Whether it is Necessary to seek Cancellation of Sale Deed if it was Executed during Pendency of Suit

Saturday, 26 October 2019

Whether it is necessary to seek cancellation of sale deed if it was executed during pendency of suit?

 In our opinion, when the sale deed had been executed during the pendency of suit the purchaser pendente lite is bound by the outcome of the suit. The provisions of Section 52 prevent multiplicity of the proceedings. It was not at all necessary to file a suit for cancellation of the sale deed as the vendor had no authority to sell land of other co-sharers. He had right to alienate his own share only which he had in the property to the extent of 14/104th. As such the right, title and interest of Bala Mallaiah were subject to the pending suit for partition in which a preliminary decree was passed in the year 1970 which had attained finality in which the vendor of Bala Mallaiah, Defendant 1 was found to be having share only to the extent of 14/104th.  { Para 48}

 Therefore, it is settled legal position that the effect of Section 52 is not to render transfer effect during the pendency of a suit by a party to the suit void; but only to render such transfers subservient to the rights of the parties to such suit and the pendente lite purchaser would be entitled to or suffer the same legal rights and obligations of his vendor as may be eventually determined by the Court. Therefore, in the present suit defendant No. 2 is bound by the decree which may be passed against defendant No. 1. Admittedly, by virtue of compromise decree in R.A. No. 272/2004 defendant No. 1 is aware that the suit property was allotted to the share of plaintiffs and he had no right title and interest so as to transfer the same in favour of defendant No. 2 by executing registered sale deed dated 02.05.1997 as per Ex. D1. In spite of knowing consequences of the same, defendant No. 1 executed the sale deed during the pendency of suit bearing O.S. No. 45/1994. Therefore, the said sale deed is hit by Section 52 of Transfer Property Act. Though, it cannot be held as void ab initio, as held by the Hon'ble Supreme Court in the judgment referred supra, Pendente lite purchaser defendant No. 2 herein is bound by the decree passed in the suit against his vendor.

IN THE HIGH COURT OF KARNATAKA (KALABURAGI BENCH)

RSA No. 1346/2007

Decided On: 24.04.2019

 Gurushantappa  Vs. Shankar and Ors.

Hon'ble Judges/Coram:

P.G.M. Patil, J.

Citation: AIR 2019 Karnat 113

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Can Court Recall or Review its Judgment Obtained by Fraud

Can Court Recall/Review it’s Judgment Obtained by Fraud?

February 22, 2019

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February 22, 2019

The statutory provisions pertaining to recalling or reviewing of judgment is contained in Section 362 of Code of Civil Procedure and Section 44 of the Indian Evidence Act, 1872.

The provision under Section 362 of CrPC provides for the Court not to alter judgment. Thus, it puts a bar for altering or reviewing of judgment or final order on merits only. The only power given to the Court is to correct any clerical or arithmetical error.

Though the aforesaid provision puts a bar on altering judgment but the Indian Judiciary has time and again reiterated that Court can vacate any judgment or order, if it is proved to have been obtained by fraud.

Hence, in such cases, the intriguing concern that is raised is that if the fraud is played upon the court whether the hands of the court are tight? Whether court cannot take any action? Whether it remains silent spectator in a matter where an order was obtained by playing a patent fraud upon the court? A person impersonate himself and dare to appear before the court with a false identity whether he can be left open?

In the aforementioned circumstances, Section 44 of the Evidence Act comes to rescue. The provision under section 44 of Evidence Act enables a party otherwise bound by a previous adjudication to show that it was not final or binding because it is vitiated by fraud. The provision therefore gives jurisdiction and authority to a court to consider and decide the question whether a prior adjudication is vitiated by fraud[1].

Judiciary on Recalling of Judgment Obtained by Fraud

In order to have a better understanding of the subject it would be relevant to refer to case laws wherein the Supreme Court and High Courts were confronted with the issue of recalling or reviewing of an order obtained by fraud.

Paranjpe Vs. Kanade[2]– In this one of the earlier judgment of the Court on the subject it was ruled that it is always competent to any Court to vacate any judgment or order, if it be proved that such judgment or order was obtained by manifest fraud.

Lakshmi Charan Saha Vs. Nur Ali[3]–  The Court in the case observed that the jurisdiction of the Court in trying a suit [questioning the earlier decision as being vitiated by fraud] was not limited to an investigation merely as to whether the plaintiff was prevented from placing his case properly at the prior trial by the fraud of the defendant. The Court could and must rip up the whole matter for determining whether there had been fraud in the procurement of the decree.

Proof of Fraud

Manindra Nath Mittra Vs. Hari Mondal[4]– The Court explained the elements to be proved before a plea of a prior decision being vitiated by fraud could be upheld. The Court with respect to the question as to what constitutes fraud for which a decree can be set aside, enumerated two propositions. Firstly, it is not permitted to show that the Court (in the former suit) was mistaken, it may be shown that it was misled, in other words 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. Secondly, a decree cannot be set aside merely on the ground that it has been procured by perjured evidence.

Esmile Uddin Biswas and Anr. Vs. Shajoran Nessa Bewa & Ors.[5]– In this case it was held that it must be shown that fraud was practised in relation to the proceedings in Court and the decree must be shown to have been procured by practising fraud of some sort upon the Court.

Nemchand Tantia Vs. Kishinchand Chellaram (India) Ltd.[6]– In this case it was held that a decree can be re-opened by a new action when the court passing it had been misled by fraud, but it cannot be reopened when the Court is simply mistaken; when the decree was passed by relying on perjured evidence, it cannot be said that the court was misled.

S.P. Chengalvaraya Naidu (Dead) by LRs. Vs. Jagannath (Dead) by LRs & Ors.[7]– The Supreme Court in the case stated that it is the settled proposition of law that a judgment or decree obtained 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.

The Court went on to observe that the High Court in that case was totally in error when it stated that there was no legal duty cast upon the plaintiff to come to the Court with a true case and prove it by true evidence and opined that “The courts of law are meant for imparting justice between the parties. One who comes to the court, must come with clean hands.”

Ram Preeti Yadav Vs. U.P. Board of High School and Intermediate Education & Others[8]– The Apex Court reiterated that fraud avoids all judicial acts.

Suppression of a Material Document is Fraud

State of A.P. & Anr. Vs. T. Suryachandra Rao[9]– The Supreme Court in the case held that suppression of a material document could also amount to a fraud on the Court. A similar observation was also made by the Supreme Court in the case of Bhaurao Dagdu Paralkar Vs. State of Maharashtra & Ors.[10], wherein it was noted that suppression of a material document would also amount to a fraud on the court. Although, negligence is not fraud, it can be evidence of fraud.

Hamza Haji vs. State of Kerala and Another[11]– The Supreme Court in the case has held that 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 its eyes to be closed to the fact that it is being used as an instrument of fraud.

Union of India vs. Ramesh Gandhi[12]– In this case it was held that fraud vitiates everything including judicial acts.

S.P. Chengalvaraya Naidu (Dead) By Lrs. Vs. Jagannath (Dead) By Lrs. & Ors.[13]– The Supreme Court in the case observed that fraud-avoids all judicial acts, ecclesiastical or temporal. It is the settled proposition of law that a judgment or decree obtained by playing fraud on the court is a nullity and nonest 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.

A.V. Papayya Sastry and Ors. Vs. Government of A.P. and Ors.[14]–  The Supreme Court noted in the case that once it is established that the order was obtained by a successful party by practising or playing fraud, it is vitiated. Such order cannot be held legal, valid or in consonance with law. It is non- existent and non-est and cannot be allowed to stand.

From the aforesaid judicial dictum it is abundantly clear that a judgment or decree that has been obtained by playing fraud on the court is null and void. Hence, if the Court is not entrusted with the power to recall a judgment obtained by fraud it would amount to the travesty of truth and justice. 

[1] Paranjpe Vs. Kanade [ILR 6 (1882) BOMBAY 148]

[2] ILR 6 (1882) BOMBAY 148

[3] [ ILR (1911)38 Calcutta 936]

[4] [(1919) 24 Calcutta Weekly Notes 133]

[5] 132 INDIAN CASES 897

[6] (1959)63 Calcutta Weekly Notes 776

[7] (1993) Supp. 3 SCR 422

[8] (2003) Supp. 3 SCR 352

[9] (2005) 6 SCC 149

[10] 2005 (7) SCC 605

[11] (2006) 7 SCC 416

[12] 2012 (1) SCC 476

[13] (1994) 1 SCC 1

[14] AIR 2007 SC 1546

Section 144 CPC Not Attracted When No Variation in Decree

Section 144 CPC Not Attracted When no Variation in decree

November 11, 2019

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“The principle of doctrine of restitution is that on the reversal of a decree, the law imposes an obligation on the party to the suit who received the benefit of the decree to make restitution to the other party for what he has lost. ”

The Supreme Court observed that the provisions of Section 144 of the Code of Civil Procedure will not be attracted when there is no variation or reversal of a decree or order.

In appeal, the bench comprising Justice Mohan M. Shantanagoudar and Justice Ajay Rastogi explained the scope of Section 144 as follows:

 It clearly transpires that Section 144 applies to a situation where a decree or order is varied or reversed in appeal, revision or any other proceeding or is set aside or modified in any suit instituted for the purpose. The principle of doctrine of restitution is that on the reversal of a decree, the law imposes an obligation on the party to the suit who received the benefit of the decree to make restitution to the other party for what he has lost. This obligation arises automatically on the reversal or modification of the decree and necessarily carries with it the right to restitution of all that has been done under the decree which has been set aside or an order is varied or reversed and the Court in making restitution is bound to restore the parties, so far as they can be restored, to the same position as they were in at the time when the Court by its action had displaced them.

An ‘Aggrieved’ Third Party Can File Review Petition, Holds SC

An ‘Aggrieved’ Third Party Can File Review Petition, Holds SC [Read Judgement] Nov 28th 2018, 12:16, by Rashid M A Ashok Kini “We have no hesitation in enunciating that even a third party to the proceedings, if he considers himself an aggrieved person, may take recourse to the remedy of review petition. The quintessence is that the person should be aggrieved by the judgment and order passed by this Court in some respect.” The Supreme Court has observed that even a third party to the proceedings, if he considers himself an aggrieved person may take recourse to the remedy of review petition. The bench comprising Justice Kurian Joseph and Justice AM Khanwilkar observed thus while disposing a review petition filed by Union of India against a 2011 judgment in National Textile Corporation Ltd. Versus Nareshkumar Badrikumar Jagad. The Supreme Court in 2011 had confirmed the decree of eviction passed against National Textiles Corporation in favour of Trustees of Seth Harichand Rupchand Charitable Trust. Union of India was not party to the said proceedings. The contention taken by the Union of India was that Validation Act of 2014 has completely altered the status of the parties retrospectively qua the suit property with effect from 1st April, 1994 by a legal fiction, as a result of which the cause of action against NTC as referred to in the subject suit had become nonexistent; and including any decree or order passed against NTC or for that matter, an undertaking filed by NTC in any court or tribunal or authority has been rendered unenforceable by operation of law and cannot be continued or taken forward. Answering the question of locus of a third party to the proceedings to file a review petition, the bench said: “Section 114 of the Code of Civil Procedure (“CPC”) which, inter alia, postulates that “any person considering himself aggrieved” would have locus to file a review petition. Order XLVII of CPC restates the position that any person considering himself aggrieved can file a review petition. Be that as it may, the Supreme Court exercises review jurisdiction by virtue of Article 137 of the Constitution which predicates that the Supreme Court shall have the power to review any judgment pronounced or order made by it. Besides, the Supreme Court has framed Rules to govern review petitions. Notably, neither Order XLVII of CPC nor Order XLVII of the Supreme Court Rules limits the remedy of review only to the parties to the judgment under review. Therefore, we have no hesitation in enunciating that even a third party to the proceedings, if he considers himself an aggrieved person, may take recourse to the remedy of review petition. The quintessence is that the person should be aggrieved by the judgment and order passed by this Court in some respect. “ The bench then considered and disposed the review petition with liberty to the Trust to pursue other appropriate legal remedy as per law. It said: “We hold that as per the amended Section 3 of the 1995 Act w.e.f. 1st April, 1994, by operation of law the statutory or protected tenancy rights of Podar Mills Ltd. in respect of the suit property stood transferred to and vested in the Central Government and it continues to so vest in it and that the decree against NTC including the undertaking given by NTC has been rendered unenforceable by a legal fiction. As a result, the Trust being the landlord is obliged to take recourse to remedy against the Central Government (Union of India) to get back possession of the suit property, as per the dispensation specified in the concerned Rent Legislation, if it so desires. It is open to the respondents (Trust) to challenge the validity of the Validation Act 2014, if they so desire.” Read Judgment