TaxTMI 
TaxTMI 
2003 (10) TMI 610
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....19.7.1979 filed by the respondent No. 1 in relation to the said mortgaged land. A preliminary decree in favour of the bank for the aforementioned amount with pendente-lite and future interest @ 6% p.a. was passed. A preliminary decree of sale of 10 Annas shares of the mortgagor was also passed by the learned Vth Additional Sub Judge on or about 22.6.1981 whereafter a final decree for sale of the mortgage property was passed on 4.8.1982 in suit No. 88/9/1977-80. 4. A First Appeal was preferred there against by the respondents herein and by an order dated 22.5.1988 a Division Bench directed that the decretal amount be paid in two instalments. Allegedly, the said direction had not been complied in letter and spirit. However, on an Execution Application filed by the, Bank, 30 acres out of total area of 57.12 acres of, land was put on auction sale on or about 7.6.1988 wherein the petitioner became the highest bidder upon offering a sum of Rs. 1,61,593.53 therefore. The said auction sale had been confirmed by the Executing Court on 7.7.1988 pursuant whereto, the appellant deposited the amount. The brother of the mortgagor, thereafter, filed an objection in the said Execution case purpor....
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....id not come into force thence. In support of the said contention the appellant filed various documents, The said application was allowed holding: "(a) Ugam Pandey died in the year 1944 when the Hindu Succession. Act, 1956 had not come into force. (b) the documents prove that the plaintiff, Smt. Savitri Devi had no interest in the suit property and that the preliminary decree prepared in the partition suit is fraudulent, collusive and void documents obtained in collusion with Arun Prakash Pandey by suppressing the death of Ugam Pandey in the plaint and in her evidence by playing fraud. (c) the final decree proceeding Initiated by the Plaintiff on the basis of preliminary decree is collusive and nullity and therefore final decree proceeding is dropped." 9. A Civil Revision application was filed there against which has been allowed by the High Court. S.L.P. (Civil) No. 6535 of 1999 arises out of the said order. 10. The appellant furthermore filed a Civil Review application being No. 245 of 1998 for reviewing the order dated 22.5.1988 passed in First Appeal No. 450 of 1981 whereby and whereunder the High Court of Patna modified the judgment and preliminary decree dated 22.6.1981 b....
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....ppeals should not be entertained. Mr. Roy would submit that having regard to the fact that the auction sale was set aside as far back as on 21.5.1992 and the Special Leave Petition filed there against having been dismissed by the Court, the review application was not maintainable. In any event, the learned counsel would contend that as pursuant to and in furtherance of the consent order passed in First Appeal: the respondents have already deposited the amount, this Court in exercises of its equitable jurisdiction should not interfere with the impugned orders. 15. Commission of fraud on court and suppression of material facts are the core issues involved in these matters. Fraud as is well-known vitiates every solemn act. Fraud and justice never dwells together. 16. Fraud is a conduct either by letter or words, which induces the other person, or authority to take a definite determinative stand as a response to the conduct of former either by word or letter. 17. It is also well settled that misrepresentation itself amounts to fraud. Indeed, innocent misrepresentation may also give reason to claim relief against fraud. 18. A fraudulent misrepresentation is called deceit and consist....
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....n more effective. Further, not to enlarge upon the last matter, it will do away with much of the prevalent confusion in regard to 'moral' fraud, a confusion which, in addition to other things, often causes lawyers to take refuge behind such convenient and indeed useful but often obscure language as 'fraud upon the law'. What is fraud upon the law? Fraud can be committed only against a being capable of rights, and 'fraud, upon the law' darkens counsel. What is really aimed at in most cases by this obscure contrast between moral fraud and fraud upon the law, is a contrast between fraud in the individual's intention to commit the wrong and fraud as seen in the obvious tendency of the act in question." 23. Recently this Court by an order dated 3^rd September, 2003 in Ram Preeti Yadav v. U.P. Board of High School & Intermediate Education and Ors. reported in JT 2003 (Supp. 1) SC 25 held: "Fraud is a conduct either by letter or words, which induces the other person, or authority to take a definite determinative stand as a response to the conduct of former either by words or letter. Although negligence is not fraud but it can be evidence ....
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....ception may not amount to fraud, fraud is anathema to all equitable principles and any affair tainted with fraud cannot be perpetuated or saved by the application of any equitable doctrine including res-judicata. 27. In Smt. Shrisht Dhawan v. Shaw Brothers , it has been held that: "Fraud and collusion vitiate even the most solemn proceedings in any civilized system of jurisprudence. It is a concept descriptive of human conduct," 28. In S.P. Chengalvaraya Naidu v. Jagannath [(1994) 1 SCC 1] this Court in no uncertain terms observed: "...The principle of "finality of litigation" cannot be passed 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 il....
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.... petitioner, would amount to fraud in such matters. Even the principles of natural justice are not required to be complied within such a situation. It is now well known that a fraud vitiates all solemn acts. Thus, even if the date of birth of the petitioner had been recorded in the service returns on the basis of the certificate produced by the petitioner, the same is not sacrosanct nor the respondent company would be bound thereby." 32. Keeping in view the aforementioned principles, the questions raised in these appeals are required to be considered. The High Court observed that the application of intervention filed by the appellant purported to be under Order XXVI, Rules 13 and 14(2) and Order XX, Rule 18 was not maintainable as they do not confer any power to court for setting aside a preliminary decree on the ground that it was obtained by practising fraud. But once the principles aforementioned are to be given effect to, indisputably the court must be held to have inherent jurisdiction in relation thereto. 33. In Manohar Lal Chopra v. Raj Bahadur Rao Raja Seth Hiralal , the law is stated in the following terms: "....
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....n, is an agreement between the parties with the seal of the Court superadded to it. The appellant herein in the Review Application categorically stated that the parties to the appeal had suppressed the auction sale as also the confirmation thereof. The effect of the events appearing subsequent to the filing of First Appeal resulting in creation of a third party right was bound to be taken into consideration by the High Court. A third party right cannot be set at naught by consent. The High Court, therefore, was required to consider the contention of the appellant in their proper perspective. The High Court, in our opinion, was obligated to address itself on these questions for the purpose of reviewing its order. 38. In Dwarka Prasad Agarwal (D) By LR.s. and Anr. v. B.D. Agarwal and Ors. [(2003) 8 SCC 230], it was observed: "Several issues of grave importance were required to be addressed by the High Court. The High Court sought to take a short cut in holding that the said compromise was not binding upon Dwarka Prasad Agarwal and thereby no writ was issued. The consequence of recording of the said compromise was tell-tale. Not only pursuant the....