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Fraud on party also void one = Fraudulently obtained a consent decree with in 3 days on illiterate women = kept quiet for long time and again filed another suit for injunction against the same women basing on earlier decree – where the fraud came to light – All lower courts went on routine manner with out analyzing the evidence – how the decree will be passed against one sharers with out adding co sharers and how the court pass a decree with out hearing the parties under or.10, rule 1 C.P.C. – which clearly discloses a fraud = Allowed the civil appeal and set aside all decrees and judgement of lower courts = “Fraud generally lights a candle for justice to get a look at it; and rogue’s pen indites the warrant for his own arrest.” 26. Ex consequenti, the appeal is allowed and the judgment and decree of the High Court in the Second Appeal as well as the judgments and decrees of the courts below are hereby set aside and as a natural corollary the judgment and decree dated 27.11.1973 is also set aside. There shall be no order as to costs. ““Fraud-avoids all judicial acts, ecclesiastical or temporal” observed Chief Justice Edward Coke of England about three centuries ago. It is the settled proposition of law that a judgment or decree obtained by playing fraud on the court is a nullity and non est in the eyes 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. It can be challenged in any court even in collateral proceedings.” Smt. Badami (Deceased) By her L.R. ….. Appellant Versus Bhali … Respondent = published in http://judis.nic.in/supremecourt/helddis.aspx

SUIT:

Fraudulent suit – Suits for permanent injunction and possession – Based on
an earlier compromise decree – Held: All facets of fraud get attracted to
the case at hand – A rustic and illiterate woman is taken to court by a
relation on the plea of creation of a lease deed and magically in a hurried
manner the plaint is presented, written statement is drafted and filed,
statement is recorded and a decree is passed within three days – It not
only gives rise to a doubt but indicates that there is some kind of foul
play – However, the trial judge who decreed the first suit on 27.11.1973
did not look at these aspects as also the requirement of O. 10, r.1, CPC –
The judgment is vitiated by fraud – When the subsequent suits were filed,
the courts below routinely followed the principles relating to consent
decree and did not dwell deep to find out how the fraud was manifestly writ
large – The foundation was a family arrangement, which was not bona fide –
No iota of evidence has been brought on record that the plaintiff had given
anything to the defendant in the arrangement – It is a matter of record
that the possession was not taken over and inference has been drawn that
possibly there was an implied agreement that the decree would be given
effect to after her death – All these reasonings are absolutely non-
plausible and common sense does not even remotely give consent to them –
The whole thing was buttressed on the edifice of fraud – The impugned
judgments and decrees are set aside – As a natural corollary, the judgment
and decree dated 27.11.1973 is also set aside – Code of Civil Procedure,
1908 – O.10, r. 1 and O. 15, r. 1.

DEEDS AND DOCUMENTS:

Family arrangement – Held: Though, a family arrangement need not be
construed narrowly and it need not be registered, but it must prima facie
appear to be genuine which is not so in the case at hand – That apart,
there was no reason to exclude the daughter and the son-in-law – It is
impossible to perceive any dispute over any property or the possibility of
it in future – On the contrary, in this so called family settlement the
whole property of the defendant is given to the plaintiff – It cannot be
accepted to be a bona fide settlement.

The plaintiff and the original defendant’s late husband were the
descendants of a common ancestor. In a prior arrangement, the said
defendant got a share in the ancestral property. The plaintiff, on
24.11.1973 filed suit No. 1422 of 1973 stating that the defendant, under a
family settlement dated 1.6.1972 gave her whole share to the plaintiff and
also handed over the possession thereof to him, but since the revenue
entries continued to be in her name and there was interference with
plaintiff’s possession over the suit land, the suit for declaration and
permanent injunction was filed. On the date of presentation of the plaint
itself, the written statement was filed admitting the plaint averment to be
correct and praying for decree of the suit. The suit was decreed on
27.11.1973. It was the case of the plaintiff that the revenue entries
continued to be in the name of the defendant and she remained in possession
of the suit property. He filed Civil Suit No. 401 of 1984 for permanent
injunction against the defendant restraining her from alienating the suit
land. He also filed Civil Suit No. 784 of 1984 for possession. The
defendant contested both the suits but her stand that the decree dated
27.11.1973 was obtained by fraud was not accepted and the suits were
decreed. Her appeals were also dismissed. During the pendency of the second
appeals filed by the original defendant, she died and the name of her
daughter was substituted. The second appeals were also dismissed holding
that the original defendant had failed to discharge the onus that the
initial decree dated 27.11.1973 was obtained by fraud. Aggrieved, the
daughter of the original defendant filed the appeal.

Allowing the appeal, the Court

HELD: 1.1. Rule 1 of O. 10 of the Code of Civil Procedure, 1908 provides
for ascertainment whether allegations in pleadings are admitted or denied.
It stipulates that “at the first hearing” of the suit the court shall
ascertain from each party or his pleader whether he admits or denies such
allegations of fact as are made in the plaint or written statement (if any)
of the opposite party and as are not expressly or by necessary implication
admitted or denied by the party against whom they are made. The court is
required to record such admissions and denials. Use of the term ‘first
hearing of the suit’ in r. 1 has its own signification. Order 15, r. 1 lays
a postulate that where “at the first hearing” of the suit it appears that
the parties are not at issue on any question of law or of fact, the court
may at once pronounce the judgment. [Para 12] [86-E-H]

Kanwar Singh Saini v. High Court of Delhi 2012 (4) SCC 307 – relied on.

1.2. Keeping in view the pronouncement of law relating to the procedure and
the lapses committed by the trial court in the case at hand, the stand of
the original defendant, the predecessor-in-interest of the appellant, gets
fructified. All facets of fraud get attracted to the case at hand. A rustic
and illiterate woman is taken to court by a relation on the plea of
creation of a lease deed and magically in a hurried manner the plaint is
presented, written statement is drafted and filed, statement is recorded
and a decree is passed within three days. On a perusal of the decree it is
manifest that there is no reference of any kind of family arrangement and
there is total non-application of mind. It only mentions there is consent
in the written statement and hence, suit has to be decreed. Be it noted, it
was a suit for permanent injunction. There was an allegation that the
defendant was interfering with the possession of the plaintiff. What could
have transpired that the defendant would go with the plaintiff and accede
to all the reliefs. It not only gives rise to a doubt but on a first look
one can feel that there is some kind of foul play. However, the trial judge
who decreed the first suit on 27.11.1973 did not look at these aspects.
[para 13 and 25] [88-F; 95-F-G; 96-A-D]

Santosh v. Jagat Ram and another 2010 (2) SCR 429 = 2010 (3) SCC 251-
relied on.

1.3. It is a matter of grave anguish that in the first suit the court had
not applied its mind to the real nature of the family arrangement. It has
been submitted on behalf of the appellant that there was no need for a
family settlement because the defendant had got a part of the property in
an earlier family arrangement. She had a daughter and a son-in-law and she
had no cavil with plaintiff. She had also to support herself. Though, a
family arrangement need not be construed narrowly and it need not be
registered but it must prima facie appear to be genuine which is not so in
the case at hand. [para 13] [89-D-E]

Krishna Beharilal (dead) by his legal representatives v. Gulabchand and
others 1971 Suppl. SCR 27= 1971 AIR 1041; Kale and others v. Deputy
Director of Consolidation and others 1976 (2) SCR 202 = 1976 AIR 807;
Maturi Pullaiah and another v. Maturi Narasimham and others 1966 AIR 1836;
S. Shanmugam Pillai & others v. K. Shanmugam Pillai & others. 1973 (1) SCR
570 = 1972 AIR 2069 – referred to.

1.4. If the factual matrix of the case in hand is tested on the anvil of
the decisions of this Court, the family arrangement does not remotely
appear to be a bona fide. The plaintiff had no semblance of right in the
property. All rights had already been settled and the defendant was the
exclusive owner in possession. It is difficult to visualise such a family
settlement. More so, it is absolutely irrational that the defendant would
give everything to the plaintiff in lieu of nothing and suffer a consent
decree. That apart, there was no reason to exclude the daughter and the
son-in-law. It is well nigh impossible to perceive any dispute over any
property or the possibility of it in future. On the contrary in this so-
called family settlement the whole property of the defendant is given to
the plaintiff. It cannot be accepted to be a bona fide settlement. [para
17] [93-B-E]

1.5. It is, therefore, clear as crystal that the judgment and decree passed
in civil suit No. 1422 of 1973 on 27.11.1973 are fundamentally fraudulent.
It is a case which depicts a picture that the delineation by the trial
Judge was totally ephemeral. The judgement is vitiated by fraud. [para 18]
[93-F]

S. B. Noronah v. Prem Kumari Khanna 1980 (1) SCR 281 =1980 AIR 193; S. P.
Chengalvaraya Naidu (dead) by L.Rs. v. Jagannath (dead) by L.Rs. and others
1993 (3) Suppl. SCR 422 = 1994 AIR 853; Smt. Shrist Dhawan v. M/s. Shaw
1991 (3) Suppl. SCR 446 = Brothers 1992 AIR 1555 Roshan Deen v. Preeti Lal
2001 (5) Suppl. SCR 23 = AIR 2002 SC 33; Ram Preeti Yadav v. U. P. Board of
High School and Intermediate Education and other 2003 (3) Suppl. SCR 352 =
(2003) 8 SC 311; and Ram Chandra Singh v. Savitri Devi and others 2003 (4)
Suppl. SCR 543 = (2003) 8 SCC 319; State of Andhra Pradesh and another v.
T. Suryachandra Rao 2005 (1) Suppl. SCR 809 =AIR 2005 SC 3110; Hamza Haji
v. State of Kerala & Anr. 2006 (4) Suppl. SCR 604 = AIR 2006 SC 3028 –
referred to.

Halsbury’s Laws of England, Vol. 16 Fourth Edition para 1553 – referred to.

2.1. When the second suit was filed in 1984 for title and the third suit
was filed for possession thereafter, the courts below had routinely
followed the principles relating to consent decree and did not dwell deep
to find out how the fraud was manifestly writ large. It was too obvious to
ignore. The courts below have gone by the concept that there was no
adequate material to establish that there was fraud, though it was
telltale. That apart the foundation was the family arrangement, which was
not bona fide. [para 25] [96-D-E]

2.2. No iota of evidence has been brought on record that the plaintiff had
given anything to the defendant in the arrangement. It is easily
perceivable that the rustic woman was also not old. Though the decree was
passed in 1973 wherein it was alleged that the defendant was already in
possession, she lived up to 1992 and expired after 19 years. It is a matter
of record that the possession was not taken over and inference has been
drawn that possibly there was an implied agreement that the decree would be
given effect to after her death. All these reasonings are absolutely non-
plausible and common sense does not even remotely give consent to them. The
whole thing was buttressed on the edifice of fraud. The impugned judgments
and decrees are set aside. As a corrolary the judgment and decree dated
27.11.1973 is also set aside. [para 25-26] [96-G-H; 97-A, C-D]

Case Law Reference:

2010 (2) SCR 429 relied on para 10
2012 (4) SCC 307 relied on para 12
1971 Suppl. SCR 27 referred to para 14
1976 (2) SCR 202 referred to para 15
1966 AIR 1836 referred to para 16
1973 (1) SCR 570 referred to para 16
1980 (1) SCR 281 referred to para 18
1993 (3) Suppl. SCR 422 referred to para 20
1991 (3) Suppl. SCR 446 referred to para 22
2001 (5) Suppl. SCR 23 referred to para 22
2003 (3) Suppl. SCR 352 referred to para 22
2003 (4 ) Suppl. SCR 543 referred to para 22
2005 (1) Suppl. SCR 809 referred to para 22
2006 (4) Suppl. SCR 604 referred to para 24

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1723 of 2008.

From the Judgment & Order dated 1.9.2006 of the High Court of Punjab &
Haryana at Chandigarh in R.S.A. No. 2001 and 2002 of 1988.

V.K. Jhanji, Jyoti Mendiratta, Deeksha Ladi for the Appellant.

Neeraj Kr. Jain, Sanjay Singh, Pratham Kant, Ugra Shankar Prasad for the
Respondent.

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL No. 1723 OF 2008
Smt. Badami (Deceased) By her L.R. ….. Appellant

Versus

Bhali … Respondent

J U D G M E N T

Dipak Misra, J.

The singular question that arises for consideration in this appeal by
way of special leave under Article 136 of the Constitution of India is
whether the judgment and decree dated 27.11.1973 passed by the learned sub-
Judge, Kaithal in Civil Suit No. 1422 of 1973 is to be declared as a
nullity being vitiated by fraud and manifest illegality being writ large
and thereby the claim of right, title and interest and possession based on
the said judgment and decree by the respondent-plaintiff in the subsequent
suits, namely, Civil Suit No. 401 of 1984 and Civil Suit No. 784 of 1984
which have been decreed and got affirmance by a composite order passed by
the Additional District Judge, Kurukshetra in Civil Appeal No. 19/13 of
1987 and Civil Appeal No. 18/13 of 1986 and further gained concurrence by
the learned single Judge of the High Court of Punjab and Haryana at
Chandigarh in R.S.A. Nos. 2001 of 1988 and 2002 of 1988, is bound to
collapse and founder.

2. To appreciate the controversy, it is incumbent to travel to the year
1973 as to how the original suit was instituted, proceeded and eventually
decreed. For the said purpose it is necessary to note that one Dai Ram was
the common ancestor. He had two sons, namely, Dinda and Rachna. Dinda had
one son, namely, Roora and Rachna had one son, namely, Ram Chand. Badami
was the widow of Roora and Bhali is the son of Ram Chand. Risali is the
daughter of Roora and Badami. Bhali, respondent herein, instituted Civil
Suit No. 1422 of 1973 on 24.11.1973 alleging that Badami was the owner of
1894/9549 share of the ancestral land and had received it at a prior
arrangement. When she was in possession, there was a family settlement on
1.6.1972 and in that family settlement the defendant gave her whole share
to the plaintiff-Bhali and the possession of the same was also handed over
in pursuance of that settlement. As pleaded, the defendant-Badami agreed
that he would get the revenue entries of the suit land corrected in favour
of the plaintiff but the name of the defendant continued as owner in the
revenue records and despite the request of the plaintiff therein not to
interfere with the possession there was interference. Hence, he had been
compelled to file a suit for declaration and for permanent injunction.

3. On the date of presentation of the plaint, the defendant in the suit,
Badami, filed the written statement admitting the assertions in the plaint
to be correct and, in fact, prayed for decree of the suit. The learned sub-
Judge, Kaithal on 27.11.1973 decreed the suit.

4. As the facts would reveal, in spite of the said consent decree the
record of entries stood in the name of Badami and she remained in
possession and enjoyed the same. The respondent- Bhali, thereafter,
initially instituted Civil Suit No. 401 of 1984 seeking permanent
injunction against her restraining from alienating the land in any manner.
The learned trial Judge relied on the earlier judgment and decree dated
27.11.1973, did not accept the stand put forth by the defendant that the
said decree was obtained by fraud and passed a decree for permanent
injunction restraining the defendant from alienating the suit land to
anyone in any manner.

5. In the second suit for possession, the learned trial Judge framed two
vital issues, namely, whether the plaintiff was owner of the suit land and
whether the impugned decree dated 27.11.1973 is null, void and not binding
on the rights of the defendants and, thereafter, came to hold that factual
matrix would show that the decree was passed three days after and Badami
had appeared in the court, and hence, the decree was validly passed. On
appeals being preferred, the learned Additional District Judge affirmed the
said findings further elaborating the reasoning that Badami had appeared in
court, made a statement and given the thumb mark and further she had not
been able to discharge the onus that the decree was obtained by fraud. The
appellate court gave credence to the family settlement and also took note
of the fact that the parties were related and hence, there was no reason to
discard the family settlement; and that it was a common phenomenon that a
member of a family is given property out of love and affection. The
learned appellate Judge opined that though after the decree dated
27.11.1973 the possession was with the appellant and the revenue entry had
not been corrected, that was possibly due to an implied understanding
between the parties that the arrangement under the decree would be worked
out only after the death of the appellant, i.e., Badami. Being of this
view, the learned appellate Judge dismissed both the appeals.

6. Being aggrieved, Badami, the original defendant, preferred two
Regular Second Appeals, namely, R.S.A. Nos. 2001 of 1988 and 2002 of 1988.
During the pendency of the appeals, she expired and Risali, her daughter,
was substituted by order dated 21.2.1992 in both the appeals. The learned
single Judge who dealt with the appeals by the impugned judgment dated 1st
September, 2006 referred to the issues framed by the learned trial Judge,
the analysis made by the courts below and came to hold that original
defendant No. 1 had failed to discharge the onus that the initial decree
dated 27.11.1973 was obtained by fraud inasmuch as she had given a
statement in court and put the thumb impression and that the conclusion
drawn by the courts below were justified being based on facts and did not
warrant any interference as no substantial question of law was involved.

7. We have heard learned counsel for the parties and perused the
records.

8. To appreciate the controversy, it is appropriate to refer to para 3
of the plaint presented on 24.11.1973. It reads as follows:-

“3. That the parties entered into a family settlement on
1/6/72 and in that family settlement the defendant gave her
whole share to the plaintiff and the possession of the same was
also handed over to the plaintiff in pursuance of that family
settlement, the defendant also agreed that he would get the
revenue entries of the suit land corrected in favour of the
plaintiff, but the name of the defendant is still continuing as
owner in the revenue records.”

9. From the perusal of the averments made in the plaint, it is obvious
that emphasis was laid on the family settlement and handing over of
possession. It is interesting to note that the first appellate court had
opined that the possession remained with Badami and the revenue entries
were not corrected and continued possibly due to implied understanding but
the plaintiff was compelled to file the second suit when there was
interference. It has come out on the testimony of evidence of Badami that
she was absolutely illiterate. The only ground on which the courts have
proceeded that there was a consent decree and allegation of fraud had not
been established.

10. In this context, we may usefully refer to the decision in Santosh v.
Jagat Ram and another[1] wherein this Court was dealing with a situation
almost similar to the present nature. In the said case the day the plaint
was presented, on the same day written statement was also filed, evidence
of the plaintiff and the defendant was recorded and the judgment was also
made ready along with a decree on the same day. In that context, this
Court observed as follows: –

“This, by itself, was sufficient to raise serious doubts in the
mind of the courts. Instead, the appellate court went on to
believe the evidence of Dharam Singh (DW 1), record keeper, who
produced the files of the summons. One wonders as to when was
the suit filed and when did the Court issue a summons and how is
it that on the same day, the written statement was also ready,
duly drafted by the other side lawyer S.K. Joshi (DW 3).”

The Bench further proceeded to observe as follows: –

“We are anguished to see the attitude of the Court, who passed
the decree on the basis of a plaint and a written statement,
which were filed on the same day. We are also surprised at the
observations made by the appellate court that such circumstance
could not, by itself, prove the fraudulent nature of the decree.

A fraud puts an end to everything. It is a settled
position in law that such a decree is nothing, but a nullity.”

11. From the aforesaid decision it becomes quite clear that this Court
expressed a sense of surprise the way the suit in that case proceeded with
and also expressed its anguish how the court passed a decree on the
foundation of a plaint and a written statement that were filed on the same
day.

12. It is seemly to note that the Code of Civil Procedure provides how
the court trying the suit is required to deal with the matter. Order IV
Rule 1 provides for suit to be commenced by plaint. Order V Rule 1(1)
provides when the suit has been duly instituted, a summon may be issued to
defendant to appear and answer the claim on a day to be therein specified.
As per the proviso to Order V Rule 1 no summon need be issued if the
defendant appears and admits the claim of the plaintiff. Order X deals
with the examination of parties by the court. Rule 1 of Order X provides
for ascertainment whether allegations in pleadings are admitted or denied.
It stipulates that “at the first hearing” of the suit the court shall
ascertain from each party or his pleader whether he admits or denies such
allegations of fact as are made in the plaint or written statement (if any)
of the opposite party and as are not expressly or by necessary implication
admitted or denied by the party against whom they are made. The court is
required to record such admissions and denials. Use of the term ‘first
hearing of the suit’ in Rule 1 has its own signification. Order XV Rule 1
lays a postulate that where “at the first hearing” of the suit it appears
that the parties are not at issue on any question of law or of fact, the
court may at once pronounce the judgment. Recently, this Court in Kanwar
Singh Saini v. High Court of Delhi[2], while dealing with the concept of
first hearing, speaking through one of us (Dr. B.S. Chauhan, J) has opined
thus: –

“12. The suit was filed on 26-4-2003 and notice was issued
returnable just after three days i.e. on 29-4-2003 and on that
date the written statement was filed and the appellant appeared
in person and the statement was recorded. Order 10 Rule 1 CPC
provides for recording the statement of the parties to the suit
at the “first hearing of the suit” which comes after the framing
of the issues and then the suit is posted for trial i.e. for
production of evidence. Such an interpretation emerges from the
conjoint reading of the provisions of Order 10 Rule 1, Order 14
Rule 1(5) and Order 15 Rule 1 CPC. The cumulative effect of the
aboverffered provisions of CPC comes to that the “first hearing
of the suit” can never be earlier than the date fixed for the
preliminary examination of the parties and the settlement of
issues. On the date of appearance of the defendant, the court
does not take up the case for hearing or apply its mind to the
facts of the case, and it is only after filing of the written
statement and framing of issues, the hearing of the case
commences. The hearing presupposes the existence of an occasion
which enables the parties to be heard by the court in respect of
the cause. Hearing, therefore, should be first in point of time
after the issues have been framed.

13. The date of “first hearing of a suit” under CPC is
ordinarily understood to be the date on which the court proposes
to apply its mind to the contentions raised by the parties in
their respective pleadings and also to the documents filed by
them for the purpose of framing the issues which are to be
decided in the suit. Thus, the question of having the “first
hearing of the suit” prior to determining the points in
controversy between the parties i.e. framing of issues does not
arise. The words “first day of hearing” do not mean the day for
the return of the summons or the returnable date, but the day on
which the court applies its mind to the case which ordinarily
would be at the time when either the issues are determined or
evidence is taken. (Vide Ved Prakash Wadhwa v. Vishwa Mohan[3],
Sham Lal v. Atme Nand Jain Sabha[4], Siraj Ahmad Siddiqui v.
Prem Nath Kapoor[5] and Mangat Singh Trilochan Singh v.
Satpal[6].”

After so stating, it has been further observed as follows: –

“From the above fact situation, it is evident that the
suit was filed on 26-4-2003 and in response to the notice issued
in that case, the appellant-defendant appeared on 29.4.2003 in
person and filed his written statement. It was on the same day
that his statement had been recorded by the court. We failed to
understand as to what statutory provision enabled the civil
court to record the statement of the appellant-defendant on the
date of filing the written statement. The suit itself has been
disposed of on the basis of his statement within three weeks of
the institution of the suit.”
13. Keeping in view the aforesaid pronouncement of law relating to
the procedure and the lapses committed by the trial court in the case at
hand, the stand of the original defendant, the predecessor-in-interest of
the present appeal gets fructified. From the evidence brought on record,
it is perceptible that Badami was a rustic and an illiterate woman; that
she had one daughter who was married and there was no animus between them
to exclude her from the whole property; and that the concept of family
arrangement is too farfetched to give any kind of credence. That apart, the
filing of written statement, the recording of statement and taking the
thumb impression in a hurried manner further nurtures the stance that the
defendant was totally unaware as to what had happened. The averments in
the plaint show that the plaintiff was put in possession but as she was
going to alienate the property because of record of rights reflected name
of Badami, the suit was filed for permanent injunction restraining her from
alienating in any manner and the defendant conceded to the same. The
averments in the plaint show that the defendant had refused the request of
the plaintiff on 11.11.1973 not to interfere with the possession yet she
accompanied him to suffer a consent decree. It is worth noting that there
is evidence on record that she was brought to the court premises to execute
the lease deed for a period of two years and she had faith in Bhali. It is
a matter of grave anguish that in the first suit the court had not applied
its mind to the real nature of the family arrangement. The learned
counsel for the appellant has submitted that there was no need for a family
settlement because Badami had got a part of the property in an earlier
family arrangement. She had a daughter and a son-in-law and she had no
cavil with plaintiff. She had also to support herself. He fairly
submitted that the family arrangement need not be construed narrowly and it
need not be registered but it must prima facie appear to be genuine which
is not so in the case at hand.

14. In this regard we may refer with profit to certain authorities of
this Court. In Krishna Beharilal (dead) by his legal representatives v.
Gulabchand and others[7] a compromise decree had come into existence, on
the basis of a compromise deed which specifically stated that the
properties given to one Pattobai were to be enjoyed by her as “Malik
Mustakil”. This Court referred to certain decisions in the field and
opined that the circumstances under which the compromise was entered into
as well as the language used in the deed did not in any manner go to
indicate that the estate given to Pattobai was anything other than an
absolute estate. The High Court had treated the compromise decree to be
illegal on the basis that a Hindu widow could not have enlarged her own
rights by entering into a compromise in a suit. This Court observed that
this was not a compromise entered into with third parties. It was a
compromise entered into with the presumptive reversioners and in that case
the issue would be totally different. Further, the question arose whether
there could have been any family settlement. In that context, this Court
held as follows:-

“8……It may be noted that Lakshmichand and Ganeshilal who along
with Pattobai were the principal parties to the compromise were
the grand-children of Parvati who was the aunt of Bulakichand.
The parties to the earlier suit were near relations. The
dispute between the parties was in respect of a certain property
which was originally owned by their common ancestor namely
Chhedilal. To consider a settlement as a family arrangement, it
is not necessary that the parties to the compromise should all
belong to one family. As observed by this Court in Ram Charan
Das v. Girija Nandini Devi[8], the word “family” in the context
of the family arrangement is not to be understood in a narrow
sense of being a group of persons who are recognised in law as
having a right of succession or having a claim to a share in the
property in dispute. If the dispute which is settled is one
between near relations then the settlement of such a dispute can
be considered as a family arrangement- see Ramcharan Das’s case,
1965-3 SCR 841=(AIR 1966 SC 323) (supra).

9. The Courts lean strongly in favour of the family
arrangements to bring about harmony in a family and do justice
to its various members and avoid in anticipation future disputes
which might ruin them all.”

15. In Kale and others v. Deputy Director of Consolidation and others[9],
it has been held that the object of the arrangement is to protect family
from filing long drawn litigation or perpetual strifes which mar the unity
and solidarity of the family and create hatred and bad blood between the
various members of the family. Their Lordships opined that the family is
to be understood in the wider sense so as to include within its fold not
only close relations or legal heirs but even those persons who may have
some sort of antecedent title, a semblance of claim or even if they have a
spes successionis so that future disputes are sealed forever and litigation
are avoided. What could be the binding effect and essentials for a family
settlement were expressed thus:-

“10. In other words to put the binding effect and the
essentials of a family settlement in a concretised form, the
matter may be reduced into the form of the following
propositions:

(1) The family settlement must be a bona fide one so as to
resolve family disputes and rival claims by a fair and equitable
division or allotment of properties between the various members
of the family;

(2) The said settlement must be voluntary and should not be
induced by fraud, coercion or undue influence;

(3) The family arrangements may be even oral in which case no
registration is necessary;

(4) It is well settled that registration would be necessary only
if the terms of the family arrangement are reduced into writing.
Here also, a distinction should be made between a document
containing the terms and recitals of a family arrangement made
under the document and a mere memorandum prepared after the
family arrangement had already been made either for the purpose
of the record or for information of the court for making
necessary mutation. In such a case the memorandum itself does
not create or extinguish any rights in immovable properties and
therefore does not fall within the mischief of Section 17(2)
(sic) (Sec. 17 (1) (b)?) of the Registration Act and is,
therefore, not compulsorily registrable;

(5) The members who may be parties to the family arrangement
must have some antecedent title, claim or interest even a
possible claim in the property which is acknowledged by the
parties to the settlement. Even if one of the parties to the
settlement has no title but under the arrangement the other
party relinquishes all its claims or titles in favour of such a
person and acknowledges him to be the sole owner, then the
antecedent title must be assumed and the family arrangement will
be upheld and the Courts will find no difficulty in giving
assent to the same;

(6) Even if bona fide disputes, present or possible, which may
not involve legal claims are settled by a bona fide family
arrangement which is fair and equitable the family arrangement
is final and binding on the parties to the settlement.”

16. We may note that the principles stated in Maturi Pullaiah and another
v. Maturi Narasimham and others[10] were reiterated in S. Shanmugam Pillai
& others v. K. Shanmugam Pillai & others.[11] in the following terms:-

“In Maturi Pullaiah v. Maturi Narasimham, AIR 1966 SC 1836 this
Court held that although conflict of legal claims in praesenti
or in futuro is generally a condition for the validity of family
arrangements, it is not necessarily so. Even bona fide disputes
present or possible, which may not involve legal claims would be
sufficient. Members of a joint Hindu family may, to maintain
peace or to bring about harmony in the family, enter into such a
family arrangement. If such an agreement is entered into bona
fide and the terms thereto are fair in the circumstances of a
particular case, the Courts would more readily give assent to
such an agreement than to avoid it.”

17. If the present factual matrix tested on the anvil of the aforesaid
decisions, the family arrangement does not remotely appear to be a bona
fide. Bhali had not semblance of right in the property. All rights had
already been settled and she was the exclusive owner in possession. It is
difficult to visualise such a family settlement. More so, it is absolutely
irrational that Badami would give everything to Bhali in lieu of nothing
and suffer a consent decree. That apart, there was no reason to exclude
the daughter and the son-in-law. Had there been any likely possibility of
any future legal cavil between the daughter and Bhali the same is
understandable. It is well nigh impossible to perceive any dispute over
any property or the possibility of it in future. On the contrary in this
so called family settlement the whole property of Badami is given to Bhali.
We are unable to accept it to be a bona fide settlement.

18. From the aforesaid analysis it is clear as crystal that the judgment
and decree passed in civil suit No. 1422 of 1973 on 27.11.1973 are
fundamentally fraudulent. It is a case which depicts a picture that the
delineation by the learned Judge was totally ephemeral. The judgement is
vitiated by fraud.

19. Presently, we shall refer as to how this Court has dealt with concept
of fraud. In S. B. Noronah v. Prem Kumari Khanna[12] while dealing with
the concept of estoppel and fraud a two-Judge Bench has stated that it is
an old maxim that estoppels are odious, although considerable inroad into
this maxim has been made by modern law. Even so, “a judgment obtained by
fraud or collusion, even, it seems a judgment of the House of Lords, may be
treated as a nullity”. (See Halsbury’s Laws of England, Vol. 16 Fourth
Edition para 1553). The point is that the sanction granted under Section
21, if it has been procured by fraud or collusion, cannot withstand
invalidity because, otherwise, high public policy will be given as hostage
to successful collusion.

20. In S. P. Chengalvaraya Naidu (dead) by L.Rs. v. Jagannath (dead) by
L.Rs. and others[13] this court commenced the verdict with the following
words:-

““Fraud-avoids all judicial acts, ecclesiastical or temporal”
observed Chief Justice Edward Coke of England about three
centuries ago. It is the settled proposition of law that a
judgment or decree obtained by playing fraud on the court is a
nullity and non est in the eyes 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. It
can be challenged in any court even in collateral proceedings.”

21. In the said case it was clearly stated that the courts of law are
meant for imparting justice between the parties and one who comes to the
court, must come with clean hands. A person whose case is based on
falsehood has no right to approach the Court. A litigant who approaches
the court, is bound to produce all the documents executed by him which are
relevant to the litigation. If a vital document is withheld in order to
gain advantage on the other side he would be guilty of playing fraud on
court as well as on the opposite party.

22. In Smt. Shrist Dhawan v. M/s. Shaw Brothers[14] it has been opined
that fraud and collusion vitiate even the most solemn proceedings in any
civilised system of jurisprudence. It has been defined as an act of
trickery or deceit. The aforesaid principle has been reiterated in Roshan
Deen v. Preeti Lal[15], Ram Preeti Yadav v. U. P. Board of High School and
Intermediate Education and other[16] and Ram Chandra Singh v. Savitri Devi
and others[17].

23. In State of Andhra Pradesh and another v. T. Suryachandra Rao[18]
after referring to the earlier decision this court observed as follows:-

“In Lazaurs Estate Ltd. v. Beasley[19] Lord Denning observed at
pages 712 & 713, “No judgment of a Court, no order of a Minister
can be allowed to stand if it has been obtained by fraud. Fraud
unravels everything.” In the same judgment Lord Parker LJ
observed that fraud vitiates all transactions known to the law
of however high a degree of solemnity. ”

24. Yet in another decision Hamza Haji v. State of Kerala & Anr.[20] it
has been held that no court will allow itself to be used as an instrument
of fraud and no court, by way of rule of evidence and procedure, can allow
its eyes to be closed to the fact it is being used as an instrument of
fraud. The basic principle is that a party who secures the judgment by
taking recourse to fraud should not be enabled to enjoy the fruits thereof.
25. It would not be an exaggeration but on the contrary an understatement
if it is said that all facets of fraud get attracted to the case at hand.
A rustic and illiterate woman is taken to court by a relation on the plea
of creation of a lease deed and magically in a hurried manner the plaint is
presented, written statement is drafted and filed, statement is recorded
and a decree is passed within three days. On a perusal of the decree it is
manifest that there is no reference of any kind of family arrangement and
there is total non-application of mind. It only mentions there is consent
in the written statement and hence, suit has to be decreed. Be it noted,
it was a suit for permanent injunction. There was an allegation that the
respondent was interfering with the possession of the plaintiff. What
could have transpired that the defendant would go with the plaintiff and
accede to all the reliefs. It not only gives rise to a doubt but on a
first look one can feel that there is some kind of foul play. However, the
learned trial Judge who decreed the first suit on 27.11.1973 did not look
at these aspects. When the second suit was filed in 1984 for title and the
third suit was filed for possession thereafter, the courts below had
routinely followed the principles relating to consent decree and did not
dwell deep to find out how the fraud was manifestly writ large. It was too
obvious to ignore. The courts below have gone by the concept that there
was no adequate material to establish that there was fraud, though it was
telltale. That apart, the foundation was the family arrangement. We have
already held that it was not bona fide, but, unfortunately the courts below
as well as the High Court have held that it is a common phenomenon that the
people in certain areas give their property to their close relations. We
have already indicated that by giving the entire property and putting him
in possession she would have been absolutely landless and would have been
in penury. It is unimaginable that a person would divest herself of one’s
own property in entirety in lieu of nothing. No iota of evidence has been
brought on record that Bhali, the respondent herein, had given anything to
Badami in the arrangement. It is easily perceivable that the rustic woman
was also not old. Though the decree was passed in 1973 wherein it was
alleged that the defendant was already in possession, she lived up to 1992
and expired after 19 years. It is a matter of record that the possession
was not taken over and inference has been drawn that possibly there was an
implied agreement that the decree would be given effect to after her death.
All these reasonings are absolutely non-plausible and common sense does
not even remotely give consent to them. It is fraudulent all the way. The
whole thing was buttressed on the edifice of fraud and it needs no special
emphasis to state that what is pyramided on fraud is bound to decay. In
this regard we may profitably quote a statement by a great thinker:

“Fraud generally lights a candle for justice to get a look at
it; and rogue’s pen indites the warrant for his own arrest.”

26. Ex consequenti, the appeal is allowed and the judgment and decree of
the High Court in the Second Appeal as well as the judgments and decrees of
the courts below are hereby set aside and as a natural corollary the
judgment and decree dated 27.11.1973 is also set aside. There shall be no
order as to costs.
……………………………………..J.
[DR. B.S. Chauhan]
……………………………………..J.
[Dipak Misra]
New Delhi;
May 22, 2012.

———————–
[1] (2010) 3 SCC 251
[2] (2012) 4 SCC 307
[3] (1981) 3 SCC 667 : AIR 1982 SC 816
[4] (1987) 1 SCC 222 : AIR 1987 SC 197
[5] (1993) 4 SCC 406 : AIR 1993 SC 2525
[6] (2003) 8 SCC 357 : AIR 2003 SC 4300
[7] AIR 1971 SC 1041
[8] (1965) 3 SCR 841 = AIR 1966 SC 323
[9] AIR 1976 SC 807
[10] AIR 1966 SC 1836
[11] AIR 1972 SC 2069
[12] AIR 1980 SC 193
[13] AIR 1994 SC 853
[14] AIR 1992 SC 1555
[15] AIR 2002 SC 33
[16] (2003) 8 SC 311
[17] (2003) 8 SCC 319
[18] AIR 2005 SC 3110
[19] (1956) 1 QB 702
[20] AIR 2006 Sc 3028

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