2008 (5) TMI 735 - HC - Indian Laws

High Court Sets Aside Ex-Parte Decree Due to Fraud, Emphasizes Equitable Relief

The High Court allowed the revision petition, setting aside the order for condonation of delay and directing the lower appellate court to decide the ... - Issues Involved:1. Ex-parte decree obtained by alleged fraud.2. Application under Section 5 of the Limitation Act for condonation of delay.3. Scope of Article 227 of the Constitution of India.4. Allegations of fraud committed by the respondent.5. Jurisdiction and powers of the High Court under Article 227 to intervene in cases of fraud.Detailed Analysis:1. Ex-parte Decree Obtained by Alleged Fraud:The petitioner claims that an ex-parte decree dated 23.12.2005 for recovery of Rs. 5,67,54,376.29 was obtained fraudulently by the respondent, M/s G.T. Agencies. The petitioner alleges that the decree was obtained through deceitful means, as the General Manager of the petitioner company, Col. A.S. Judge, who is also a managing partner of the respondent firm, accepted the summons on behalf of the petitioner and engaged a counsel who later absented himself. The trial court proceeded ex-parte and decreed the suit in favor of the respondent without the petitioner being properly represented.2. Application Under Section 5 of the Limitation Act for Condonation of Delay:The petitioner filed an appeal against the ex-parte decree within thirty days of acquiring knowledge of it and also filed an application under Section 5 of the Limitation Act seeking condonation of a 455-day delay as a precaution. The District Judge framed an issue regarding the sufficiency of grounds to condone the delay and fixed the case for evidence. The petitioner contends that the facts indicating fraud are glaringly apparent and do not require oral evidence for deciding the application for condonation of delay.3. Scope of Article 227 of the Constitution of India:The case led to a significant debate on the scope of Article 227, especially in the context of allegations of fraud. The petitioner argued that Article 227 has a wide scope, even broader than Article 226, and the High Court should intervene to rectify the fraud. The respondent, however, contended that the petitioner's prayer is limited and the issues agitated cannot be expanded beyond the specific relief sought.4. Allegations of Fraud Committed by the Respondent:The petitioner alleged that the respondent committed fraud by having Col. A.S. Judge, who is a managing partner of the respondent firm, accept the summons on behalf of the petitioner company and engage a counsel who later absented himself. The trial court proceeded ex-parte without being informed of this conflict of interest. The petitioner only learned of the decree when approached by a real estate agent regarding the sale of the property in execution proceedings.5. Jurisdiction and Powers of the High Court Under Article 227 to Intervene in Cases of Fraud:The High Court discussed its powers under Article 227 to intervene in cases of fraud, emphasizing that fraud vitiates all judicial acts. The court cited various precedents to assert that it has the inherent power to set aside judgments obtained by fraud, even if such fraud was not explicitly pleaded before the lower courts. The court highlighted that its supervisory jurisdiction under Article 227 is broader and not confined by the technicalities of procedure applicable to certiorari jurisdiction.Conclusion:The High Court allowed the revision petition, setting aside the impugned order framing the issue for condonation of delay. The court condoned the delay in filing the appeal and directed the lower appellate court to decide the appeal against the ex-parte decree on merits. The court emphasized that the ex-parte decree obtained by fraud is a nullity and must be set aside to ensure justice. The issue regarding the locus of Ajit Singh to file the application for condonation of delay was rendered infructuous. The High Court exercised its equitable jurisdiction to rectify the fraud and ensure that the parties obtain appropriate relief by leading legal and valid evidence.