2012 (5) TMI 648 - SC - Indian Laws

Supreme Court Nullifies Decree for Fraud

The Supreme Court declared the judgment and decree dated 27.11.1973 null and void due to fraud and procedural irregularities. Subsequent possession and ... Suit for permanent injunction - principles of res judicata - Entitlement to be declared as owners of half portions of the property - HELD THAT:- It would not be an exaggeration but on the contrary an understatement if it is said that all facets of fraud get attracted to the case at hand. A rustic and illiterate woman is taken to court by a relation on the plea of creation of a lease deed and magically in a hurried manner the plaint is presented, written statement is drafted and filed, statement is recorded and a decree is passed within three days. On a perusal of the decree it is manifest that there is no reference of any kind of family arrangement and there is total non-application of mind. It only mentions there is consent in the written statement and hence, suit has to be decreed. Be it noted, it was a suit for permanent injunction. There was an allegation that the respondent was interfering with the possession of the plaintiff. What could have transpired that the defendant would go with the plaintiff and accede to all the reliefs. It not only gives rise to a doubt but on a first look one can feel that there is some kind of foul play. However, the learned trial Judge who decreed the first suit on 27.11.1973 did not look at these aspects. When the second suit was filed in 1984 for title and the third suit was filed for possession thereafter, the courts below had routinely followed the principles relating to consent decree and did not dwell deep to find out how the fraud was manifestly writ large. It was too obvious to ignore. The courts below have gone by the concept that there was no adequate material to establish that there was fraud, though it was telltale. That apart, the foundation was the family arrangement. We have already held that it was not bona fide, but, unfortunately the courts as well as the High Court have held that it is a common phenomenon that the people in certain areas give their property to their close relations. We have already indicated that by giving the entire property and putting him in possession she would have been absolutely landless and would have been in penury. It is unimaginable that a person would divest herself of one’s own property in entirety in lieu of nothing. No iota of evidence has been brought on record that Bhali, the respondent herein, had given anything to Badami in the arrangement. It is easily perceivable that the rustic woman was also not old. Though the decree was passed in 1973 wherein it was alleged that the defendant was already in possession, she lived up to 1992 and expired after 19 years. It is a matter of record that the possession was not taken over and inference has been drawn that possibly there was an implied agreement that the decree would be given effect to after her death. All these reasonings are absolutely non-plausible and common sense does not even remotely give consent to them. It is fraudulent all the way. The whole thing was buttressed on the edifice of fraud and it needs no special emphasis to state that what is pyramided on fraud is bound to decay. In this regard we may profitably quote a statement by a great thinker: “Fraud generally lights a candle for justice to get a look at it; and rogue’s pen indites the warrant for his own arrest.” Ex consequenti, the appeal is allowed and the judgment and decree of the High Court in the Second Appeal as well as the judgments and decrees of the courts below are hereby set aside and as a natural corollary the judgment and decree dated 27.11.1973 is also set aside. There shall be no order as to costs. Issues Involved:1. Validity of the judgment and decree dated 27.11.1973.2. Allegation of fraud and manifest illegality in obtaining the decree.3. Possession and ownership claims based on the said decree.4. Examination of family settlement and its genuineness.5. Procedural lapses in the trial court's handling of the case.6. Application of legal principles related to fraud and estoppel.Detailed Analysis:1. Validity of the Judgment and Decree Dated 27.11.1973The core issue in the appeal was whether the judgment and decree passed by the learned sub-Judge, Kaithal in Civil Suit No. 1422 of 1973 should be declared null and void due to fraud and manifest illegality. The Supreme Court scrutinized the procedural aspects and the circumstances under which the decree was obtained, emphasizing that the trial court did not apply its mind to the real nature of the family arrangement and the hurried manner in which the decree was passed.2. Allegation of Fraud and Manifest IllegalityThe Supreme Court highlighted that the decree was obtained by fraud, as evidenced by the rapid sequence of events: the plaint was presented, the written statement was filed, the statement was recorded, and the decree was passed within three days. The Court referred to previous judgments, including Santosh v. Jagat Ram, to underscore that such expedited proceedings raise serious doubts and indicate fraudulent activity. The Court reiterated that 'fraud puts an end to everything' and a decree obtained by fraud is a nullity.3. Possession and Ownership Claims Based on the Said DecreeThe respondent-plaintiff's subsequent suits for permanent injunction and possession relied on the 1973 decree. The trial and appellate courts upheld these claims, but the Supreme Court found that the initial decree was fraudulent and thus invalid. The Court noted that despite the decree, the possession remained with Badami, and the revenue entries were not corrected, suggesting an implied understanding that the arrangement would be effective only after Badami's death.4. Examination of Family Settlement and Its GenuinenessThe Court examined the purported family settlement, which was the basis for the 1973 decree. It found that the settlement was not bona fide, as it was irrational for Badami to divest herself of her entire property without any consideration. The Court emphasized that a genuine family settlement must be voluntary, fair, and equitable, and should not exclude close family members without reason. The alleged settlement did not meet these criteria.5. Procedural Lapses in the Trial Court's Handling of the CaseThe Supreme Court criticized the trial court for not following proper procedures as outlined in the Code of Civil Procedure. The Court highlighted that the trial court failed to issue summons, record proper examination of parties, and frame issues before passing the decree. The Court cited Kanwar Singh Saini v. High Court of Delhi to explain that the 'first hearing' of a suit involves a detailed examination of pleadings and framing of issues, which was not done in this case.6. Application of Legal Principles Related to Fraud and EstoppelThe Supreme Court referred to various precedents to elucidate the legal principles related to fraud. It reiterated that judgments obtained by fraud are nullities and can be challenged at any stage. The Court cited cases like S. B. Noronah v. Prem Kumari Khanna and S. P. Chengalvaraya Naidu to emphasize that fraud vitiates even the most solemn proceedings. The Court concluded that the entire case was built on fraudulent foundations, and thus, the judgments and decrees of the lower courts were set aside.Conclusion:The appeal was allowed, and the judgment and decree dated 27.11.1973, along with subsequent judgments and decrees based on it, were declared null and void due to fraud and procedural irregularities. The Supreme Court underscored the importance of adhering to proper legal procedures and the principle that fraud vitiates all judicial acts.