Saturday, 28 January 2017

When decree obtained by a party will not be treated as fraudulent?

 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.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.11491 OF 2016
HARJAS RAI MAKHIJA (D) THR. LRS.
VS.
PUSHPARANI JAIN & ANR



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 Procedure1
1 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

(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
(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.

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

3
rd 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 Gandhi3
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.
2 (2007) 4 SCC 221
3 (2012) 1 SCC 476

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.
4 (2010) 8 SCC 383 (paragraphs 28 to 36)
5 (2005) 7 SCC 605
6 (2009) 12 SCC 378

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

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