Whether court can recall its judgment or order if it is obtained by fraud on court?

 In Indian Bank v. Satyam Fibres
(India) (P) Ltd. referring to Lazarus
Estates and Smith v. East Elloe Rural
Distt. Council this Court stated: (SCC pp.
562-63, para 22)
“22. The judiciary in India also possesses
inherent power, specially under Section
151 CPC, to recall its judgment or order if
it is obtained by fraud on court. 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. Inherent powers are powers which
are resident in all courts, especially of
superior jurisdiction. These powers spring
not from legislation but from the nature
and the constitution of the tribunals or
courts themselves so as to enable them to
maintain their dignity, secure obedience
to its process and rules, protect its
officers from indignity and wrong and to
punish unseemly behaviour. This power is
necessary for the orderly administration
of the court's business.”
MADHYA PRADESH HIGH COURT
GWALIOR BENCH
R.P.No.470/2013

Chief Municipal Officer Vs. Mahila Munni Devi & Ors.
Dated;10/07/2014
Citation; AIR 2014 MP129

There is delay of seven years and 84 days in
filing the present review petition.
3.
It is pleaded in the application for condonation of
delay that an application for compromise was filed on
behalf of Municipal Council, however, no permission
was taken from the Council in regard to compromise,
hence, the Council was not aware about the fact of
compromise. The President and CMO of the Council
were hand in gloves, they did not inform the Council
about the judgment. After seven years, contempt
proceedings were initiated and the contempt case was
registered as Cont. Case No.497/2013. Thereafter,
notices
were issued. Council
received
notice
on
27.8.2013, then it came to the knowledge of the
Council. Thereafter, certified copy of the judgment was
obtained and review petition has been filed.
4.
In the present case, there was no permission to
enter into compromise by the Municipal Council. Apart
from this, by way of compromise, right of ownership in
regard to a land, which was of the ownership of the
Municipal Council, was created in favour of the

respondent. The compromise was void ab initio and is
per se illegal.
5.
Hon'ble Supreme Court in Esha Bhattacharjee
Vs. Managing Committee of Raghunathpur Nafar
Academy and others reported in (2013) 12 SCC 649
has
laid
down
following
principles
in
regard
to
considering the facts by the Court in the matter of
condonation
of
delay
after
considering
earlier
judgments of the Hon'ble Supreme Court:-
“15. From the aforesaid authorities the
principles that can broadly be culled out are:
(i)
There should be a liberal, pragmatic,
justice-oriented, non-pedantic approach
while dealing with an application for
condonation of delay, for the courts are not
supposed to legalise injustice but are
obliged to remove injustice.
(ii)
The terms “sufficient cause” should
be understood in their proper spirit,
philosophy and purpose regard being had
to the fact that these terms are basically
elastic and are to be applied in proper
perspective to the obtaining fact-situation.
(iii) Substantial justice being paramount
and pivotal the technical considerations
should not be given undue and uncalled for
emphasis.
(iv) No presumption can be attached to
deliberate causation of delay but, gross
negligence on the part of the counsel or
litigant is to be taken note of.
(v)
Lack of bona fides imputable to a
party seeking condonation of delay is a
significant and relevant fact.
(vi) It is to be kept in mind that
adherence to strict proof should not affect

public justice and cause public mischief
because the courts are required to be
vigilant so that in the ultimate eventuate
there is no real failure of justice.
(vii) The concept of liberal approach has
to
encapsule
the
conception
of
reasonableness and it cannot be allowed a
totally unfettered free play.
(viii) There is a distinction between
inordinate delay and a delay of short
duration or few days, for to the former
doctrine of prejudice is attracted whereas
to the latter it may not be attracted. That
apart, the first one warrants strict
approach whereas the second calls for a
liberal delineation. ix) The conduct,
behaviour and attitude of a party relating
to its inaction or negligence are relevant
factors to be taken into consideration. It is
so as the fundamental principle is that the
courts are required to weigh the scale of
balance of justice in respect of both parties
and the said principle cannot be given a
total go by in the name of liberal approach.
(x)
If
the
explanation
offered
is
concocted or the grounds urged in the
application are fanciful, the courts should
be vigilant not to expose the other side
unnecessarily to face such a litigation.
(xi) It is to be borne in mind that no one
gets away with fraud, misrepresentation or
interpolation by taking recourse to the
technicalities of law of limitation.
(xii) The entire gamut of facts are to be
carefully scrutinized and the approach
should be based on the paradigm of judicial
discretion which is founded on objective
reasoning and not on individual perception.
(xiii) The State or a public body or an
entity representing a collective cause
should be given some acceptable latitude.”

6.

In view of the facts of the case, after applying the
principle of law laid down by the Hon'ble Supreme
Court
in
the
aforesaid
case,
application
(I.A.No.4630/2013) is allowed and the delay in filing the
present review petition is hereby condoned.
7. Heard on merits of the review petition.
8. This petition has been filed for review of the order
dt.29.3.2006 passed in S.A.No.395/2003.
9.
The court passed the following order :-
“'Heard on I.A.No.4780/2006, which is an
application for compromise filed by the parties.
Learned counsel for the appellants and
learned counsel the respondents No.1 and 2
submit that the compromise has taken place
between the parties.
In view of this, appeal has been disposed
of in terms of compromise filed by the parties.
The compromise application shall be part of the
decree.
C.C. as per rules.”
10.
A compromise application (I.A.No0.4780/2006)
was filed before the court. The compromise application
was filed by the President, Nagar Panchayat Alampur
and CMO, Nagar Panchayat Alampur. The following
were the terms and conditions of the compromise :-
“That, the suit shop comprising area 10x6 sq.
ft. situated in Ward No.7 in Town Alampur,
District Bhind (M.P.) as per map attached to
the plaint shall be in possession of
appellants/plaintiffs and in the possession of
their legal heirs and respondents/defendants
can not interfere in the peaceful possession
of the suit shop, and the appellants/plaintiffs

shall have a right of owner in possession
upon the suit property and can construct or
reconstruct the suit shop with the permission
of respondents/plaintiffs, parties shall bear
their own cost.”
11.
It is clear from the terms and conditions that
right of ownership was granted in favour of the
respondent. In accordance with the provision of
Section 312 Chapter XI of the M.P.Municipalities Act,
1961 the compromise can only be entered with the
permission
by
the
Municipal
Council.
No
such
permission was taken by the President and CMO of
Nagar Panchayat Alampur to file the compromise.
Apart from this, right of ownership in regard to the
land, which is of the ownership of the Municipal
Council could not be granted because the first
appellate court dismissed the suit of the respondent. In
this view of the matter, the compromise was per se
illegal. It was obtained by playing the fraud.
12.
Section 17 of the Indian Contract Act 1872
defines the 'fraud', which is as under :-
“17. Fraud' defined.- 'Fraud' means and
includes any of the following acts
committed by a party to a contract, or
with his connivance, or by his agent, with
intent to deceive another party thereto or
his agent, or to induce him to enter into
the contract:-
(1)the suggestion, as a fact, of that
which is not true, by one who does
not believe it to be true;

(2)the active concealment of a fact by
one having knowledge or belief of
the fact;
(3)a promise made without any
intention of performing it;
(4)any other act fitted to deceive;
(5)any such act or omission as the law
specially declares to be fraudulent.”
13.
Hon'ble Supreme Court in the case of MCD Vs.
State of Delhi and another – (2005) 4 SCC 605 has
held as under in regard to effect of 'fraud' -
19. The trial court heard the respondent
on sentence also and passed the following
order:
“Convict in person with counsel.
Heard on sentence.
It is contended that he is first offender.
He is not a previous convict nor habitual
offender. He has faced trial since 1991.
He is aged about 57 years. He is not
doing any business due to his bad health.
Considering
the
above
facts
and
circumstances, and gravity of the nature
of the offence i.e. extent of construction
raised by the accused for commercial (sic
purposes) as 11 shops at ground floor and
11 shops at first floor, I am not inclined to
release the accused/convict on probation.
Hence request declined.
In the interest of justice, sentence of six
months' SI, with fine of Rs 5000, ID one-
month SI is imposed upon the convict for
offence under Sections 332/461, DMC
Act. Fine deposited. Convict remained for
sentence.”
20.The Additional Sessions Judge, New
Delhi also in Civil Appeal No. 7 of 2002

(Annexure P-2) dismissed the appeal as
there is no infirmity in the order of the
trial court and upheld the conviction
order passed by the trial court on the
point of sentence. The appellate court
held that no interference is required in
the order passed by the trial court
regarding point of sentence. Since the
appellant MCD was not given any
opportunity by the High Court to file
conduct report of the respondent, the
order impugned in this appeal is liable to
be set aside.
14.
Hon'ble
Supreme
Court
in
the
case
of
A.V.Papayya Sastry and others Vs. Govt. of A.P.
And others – (2007) 4 SCC 221 has held as under in
regard to 'fraud' :-
21. Now, it is well-settled principle of law
that if any judgment or order is obtained
by fraud, it cannot be said to be a
judgment or order in law. Before three
centuries, Chief Justice Edward Coke
proclaimed:
“Fraud
avoids
all
judicial
acts,
ecclesiastical or temporal.”
22. It is thus settled proposition of law
that 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. Such a judgment, decree
or order—by the first court or by the final
court—has to be treated as nullity by
every court, superior or inferior. It can be
challenged in any court, at any time, in
appeal, revision, writ or even in collateral
proceedings.

23. In the leading case of Lazarus Estates
Ltd. v. Beasley Lord Denning observed:
(All ER p. 345 C)
“No judgment of a court, no order of a
Minister, can be allowed to stand if it has
been obtained by fraud.”
24. In Duchess of Kingstone, Smith's
Leading Cases, 13th Edn., p. 644,
explaining the nature of fraud, de Grey,
C.J. stated that though a judgment would
be res judicata and not impeachable from
within, it might be impeachable from
without. In other words, though it is not
permissible to show that the court was
“mistaken”, it might be shown that it was
“misled”. There is an essential distinction
between mistake and trickery. The clear
implication of the distinction is that an
action to set aside a judgment cannot be
brought on the ground that it has been
decided wrongly, namely, that on the
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.
25. It has been said: 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).
26. 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,
R.P.No.470/2013
9
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.
27. In S.P. Chengalvaraya Naidu v.
Jagannath this Court had an occasion to
consider the doctrine of fraud and the
effect thereof on the judgment obtained
by a party. In that case, one A by a
registered deed, relinquished all his
rights in the suit property in favour of C
who sold the property to B. Without
disclosing that fact, A filed a suit for
possession against B and obtained
preliminary decree. During the pendency
of an application for final decree, B came
to know about the fact of release deed by
A in favour of C. He, therefore, contended
that the decree was obtained by playing
fraud on the court and was a nullity. The
trial court upheld the contention and
dismissed the application. The High
Court, however, set aside the order of the
trial court, observing that “there is no
legal duty cast upon the plaintiff to come
to court with a true case and prove it by
true evidence”. B approached this Court.
28. Allowing the appeal, setting aside the
judgment of the High Court and
describing the observations of the High
Court as “wholly perverse”, Kuldip Singh,
J. stated: (SCC p. 5, para 5)
“The courts of law are meant for
imparting justice between the parties.
One who comes to the court, must come
with clean hands. We are constrained to
say that more often than not, process of
the court is being abused. Property
R.P.No.470/2013
10
grabbers, tax-evaders, bank-loan-dodgers
and other unscrupulous persons from all
walks of life find the court process a
convenient lever to retain the illegal gains
indefinitely. We have no hesitation to say
that a person, whose case is based on
falsehood, has no right to approach the
court. He can be summarily thrown out at
any stage of the litigation.” (emphasis
supplied)
29. The Court proceeded to state: (SCC p.
5, para 6)
“A litigant, who approaches the court, is
bound to produce all the documents
executed by him which are relevant to the
litigation. If he withholds a vital document
in order to gain advantage on the other
side then he would be guilty of playing
fraud on the court as well as on the
opposite party.”
30. The Court concluded: (SCC p. 5, para
5)
“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.”
31. In Indian Bank v. Satyam Fibres
(India) (P) Ltd. referring to Lazarus
Estates and Smith v. East Elloe Rural
Distt. Council this Court stated: (SCC pp.
562-63, para 22)
“22. The judiciary in India also possesses
inherent power, specially under Section
151 CPC, to recall its judgment or order if
it is obtained by fraud on court. 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. Inherent powers are powers which
are resident in all courts, especially of
superior jurisdiction. These powers spring
not from legislation but from the nature
and the constitution of the tribunals or
courts themselves so as to enable them to
maintain their dignity, secure obedience
to its process and rules, protect its
officers from indignity and wrong and to
punish unseemly behaviour. This power is
necessary for the orderly administration
of the court's business.”
15.
As per the principle of law laid down by the
Hon'ble Supreme Court, fraud vitiates everything.
16.
The
Hence, the present review petition is allowed.
order
under
review
is
hereby
recalled.
S.A.No.395/2003 is restored to file.
(S.K. Gangele)
Judge
SP
(S.K.Palo)
Judge