section 151 C.P.C. to even re-call its judgment or order if it is obtained by fraud on court. It is only when the affected party is defrauded that he may be asked to have a separate remedy and this position would not apply when the fraud is played on the court. Facts in the instant case reveal that the court was deceived in passing this judgment and decree. Equitable relief for the judgment, as noted in foregoing paragraphs, where fraud is committed by a successful party himself or in connivance with others as by instigating others can be granted. It is also a case where the respondent made a counsel to appear for the petitioner by himself engaging him, who pretended to represent the petitioner but apparently has connived with the respondent to ensure defeat of the petitioner. It is not made out from the record as to how the respondent had obtained notice at the local address without it being sent to the remaining addresses of the petitioner. Respondent, thus, prevented the petitioner from having a fair trial of the issues. Cumulative effect of the above noted position is that this is a fit case for exercise of equitable jurisdiction, even suo moto, to interfere in this case and set right the fraud which has been played on the court, so that parties to the suit can have fair trial of the issues raised in the case. The unfair advantage obtained by the respondent in obtaining ex-parte decree cannot be allowed to stand. The application, for seeking condonation of delay need not be put to any trial. In fact the ex-parte decree, which had been obtained by fraud, also needs to be interfered as it is a nullity. This is essential to ensure purity of justice and to send a message that no body can be allowed to be one up with law or defraud the court.
39. In view of the precedents that have been noted above, this Court would have ample powers to interfere in this case to set at naught the effect of fraud irrespective of the fact whether any such prayer is made in the present revision petition in this regard or not. The court would not feel bound with any self imposed restriction while exercising jurisdiction under Article 227 of the Constitution of India in such like case, where there is fraud found. This must be set right without any concern with the limitation, that may have to be otherwise kept in view.
40. I would accordingly allow this revision petition and would set-aside the impugned order, whereby the lower Appellate Court, has framed issue to decide the application under Section 5 of the Limitation Act. While allowing this revision petition, the delay in filing the appeal would stand condoned with direction to the court to decide the appeal against the ex-parte decree and order passed.
41. The facts as pleaded are not much in dispute otherwise. Since the matter in regard to setting aside of this ex-parte decree is pending before the Appellate Court, I am leaving it for the Appellate Court to deal with this ex-parte decree and pass an appropriate order. Appellate Court has to realise that the parties in this case must prove their claim and obtain an appropriate relief by leading legal and valid evidence and that no one should be permitted to take any advantage of unfair nature. This court would have such power to guide the Appellate Court while exercising jurisdiction under Article 227 of the Constitution. Since the delay in filing the appeal has been condoned, the issue in regard to locus of Ajit Singh son of late Shri Daljit Singh to file this application seeking condonation of delay is rendered infructuous and need not be gone into.