THE HONBLE SRI JUSTICE RAMESH RANGANATHAN AND THE HON'BLE SRI JUSTICE S. RAVI KUMAR
APPEAL SUIT No.968 of 2013
25-06-2015
Kothakapu Muthyam Reddy and others.Appellants
Bhargavi Constructions, rep., by its Managing partner Sri V. Ramachandra Rao
and others. Respondents
Counsel for the appellants: Sri K. Chidambaram, Advocate
appeared on behalf of Sri M. Rajender Reddy,
Counsel for the appellant
Counsel for respondent: Sri H. Venugopal
<GIST:
>HEAD NOTE:
? Citations:
1) 2010 (1) ALD 277 (DB)
2) 2014 (2) ALD 676 (DB)
3) (2007) 4 SCC 221
4) (2008) 2 SCC 660
5) (2005) 6 SCC 478
6) 2012 (6) ALD 58 (SC)
7) 2012 (4) ALD 27 (DB)
8) 2010 (3) ALD 330 (DB)
9) AIR 1969 SC 78 = (1968) 3 SCR 662
10) AIR 1940 Privy Council 105
11) AIR 1997 SC 1125
12) (1956) 1 All ER 341
13) (1994) 1 SCC 1
14) (2000) 3 SCC 581
15) (1996) 5 SCC 550
16) (2001 (6) ALD 582 (FB)
17) (1993) 2 SCC 567
18) (2011) 12 SCC 18
19) (1992) 1 SCC 534
20) (1994) 1 SCC 502
21) (2006) 5 SCC 558
22) (2004) 8 SCC 588
23) (1976) 1 SCC 747
24) AIR 1941 P.C. 93
25) (2005) 11 SCC 314
26) (2005) 10 SCC 465
27) (2005) 11 SCC 209
27) (2011) 1 SCC 167
THE HON'BLE SRI JUSTICE RAMESH RANGANATHAN
AND
THE HON'BLE SRI JUSTICE S. RAVI KUMAR
APPEAL SUIT No.968 of 2013
JUDGMENT: (Per Honble Sri Justice Ramesh Ranganathan)
The appellants herein are the plaintiffs in O.S. No.107 of
2010. They sought a decree in their favour, and against the
defendants, to declare para 18 of the compromise recorded in O.S.
No.481 of 2007 before the Lok Adalat dated 22.08.2007, in so far
as it related to land admeasuring Ac.9.29 gts of land in Sy.
Nos.271, 272 and 273 shown to have created rights in favour of
defendant No.31 i.e., M/s. Bhargavi Constructions represented by
Sri V. Ramachandra Rao, as nonest in law for having been
obtained by fraud and collusion, by playing fraud upon the
plaintiffs; and for grant of a permanent injunction restraining the
defendants, especially defendant No.31, their agents, servants,
employees etc., from interfering with the peaceful possession and
enjoyment of the plaintiffs in respect of the suit schedule A, B and
C properties.
In this plaint filed in O.S. No.107 of 2010, the appellants
stated that the 1st plaintiff had purchased land admeasuring
Ac.25.00 cts in Sy. Nos.262, 274 under registered sale deed dated
06.07.1974 from Sri Jamaluddin and others; the first plaintiff also
purchased Ac.6.10 gts from Sri Jamaluddin in the year 1975,
which was confirmed by a deed of confirmation dated 24.04.1985;
Sri Mohd. Kareemuddin had obtained a loan from Sri K. Mutyam
Reddy, and had mortgaged the land admeasuring Ac.6.10 guntas,
in the year 1982, by executing the mortgage deed; in addition
thereto, land admeasuring Ac.12.20 gts was also in possession of
the plaintiffs since June, 1993; between themselves, the plaintiffs
were in peaceful possession and enjoyment of a total extent of
Ac.50.00 gts of land in Sy. Nos.262 to 274 in Poppulaguda village,
Rajendranagar Mandal, Ranga Reddy District; as Sri Md.
Khairuddin, Ajeemuddin and Kareemuddin, were interfering, the
1st plaintiff filed the injunction suit in O.S. No.333 of 1992 which
was decreed in his favour; as the patta was not mutated in his
name, the 1st plaintiff filed O.S. No.259 of 1994 against Sri
Jamaladdin and others for declaration of his title and for perpetual
injunction; on O.S. No.259 of 1994 being dismissed on
05.04.2004, the 1st plaintiff filed A.S. No.2323 of 2005; during the
pendency of the said appeal, the 1st defendant filed O.S. No.481 of
2007 for specific performance of the agreement of sale dated
28.12.1995 in respect of agricultural land admeasuring Ac.51.29
gts in Sy. No.262 to 274 of Poppulaguda village, Rajendranagar
Mandal, Ranga Reddy District; the plaintiffs, in the present Suit,
were arrayed as defendants 22 to 25 therein; however, on the
intervention of mediators, a compromise was arrived at; under the
terms of the settlement, the plaintiffs were to relinquish Ac.41.34
gts, and the 1st plaintiff would be left with Ac.9.29 gts; from out of
the total extent of Ac.41.34 gts, it was agreed that Ac.10.20 gts of
land would be transferred in the name of Sri Ratangapani Reddy
i.e., the son-in-law of the first plaintiff; the remaining land was to
be given to the 1st plaintiff; an area of land, admeasuring Ac.6.25
gts, had been acquired for the outer ring road; the schedule of
payment of money was also incorporated, in the compromise, only
to the extent of Ac.25.00 gts; the defendants surreptitiously added
therein that the plaintiffs had given up their rights in respect of
land admeasuring Ac.9.29 gts in favour of M/s. Bhargavi
Constructions, represented by Sri V. Ramachandra Rao, who were
not parties to O.S. No.481 of 2007; no compromise could be
recorded with persons who were not parties to the suit;
immediately after the compromise was recorded in the Lok Adalat,
a sale deed was executed on the same day in favour of M/s.
Grandbay Estate Developers Ltd and Venezia Estate Developers
Ltd., vide document No.8379 of 2007 dated 22.08.2007 in respect
of land admeasuring Ac.14.02 gts in Sy. Nos.263 to 270; another
agreement of sale with irrevocable GPA dated 22.08.2007 was
entered into with Sri K. Ratangapani Reddy in respect of land
admeasuring Ac.10.20 gts in Sy. Nos.272/1 and 273/1; execution
of these documents went on till late in the night; while they
received money as stated in the compromise, averments relating to
the remaining extent of land admeasuring Ac.9.29 gts were
surreptitiously included therein as if the plaintiffs had given up
their rights in favour of M/s. Bhargavi Constructions represented
by Sri V. Ramachandra Rao, which was never the terms of
compromise; if there was any such understanding, the document
would have been executed on the same day; no such document
was executed on that date; the aforesaid documents were executed
not only by the plaintiffs, but by the other defendants also; the
plaintiffs are illiterate, and are not well versed with court
proceedings; as per the representation made by Sri S. Narayana
Reddy, Sri D.S. Karunakar Reddy, the matter was referred to the
Lok Adalat; a compromise memo was filed before the Lok Adalat
and the signatures of the plaintiffs herein, ie the defendants in
O.S.No.481 of 2007, were obtained therein; the proceedings of the
Lok Adalat basically state that the compromise arrived at is in
respect of the suit schedule property; an award was passed by the
Lok Adalat, Ranga Reddy District dated 22.08.2007, and terms of
the compromise were signed by the parties; even after the
compromise, the 1st plaintiff and his family members continue to
be in occupation, possession and enjoyment of the property
admeasuring Ac.9.29 gts till date; O.S.No.643 of 2007 was filed by
M/s. Bhargavi Constructions on the file of the Additional Junior
Civil Judge, Ranga Reddy District which was later renumbered as
O.S. No.42 of 2009; and, in para 18 of the compromise, the
following lines were added:
That in view of the compromise, similarly the plaintiff and defendants 1
to 32 are relinquishing all their rights and interest of whatsoever nature in
respect of Ac.41.34 gts in favour of defendant No.33 including the right of
receiving compensation for any acquisition in respect thereof and also
withdrawing the right, interest and claim whatsoever in the remaining land
admeasuring AC.9.29 gts in Sy. Nos.271, 272 and 273 (part) owned and
possessed by M/s. Bhargavi constructions represented by Sri V.
Ramachandra Rao, the G.P.A. holder of defendants 10 to 19, Sri V.
Ramachandra Rao and Sri V.K. Vishwanatham. Thus, the plaintiff and the
defendants 1 to 32 have no right, title or claim whatsoever in future in
respect of total suit schedule land admeasuring Ac.51.29 gts in Sy. Nos.262
to 274 situated at Poppalaguda vilale, Rajendranagar Mandal, R.R.
District. (emphasis supplied)
The appellants-plaintiffs further stated that the decree,
obtained by surreptitious means before the Lok Adalat by the
defendants, did not create any interest in favour of defendant
Nos.31 and 32; there was no question of the plaintiffs
relinquishing their rights in respect of Ac.9.25 guntas of land;
there was, in fact, no relinquishment; this is also apparent as
O.S.No.42 of 2009, filed by M/s. Bhargavi Constructions, is still
pending before the Court of the Junior Civil Judge, Ranga Reddy
District; the plaintiffs realised the ill-intentions of defendant Nos.
31 and 32 only in the last week of October, 2009 when persons,
claiming on behalf of M/s. Bhargavi Constructions, tried to illegally
trespass into the plaint schedule property; when they were
questioned by the plaintiffs, they referred to the decree passed in
O.S. No.481 of 2007; on a careful examination of the decree, they
were shocked to find that surreptitious insertions were made in
para 18 of the compromise; in the circumstances, an out and out
fraud was placed upon the plaintiffs while obtaining their
signatures on the said compromise; even otherwise the said
compromise, including the contents of para 18 especially in the
highlighted portion, could not have been recorded and could not be
given effect to as it is beyond the scope of the compromise, as
contemplated under Order 23 Rule 3 CPC, even after its
amendment; it is apparent from the rough sketch plan with respect
to Ac.9.29 gts, that the entire extent of land is not a contiguous
piece of land, as the three portions are separately shown; the
action of defendant Nos.31 and 32, (ie M/s.Bhargavi Constructions
and Sri V. Ramachandra Rao) in collusion with the other
defendants, is fraudulent; it has given a cause of action to the
plaintiffs to seek redresal; the compromise was recorded before the
Court on 22.08.2007; the plaintiffs have initiated the present
action, in the nature of a suit for declaration, within three years of
realising the fraud played upon them; the plaintiffs actually came
to know of the said fraud only in the last week of October, 2009;
and, even otherwise, the suit is filed within three years from
22.08.2007.
In their written statement defendant Nos.31 and 32, after
referring to Sections 21 and 22-E of the Legal Services Authorities
Act (hereinafter called the Act), state that the only remedy, that
too only on very limited grounds, is to challenge the award either
under Article 226 or 227 of the Constitution of India; O.S.No.107
of 2010 was barred by Sections 21 and 22-E of the Act, and, as
such, it is liable to be rejected.
Defendant Nos.31 and 32, in O.S. No.107 of 2010, filed I.A.
No.894 of 2010 under Order VII Rule 11 CPC requesting the Court
below to reject the plaint in O.S. No.107 of 2010 as barred under
Sections 21 and 22-E of the Act. In the affidavit, filed in support of
I.A. No.894 of 2010, defendant Nos.31 and 32 stated that the
petition was being filed to reject the plaint filed by the plaintiffs in
O.S. No.107 of 2010, as barred under Sections 21 and 22-E of the
Act; the plaintiffs had filed the suit for a declaration that a part of
the Award passed in O.S. No.481 of 2007 by the Lok Adalat, Ranga
Reddy District dated 22.08.2007, in respect of the land
admeasuring Ac.9.29 gts in Sy. Nos.271, 272 and 273 creating
rights in favour of D-31 and D-32, was nonest in law and had been
obtained by fraud and collusion; they had, consequently, sought
permanent injunction restraining D-31 and D-32 from interfering
with the peaceful possession and enjoyment of the suit schedule
property; along with the plaint, the plaintiffs had filed a copy the
plaint in O.S. No.481 of 2007, and a copy of the award passed by
the Lok Adalat dated 22.08.2007; it is evident from the award
passed by the Lok Adalat under Section 21 of the Act and from
para 1 of the compromise petition, that the plaintiffs and
defendant Nos.11 to 30 were parties to O.S. No.481 of 2007;
defendant Nos.31 and 32 later got themselves impleaded in the
suit; and the allegations that, under the settlement, it was made
known to the plaintiffs that, from out of the total extent of Ac.51.29
gts belonging to them, the plaintiffs had to relinquish their rights
in respect of Ac.41.34 gts, and they would be left with Ac.9.29 gts
is not borne by the award.
After referring to the history of the litigation, it is stated that
the matter was referred to, and the compromise memo was filed
before, the Lok Adalat; a copy of the award passed by the Lok
Adalat dated 22.08.2007, along with Form No.V of the compromise
signed by the parties were filed as document Nos.2 and 3; it is
evident from the award that the suit filed by the 5th respondent,
against the plaintiffs and defendant Nos.1 to 30, was on the basis
of the agreement of sale dated 28.12.1995 in respect of the suit
schedule property totalling admeasuring Ac.51.29 gts in Sy.
Nos.262 to 274 of Poppalaguda village, Rajendranagar Mandal,
R.R. District, and was referred to the Lok Adalat for settlement; the
plaintiffs and defendant Nos.1 to 33 were present in person;
defendant Nos.10 to 19 were represented by their G.P.A. holder Sri
V. Ramachandra Rao, and their identity was established; the
parties had filed the detailed terms of compromise running into 19
paras which are admitted to be truly and correctly recorded; in
terms of the compromise, the plaintiffs and defendant Nos.1 to 32
had relinquished their rights in respect of land admeasuring
Ac.41.34 gts under the suit schedule property in favour of D-33,
including the right of receiving compensation for any acquisition in
respect thereof; they had also withdrawn their right, interest and
claim of whatsoever nature in the remaining extent of land of
Ac.9.29 gts out of the suit schedule property which was owned and
possessed by M/s. Bhargavi Constructions represented by Sri V.
Ramachandra Rao who was the GPA holder of D-10 to D-19; an
award was passed accordingly; the plaintiffs were very much
present, and had put their signatures to the said award; clause 5
of the terms of compromise stipulated that the compromise would
be binding on the plaintiff and defendant Nos.1 to 32, and all their
legal heirs, representatives or their nominees or any person
claiming through them in respect of the land to an extent of
Ac.41.34 gts; the remaining land, of an extent of Ac.9.29 gts, was
owned and possessed by M/s. Bhargavi Constructions represented
by Sri V. Ramachandra Rao and Sri V.K. Viswanatham; neither the
plaintiffs nor defendant Nos.1 to 33 had anything to do with the
said property; it is evident from Clause 8, that the amount paid by
defendant No.33 was towards full and final settlement of all the
rights, claims and interest of defendant Nos.1 to 32 over the suit
schedule property, and plaintiffs and defendant Nos.1 to 32 could
not, henceforth, have any further right whatsoever over the
schedule property; it is evident from clause 17 that all parties had
represented and stated that the memorandum was being executed
on the respective representations made by each of the parties, and
that each party has made such representations in a wilful and
deliberate manner knowing fully well that such representations
would be acted upon by the other in entering into this
memorandum of compromise; from clause 18, it is evident that, in
view of the compromise, the plaintiffs and defendant Nos.1 to 32
had relinquished all their rights and interest of whatsoever nature
in respect of Ac.41.34 gts, and had withdrawn their right, interest
and claims in the remaining land admeasuring Ac.9.29 gts; thus
the plaintiffs and defendant Nos.1 to 32 had no right, title or claim
in future in respect of the total suit schedule land admeasuring
Ac.51.29 gts in Sy. Nos.262 to 274 situated at Poppalguda village,
Rajendranagar Mandal, R.R. District; an award was passed by the
Lok Adalat in respect of the entire land of an extent of Ac.51.29
gts; the plaintiffs and defendant Nos.1 to 35 had categorically
stated that they had no right or interest of whatsoever nature in
respect of the total suit schedule property of Ac.51.29 gts; the very
claim of the plaintiffs, that they were illiterate and were not put on
notice, is false; it is incorrect to state that no compromise can be
entered into with persons who are not parties to the suit; the
plaintiffs, along with other parties, had relinquished all their
rights, title and interest, and had withdrawn all their claims
against the other respondents; the award was passed under
Section 21 of the Act, and there was a bar for filing of the present
suit; the Supreme Court and the High Court, in a catena of
decisions, have held that the only remedy, that too on very limited
grounds, is to challenge the award either under Article 226 or 227
of the Constitution of India; the suit, filed by the plaintiffs, is
barred by Sections 21 and 22-E of the Act; and the plaint was,
therefore, liable to be rejected. Defendant Nos.31 and 32
requested the Court below to reject the plaint in O.S. No.107 of
2010 as barred by Sections 21 and 22-E of the Act.
In the counter filed thereto by the appellants-plaintiffs, it is
stated that the application, filed to reject the plaint under Sections
21 and 22-E of the Act was not maintainable in law or on the facts
of the case; the contents of para 4 of the affidavit was incorrect and
false; the allegation, that Ac.9.29 gts were not to be left with the
plaintiffs in the suit, was incorrect; the plaint details the manner
in which fraud was played on the plaintiffs, while obtaining their
consent for the said compromise and getting the award passed
surreptitiously in respect of Ac.9.29 gts portion of the suit
schedule property; while affixing of signatures on the compromise
memo was not disputed by the plaintiffs, the manner in which the
compromise was drafted, and the award was obtained, was a
fraudulent act as explained in detail in the plaint; the allegation
that Ac.9.29 gts of land was owned and possessed by
M/s.Bhargavi Constructions represented by Sri V. Ramachandra
Rao, the alleged GPA holder of defendant Nos.1 to 19, is incorrect
and false; the contention that, from clause 8, it is evident that the
amount paid by defendant No.33 is towards full and final
settlement of all rights, claim, interest of defendant Nos.1 to 32
over the entire suit schedule property is false; if it was so, such a
surreptitious insertion would not have been made in the clauses of
the compromise memo; the interpretation sought to be given to
clause 17 of the memorandum of compromise is incorrect and
false; the plaintiffs never agreed to forego their rights in respect of
Ac.9.29 gts of land as alleged; the plaintiffs specifically alleged
fraud, and had explained that, admittedly, M/s.Bhargavi
Constructions was not a party to the suit and, as such, it was not
open to them to claim that there was any inter-parties compromise
arrived at between the parties as explained in detail in the plaint;
the award passed by the Lok Adalat was obtained by
misrepresentation by D-31 and D-32 in collusion with the
defendants, and was against the basic principles of Order 23 Rule
3 CPC as well as the provisions of the Act; fraud is always an
exception to all such circumstances; fraud is an act of deliberate
deception with the design of securing something by taking an
unfair advantage over another; any judgment or decree, obtained
by playing fraud, is a nullity and nonest in the eye 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;
the principle of finality of litigation cannot be pressed to the extent
of such an absurdity that it becomes an engine of fraud in the
hands of dishonest litigants; the controversy in this respect has
also been set at rest by the Division bench of the High Court which
held that a suit would always be maintainable, when the award is
obtained by fraud or misrepresentation or collusion to defeat the
rights of private parties; and the petition as filed is not
maintainable in law, and must be dismissed with exemplary costs.
By its order in I.A. No.894/2010 in O.S.No.107/2010 dated
24-07-2013, the Court below rejected the plaint and dismissed
O.S.No.107/2010 as not maintainable under Section 9 CPC, Order
VII Rule 11 CPC and Sections 21 & 22-E of the Act. The reasons
for rejection of the plaint, as recorded by the Court below in the
order under challenge in this Appeal, are that the parties had
approached the Civil Court by filing a separate suit questioning the
award passed by the Lok Adalat; in view of the Judgment of the
Division Bench, in Batchu Subba Lakshmi v. Sannidhi
Srinivasulu , a suit for declaration, questioning a part of the
Award passed by the Lok Adalat, was not maintainable; the suit
claim was not enforceable before a Court of law; the plaintiffs could
not challenge the award passed by the Lok Adalat before the Civil
Court by filing a separate suit; their remedy was only by way of a
Writ Petition before the High Court pleading fraud,
misrepresentation and undue influence etc. by invoking Articles
226 or 227 of the Constitution of India; considering the legal
position on the factual matrix, it was clear that the suit filed by the
plaintiffs, seeking to declare the award passed in O.S.No.481/2007
as non-est, was not maintainable; the plaintiffs suit was barred by
law; Section 9 CPC enables a Civil Court to take cognizance of all
civil disputes except those disputes, which are expressly or
impliedly barred by law; in the present case, the Act is a special
law; it prohibits any suit or appeal against the award passed by the
Lok Adalat, basing on a compromise arrived at between the parties;
and the suit was not maintainable under Section 9 CPC, and
under Order VII Rule 11 CPC r/w Sections 21 & 22-E of the Act.
Aggrieved by the said order, the plaintiffs in O.S.No.107/2010 have
preferred this appeal.
Sri K. Chidambaram, learned counsel for the appellants,
would place reliance on Vadiga Amose v. Vadiga Anjaneyulu in
support of his submission that the remedy, under Article 226 of
the Constitution of India, is barred; a writ petition does not lie
against the award passed by the Lok Adalat; and the appellants
remedy is only to file a suit to declare that the award is vitiated by
fraud. He would rely on A.V. Papayya Sastry v. Govt. of A.P. in
support of his submission that, where a decree has been obtained
by fraud, a suit can be filed to declare it to be a nullity. He would
further submit that, under Order VII Rule 11 (d) CPC, it is only
when the suit appears, in the statement in the plaint, to be barred
by any law, can the plaint be rejected; there is no express bar in
the Act precluding the appellants from filing a suit to declare the
award passed by the Lok Adalat a nullity on the ground that it is
vitiated by fraud; and, even if the appellants are held entitled to
invoke the extra-ordinary jurisdiction of this Court under Article
226 of the Constitution of India, it is open to them to also file a
suit in view of Section 9 CPC, more so in the absence of any
specific statutory provision barring them from invoking the
jurisdiction of the Civil Court.
On the other hand, Sri H. Venugopal, learned counsel
appearing on behalf of the respondents, would submit that
Sections 21 & 22-E of the Act give a finality to the award passed by
the Lok Adalat; while a third party, who is not a party to the
Award, may possibly be entitled to file a suit, the appellants herein
were parties to the compromise; they signed the compromise
petitions; consequently, the award passed by the Lok Adalat binds
them as it is deemed to have attained finality; in the absence of a
statutory remedy of appeal, the only remedy which the appellants
have is to invoke the extra-ordinary jurisdiction of this Court
under Article 226 of the Constitution of India; the remedy of a Suit
is impliedly barred under Section 21, and is explicitly barred under
Section 22-E of the Act; the allegations of fraud, made by the
plaintiffs in O.S.No.107/2010, are false; such allegations have
been made only to harass the respondents, and to force them to
undergo the needless ordeal of a civil litigation which would spread
over several years; and no interference is called for as the plaint
has, rightly, been rejected by the Court below exercising its powers
under Order VII Rule 11 (d) CPC. Learned Counsel would rely on
State of Punjab v. Jalour Singh , P.T. Thomas v. Thomas Job ,
Bar Council of India v. Union of India , Sri Durga Malleswara
Educational Society, Vijayawada, Krishna District v. District
Legal Services Authoirty (Lok Adalath), Vijayawada, Krishna
District , Sanjay Kumar v. Secretary, City Civil Court Legal
Services Authoirty, Hyderabad and Batchu Subba Lakshmi1.
The point for consideration in this appeal is whether a party,
to an award passed by the Lok Adalat, is barred by the provisions
of the Act and Section 9 CPC, from invoking the jurisdiction of the
Civil Court seeking to have the award declared as a nullity on the
ground that it was obtained by misrepresentation and/or fraud?
Order 7 Rule 11 CPC relates to rejection of plaint and, under
clause (d) thereof, a plaint shall be rejected where the suit appears,
from the statement in the plaint, to be barred by any law. Section
9 of the Civil Procedure Code confers jurisdiction on a Civil Court
to try all suits of a civil nature excepting suits of which their
cognizance is either expressly or impliedly barred. A civil suit does
not lie if the orders of the authorities are declared to be final or
there is an express prohibition in the particular Act. (Dhulabhai v.
State of M.P., ). Exclusion of the jurisdiction of the Civil Court is
not to be readily inferred. Such exclusion must either be explicitly
expressed or clearly implied. Even if the jurisdiction is so
excluded, the Civil Courts have jurisdiction to examine cases
where the provisions of the Act have not been complied with, or the
statutory tribunal has not acted in conformity with the
fundamental principles of judicial procedure. (Secretary of State
v. Mask & Co ; Dhulabhai9). It is only if a suit is explicitly or
impliedly barred by any law, can a plaint be rejected under Order 7
Rule 11(d) CPC.
Let us now examine whether a suit filed to declare an award
of the Lok Adalat a nullity, on the ground that it was obtained by
fraud, is either explicitly or implicitly barred under the Act.
Section 2(d) of the Act defines Lok Adalat to mean a Lok Adalat
organised under Chapter VI. Section 19, under Chapter VI of the
Act, relates to organisation of Lok Adalats. Section 19(1) stipulates
that every State Authority or District Authority or the Supreme
Court Legal Services Committee or every High Court Legal Services
Committee or, as the case may be, the Taluq Legal Services
Committee may organise Lok Adalats at such intervals and places,
and for exercising such jurisdiction and for such areas, as it thinks
fit. Section 19(5) stipulates that a Lok Adalat shall have
jurisdiction to determine and to arrive at a settlement between the
parties to a dispute in respect of (i) any case pending before or (ii)
any matter which is falling within the jurisdiction of, and is not
brought before, any court for which the Lok Adalat is organised.
Section 21 of the Act relates to the award of the Lok Adalat and,
under sub-section (1) thereof, every award of the Lok Adalat shall
be deemed to be a decree of a Civil Court or, as the case may be,
an order of any other Court. Section 21(2) stipulates that every
award made by a Lok Adalat shall be final and binding on all the
parties to the disputes, and no appeal shall lie to any Court
against the award.
Chapter VI-A of the Act relates to pre-litigation conciliation
and settlement. Section 22A(a) thereunder stipulates that in this
Chapter and for the purposes of Sections 22 and 23, unless the
context otherwise requires, a Permanent Lok Adalat shall mean a
Permanent Lok Adalat established under sub-section (1) of Section
22-B. Section 22B(1) stipulates that, notwithstanding anything
contained in Section 19, the Central Authority or, as the case may
be, every State Authority shall, by notification, establish
Permanent Lok Adalats at such places and for exercising such
jurisdiction in respect of one or more public utility services and for
such areas as may be specified. Section 22A(b) defines public utility
services to mean any of (i) transport service for the carriage of
passengers or goods by air, road or water; or (ii) postal, telegraph
or telephone service; or (iii) supply of power, light or water to the
public by any establishment; or (iv) system of public conservancy
or sanitation; or (v) service in hospital or dispensary; or (vi)
insurance service, and includes any service which the Central
Government, or the State Government as the case may be, in the
public interest may, by notification, declare to be a public utility
service for the purposes of this Chapter. It is only in respect of one
or more public utility services can a Permanent Lok Adalat be
established under Section 22B of Chapter VI-A of the Act.
Section 22E(1), in Chapter VI-A of the Act, stipulates that
every award, made by the Permanent Lok Adalat under this Act,
shall, on merits or in terms of a settlement agreement, be final and
binding on all the parties thereto and on persons claiming under
them. Section 22E(2) stipulates that every award of the Permanent
Lok Adalat shall be deemed to be a decree of a Civil Court. Section
22E(4) provides that every award, made by the Permanent Lok
Adalat, shall be final and shall not be called in question in any
original suit, application or execution proceeding. Section 22E(4)
prohibits an award made by a Permanent Lok Adalat to be called in
question in any original suit also.
Section 22-E(1) of the Act makes every award of the
Permanent Lok Adalat either on merits, or in terms of a settlement,
final and binding on all the parties thereto and on persons
claiming under them. No appeal is provided from the award passed
by the Permanent Lok Adalat as it is important that such dispute
is brought to an end at the earliest, and is not prolonged
unnecessarily. There is no inherent right of appeal. Appeal is
always a creature of statute. If at all a party to the dispute has a
grievance against the award of the Permanent Lok Adalat, he can
always approach the High Court under its supervisory and
extraordinary jurisdiction under Articles 226 and 227 of the
Constitution of India. (Bar Council of India6).
The award, in the present case, neither relates to a public
utility service nor was it passed by a Permanent Lok Adalat,
Section 22E(4) of the Act, which prohibits such an award from
being called in question in any original suit, has therefore no
application. The award, which was subjected to challenge in O.S.
No.107 of 2010, was passed by the Lok Adalat organised under
Section 19 of Chapter VI of the Act. Unlike Section 22-E(4) which
prohibits an award passed by a permanent Lok Adalat to be called
in question in an original suit, Section 21(2) of the Act only
prohibits an appeal being filed against an award passed by the Lok
Adalat. It cannot, therefore, be said that the remedy of a Civil
Court is explicitly barred.
Before examining the question whether the remedy of a Civil
Suit is impliedly barred under the Act, it must be borne in mind
that the award of the Lok Adalat is an administrative act of
incorporating the terms of a compromise or settlement agreed by
the parties in its presence. The Lok Adalat does not adjudicate a
dispute. When an award is passed by the Lok Adalat in terms of
the settlement arrived between the parties, and is duly signed by
them, it is binding on the parties to the settlement and is
executable as if it is a decree of the Civil Court. (Jalour Singh4;
Sanjay Kumar8; Batchu Subba Lakshmi1).
The Lok Adalat passes the award with the consent of the
parties. There is, therefore, no need either to reconsider or review
the matter again and again as the award passed by the Lok Adalat
is final. Even under Section 96(3) CPC no appeal shall lie from a
decree passed by the court with the consent of parties. The award
of the Lok Adalat is an order by the Lok Adalat with the consent of
the parties. It is deemed to be a decree of the Civil Court and,
therefore, no appeal lies from the award of the Lok Adalat. (P.T.
Thomas5). In stipulating that the award is enforceable as a
decree, and in giving it finality, the endeavour is only to see that
the disputes are narrowed down and the settlement is made final
so that the parties are not again driven to further litigation.
Though the award of a Lok Adalat is not a result of a contest on
merits, it is equal to and on par with a decree on compromise. It
will have the same binding effect, and be conclusive. Just as the
decree passed on a compromise cannot be challenged in a regular
appeal, the award of the Lok Adalat, being akin thereto, cannot be
challenged by any of the regular remedies available under law.
(P.T. Thomas5). No appeal would lie against the award of Lok
Adalat and, if any party wants to challenge such an award, it can
be by way of a petition under Article 226 or 227 of the
Constitution. (Jalour Singh4; Sanjay Kumar8; Batchu Subba
Lakshmi1).
The award passed by the Lok Adalat in a pending litigation,
or in a pre-litigation case, is not, ordinarily, amenable to judicial
review. But when an award of the Lok Adalat is obtained by
misrepresentation, fraud or without due compliance with the
provisions of the Act and that it was not preceded by a
compromise/settlement, it can be challenged in a Writ Petition.
(Sri Durga Malleswari Educational Society7). The challenge to
the award of the Lok Adalat, in proceeding under Article 226 of the
Constitution of India, can be entertained only at the behest of
parties to the settlement/ compromise before the Lok Adalat, and
not by anyone else. (Sanjay Kumar8). The parties to the
compromise or settlement, which is the basis for the award of a
Lok Adalat, are entitled to challenge the award. Ordinarily, a third
party cannot challenge the award in a writ petition, even if such an
award causes prejudice. The remedy of such party would be to
institute a separate suit within the period of limitation prescribed
under law for necessary redressal, and seek an appropriate decree.
As a Civil Court can even declare that an earlier decree of the
Court is not binding on the party before it, there can be no
objection for a third party to institute a suit in a Civil Court
seeking a declaration that the award of Lok Adalat is not binding
on him. There may, however, be extraordinary cases where a third
party is meted with injustice at the behest of two or more
conniving and colluding parties who may have obtained an award
of the Lok Adalat by fraud or misrepresentation only to defeat the
rights of a third party. In such cases, such a third party may
maintain a Writ Petition. In such cases, there should be prima
facie evidence of fraud or misrepresentation or collusion in
obtaining the award of the Lok Adalat. Even if such allegations are
made, and the question involves complicated questions of fact
requiring voluminous evidence, the third party should be left to
seek the remedy in a Civil Court, rather than invoking the
extraordinary jurisdiction of the High Court under Article 226 of
Constitution. (Batchu Subba Lakshmi1).
In Vadiga Amose2, the petitioner, on coming to know of the
filing of a suit and settlement of the same in the Lok Adalat,
obtained a certified copy of the Lok Adalat award. He contended
that respondents 1 to 4 had, together, colluded and initiated the
civil suit by playing fraud against the Court; they had obtained the
award behind his back suppressing the partition deed; and the Lok
Adalat award was non-est in the eye of law, and it was liable to be
set aside. It is in this context that the Division Bench of this Court
held that an award passed under Section 21 of the Act is deemed
to be a decree of the Civil Court; a decree, obtained by playing
fraud on the Court, can be challenged by a third party to the suit
by filing a suit for declaration; and, in order to avoid multiplicity of
proceedings and to put an end to the litigation once and for all, the
best course open to the petitioner was to approach jurisdictional
Civil Court for redressal. As the appellants herein, are parties to
the award passed by the Lok Adalat, reliance placed by Sri K.
Chidambaram, Learned Counsel, on Vadiga Amose2, to contend
that the appellants cannot invoke the jurisdiction of this Court,
under Article 226 of the Constitution of India, is misplaced.
Judicial review is available to test the validity of awards
passed by the Lok Adalat on limited grounds, one of which is when
a party alleges that there was no settlement enabling an award
being passed. If it is shown that there is no settlement or
compromise, or that settlement or compromise itself is vitiated by
fraud or misrepresentation, it would be a fit case for interference.
Except the remedy of challenging the Lok Adalat award on limited
grounds, no other authority or Court can question the award of
Lok Adalat which shall be treated as final and binding. (Sanjay
Kumar8; Sri Durga Malleswari Educational Society7). In the
absence of a statutory remedy of an appeal, an award can be
subjected to challenge in writ proceedings invoking the extra-
ordinary jurisdiction of this Court under Article 226 of the
Constitution of India. As the jurisdiction, which this Court
exercises under Article 226 of the Constitution of India is extra-
ordinary, and as the power of judicial review under Article 226 is
part of the basic structure of the Constitution (L. Chandra Kumar
v. Union of India ), it cannot be circumscribed or negated by
legislation plenary or subordinate. Availability of the remedy, of
invoking the extra-ordinary jurisdiction of the High Court under
Article 226 of the Constitution of India, would not per se disable a
person aggrieved from invoking the jurisdiction of the Civil Court.
While a person, aggrieved by an award passed by the Lok
Adalat, can challenge its validity in proceedings under Article 226
of the Constitution of India, the question which necessitates
examination is whether such a person is barred from filing a suit
when it is his specific case that the award has been obtained by
fraud. As Section 21(2) of the Act give finality to an award passed
by the Lok Adalat, and the remedy of an appeal is explicitly barred,
ordinarily the remedy of a Civil Suit is not available to the parties
to the award passed by the Lok Adalat. As noted hereinabove,
even if the jurisdiction of the Civil Court is impliedly excluded, the
Civil Court has jurisdiction to examine cases where the provisions
of the Act have not been complied with, or the statutory Tribunal
has not complied with the fundamental principles of judicial
procedure.
An action, to set aside a judgment, cannot be brought on the
ground that it has been decided wrongly, namely, that, on merits,
the decision was one which should not have been rendered. But it
can be set aside, if the court was imposed upon or tricked into
giving the judgment. (A.V. Papayya Sastry3). If any judgment or
order is obtained by fraud, it cannot be said to be a judgment or
order in law. (A.V. Papayya Sastry3). No judgment of a court can
be allowed to stand if it has been obtained by fraud. (Lazarus
Estates Ltd. v. Beasley ; A.V. Papayya Sastry3). Fraud and
justice never dwell together (fraus et jus nunquam cohabitant); or
fraud and deceit ought to benefit none (fraus et dolus nemini
patrocinari debent). (A.V. Papayya Sastry3). Fraud may be
defined as 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 an extrinsic collateral act which vitiates all
judicial acts, whether in rem or in personam. The principle of
finality of litigation cannot be stretched to the extent of an
absurdity that it can be utilised as an engine of oppression by
dishonest and fraudulent litigants. (A.V. Papayya Sastry3).
Fraud avoids all judicial acts, ecclesiastical or temporal. A
judgment, decree or order obtained by playing fraud on the Court,
Tribunal or authority is a nullity and non-est in the eye of the law.
It can be challenged in any court, at any time, in appeal, revision,
writ or even in collateral proceedings. (A.V. Papayya Sastry3; S.P.
Chengalvaraya Naidu v. Jagannath ). Once it is established that
the order was obtained by a successful party by practising or
playing fraud, it is vitiated. Such an order cannot be held legal,
valid or in consonance with the law. It is non-existent and non-est
and cannot be allowed to stand. A judgment, decree or order
obtained by fraud has to be treated as a nullity, whether by the
court of first instance or by the final court. And it has to be treated
as non est by every court, superior or inferior. (United India
Insurance Co. Ltd. v. Rajendra Singh ). In the case of fraud on
a party to the suit or proceedings, the Court may direct the
affected party to file a separate suit for setting aside the decree
obtained by fraud. (Indian Bank v. Satyam Fibres (India) (P)
Ltd. ).
An award passed by the Lok Adalat is, under Section 21(1) of
the Act, deemed to be a decree of a Civil Court. If a Civil Suit can
be filed to set aside a decree obtained by fraud, we see no reason
why a Civil Suit cannot be filed to set aside an award of the Lok
Adalat, if such an award has been obtained by fraud. As the
appellant has specifically pleaded, in the suit filed by him, that the
award of the Lok Adalat is vitiated by fraud, the Court below erred
in rejecting his plaint, under Order 7 Rule 11 CPC, on the ground
that a civil suit does not lie against an award passed by the Lok
Adalat. The point for consideration is answered holding that the
remedy of a Civil Suit is not barred where the jurisdiction of the
Civil Court is invoked by a party to the compromise, or the award
of Lok Adalat, alleging that the said compromise or award was
obtained by misrepresentation or fraud.
Though an award of the Lok Adalat can be subjected to
challenge in a Civil Court if it is vitiated by fraud, it must be borne
in mind that allegations of fraud are easier made than established.
Fraud can either be proved by established facts or an inference can
be drawn from admitted and/or undisputed facts. (A.P. Scheduled
Tribes Employees Association v. Aditya Pratap Bhanj Dev ).
The law requires strict proof of fraud. (State of Maharashtra v.
Budhikota Subba Rao (Dr.) ; Saradamani Kandappan v. S.
Rajalakshmi ). Fraud is essentially a question of fact, the burden
to prove which is upon him who alleges it. (Shrisht Dhawan v.
Shaw Bros ). Mere allegations or averments of facts do not make a
strong prima facie case of fraud. The material and evidence has to
show it. A finding as to fraud cannot be based on suspicion and
conjecture and must be established beyond reasonable doubt.
(Svenska Handelsbanken v. Indian Charge Chrome ).
Ordinarily, the burden to prove fraud would be on the party who
asserts the affirmative of the issue and it rests, after evidence is
gone into, upon the party against whom, at the time the question
arises, judgment would be given if no further evidence were to be
adduced by either side. (Anil Rishi v. Gurbaksh Singh ). The
degree of proof required in such cases is extremely high. (A.C.
Ananthaswamy v. Boraiah ).
Fraud must be established beyond reasonable doubt.
However suspicious may be the circumstances, however strange
the coincidences, and however grave the doubt, suspicion alone
can never take the place of proof. (Union of India v. Chaturbhai
M. Patel & Co., ; A.L.N. Narayanan Chettyar v. Official
Assignee, High Court, Rangoon ). The basic principles of the
rules of evidence require a party alleging fraud to give particulars
of the fraud. In the absence of such particulars, no inference can
be drawn of fraud merely on the basis of presumptions. A heavy
duty lies upon the party who alleges fraud and the level of proof
required, for proving fraud, is extremely high. (Sangramsingh P.
Gaekwad v. Shantadevi P. Gaekwad ; Chief Engineer, M.S.E.B.
v. Suresh Raghunath Bhokare ; Maharashtra Power
Development Corpn. Ltd. v. Dabhol Power Co. ; and Alva
Aluminium Ltd. v. Gabriel India Ltd. ). It is only if fraud is
established can the civil Court, on its jurisdiction being invoked,
interfere and set aside the award of the Lok Adalat.
Sri H. Venugopal, Learned Counsel for the respondent,
would submit that the allegations in the plaint do not make out a
case of fraud. The Court below had rejected the plaint solely on
the ground that a civil suit cannot be filed, and the plaintiffs
remedy is only to invoke the jurisdiction of this Court under Article
226 of the Constitution of India. Whether or not the appellant is
justified in his claim, that the award of the Lok Adalat is vitiated by
fraud, are matters to be examined by the Court below. As the
power to reject a plaint under Order 7 Rule 11(d) is to be exercised
by the civil court only if the suit appears, from the statement in the
plaint, to be barred by law, the court below erred in rejecting the
plaint on the ground that a civil suit is not maintainable. The
order under appeal is set aside. We make it clear that we have not
expressed any opinion on the truth or otherwise of the appellants
claim that the award of the Lok Adalat is vitiated by fraud. The
Court below shall adjudicate the suit on its merits, and in
accordance with law.
The order, under challenge in this appeal, is set aside and
the appeal is allowed with costs. Miscellaneous petitions pending,
if any, shall also stand disposed of.
______________________________
RAMESH RANGANATHAN, J
___________________
S.RAVI KUMAR, J
Date: 25.06.2015.
APPEAL SUIT No.968 of 2013
25-06-2015
Kothakapu Muthyam Reddy and others.Appellants
Bhargavi Constructions, rep., by its Managing partner Sri V. Ramachandra Rao
and others. Respondents
Counsel for the appellants: Sri K. Chidambaram, Advocate
appeared on behalf of Sri M. Rajender Reddy,
Counsel for the appellant
Counsel for respondent: Sri H. Venugopal
<GIST:
>HEAD NOTE:
? Citations:
1) 2010 (1) ALD 277 (DB)
2) 2014 (2) ALD 676 (DB)
3) (2007) 4 SCC 221
4) (2008) 2 SCC 660
5) (2005) 6 SCC 478
6) 2012 (6) ALD 58 (SC)
7) 2012 (4) ALD 27 (DB)
8) 2010 (3) ALD 330 (DB)
9) AIR 1969 SC 78 = (1968) 3 SCR 662
10) AIR 1940 Privy Council 105
11) AIR 1997 SC 1125
12) (1956) 1 All ER 341
13) (1994) 1 SCC 1
14) (2000) 3 SCC 581
15) (1996) 5 SCC 550
16) (2001 (6) ALD 582 (FB)
17) (1993) 2 SCC 567
18) (2011) 12 SCC 18
19) (1992) 1 SCC 534
20) (1994) 1 SCC 502
21) (2006) 5 SCC 558
22) (2004) 8 SCC 588
23) (1976) 1 SCC 747
24) AIR 1941 P.C. 93
25) (2005) 11 SCC 314
26) (2005) 10 SCC 465
27) (2005) 11 SCC 209
27) (2011) 1 SCC 167
THE HON'BLE SRI JUSTICE RAMESH RANGANATHAN
AND
THE HON'BLE SRI JUSTICE S. RAVI KUMAR
APPEAL SUIT No.968 of 2013
JUDGMENT: (Per Honble Sri Justice Ramesh Ranganathan)
The appellants herein are the plaintiffs in O.S. No.107 of
2010. They sought a decree in their favour, and against the
defendants, to declare para 18 of the compromise recorded in O.S.
No.481 of 2007 before the Lok Adalat dated 22.08.2007, in so far
as it related to land admeasuring Ac.9.29 gts of land in Sy.
Nos.271, 272 and 273 shown to have created rights in favour of
defendant No.31 i.e., M/s. Bhargavi Constructions represented by
Sri V. Ramachandra Rao, as nonest in law for having been
obtained by fraud and collusion, by playing fraud upon the
plaintiffs; and for grant of a permanent injunction restraining the
defendants, especially defendant No.31, their agents, servants,
employees etc., from interfering with the peaceful possession and
enjoyment of the plaintiffs in respect of the suit schedule A, B and
C properties.
In this plaint filed in O.S. No.107 of 2010, the appellants
stated that the 1st plaintiff had purchased land admeasuring
Ac.25.00 cts in Sy. Nos.262, 274 under registered sale deed dated
06.07.1974 from Sri Jamaluddin and others; the first plaintiff also
purchased Ac.6.10 gts from Sri Jamaluddin in the year 1975,
which was confirmed by a deed of confirmation dated 24.04.1985;
Sri Mohd. Kareemuddin had obtained a loan from Sri K. Mutyam
Reddy, and had mortgaged the land admeasuring Ac.6.10 guntas,
in the year 1982, by executing the mortgage deed; in addition
thereto, land admeasuring Ac.12.20 gts was also in possession of
the plaintiffs since June, 1993; between themselves, the plaintiffs
were in peaceful possession and enjoyment of a total extent of
Ac.50.00 gts of land in Sy. Nos.262 to 274 in Poppulaguda village,
Rajendranagar Mandal, Ranga Reddy District; as Sri Md.
Khairuddin, Ajeemuddin and Kareemuddin, were interfering, the
1st plaintiff filed the injunction suit in O.S. No.333 of 1992 which
was decreed in his favour; as the patta was not mutated in his
name, the 1st plaintiff filed O.S. No.259 of 1994 against Sri
Jamaladdin and others for declaration of his title and for perpetual
injunction; on O.S. No.259 of 1994 being dismissed on
05.04.2004, the 1st plaintiff filed A.S. No.2323 of 2005; during the
pendency of the said appeal, the 1st defendant filed O.S. No.481 of
2007 for specific performance of the agreement of sale dated
28.12.1995 in respect of agricultural land admeasuring Ac.51.29
gts in Sy. No.262 to 274 of Poppulaguda village, Rajendranagar
Mandal, Ranga Reddy District; the plaintiffs, in the present Suit,
were arrayed as defendants 22 to 25 therein; however, on the
intervention of mediators, a compromise was arrived at; under the
terms of the settlement, the plaintiffs were to relinquish Ac.41.34
gts, and the 1st plaintiff would be left with Ac.9.29 gts; from out of
the total extent of Ac.41.34 gts, it was agreed that Ac.10.20 gts of
land would be transferred in the name of Sri Ratangapani Reddy
i.e., the son-in-law of the first plaintiff; the remaining land was to
be given to the 1st plaintiff; an area of land, admeasuring Ac.6.25
gts, had been acquired for the outer ring road; the schedule of
payment of money was also incorporated, in the compromise, only
to the extent of Ac.25.00 gts; the defendants surreptitiously added
therein that the plaintiffs had given up their rights in respect of
land admeasuring Ac.9.29 gts in favour of M/s. Bhargavi
Constructions, represented by Sri V. Ramachandra Rao, who were
not parties to O.S. No.481 of 2007; no compromise could be
recorded with persons who were not parties to the suit;
immediately after the compromise was recorded in the Lok Adalat,
a sale deed was executed on the same day in favour of M/s.
Grandbay Estate Developers Ltd and Venezia Estate Developers
Ltd., vide document No.8379 of 2007 dated 22.08.2007 in respect
of land admeasuring Ac.14.02 gts in Sy. Nos.263 to 270; another
agreement of sale with irrevocable GPA dated 22.08.2007 was
entered into with Sri K. Ratangapani Reddy in respect of land
admeasuring Ac.10.20 gts in Sy. Nos.272/1 and 273/1; execution
of these documents went on till late in the night; while they
received money as stated in the compromise, averments relating to
the remaining extent of land admeasuring Ac.9.29 gts were
surreptitiously included therein as if the plaintiffs had given up
their rights in favour of M/s. Bhargavi Constructions represented
by Sri V. Ramachandra Rao, which was never the terms of
compromise; if there was any such understanding, the document
would have been executed on the same day; no such document
was executed on that date; the aforesaid documents were executed
not only by the plaintiffs, but by the other defendants also; the
plaintiffs are illiterate, and are not well versed with court
proceedings; as per the representation made by Sri S. Narayana
Reddy, Sri D.S. Karunakar Reddy, the matter was referred to the
Lok Adalat; a compromise memo was filed before the Lok Adalat
and the signatures of the plaintiffs herein, ie the defendants in
O.S.No.481 of 2007, were obtained therein; the proceedings of the
Lok Adalat basically state that the compromise arrived at is in
respect of the suit schedule property; an award was passed by the
Lok Adalat, Ranga Reddy District dated 22.08.2007, and terms of
the compromise were signed by the parties; even after the
compromise, the 1st plaintiff and his family members continue to
be in occupation, possession and enjoyment of the property
admeasuring Ac.9.29 gts till date; O.S.No.643 of 2007 was filed by
M/s. Bhargavi Constructions on the file of the Additional Junior
Civil Judge, Ranga Reddy District which was later renumbered as
O.S. No.42 of 2009; and, in para 18 of the compromise, the
following lines were added:
That in view of the compromise, similarly the plaintiff and defendants 1
to 32 are relinquishing all their rights and interest of whatsoever nature in
respect of Ac.41.34 gts in favour of defendant No.33 including the right of
receiving compensation for any acquisition in respect thereof and also
withdrawing the right, interest and claim whatsoever in the remaining land
admeasuring AC.9.29 gts in Sy. Nos.271, 272 and 273 (part) owned and
possessed by M/s. Bhargavi constructions represented by Sri V.
Ramachandra Rao, the G.P.A. holder of defendants 10 to 19, Sri V.
Ramachandra Rao and Sri V.K. Vishwanatham. Thus, the plaintiff and the
defendants 1 to 32 have no right, title or claim whatsoever in future in
respect of total suit schedule land admeasuring Ac.51.29 gts in Sy. Nos.262
to 274 situated at Poppalaguda vilale, Rajendranagar Mandal, R.R.
District. (emphasis supplied)
The appellants-plaintiffs further stated that the decree,
obtained by surreptitious means before the Lok Adalat by the
defendants, did not create any interest in favour of defendant
Nos.31 and 32; there was no question of the plaintiffs
relinquishing their rights in respect of Ac.9.25 guntas of land;
there was, in fact, no relinquishment; this is also apparent as
O.S.No.42 of 2009, filed by M/s. Bhargavi Constructions, is still
pending before the Court of the Junior Civil Judge, Ranga Reddy
District; the plaintiffs realised the ill-intentions of defendant Nos.
31 and 32 only in the last week of October, 2009 when persons,
claiming on behalf of M/s. Bhargavi Constructions, tried to illegally
trespass into the plaint schedule property; when they were
questioned by the plaintiffs, they referred to the decree passed in
O.S. No.481 of 2007; on a careful examination of the decree, they
were shocked to find that surreptitious insertions were made in
para 18 of the compromise; in the circumstances, an out and out
fraud was placed upon the plaintiffs while obtaining their
signatures on the said compromise; even otherwise the said
compromise, including the contents of para 18 especially in the
highlighted portion, could not have been recorded and could not be
given effect to as it is beyond the scope of the compromise, as
contemplated under Order 23 Rule 3 CPC, even after its
amendment; it is apparent from the rough sketch plan with respect
to Ac.9.29 gts, that the entire extent of land is not a contiguous
piece of land, as the three portions are separately shown; the
action of defendant Nos.31 and 32, (ie M/s.Bhargavi Constructions
and Sri V. Ramachandra Rao) in collusion with the other
defendants, is fraudulent; it has given a cause of action to the
plaintiffs to seek redresal; the compromise was recorded before the
Court on 22.08.2007; the plaintiffs have initiated the present
action, in the nature of a suit for declaration, within three years of
realising the fraud played upon them; the plaintiffs actually came
to know of the said fraud only in the last week of October, 2009;
and, even otherwise, the suit is filed within three years from
22.08.2007.
In their written statement defendant Nos.31 and 32, after
referring to Sections 21 and 22-E of the Legal Services Authorities
Act (hereinafter called the Act), state that the only remedy, that
too only on very limited grounds, is to challenge the award either
under Article 226 or 227 of the Constitution of India; O.S.No.107
of 2010 was barred by Sections 21 and 22-E of the Act, and, as
such, it is liable to be rejected.
Defendant Nos.31 and 32, in O.S. No.107 of 2010, filed I.A.
No.894 of 2010 under Order VII Rule 11 CPC requesting the Court
below to reject the plaint in O.S. No.107 of 2010 as barred under
Sections 21 and 22-E of the Act. In the affidavit, filed in support of
I.A. No.894 of 2010, defendant Nos.31 and 32 stated that the
petition was being filed to reject the plaint filed by the plaintiffs in
O.S. No.107 of 2010, as barred under Sections 21 and 22-E of the
Act; the plaintiffs had filed the suit for a declaration that a part of
the Award passed in O.S. No.481 of 2007 by the Lok Adalat, Ranga
Reddy District dated 22.08.2007, in respect of the land
admeasuring Ac.9.29 gts in Sy. Nos.271, 272 and 273 creating
rights in favour of D-31 and D-32, was nonest in law and had been
obtained by fraud and collusion; they had, consequently, sought
permanent injunction restraining D-31 and D-32 from interfering
with the peaceful possession and enjoyment of the suit schedule
property; along with the plaint, the plaintiffs had filed a copy the
plaint in O.S. No.481 of 2007, and a copy of the award passed by
the Lok Adalat dated 22.08.2007; it is evident from the award
passed by the Lok Adalat under Section 21 of the Act and from
para 1 of the compromise petition, that the plaintiffs and
defendant Nos.11 to 30 were parties to O.S. No.481 of 2007;
defendant Nos.31 and 32 later got themselves impleaded in the
suit; and the allegations that, under the settlement, it was made
known to the plaintiffs that, from out of the total extent of Ac.51.29
gts belonging to them, the plaintiffs had to relinquish their rights
in respect of Ac.41.34 gts, and they would be left with Ac.9.29 gts
is not borne by the award.
After referring to the history of the litigation, it is stated that
the matter was referred to, and the compromise memo was filed
before, the Lok Adalat; a copy of the award passed by the Lok
Adalat dated 22.08.2007, along with Form No.V of the compromise
signed by the parties were filed as document Nos.2 and 3; it is
evident from the award that the suit filed by the 5th respondent,
against the plaintiffs and defendant Nos.1 to 30, was on the basis
of the agreement of sale dated 28.12.1995 in respect of the suit
schedule property totalling admeasuring Ac.51.29 gts in Sy.
Nos.262 to 274 of Poppalaguda village, Rajendranagar Mandal,
R.R. District, and was referred to the Lok Adalat for settlement; the
plaintiffs and defendant Nos.1 to 33 were present in person;
defendant Nos.10 to 19 were represented by their G.P.A. holder Sri
V. Ramachandra Rao, and their identity was established; the
parties had filed the detailed terms of compromise running into 19
paras which are admitted to be truly and correctly recorded; in
terms of the compromise, the plaintiffs and defendant Nos.1 to 32
had relinquished their rights in respect of land admeasuring
Ac.41.34 gts under the suit schedule property in favour of D-33,
including the right of receiving compensation for any acquisition in
respect thereof; they had also withdrawn their right, interest and
claim of whatsoever nature in the remaining extent of land of
Ac.9.29 gts out of the suit schedule property which was owned and
possessed by M/s. Bhargavi Constructions represented by Sri V.
Ramachandra Rao who was the GPA holder of D-10 to D-19; an
award was passed accordingly; the plaintiffs were very much
present, and had put their signatures to the said award; clause 5
of the terms of compromise stipulated that the compromise would
be binding on the plaintiff and defendant Nos.1 to 32, and all their
legal heirs, representatives or their nominees or any person
claiming through them in respect of the land to an extent of
Ac.41.34 gts; the remaining land, of an extent of Ac.9.29 gts, was
owned and possessed by M/s. Bhargavi Constructions represented
by Sri V. Ramachandra Rao and Sri V.K. Viswanatham; neither the
plaintiffs nor defendant Nos.1 to 33 had anything to do with the
said property; it is evident from Clause 8, that the amount paid by
defendant No.33 was towards full and final settlement of all the
rights, claims and interest of defendant Nos.1 to 32 over the suit
schedule property, and plaintiffs and defendant Nos.1 to 32 could
not, henceforth, have any further right whatsoever over the
schedule property; it is evident from clause 17 that all parties had
represented and stated that the memorandum was being executed
on the respective representations made by each of the parties, and
that each party has made such representations in a wilful and
deliberate manner knowing fully well that such representations
would be acted upon by the other in entering into this
memorandum of compromise; from clause 18, it is evident that, in
view of the compromise, the plaintiffs and defendant Nos.1 to 32
had relinquished all their rights and interest of whatsoever nature
in respect of Ac.41.34 gts, and had withdrawn their right, interest
and claims in the remaining land admeasuring Ac.9.29 gts; thus
the plaintiffs and defendant Nos.1 to 32 had no right, title or claim
in future in respect of the total suit schedule land admeasuring
Ac.51.29 gts in Sy. Nos.262 to 274 situated at Poppalguda village,
Rajendranagar Mandal, R.R. District; an award was passed by the
Lok Adalat in respect of the entire land of an extent of Ac.51.29
gts; the plaintiffs and defendant Nos.1 to 35 had categorically
stated that they had no right or interest of whatsoever nature in
respect of the total suit schedule property of Ac.51.29 gts; the very
claim of the plaintiffs, that they were illiterate and were not put on
notice, is false; it is incorrect to state that no compromise can be
entered into with persons who are not parties to the suit; the
plaintiffs, along with other parties, had relinquished all their
rights, title and interest, and had withdrawn all their claims
against the other respondents; the award was passed under
Section 21 of the Act, and there was a bar for filing of the present
suit; the Supreme Court and the High Court, in a catena of
decisions, have held that the only remedy, that too on very limited
grounds, is to challenge the award either under Article 226 or 227
of the Constitution of India; the suit, filed by the plaintiffs, is
barred by Sections 21 and 22-E of the Act; and the plaint was,
therefore, liable to be rejected. Defendant Nos.31 and 32
requested the Court below to reject the plaint in O.S. No.107 of
2010 as barred by Sections 21 and 22-E of the Act.
In the counter filed thereto by the appellants-plaintiffs, it is
stated that the application, filed to reject the plaint under Sections
21 and 22-E of the Act was not maintainable in law or on the facts
of the case; the contents of para 4 of the affidavit was incorrect and
false; the allegation, that Ac.9.29 gts were not to be left with the
plaintiffs in the suit, was incorrect; the plaint details the manner
in which fraud was played on the plaintiffs, while obtaining their
consent for the said compromise and getting the award passed
surreptitiously in respect of Ac.9.29 gts portion of the suit
schedule property; while affixing of signatures on the compromise
memo was not disputed by the plaintiffs, the manner in which the
compromise was drafted, and the award was obtained, was a
fraudulent act as explained in detail in the plaint; the allegation
that Ac.9.29 gts of land was owned and possessed by
M/s.Bhargavi Constructions represented by Sri V. Ramachandra
Rao, the alleged GPA holder of defendant Nos.1 to 19, is incorrect
and false; the contention that, from clause 8, it is evident that the
amount paid by defendant No.33 is towards full and final
settlement of all rights, claim, interest of defendant Nos.1 to 32
over the entire suit schedule property is false; if it was so, such a
surreptitious insertion would not have been made in the clauses of
the compromise memo; the interpretation sought to be given to
clause 17 of the memorandum of compromise is incorrect and
false; the plaintiffs never agreed to forego their rights in respect of
Ac.9.29 gts of land as alleged; the plaintiffs specifically alleged
fraud, and had explained that, admittedly, M/s.Bhargavi
Constructions was not a party to the suit and, as such, it was not
open to them to claim that there was any inter-parties compromise
arrived at between the parties as explained in detail in the plaint;
the award passed by the Lok Adalat was obtained by
misrepresentation by D-31 and D-32 in collusion with the
defendants, and was against the basic principles of Order 23 Rule
3 CPC as well as the provisions of the Act; fraud is always an
exception to all such circumstances; fraud is an act of deliberate
deception with the design of securing something by taking an
unfair advantage over another; any judgment or decree, obtained
by playing fraud, is a nullity and nonest in the eye 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;
the principle of finality of litigation cannot be pressed to the extent
of such an absurdity that it becomes an engine of fraud in the
hands of dishonest litigants; the controversy in this respect has
also been set at rest by the Division bench of the High Court which
held that a suit would always be maintainable, when the award is
obtained by fraud or misrepresentation or collusion to defeat the
rights of private parties; and the petition as filed is not
maintainable in law, and must be dismissed with exemplary costs.
By its order in I.A. No.894/2010 in O.S.No.107/2010 dated
24-07-2013, the Court below rejected the plaint and dismissed
O.S.No.107/2010 as not maintainable under Section 9 CPC, Order
VII Rule 11 CPC and Sections 21 & 22-E of the Act. The reasons
for rejection of the plaint, as recorded by the Court below in the
order under challenge in this Appeal, are that the parties had
approached the Civil Court by filing a separate suit questioning the
award passed by the Lok Adalat; in view of the Judgment of the
Division Bench, in Batchu Subba Lakshmi v. Sannidhi
Srinivasulu , a suit for declaration, questioning a part of the
Award passed by the Lok Adalat, was not maintainable; the suit
claim was not enforceable before a Court of law; the plaintiffs could
not challenge the award passed by the Lok Adalat before the Civil
Court by filing a separate suit; their remedy was only by way of a
Writ Petition before the High Court pleading fraud,
misrepresentation and undue influence etc. by invoking Articles
226 or 227 of the Constitution of India; considering the legal
position on the factual matrix, it was clear that the suit filed by the
plaintiffs, seeking to declare the award passed in O.S.No.481/2007
as non-est, was not maintainable; the plaintiffs suit was barred by
law; Section 9 CPC enables a Civil Court to take cognizance of all
civil disputes except those disputes, which are expressly or
impliedly barred by law; in the present case, the Act is a special
law; it prohibits any suit or appeal against the award passed by the
Lok Adalat, basing on a compromise arrived at between the parties;
and the suit was not maintainable under Section 9 CPC, and
under Order VII Rule 11 CPC r/w Sections 21 & 22-E of the Act.
Aggrieved by the said order, the plaintiffs in O.S.No.107/2010 have
preferred this appeal.
Sri K. Chidambaram, learned counsel for the appellants,
would place reliance on Vadiga Amose v. Vadiga Anjaneyulu in
support of his submission that the remedy, under Article 226 of
the Constitution of India, is barred; a writ petition does not lie
against the award passed by the Lok Adalat; and the appellants
remedy is only to file a suit to declare that the award is vitiated by
fraud. He would rely on A.V. Papayya Sastry v. Govt. of A.P. in
support of his submission that, where a decree has been obtained
by fraud, a suit can be filed to declare it to be a nullity. He would
further submit that, under Order VII Rule 11 (d) CPC, it is only
when the suit appears, in the statement in the plaint, to be barred
by any law, can the plaint be rejected; there is no express bar in
the Act precluding the appellants from filing a suit to declare the
award passed by the Lok Adalat a nullity on the ground that it is
vitiated by fraud; and, even if the appellants are held entitled to
invoke the extra-ordinary jurisdiction of this Court under Article
226 of the Constitution of India, it is open to them to also file a
suit in view of Section 9 CPC, more so in the absence of any
specific statutory provision barring them from invoking the
jurisdiction of the Civil Court.
On the other hand, Sri H. Venugopal, learned counsel
appearing on behalf of the respondents, would submit that
Sections 21 & 22-E of the Act give a finality to the award passed by
the Lok Adalat; while a third party, who is not a party to the
Award, may possibly be entitled to file a suit, the appellants herein
were parties to the compromise; they signed the compromise
petitions; consequently, the award passed by the Lok Adalat binds
them as it is deemed to have attained finality; in the absence of a
statutory remedy of appeal, the only remedy which the appellants
have is to invoke the extra-ordinary jurisdiction of this Court
under Article 226 of the Constitution of India; the remedy of a Suit
is impliedly barred under Section 21, and is explicitly barred under
Section 22-E of the Act; the allegations of fraud, made by the
plaintiffs in O.S.No.107/2010, are false; such allegations have
been made only to harass the respondents, and to force them to
undergo the needless ordeal of a civil litigation which would spread
over several years; and no interference is called for as the plaint
has, rightly, been rejected by the Court below exercising its powers
under Order VII Rule 11 (d) CPC. Learned Counsel would rely on
State of Punjab v. Jalour Singh , P.T. Thomas v. Thomas Job ,
Bar Council of India v. Union of India , Sri Durga Malleswara
Educational Society, Vijayawada, Krishna District v. District
Legal Services Authoirty (Lok Adalath), Vijayawada, Krishna
District , Sanjay Kumar v. Secretary, City Civil Court Legal
Services Authoirty, Hyderabad and Batchu Subba Lakshmi1.
The point for consideration in this appeal is whether a party,
to an award passed by the Lok Adalat, is barred by the provisions
of the Act and Section 9 CPC, from invoking the jurisdiction of the
Civil Court seeking to have the award declared as a nullity on the
ground that it was obtained by misrepresentation and/or fraud?
Order 7 Rule 11 CPC relates to rejection of plaint and, under
clause (d) thereof, a plaint shall be rejected where the suit appears,
from the statement in the plaint, to be barred by any law. Section
9 of the Civil Procedure Code confers jurisdiction on a Civil Court
to try all suits of a civil nature excepting suits of which their
cognizance is either expressly or impliedly barred. A civil suit does
not lie if the orders of the authorities are declared to be final or
there is an express prohibition in the particular Act. (Dhulabhai v.
State of M.P., ). Exclusion of the jurisdiction of the Civil Court is
not to be readily inferred. Such exclusion must either be explicitly
expressed or clearly implied. Even if the jurisdiction is so
excluded, the Civil Courts have jurisdiction to examine cases
where the provisions of the Act have not been complied with, or the
statutory tribunal has not acted in conformity with the
fundamental principles of judicial procedure. (Secretary of State
v. Mask & Co ; Dhulabhai9). It is only if a suit is explicitly or
impliedly barred by any law, can a plaint be rejected under Order 7
Rule 11(d) CPC.
Let us now examine whether a suit filed to declare an award
of the Lok Adalat a nullity, on the ground that it was obtained by
fraud, is either explicitly or implicitly barred under the Act.
Section 2(d) of the Act defines Lok Adalat to mean a Lok Adalat
organised under Chapter VI. Section 19, under Chapter VI of the
Act, relates to organisation of Lok Adalats. Section 19(1) stipulates
that every State Authority or District Authority or the Supreme
Court Legal Services Committee or every High Court Legal Services
Committee or, as the case may be, the Taluq Legal Services
Committee may organise Lok Adalats at such intervals and places,
and for exercising such jurisdiction and for such areas, as it thinks
fit. Section 19(5) stipulates that a Lok Adalat shall have
jurisdiction to determine and to arrive at a settlement between the
parties to a dispute in respect of (i) any case pending before or (ii)
any matter which is falling within the jurisdiction of, and is not
brought before, any court for which the Lok Adalat is organised.
Section 21 of the Act relates to the award of the Lok Adalat and,
under sub-section (1) thereof, every award of the Lok Adalat shall
be deemed to be a decree of a Civil Court or, as the case may be,
an order of any other Court. Section 21(2) stipulates that every
award made by a Lok Adalat shall be final and binding on all the
parties to the disputes, and no appeal shall lie to any Court
against the award.
Chapter VI-A of the Act relates to pre-litigation conciliation
and settlement. Section 22A(a) thereunder stipulates that in this
Chapter and for the purposes of Sections 22 and 23, unless the
context otherwise requires, a Permanent Lok Adalat shall mean a
Permanent Lok Adalat established under sub-section (1) of Section
22-B. Section 22B(1) stipulates that, notwithstanding anything
contained in Section 19, the Central Authority or, as the case may
be, every State Authority shall, by notification, establish
Permanent Lok Adalats at such places and for exercising such
jurisdiction in respect of one or more public utility services and for
such areas as may be specified. Section 22A(b) defines public utility
services to mean any of (i) transport service for the carriage of
passengers or goods by air, road or water; or (ii) postal, telegraph
or telephone service; or (iii) supply of power, light or water to the
public by any establishment; or (iv) system of public conservancy
or sanitation; or (v) service in hospital or dispensary; or (vi)
insurance service, and includes any service which the Central
Government, or the State Government as the case may be, in the
public interest may, by notification, declare to be a public utility
service for the purposes of this Chapter. It is only in respect of one
or more public utility services can a Permanent Lok Adalat be
established under Section 22B of Chapter VI-A of the Act.
Section 22E(1), in Chapter VI-A of the Act, stipulates that
every award, made by the Permanent Lok Adalat under this Act,
shall, on merits or in terms of a settlement agreement, be final and
binding on all the parties thereto and on persons claiming under
them. Section 22E(2) stipulates that every award of the Permanent
Lok Adalat shall be deemed to be a decree of a Civil Court. Section
22E(4) provides that every award, made by the Permanent Lok
Adalat, shall be final and shall not be called in question in any
original suit, application or execution proceeding. Section 22E(4)
prohibits an award made by a Permanent Lok Adalat to be called in
question in any original suit also.
Section 22-E(1) of the Act makes every award of the
Permanent Lok Adalat either on merits, or in terms of a settlement,
final and binding on all the parties thereto and on persons
claiming under them. No appeal is provided from the award passed
by the Permanent Lok Adalat as it is important that such dispute
is brought to an end at the earliest, and is not prolonged
unnecessarily. There is no inherent right of appeal. Appeal is
always a creature of statute. If at all a party to the dispute has a
grievance against the award of the Permanent Lok Adalat, he can
always approach the High Court under its supervisory and
extraordinary jurisdiction under Articles 226 and 227 of the
Constitution of India. (Bar Council of India6).
The award, in the present case, neither relates to a public
utility service nor was it passed by a Permanent Lok Adalat,
Section 22E(4) of the Act, which prohibits such an award from
being called in question in any original suit, has therefore no
application. The award, which was subjected to challenge in O.S.
No.107 of 2010, was passed by the Lok Adalat organised under
Section 19 of Chapter VI of the Act. Unlike Section 22-E(4) which
prohibits an award passed by a permanent Lok Adalat to be called
in question in an original suit, Section 21(2) of the Act only
prohibits an appeal being filed against an award passed by the Lok
Adalat. It cannot, therefore, be said that the remedy of a Civil
Court is explicitly barred.
Before examining the question whether the remedy of a Civil
Suit is impliedly barred under the Act, it must be borne in mind
that the award of the Lok Adalat is an administrative act of
incorporating the terms of a compromise or settlement agreed by
the parties in its presence. The Lok Adalat does not adjudicate a
dispute. When an award is passed by the Lok Adalat in terms of
the settlement arrived between the parties, and is duly signed by
them, it is binding on the parties to the settlement and is
executable as if it is a decree of the Civil Court. (Jalour Singh4;
Sanjay Kumar8; Batchu Subba Lakshmi1).
The Lok Adalat passes the award with the consent of the
parties. There is, therefore, no need either to reconsider or review
the matter again and again as the award passed by the Lok Adalat
is final. Even under Section 96(3) CPC no appeal shall lie from a
decree passed by the court with the consent of parties. The award
of the Lok Adalat is an order by the Lok Adalat with the consent of
the parties. It is deemed to be a decree of the Civil Court and,
therefore, no appeal lies from the award of the Lok Adalat. (P.T.
Thomas5). In stipulating that the award is enforceable as a
decree, and in giving it finality, the endeavour is only to see that
the disputes are narrowed down and the settlement is made final
so that the parties are not again driven to further litigation.
Though the award of a Lok Adalat is not a result of a contest on
merits, it is equal to and on par with a decree on compromise. It
will have the same binding effect, and be conclusive. Just as the
decree passed on a compromise cannot be challenged in a regular
appeal, the award of the Lok Adalat, being akin thereto, cannot be
challenged by any of the regular remedies available under law.
(P.T. Thomas5). No appeal would lie against the award of Lok
Adalat and, if any party wants to challenge such an award, it can
be by way of a petition under Article 226 or 227 of the
Constitution. (Jalour Singh4; Sanjay Kumar8; Batchu Subba
Lakshmi1).
The award passed by the Lok Adalat in a pending litigation,
or in a pre-litigation case, is not, ordinarily, amenable to judicial
review. But when an award of the Lok Adalat is obtained by
misrepresentation, fraud or without due compliance with the
provisions of the Act and that it was not preceded by a
compromise/settlement, it can be challenged in a Writ Petition.
(Sri Durga Malleswari Educational Society7). The challenge to
the award of the Lok Adalat, in proceeding under Article 226 of the
Constitution of India, can be entertained only at the behest of
parties to the settlement/ compromise before the Lok Adalat, and
not by anyone else. (Sanjay Kumar8). The parties to the
compromise or settlement, which is the basis for the award of a
Lok Adalat, are entitled to challenge the award. Ordinarily, a third
party cannot challenge the award in a writ petition, even if such an
award causes prejudice. The remedy of such party would be to
institute a separate suit within the period of limitation prescribed
under law for necessary redressal, and seek an appropriate decree.
As a Civil Court can even declare that an earlier decree of the
Court is not binding on the party before it, there can be no
objection for a third party to institute a suit in a Civil Court
seeking a declaration that the award of Lok Adalat is not binding
on him. There may, however, be extraordinary cases where a third
party is meted with injustice at the behest of two or more
conniving and colluding parties who may have obtained an award
of the Lok Adalat by fraud or misrepresentation only to defeat the
rights of a third party. In such cases, such a third party may
maintain a Writ Petition. In such cases, there should be prima
facie evidence of fraud or misrepresentation or collusion in
obtaining the award of the Lok Adalat. Even if such allegations are
made, and the question involves complicated questions of fact
requiring voluminous evidence, the third party should be left to
seek the remedy in a Civil Court, rather than invoking the
extraordinary jurisdiction of the High Court under Article 226 of
Constitution. (Batchu Subba Lakshmi1).
In Vadiga Amose2, the petitioner, on coming to know of the
filing of a suit and settlement of the same in the Lok Adalat,
obtained a certified copy of the Lok Adalat award. He contended
that respondents 1 to 4 had, together, colluded and initiated the
civil suit by playing fraud against the Court; they had obtained the
award behind his back suppressing the partition deed; and the Lok
Adalat award was non-est in the eye of law, and it was liable to be
set aside. It is in this context that the Division Bench of this Court
held that an award passed under Section 21 of the Act is deemed
to be a decree of the Civil Court; a decree, obtained by playing
fraud on the Court, can be challenged by a third party to the suit
by filing a suit for declaration; and, in order to avoid multiplicity of
proceedings and to put an end to the litigation once and for all, the
best course open to the petitioner was to approach jurisdictional
Civil Court for redressal. As the appellants herein, are parties to
the award passed by the Lok Adalat, reliance placed by Sri K.
Chidambaram, Learned Counsel, on Vadiga Amose2, to contend
that the appellants cannot invoke the jurisdiction of this Court,
under Article 226 of the Constitution of India, is misplaced.
Judicial review is available to test the validity of awards
passed by the Lok Adalat on limited grounds, one of which is when
a party alleges that there was no settlement enabling an award
being passed. If it is shown that there is no settlement or
compromise, or that settlement or compromise itself is vitiated by
fraud or misrepresentation, it would be a fit case for interference.
Except the remedy of challenging the Lok Adalat award on limited
grounds, no other authority or Court can question the award of
Lok Adalat which shall be treated as final and binding. (Sanjay
Kumar8; Sri Durga Malleswari Educational Society7). In the
absence of a statutory remedy of an appeal, an award can be
subjected to challenge in writ proceedings invoking the extra-
ordinary jurisdiction of this Court under Article 226 of the
Constitution of India. As the jurisdiction, which this Court
exercises under Article 226 of the Constitution of India is extra-
ordinary, and as the power of judicial review under Article 226 is
part of the basic structure of the Constitution (L. Chandra Kumar
v. Union of India ), it cannot be circumscribed or negated by
legislation plenary or subordinate. Availability of the remedy, of
invoking the extra-ordinary jurisdiction of the High Court under
Article 226 of the Constitution of India, would not per se disable a
person aggrieved from invoking the jurisdiction of the Civil Court.
While a person, aggrieved by an award passed by the Lok
Adalat, can challenge its validity in proceedings under Article 226
of the Constitution of India, the question which necessitates
examination is whether such a person is barred from filing a suit
when it is his specific case that the award has been obtained by
fraud. As Section 21(2) of the Act give finality to an award passed
by the Lok Adalat, and the remedy of an appeal is explicitly barred,
ordinarily the remedy of a Civil Suit is not available to the parties
to the award passed by the Lok Adalat. As noted hereinabove,
even if the jurisdiction of the Civil Court is impliedly excluded, the
Civil Court has jurisdiction to examine cases where the provisions
of the Act have not been complied with, or the statutory Tribunal
has not complied with the fundamental principles of judicial
procedure.
An action, to set aside a judgment, cannot be brought on the
ground that it has been decided wrongly, namely, that, on merits,
the decision was one which should not have been rendered. But it
can be set aside, if the court was imposed upon or tricked into
giving the judgment. (A.V. Papayya Sastry3). If any judgment or
order is obtained by fraud, it cannot be said to be a judgment or
order in law. (A.V. Papayya Sastry3). No judgment of a court can
be allowed to stand if it has been obtained by fraud. (Lazarus
Estates Ltd. v. Beasley ; A.V. Papayya Sastry3). Fraud and
justice never dwell together (fraus et jus nunquam cohabitant); or
fraud and deceit ought to benefit none (fraus et dolus nemini
patrocinari debent). (A.V. Papayya Sastry3). Fraud may be
defined as 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 an extrinsic collateral act which vitiates all
judicial acts, whether in rem or in personam. The principle of
finality of litigation cannot be stretched to the extent of an
absurdity that it can be utilised as an engine of oppression by
dishonest and fraudulent litigants. (A.V. Papayya Sastry3).
Fraud avoids all judicial acts, ecclesiastical or temporal. A
judgment, decree or order obtained by playing fraud on the Court,
Tribunal or authority is a nullity and non-est in the eye of the law.
It can be challenged in any court, at any time, in appeal, revision,
writ or even in collateral proceedings. (A.V. Papayya Sastry3; S.P.
Chengalvaraya Naidu v. Jagannath ). Once it is established that
the order was obtained by a successful party by practising or
playing fraud, it is vitiated. Such an order cannot be held legal,
valid or in consonance with the law. It is non-existent and non-est
and cannot be allowed to stand. A judgment, decree or order
obtained by fraud has to be treated as a nullity, whether by the
court of first instance or by the final court. And it has to be treated
as non est by every court, superior or inferior. (United India
Insurance Co. Ltd. v. Rajendra Singh ). In the case of fraud on
a party to the suit or proceedings, the Court may direct the
affected party to file a separate suit for setting aside the decree
obtained by fraud. (Indian Bank v. Satyam Fibres (India) (P)
Ltd. ).
An award passed by the Lok Adalat is, under Section 21(1) of
the Act, deemed to be a decree of a Civil Court. If a Civil Suit can
be filed to set aside a decree obtained by fraud, we see no reason
why a Civil Suit cannot be filed to set aside an award of the Lok
Adalat, if such an award has been obtained by fraud. As the
appellant has specifically pleaded, in the suit filed by him, that the
award of the Lok Adalat is vitiated by fraud, the Court below erred
in rejecting his plaint, under Order 7 Rule 11 CPC, on the ground
that a civil suit does not lie against an award passed by the Lok
Adalat. The point for consideration is answered holding that the
remedy of a Civil Suit is not barred where the jurisdiction of the
Civil Court is invoked by a party to the compromise, or the award
of Lok Adalat, alleging that the said compromise or award was
obtained by misrepresentation or fraud.
Though an award of the Lok Adalat can be subjected to
challenge in a Civil Court if it is vitiated by fraud, it must be borne
in mind that allegations of fraud are easier made than established.
Fraud can either be proved by established facts or an inference can
be drawn from admitted and/or undisputed facts. (A.P. Scheduled
Tribes Employees Association v. Aditya Pratap Bhanj Dev ).
The law requires strict proof of fraud. (State of Maharashtra v.
Budhikota Subba Rao (Dr.) ; Saradamani Kandappan v. S.
Rajalakshmi ). Fraud is essentially a question of fact, the burden
to prove which is upon him who alleges it. (Shrisht Dhawan v.
Shaw Bros ). Mere allegations or averments of facts do not make a
strong prima facie case of fraud. The material and evidence has to
show it. A finding as to fraud cannot be based on suspicion and
conjecture and must be established beyond reasonable doubt.
(Svenska Handelsbanken v. Indian Charge Chrome ).
Ordinarily, the burden to prove fraud would be on the party who
asserts the affirmative of the issue and it rests, after evidence is
gone into, upon the party against whom, at the time the question
arises, judgment would be given if no further evidence were to be
adduced by either side. (Anil Rishi v. Gurbaksh Singh ). The
degree of proof required in such cases is extremely high. (A.C.
Ananthaswamy v. Boraiah ).
Fraud must be established beyond reasonable doubt.
However suspicious may be the circumstances, however strange
the coincidences, and however grave the doubt, suspicion alone
can never take the place of proof. (Union of India v. Chaturbhai
M. Patel & Co., ; A.L.N. Narayanan Chettyar v. Official
Assignee, High Court, Rangoon ). The basic principles of the
rules of evidence require a party alleging fraud to give particulars
of the fraud. In the absence of such particulars, no inference can
be drawn of fraud merely on the basis of presumptions. A heavy
duty lies upon the party who alleges fraud and the level of proof
required, for proving fraud, is extremely high. (Sangramsingh P.
Gaekwad v. Shantadevi P. Gaekwad ; Chief Engineer, M.S.E.B.
v. Suresh Raghunath Bhokare ; Maharashtra Power
Development Corpn. Ltd. v. Dabhol Power Co. ; and Alva
Aluminium Ltd. v. Gabriel India Ltd. ). It is only if fraud is
established can the civil Court, on its jurisdiction being invoked,
interfere and set aside the award of the Lok Adalat.
Sri H. Venugopal, Learned Counsel for the respondent,
would submit that the allegations in the plaint do not make out a
case of fraud. The Court below had rejected the plaint solely on
the ground that a civil suit cannot be filed, and the plaintiffs
remedy is only to invoke the jurisdiction of this Court under Article
226 of the Constitution of India. Whether or not the appellant is
justified in his claim, that the award of the Lok Adalat is vitiated by
fraud, are matters to be examined by the Court below. As the
power to reject a plaint under Order 7 Rule 11(d) is to be exercised
by the civil court only if the suit appears, from the statement in the
plaint, to be barred by law, the court below erred in rejecting the
plaint on the ground that a civil suit is not maintainable. The
order under appeal is set aside. We make it clear that we have not
expressed any opinion on the truth or otherwise of the appellants
claim that the award of the Lok Adalat is vitiated by fraud. The
Court below shall adjudicate the suit on its merits, and in
accordance with law.
The order, under challenge in this appeal, is set aside and
the appeal is allowed with costs. Miscellaneous petitions pending,
if any, shall also stand disposed of.
______________________________
RAMESH RANGANATHAN, J
___________________
S.RAVI KUMAR, J
Date: 25.06.2015.
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