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Thursday, March 30, 2017

fraud vitiates all contracts or agreements = Even if we were to ignore the false claim set up by Respondent No.1 that she had obtained the tenancy rights on this land from K.P. Gopinathan in the year 1962, admittedly when she was only 10 years old and at that time K.P. Gopinathan was not the owner of the property as his father K.P. Choyi was still alive, yet we cannot ignore the fact that in the year 1988 Respondent No.1 was having a valid licence to run an aluminium industry and was employing 9 persons. Therefore, Respondent No.1 cannot claim to fall under the category of “landless agricultural labourer”. Therefore, she had obtained the assignment order by totally mis-representing the facts and had played fraud on the authorities. The law is well settled that fraud vitiates all contracts or agreements. This is a case where fraud is writ large. It is evident that assignment was obtained in total contravention of Section 96 of the Act and, therefore, Rule 29(8) was also applicable. Hence, we are not in agreement with the view expressed by the Division Bench of the High Court of Kerala. Accordingly, the appeal is allowed.

                                                              NON-REPORTABLE

                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURSIDICTION

                        CIVIL APPEAL NO.4535 OF 2017
      (Arising out of Special Leave Petition (Civil ) No.23266 of 2014)


Karunakaran                                               ..  Appellant(s)

                                   Versus

V. Padmini & Ors.                                      ..Respondent(s)



                               J U D G M E N T


DEEPAK GUPTA, J.

      Leave granted.

2.    This appeal is directed against the judgment dated  06.02.2014  passed
in Writ Appeal No.1335 of 2013, whereby the Division  Bench  of  the  Kerala
High  Court  upheld  the  judgment  passed  by  the  learned  Single  Judge,
dismissing the writ petition filed by the appellant.

3.    Briefly stated the facts of the case are that one Mr. K.P.  Gopinathan
was a landlord whose lands  came  under  the  purview  of  the  Kerala  Land
Reforms Act, 1963 (hereinafter referred to as the Act).  The land  which  is
the subject matter of the present proceedings was  declared  to  be  surplus
land by the landlord.  Originally,  Respondent  No.1  filed  an  application
claiming Kudikidappukars (tenancy)  rights  on  the  land.   This  claim  of
Respondent No.1 was rejected by the Board constituted under  the  Act,  some
time in the year  1988.   Thereafter,  Respondent  No.1  filed  applications
claiming assignment of the property measuring 8 cents in her favour  on  the
ground that she was a landless agricultural labourer entitled to  assignment
of such rights in terms of Section 96 of the Act which reads as follows:-
“96.  Assignment of lands by Land Board. (1) The Land Board shall assign  on
registry subject to such conditions and restrictions as may  be  prescribed,
the lands vested in the Government  under  Section  86  or  Section  87,  as
specified below:

the lands in which there are  kudikidappukars  shall  be  assigned  to  such
kudikidappukars;

the remaining lands shall be assigned to –

    landless agricultural labourers; and
    smallholders and other landlords who are  not  entitled  to  resume  any
land:

Provided that eighty-seven and a half per cent of  the  area  of  the  lands
referred to in clause (ii) available for assignment  in  a  taluk  shall  be
assigned to landless agricultural  labourers  of  which  one-half  shall  be
assigned to landless  agricultural  labourers  belonging  to  the  Scheduled
Castes, the Scheduled  Tribes  and  such  other  socially  and  economically
backward classes of citizens as may be  specified  in  this  behalf  by  the
Government by notification in the Gazette.


Explanation. – For the purposes of this sub-section-

    a kudikidappukaran or the tenant of a kudiyiruppu shall be deemed to  be
a landless agricultural labourer if he does not possess any other land;

    “kudikidappukaran shall include a person who was  a  kudikidppukaran  to
whom a certificate of purchase has been  issued  under  sub-section  (2)  of
Section 80C.”


xxx                          xxx                     xxx

On 23.10.1991, assignment of 6 cents  of  land  was  granted  in  favour  of
Respondent No.1 by the District Collector,  Kozhikode  and  Assignment  Deed
was  entered  into  by  Respondent  No.1  with  the  State   Government   on
12.11.1991.

4.    It would be pertinent to mention that at the time of  verification  of
the assignment, inspection of the property was  done.   It  was  found  that
from the year 1978 Respondent No.1, along with her family had been  residing
in a building which covered 6 cents  out  of  the  total  land  measuring  8
cents.  The remaining 2 cents of land was under a shed.  Therefore,  only  6
cents was assigned in favour of Respondent No.1.  Thereafter,  the  original
landlord filed O.P. No. 311 of 1992 in the High  Court  of  Kerala  claiming
that since the land was admittedly covered by a building, the same  did  not
fall under purview of  the  Act.   The  learned  Single  Judge  allowed  the
petition  and  referred  the  matter   to   the   Taluk   Land   Board   for
reconsideration of the entire case.  Thereafter, Respondent No.1 filed  Writ
Appeal No.898 of 1992 before the High Court of Kerala.  During the  pendency
of the Writ Appeal the original landlord stated that  the  matter  had  been
settled out of court and he did not want to continue with the original  writ
petition itself.  Therefore, the Division Bench set aside  the  judgment  of
the learned Single Judge and disposed of the Writ Appeal on 07.09.1993.

5.    The appellant herein challenged the assignment of the land  in  favour
of Respondent No.1 by filing a petition under Rule 29(8) of the Kerala  Land
Reforms (Ceiling) Rules, 1970  before  the  District  Collector,  Kozhikode.
The main ground raised was that Respondent No.1 had obtained the  assignment
in her favour by playing fraud and by total misrepresentation of  facts  and
hence  was  not  entitled  to  the  assignment.  He,   accordingly,   sought
cancellation of  the  assignment.   The  Collector,  vide  his  order  dated
22.08.2003 came to the conclusion that Respondent No.1 had played fraud  and
misrepresented facts and reviewed  the  Assignment  Deed  and  recalled  the
earlier order assigning the land in favour of Respondent No.1.

6.    Thereafter, Respondent No.1 filed a Writ  Petition  No.28218  of  2003
before the High Court of Kerala,  challenging  the  order  of  the  District
Collector and the learned Single Judge held that the Collector had no  power
to recall the earlier order.  He further held that even if  there  was  some
misstatement or misrepresentation that did not amount  to  fraud  and  hence
the order of assignment could not  be  recalled.   Against  this  order  the
appellant filed a Writ Appeal No. 1335 of 2013 which has been dismissed  and
hence the present appeal.

7.    The appellant in his petition before  the  District  Collector  raised
mainly four grounds, namely: (i)   Respondent No.1 had claimed that she  had
obtained the land through an oral lease from K.P.  Gopinathan  in  the  year
1962. The appellant stated that, in fact, in the year 1962  K.P.  Gopinathan
was not the owner since his father K.P. Choyi was still  alive.   Therefore,
the question of lease being executed by K.P. Gopinathan did not arise;  (ii)
 Respondent No.1 was born in the year  1952  and,  therefore,  was  only  10
years old in the year 1962 and hence the question of her obtaining  a  valid
legal lease did not arise; (iii) that the Respondent first  claimed  tenancy
rights which were rejected and, therefore, set up a  false  claim  that  she
was a landless agricultural labourer; (iv)  Respondent No.1  falsely  stated
that she was a  landless  agricultural  labourer  but  in  reality  she  was
running an aluminium industry employing 9 persons and was also paying  sales
tax and  income  tax  and  hence  the  question  of  her  being  a  landless
agricultural labourer did not arise.

8.    Para 4 of the Assignment Deed reads as follows :-

“4.   This assignment is liable to be altered or cancelled if  it  is  found
that it was obtained by false representation, mistaken facts or fraud.”

Bare perusal of this Clause shows that if  the  assignment  is  obtained  by
false representation, mistaken facts or fraud, the same is liable to be  set
aside.  We may also make reference to Rule 29 of  the  Kerala  Land  Reforms
(Ceiling) Rules, 1970 which reads as follows :-

      “29. Conditions and restrictions regarding assignment:-

xxx         xxx        xxx

(8)   The assignment of any land under Section 96  shall  be  liable  to  be
cancelled for contravention of any of the conditions  or  restrictions  laid
down in this rule and the land assigned shall be liable to be resumed by  or
at the instance of the authority which assigned the land as if such land  is
a land belonging to Government and in the  unauthorised  occupation  of  the
person then in possession or occupation, provided that no such  cancellation
shall be done  without  giving  the  party  affected  thereby  a  reasonable
opportunity of being heard.”

This provision also envisages that an assignment made under  Section  96  is
liable to be cancelled if there is contravention of any  of  the  conditions
laid down in the Rules.

9.    The learned Single Judge held that the contraventions pointed  out  by
the appellant/petitioner did not fall within the ambit of Rule 29(8).   This
finding was upheld by the Division Bench.  Section 96  of  the  Act  clearly
envisages  that  assignment  can  only  be  made  in  favour   of   landless
agricultural labourers or small holders and other landlords.  In this  case,
we are only concerned with landless  agricultural  labourers.   Even  if  we
were to ignore the false claim set  up  by  Respondent  No.1  that  she  had
obtained the tenancy rights on this land from K.P. Gopinathan  in  the  year
1962, admittedly when she was only 10  years  old  and  at  that  time  K.P.
Gopinathan was not the owner of the property as his father  K.P.  Choyi  was
still alive, yet we cannot ignore the fact that in the year 1988  Respondent
No.1 was having a valid  licence  to  run  an  aluminium  industry  and  was
employing 9 persons.  Therefore, Respondent No.1 cannot claim to fall  under
the  category  of  “landless  agricultural  labourer”.  Therefore,  she  had
obtained the assignment order by totally mis-representing the facts and  had
played fraud on the  authorities.   The  law  is  well  settled  that  fraud
vitiates all contracts or agreements.  This is a case where  fraud  is  writ
large.  It is evident that assignment was obtained  in  total  contravention
of Section 96 of the Act and, therefore, Rule  29(8)  was  also  applicable.
Hence, we are not in agreement with  the  view  expressed  by  the  Division
Bench of the High Court of Kerala.   Accordingly,  the  appeal  is  allowed.
The judgments of the learned Single Judge and the  Division  Bench  are  set
aside and the writ petition of the  appellant/petitioner  is  allowed.   The
order of  the  District  Collector  cancelling  the  Assignment  Deed  dated
22.08.2003 is restored.



...................................J.
(MADAN B. LOKUR)



....................................J.
(DEEPAK GUPTA)

New Delhi
March  28, 2017






ITEM NO.1A               COURT NO.5               SECTION XIA
(For judgment)
               S U P R E M E  C O U R T  O F  I N D I A
                       RECORD OF PROCEEDINGS

Petition(s) for Special Leave to Appeal (C)  No(s).  23266/2014

KARUNAKARAN                                      Appellant(s)

                                VERSUS

V. PADMINI & ORS.                                Respondent(s)
(With Interim Relief and Office Report)

Date   :   28/03/2017         This    petition    was    called    on    for
      pronouncement of judgment today.

CORAM :                HON'BLE MR. JUSTICE MADAN B. LOKUR
                       HON'BLE MR. JUSTICE DEEPAK GUPTA

For Petitioner(s)      Mr. A. Venayagam Balan, AOR

For Respondent(s)      Mr. Raghenth Basant, Adv.
                       Mr. Mishal Johari, Adv.
                       Ms. Aanchal Tikmani, Adv.
                       Mr. Senthil Jagadeesan, AOR

                       Mr. Nishe Rajen Shonker, AOR

       Hon'ble  Mr.  Justice  Deepak  Gupta  pronounced  the  non-reportable
judgment of the Bench comprising Hon'ble Mr. Justice Madan B. Lokur and  His
Lordship.
      The appeal is allowed in terms of the signed non-reportable judgment.



(Meenakshi Kohli)                             (Sharda Kapoor)
Court Master (SH)                            Court Master (NS)
           [Signed non reportable judgment is placed on the file]

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