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Tuesday, January 10, 2017

when there is an allegation of fraud by non-disclosure of necessary and relevant facts or concealment of material facts, it must be inquired into. It is only after evidence is led coupled with intent to deceive that a conclusion of fraud could be arrived at. A mere concealment or non-disclosure without intent to deceive or a bald allegation of fraud without proof and intent to deceive would not render a decree obtained by a party as fraudulent. To conclude in a blanket manner that in every case where relevant facts are not disclosed, the decree obtained would be fraudulent, is stretching the principle to a vanishing point.- fraud has a definite meaning in law and it must be proved and not merely alleged and inferred. In so far as the present appeal is concerned, there is no doubt that Makhija had an opportunity to prove the allegation of fraud when he filed an application under Order XLI Rule 27 of the CPC. However, he missed that opportunity right up to this court. Makhija took a second shot at alleging fraud and filing another suit against Pushparani. However, the evidence that he relied upon was very thin and could not even be considered as secondary evidence. Accordingly both the Trial Court as well as the High Court rejected the allegation of fraud by not accepting the evidence put forward by Makhija to allege that fraud had been committed by Pushparani when she obtained the decree dated 4th October, 1999.

                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO.11491 OF 2016


HARJAS RAI MAKHIJA (D) THR. LRS.
...APPELLANTS

                                     VS.

PUSHPARANI JAIN & ANR.                              …RESPONDENTS



                               J U D G M E N T

MADAN B. LOKUR,  J.

1.     The  appellant  (Harjas  Rai  Makhija  represented   by   his   legal
representatives) is aggrieved by the judgment and  order  dated  3rd  April,
2012 passed by the High Court of Madhya Pradesh at Jabalpur in FA No.961  of
2010 whereby his appeal has been dismissed with costs of Rs.25,000/-.

2.    Respondent  No.1,  Pushparani  Jain  (Pushparani)  was  allotted  Plot
No.251 in Major Shopping Centre Zone - II, Habibganj,  Bhopal  under  Scheme
No.13 of the Bhopal Development Authority (for short BDA).  Since she was  a
resident of the  United  States  of  America  and  had  some  difficulty  in
completing the formalities with regard to the allotment, she  appointed  her
brother Jinendra Jain as her attorney on or about 28th August,  1981.   This
was communicated by her to the Chairman of the BDA by a letter of  the  same
date.
3.    On the basis of the communication sent by Pushparani to the  BDA,  and
on the basis of the Power of Attorney given by her  to  Jinendra  Jain,  she
was able to obtain possession of the plot allotted to her and  complete  the
necessary formalities.

4.    According to the  appellant  Harjas  Rai  Makhija  (Makhija),  another
Power of Attorney had been executed by Pushparani on  30th  April,  1983  in
favour of Jinendra Jain.   The  original  of  this  document  has  not  been
produced by anybody.  Be that as it may, on the basis of the  alleged  Power
of Attorney dated 30th April, 1983, an agreement was  entered  into  between
Jinendra Jain and Makhija on 16th October, 1988 to sell  the  plot  allotted
to Pushparani in favour of Makhija. In terms  of  the  agreement,  the  sale
deed was to be executed on or before 30th April, 1989.

5.    When Pushparani came to know about the agreement for sale  in  respect
of the plot allotted to her, she filed a  civil  suit  before  the  District
Judge, Bhopal and that suit subsequently came to be numbered as Suit No. 51-
A of 1999.   The  prayer  made  by  Pushparani  in  the  plaint  was  for  a
declaration that the  agreement  for  sale  dated  16th  October,  1988  was
without any authority given to Jinendra Jain.  She also made  a  prayer  for
recovery of possession and grant of mesne profits since  possession  of  the
plot had been given by Jinendra Jain to Makhija.
6.    Makhija also filed a  civil  suit  before  the  District  Judge  which
subsequently came to be numbered as Suit No.52-A of 1999.  The  prayer  made
by Makhija  was  for  specific  performance  of  the  agreement  dated  16th
October, 1988 entered into by  him  with  Pushparani  through  her  attorney
Jinendra Jain.

7.    Both the suits one filed by Pushparani and the other by  Makhija  were
taken up and heard together.  By a judgment and decree  dated  4th  October,
1999 the suit filed by Pushparani was  decreed  with  the  result  that  the
agreement for sale dated 16th October, 1988 was declared to be illegal.   It
was also  decreed  that  Makhija  shall  handover  possession  of  the  suit
property to Pushparani  and  pay  monthly  compensation  of  Rs.5,000/-  per
month.  The suit filed by Makhija was dismissed.

8.    Feeling aggrieved by the result of  the  two  suits  mentioned  above,
Makhija preferred two appeals before the High Court being F.A.  No.  607  of
1999 and F.A. No.638 of 1999 challenging the decree  granted  in  favour  of
Pushparani and the dismissal of his suit.
9.    During the  pendency  of  the  aforesaid  appeals,  Makhija  filed  an
application before the High Court under Order XLI Rule 27  of  the  Code  of
Civil Procedure[1] (for short the CPC) for adducing additional evidence.  By
virtue  of  this  application,  Makhija  sought  to  bring  on   record   an
application said to have been filed by Jinendra Jain with the BDA on  behalf
of Pushparani as her attorney for the grant of a  No  Objection  Certificate
in respect of the suit property.  According to  the  averment  made  in  the
application, Jinendra Jain had moved the application before the BDA  on  1st
June, 1983.
10.   By a judgment and order dated 13th  September,  2002  the  High  Court
dismissed both the appeals filed by  Makhija  as  well  as  the  application
under Order XLI  Rule 27 of the CPC.  While dismissing the appeals  and  the
application, the High Court held that no document was  produced  before  the
Trial Court to establish that Pushparani had executed a  Power  of  Attorney
in favour of Jinendra Jain on 30th April, 1983.  The High Court  also  noted
that according to Makhija what was produced before the BDA as the  Power  of
Attorney dated 30th April, 1983 was in  fact  a  photocopy  of  the  alleged
Power of  Attorney.   Therefore,  the  High  Court  took  the  view  that  a
photocopy produced before it was a photocopy  of  another  photocopy  (filed
before the BDA) and as such it could not even  be  considered  as  secondary
evidence.  Even otherwise, the  High  Court  concluded  that  there  was  no
material to indicate that Jinendra Jain was  authorized  to  enter  into  an
agreement for sale the suit property on behalf of Pushparani.

11.   Feeling aggrieved by the dismissal of  the  appeals  as  well  as  the
application, Makhija preferred S.L.P.(C) Nos.524-525 of 2003 which  came  to
be  dismissed by this Court on 25th July, 2003.  The review petitions  filed
by Makhija also came to be dismissed by this Court on 9th September, 2003.

12.   Notwithstanding the dismissal of Makhija’s case,  he  was  unrelenting
and filed yet another suit before  the  Additional  District  Judge,  Bhopal
which came to be numbered as Suit  No.471-A  of  2008.   In  this  suit,  he
produced a certified copy of the Power of Attorney dated  30th  April,  1983
allegedly filed by Jinendra Jain before the BDA.  The  prayer  made  in  the
plaint filed by Makhija was for a declaration  that  the  decree  dated  4th
October, 1999 passed in favour of Pushparani was obtained  in  a  fraudulent
manner and is void and not worthy of being executed.  This suit came  to  be
dismissed by the Additional District Judge by the judgment and decree  dated
28th September, 2010.

13.   Feeling aggrieved by the dismissal of the suit filed by  him,  Makhija
preferred FA No. 961 of 2010 in the  High  Court  of  Madhya  Pradesh.   The
appeal was taken up for consideration by the High Court and by judgment  and
order dated 3rd April, 2012 (impugned) the appeal was  dismissed.  The  High
Court took the view that the alleged Power of  Attorney  dated  30th  April,
1983 could not be accepted as a valid piece of documentary evidence being  a
certified copy of a photocopied document. It was also held that Makhija  had
an opportunity to raise the same issue  when  the  application  for  leading
additional evidence was filed but did not do so and  cannot  have  a  second
shot for the same purpose.  The allegation of fraud leveled by  Makhija  was
not accepted by the High Court.
14.   Learned counsel for Makhija raised quite a few submissions  before  us
but in our opinion, the present appeal  deserves  to  be  dismissed  on  the
ground that no fraud has been alleged in the  plaint  filed  by  Makhija  or
found in respect of the decree dated 4th October, 1999.

15.   There is no doubt that a decree was passed in favour of Pushparani  by
the District Judge on 4th October, 1999 after a full-fledged trial and  that
decree was upheld not only by  the  High  Court  but  also  by  this  Court.
Makhija made an application before the  High  Court  to  produce  additional
evidence to suggest that the agreement for sale entered  into  by  him  with
Pushparani through her attorney Jinendra Jain  on  16th  October,  1988  was
genuine and based on the Power of Attorney given by her to Jinendra Jain  on
30th April, 1983.  Not only was  the  application  for  bringing  on  record
additional evidence dismissed by the High Court but  the  decree  dismissing
the suit for specific performance  of  the  agreement  for  sale   filed  by
Makhija was dismissed by the High Court.  That dismissal  attained  finality
when the petitions for  special  leave  to  appeal  filed  by  Makhija  were
dismissed by this Court.

16.   It is significant to note that Makhija  has  not  sought  (and  indeed
could not seek) to reopen the proceedings pertaining  to  the  dismissal  of
his suit for specific performance. As such, as mentioned above,  the  decree
dismissing his suit for specific performance of  the  agreement  dated  16th
October, 1988 has become  final.   Therefore,  under  no  circumstances  can
Makhija now collaterally pray  for  a  decree  of  specific  performance  in
respect of that agreement.

17.   Through a  collateral  attack,  Makhija  has  now  sought  to  deprive
Pushparani of her allotment of the suit property by alleging  that  she  had
concealed the Power of Attorney executed by her in favour of  Jinendra  Jain
on 30th April, 1983 and had thereby committed a fraud on the courts.

18.   We have been taken through the plaint filed by  Makhija  in  Suit  No.
471-A of 2008 and find that he has nowhere made any specific  allegation  of
a fraud having been played by Pushparani on the Trial Court while  obtaining
the decree dated 4th October, 1999.

19.   During the course of  submissions,  it  was  contended  on  behalf  of
Makhija that it is a settled proposition of law that a  decree  obtained  by
playing fraud on the court is a nullity and that  such  a  decree  could  be
challenged at any time in any proceedings.   Reliance  was  placed  on  A.V.
Papayya Sastry v. Government of A.P.[2]  This proposition is  certainly  not
in dispute.
20.   Learned counsel also placed reliance  on  Union  of  India  v.  Ramesh
Gandhi[3] which reads as under:-


“27.  If a judgment obtained by playing fraud on the court is a nullity  and
is to be treated as non est by every court, superior or inferior,  it  would
be strange logic to hear  that  an  enquiry  into  the  question  whether  a
judgment was secured by playing fraud on the court  by  not  disclosing  the
necessary facts relevant for the adjudication of the controversy before  the
court is impermissible. From the above judgments, it is clear that  such  an
examination is permissible. Such a principle is required to be applied  with
greater emphasis in the realm of public law  jurisdiction  as  the  mischief
resulting from such fraud has larger dimension affecting the  larger  public
interest.” (Emphasis supplied by us).



21.   We agree that when there is an allegation of fraud  by  non-disclosure
of necessary and relevant facts or concealment of material  facts,  it  must
be inquired into. It is only after evidence is led coupled  with  intent  to
deceive that a conclusion of fraud could be arrived at. A  mere  concealment
or non-disclosure without intent to deceive or a bald  allegation  of  fraud
without proof and intent to deceive would not render a decree obtained by  a
party as fraudulent.  To conclude in a blanket manner  that  in  every  case
where relevant facts  are  not  disclosed,  the  decree  obtained  would  be
fraudulent, is stretching the principle to a vanishing point.
22.   What is fraud has been adequately discussed in Meghmala & Ors.  v.  G.
Narasimha Reddy & Ors.[4]  Unfortunately, this decision does  not  refer  to
earlier decisions where also there is an  equally  elaborate  discussion  on
fraud.   These  two  decisions  are  Bhaurao  Dagdu  Paralkar  v.  State  of
Maharashtra & Ors.[5] and State of Orissa  &  Ors.  v.  Harapriya  Bisoi.[6]
In view of the elaborate discussion in these and several other  cases  which
have been referred to in these decisions, it  is  clear  that  fraud  has  a
definite meaning in law and it must be proved and  not  merely  alleged  and
inferred.
23.   In so far as the present appeal is concerned, there is no  doubt  that
Makhija had an opportunity to prove the allegation of fraud  when  he  filed
an application under Order XLI Rule 27 of the CPC.  However, he missed  that
opportunity right up to this court.  Makhija took a second shot at  alleging
fraud and filing another suit against  Pushparani.   However,  the  evidence
that he relied upon was very thin  and  could  not  even  be  considered  as
secondary evidence.   Accordingly both the Trial Court as well as  the  High
Court rejected the allegation of fraud by not  accepting  the  evidence  put
forward by Makhija to allege that fraud had  been  committed  by  Pushparani
when she obtained the decree dated 4th October, 1999.

24.   Fraud not having been proved but merely alleged, we do  not  find  any
reason to differ with the judgment and order passed by the  High  Court  and
the Trial Court.

25.   The appeal is dismissed with costs quantified at Rs.50,000/-.



                                                            ..……………………………..J
                                                    (Madan B. Lokur )



                                                               ………………………………J
                                                   (Adarsh Kumar Goel )
New Delhi;
January 2, 2017


-----------------------

[1]   [2]  Order XLI  Rule  27.  -  Production  of  additional  evidence  in
Appellate Court. - (1) The parties to an appeal shall  not  be  entitled  to
produce additional evidence, whether oral or documentary, in  the  Appellate
Court. But if –  (a) the Court from whose decree  the  appeal  is  preferred
has refused to admit evidence which ought to have been admitted, or


      (aa) the party seeking to  produce  additional  evidence,  establishes
that notwithstanding the exercise of due diligence, such  evidence  was  not
within his knowledge or could not, after the exercise of due  diligence,  be
produced by him at the time when the decree appealed against was passed, or


      (b)  the Appellate Court requires any document to be produced  or  any
witness to be examined to enable it to pronounce judgment, or for any  other
substantial cause,  the Appellate Court may allow such evidence or  document
to be produced, or witness to be examined.


      (2)  Wherever additional evidence is allowed  to  be  produced  by  an
Appellate Court, the Court shall record the reason for its admission.


[3]   [4] (2007) 4 SCC 221
[5]   [6] (2012) 1 SCC 476
[7]   [8] (2010) 8 SCC 383 (paragraphs 28 to 36)
[9]   [10] (2005) 7 SCC 605
[11]  [12] (2009) 12 SCC 378


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