1. This revision petition is filed by the revision petitioners/judgment debtors 1 and 2 against the decree holder challenging the orders dated 30.11.2001 on a memo filed by the judgment debtor dated 19.10.2001 in Ex. Case No. 247/99.
2. The facts that led to the filing of this revision petition in brief are as under :
The respondent herein had filed O.S. No. 7905/95 against the revision petitioners for recovery of Rs. 3,00,000/- and odd with interest. The said suit ended in a compromise as the compromise petition came to be filed on 10.11.1998. On the very same day the suit was decreed with consent of both the parties. Subsequently, the present execution petition 247/99 came to be filed for recovery of the amount.
3. It is also gathered from the arguments of the learned Counsels and also the records that several applications came to be filed by the decree holder and also the judgment debtor in the execution petition. Challenging the said orders revisions were also filed before this Court.
4. One of the important applications that came to be filed by the judgment debtor was an application under Section 47. In the said application they have specifically taken a pleading that fraud was played on the revision petitioners in obtaining the decree. The revision petitioner/judgment debtors filed a memo on 19.10.2001 seeking the permission of the Court for recording evidence on the allegations of fraud played on them. Said memo came to be rejected on 30.11.2001. Aggrieved by the said order this revision petition came to be filed by the revision petitioners.
5. It is contended that while considering the application under Section 151, CPC seeking certain reliefs on 29.9.2001 while disposing of said application, the learned Judge observed that no order would be passed on the factum of fraud, as it would be considered at the relevant time. This observation was made in the orders dated 29.9.2001 as the judgment debtors alleged fraud in the objections to the prayer made by the decree holder seeking attachment of movables, Therefore, the Court ought not to have dismissed the memo and has committed the serious error holding that the judgments relied upon by the revision petitioners were not applicable to the facts of the present case.
6. It is further contended that the Apex Court has held that question as to whether decree obtained by fraud can be gone into even at the stage of execution. In that view of the matter when the compromise decree is a result of fraud, which amounts to nullity in law, the executing Court had to consider this question before proceeding with the execution of the decree. Instead he erred in holding that he cannot go beyond the decree. He also relied on several judgments, which would be mentioned in detail hereinafter.
7. The learned Counsel for the respondent/decree holder contended that though in the three applications which came to be filed on 2.7.1999 allegation of fraud was made, the specific prayer to hold inquiry regarding the said fraud was asked only in the month of October, 2001. He further argued that the revision petitioners cannot seek the intervention of the Court to go beyond the decree and decide whether fraud was played on the revision petitioners or not He also relied on several decisions, which would be narrated in the subsequent paragraphs.
8. On hearing the arguments of the learned Counsels for both the parties, the serious question that would fall for the consideration of this Court is whether the executing Court can hold inquiry and decide with regard to the committal of fraud on the revision petitioners by the respondent in obtaining a compromise decree as alleged by the revision petitioners ?
9. Admittedly, O.S. No. 7905/97 was decreed on 10.11.1998. The learned Counsel for the revision petitioners tried to bring to the notice of the Court that the suit was filed on 31.10.3 997 and before the notice could be served on the defendants/revision petitioners, on advancement application filed by the petitioner's Counsel a compromise petition came to be filed. This prima facie goes to show that the revision petitioners were made to listen to the plaintiff-decree holder by playing fraud. No doubt he explained how the fraud was played on the revision petitioners, but this Court is not dealing with the actual committal of fraud on the revision petitioners in this revision.
10. As already stated above, the CRP pertains to the powers of the executing Court to inquire into the allegation of fraud alleged by the revision petitioners. As already stated above several applications were filed by both the parties and admittedly in an application under Section 47 allegation of fraud was made. On 19.10.2001 the memo in question came to be filed seeking the permission of the Court to lead evidence on the allegation of fraud by the revision petitioners.
11. The learned Counsel for the revision petitioner relies on the following decisions :
: 3SCR60 (Sunder Dass v. Ram Parkash): The question in this case arose was whether the addition of proviso to Section 3 of the Delhi Rent Control Act by way of amendment with retrospective effect had the effect of rendering the decree of eviction null and void holding that the proviso was introduced with retrospective effect, it was applicable to the tenancy on hand. Therefore, it was held the Civil Court had no inherent jurisdiction to entertain the suit and the decree for eviction was a nullity.
12. In that situation the Apex Court held that:
'An executing Court cannot go behind the decree nor can it question its legality or correctness. But there is one exception to this general rule and that is that where the decree sought to be executed is a nullity for lack of inherent jurisdiction in the Court passing it, its invalidity can be set up in an execution proceeding. The executing Court can, therefore, entertain an objection that the decree is a nullity and can refuse to execute the decree. By doing so, the executing Court would not incur the reproach that it is going behind the decree, because the decree being null and void, there would really be no decree at all.'
13. In : 1980CriLJ202 , Raj Kapoor and Ors. State (Delhi Administration) and Ors., the Apex Court held that a besetting sin of our legal system is the tyranny of technicality in the name of finical legality, hospitably entertained sometimes in the halls of justice. Absent orientation, justicing becomes 'computering' and ceases to be social engineering.
14. It was further held at para 10 of the judgment as under :
'I am therefore clear in my mind that the inherent power is not rebuffed in the case situation before us. Counsel on both sides sensitively responding to our allergy for legalistics, rightly agreed that the fanatical insistence on the formal filing of a copy of the order under cassation need not take up this Court's time. Our conclusion concurs with the concession of Counsel on both sides that merely because a copy of the order has not been produced, despite its presence in the records in the Court, it is not possible for me to hold that the entire revisory power stands frustrated and the inherent power stultified.'
15. In : AIR1993SC1139 , Banwari Lal v. Smt. Chando Devi (through L.R.) and Anr., it was held at paras 13 and 14 as under :
'Para 13: When the amending Act introduced a proviso along with an explanation to Rule 3 of Order 23 saying that where it is alleged by one party and denied by other that an adjustment or satisfaction has been arrived at, 'the Court shall decide the question', the Court before which a petition of compromise is filed and to decide the question whether an adjustment or satisfaction had been arrived at on basis of any lawful agreement. To make the enquiry in respect of validity of the agreement or the compromise more comprehensive, the explanation to the proviso says that an agreement or compromise 'which is void or voidable under the Indian Contract Act....' shall not be deemed to be lawful within the meaning of the said Rule. In view of the proviso read with the explanation, a Court which had entertained the petition of compromise has to examine whether the compromise was void or violable under the Indian Contract Act, Even Rule 1(m) of Order 43 has been deleted under which an appeal was maintainable against an order recording a compromise. As such a party challenging a compromise can file a petition under proviso to Rule 3 of Order 23, or an appeal under Section 96(1) of the Code, in which he can now question the validity of the compromise in view of Rule 1A of Order 43 of the Code.
Para 14 : The application for exercise of power under proviso to Rule 3 of Order 23 can be labelled under Section 151 of the Code but when by the amending Act specifically such power has been vested in the Court before which the petition of compromise had been filed, the power in appropriate cases has to be exercised under the said proviso to Rule 3. It has been held by different High Courts that even recorded, the Court concerned can entertain an application under Section 151 of the Code, questioning the legality of validity of the compromise. Reference in this connection may be made to the cases Smt. Tara Bai v. V.S. Krishnaswamy Rao, AIR 1985 Kar. 270; S.G. Thimmappa v. T. Ananta, : AIR1986Kant1 , Bindeshwari Pd. Chaudhary v. Debendra Pd. Singh, : AIR1958Pat618 ; Mangal Mahton v. Behari Mahton, : AIR1964Pat483 and Sri Sri Iswar Copal Jew v. Bhagwandas Shaw, : AIR1982Cal12 , where it has been held that application under Section 151 of the Code is maintainable. The Court before which it is alleged by one of the parties to the alleged compromise that no such compromise had been entered between the parties that Court has to decide whether the agreement or compromise in question was lawful and not void or voidable under the Indian Contract Act. If the agreement or the compromise itself is fraudulent then it shall be deemed to be void within the meaning of the explanation to the proviso to Rule 3 and as such not lawful. The learned Subordinate Judge was perfectly justified in entertaining the application filed on behalf of the appellant and considering the question as to whether there had been a lawful agreement or compromise on the basis of which the Court could have recorded such agreement or compromise on 27.2.1991. Having come to the conclusion on the material produced that compromise was not lawful within the meaning of Rule 3, there was no option left except to recall that order.'
16. In the said suit an application came to be filed for recalling the order regarding the compromise on the ground that fraud was played and the suit be restored and be heard on merits. The Trial Court directed restoration of the suit, but in a revision before the High Court the said order was set aside and the Apex Court held as mentioned above at paras 13 and 14.
17. In another case reported in : 2SCR1 , Jaipur Development Authority v. Radhey Shyam and Ors., in a case pertaining to land acquisition matter Their Lordships of the Apex Court held that under Section 47 of the CPC a party is entitled to raise the questions regarding the invalidity and nullity of the decree in execution proceedings.
18. In : AIR1994SC853 , Chengalvaraya Naidu by LRs. v. Jagannath by L.Rs. and Ors., the Apex Court held that the Courts of law are meant for imparting justice between the parties. One who comes to Court must come to the Court with clean hands. It is the settled preposition of law that a judgment or decree obtained by playing fraud in the Court is a nullity and non est in the eye of law.
19. In another case reported in 1995(4) SCC 582, Tiko and Ors. v. Lachman, it was a case where an amendment application came to be filed in execution proceedings in an application under Section 47. In the said case the amendment application to correct the error and description of the mortgage property came to be rejected by the executing Court holding that it could not go beyond the decree. But revision was also dismissed by the High Court. The Apex Court held that technically speaking the executing Court could not go beyond the decree but as the executing Court was the Court, which could have amended that plaint and decree, it was open to that court to treat the application as an application made before the decretal Court and proceeded to dispose of the same in accordance with law.
20. This Court in : ILR1985KAR2930 , Tarabai v. Krishnaswamy Rao, had an occasion to go into the question whether a suit could be filed or review petition could be filed to question the compromise decree on the ground that it was unlawful and barred under Rule 3A of Order 23. The Court held at paras 6, 7 and 8 as under :
'Para 6 : The Trial Court dismissed I.A. No. 3 mainly on the ground that a suit to question a compromise decree, was now barred by Order 23 Rule 3A, CPC and therefore the only remedy open to the party was to file a review application under Order 47, CPC. Order 23 Rule 3A, CPC reads as :
No suit shall He to set aside a decree on the ground that the compromise on which the decree is based was not lawful. The explanation to Order 23 Rule 3, CPC reads as : .
An agreement or compromise which is void or voidable under the Indian Contract Act, 1872, shall not be deemed to be lawful within the meaning of this rule.
An agreement which is vitiated by fraud or misrepresentation, is a voidable one. So if any agreement is vitiated by fraud or misrepresentation such an agreement or compromise shall not be lawful within the meaning of Order 22 Rule 3A, CPC.
Para 7 : It thus becomes crystal clear that now a suit to question the compromise decree on the ground that it is unlawful, is barred. If a suit is barred, can it be said that the party has no right to question the compromise decree either on the ground of fraud or misrepresentation. Order 47 Rule 1, CPC reads as :
Application for review of judgment --
(i) Any person considering himself aggrieved.
(a) By a decree or order from which an appeal is allowed, but from which no appeal has been preferred.
(b) By a decree on order from which no appeal is allowed, or
(c) By a decision on a reference from a Court of Small Causes, and who, from the discovery of new and important matter or evidence which, after the exercise of due diligence, was not within his knowledge or could not be produced by him at the time when the decree was passed or order made, or on account of some mistake or error apparent on the face of the record, or for any other sufficient reason, desires to obtain a review of the decree passed or order made against him, may apply for a review of judgment to the Court which passed the decree or made the order.
Therefore, in order to invoke the review jurisdiction the following circumstances must exist --
(1) There should be discovery of new and important matter or evidence, which was not within his knowledge or could not be produced by him at the time when the decree was passed;
(2) Some mistake or error apparent on the face of the record;
(3) For any other sufficient reason.
The fraud now alleged by the revision petitioner will not come under any one of these three categories. Therefore, the review jurisdiction on the ground of fraud or misrepresentation so far as the compromise is concerned, cannot be invoked under Order 47, CPC at all. Therefore, the Court below in my opinion, committed an error in holding that the only remedy available to the revision petitioner was to file an application for review.
Para 8: Then the next question is what is the remedy to a party complaining of fraud or misrepresentation being perpetrated on her. Section 151, CPC reads as --
Nothing in this code shall be deemed to limit or otherwise affect the inherent power of the Court to make such orders as may be necessary for the ends of justice or to prevent abuse of the process of the Court.
The learned author Sri. Mulla has enumerated a list of various cases in which the Court would be justified in invoking the inherent jurisdiction under Section 151, CPC. The learned author Sri Mulla has stated in his CPC 14th Edition Volume I page 792 at Sl. No. 29 as 'to set aside an order recording compromise obtained by fraud'.
The learned author Sri Mulla has referred to Bindeswari Prasad v. Debendra Prasad. It has been laid down in that case as --
'Where fraud is practised on the Court in obtaining an order recording the compromise, the Court is perfectly justified in setting aside the same under its inherent powers.' The learned author Sri Mulla has further stated on page 793 at Sl. No., 49 as 'to vacate an order obtained by fraud, as where an order is made recording the adjustment of a decree (Order 21 Rule 2), and the adjustment has been brought about by fraud practised by one party upon another.'
The learned author Sri. Mulla has referred to Paranjpe v. Kanade. Thus it becomes crystal clear that the Court is not helpless even in cases where the compromise has been recorded by the Court when fraud has been perpetrated by either of the parties. Thus, it appears to me, that Section 151, CPC is the only section that is applicable to such cases. Otherwise, the Court will have to shut its eyes against fraud or misrepresentation which might have vitiated the compromise.'
21. In another case reported in KLJ 1994(3) 539 referring to reported decision in Banwari Lal v. Chando Devi and Anr., AIR 1993 SC 354, it is held as under :
'If the Court has not applied its mind for the purposes of being satisfied either on the face of the decree or on materials on record to pass a decree on any of admissible grounds then it is open for the aggrieved party to challenge the same as being invalid...... The Court can pass a decree on the basis of compromise. In such a situation, the only thing to be seen is whether the compromise is in violation of the requirement of the law. In other words, parties cannot be permitted to have tenant's eviction merely by agreement without anything more. The compromise must indicate either on its face or in the background of other materials in the case that the tenant expressly or impliedly is agreeing to suffer a decree for eviction because the landlord in the circumstances is entitled to have such a decree under law....... If the agreement or compromise for eviction of the tenant is found on facts of a particular case to be in violation of particular rent restriction or Rent Control Act the Court would refuse to record the compromise as it will not be a lawful agreement. If on the other hand, the Court is satisfied on consideration of the terms of the compromise and if necessary by considering them in the context of pleading them in the context of pleadings and other materials in the case, the Court is bound to record the compromise and pass a decree in accordance therewith. Passing a decree for eviction on adjudication of requisite facts or on their admission in a compromise either express or implied is not different. The object of Order 23, Rule 3 is to enable the Court to give effect to a lawful agreement or compromise. The agreement of compromise recorded under this rule would result in passing a decree in accordance with terms of compromise insofar as they relate to reliefs sought for. The words where it is proved to the satisfaction of the Court with which the rule opens impose an obligation on the part of the Court to be satisfied that the matter has been genuinely adjusted........ If one party sets up an agreement or compromise whose terms are lawful and other party to such alleged agreement or compromise denies it or alleges that it has been brought about by fraud, undue influence, coercion or misrepresentation as vitiating compromise, then recording of such compromise cannot be said to be lawful agreement and that it was arrived at the party's free will and consent, it is not intended to sow the seeds of fresh litigation or to leave the contentions raised by the parties to a further suit......... The trial Court has dismissed the application filed by the tenant under Order 23 Rule 3A of CPC, mainly on the ground of limitation. The Trial Court has equated the application filed under Order 23 Rule 3A, CPC as being an application seeking review of the order under Section 114 of CPC........ The findings recorded by the Trial Court while disposing of I. A. Nos. 2 and 3 requires to be set aside. The assumption of the Trial Court that an application of the trial Court that an application under Order 23 Rule 3A to be treated as an application under Section 114, CPC and application of article of limitation governing review application to the application filed under Order 23 Rule 3A is to be stated as not correct......... The impugned order is hereby set aside. Since the tenant has elected to resort to the amended provisions of Order 23 Rule 3 for challenging the order of eviction; without prejudice to the rights of the parties it is open for the landlord to move the jurisdictional Court where original suit proceedings are pending for striking of the reliefs touching upon the jural relationship of landlord and tenant, sub-sentiency of tenure of lease, payment of rent invalidity and inexecutability of the order passed in HRC 1338/91 particularly the reliefs such as (i), (ii), (iii) and (iv) as claimed by the tenant in O.S. No. 6676/92 and the jurisdictional Court may consider and pass such orders in accordance with law. When once element of fraud has been set up for deciding the proceedings as a nullity it is just and proper that till inquiry and findings are given on the questions relating to validity or otherwise of orders passed, it is not proper to give effect to the order which is sought to be declared as nullity as the same is based on maxim ex nihilo nihility (out of nothing comes nothing).'
22. In : AIR2000Kant21 (Bahubali Ramappa Padnad and Anr. v. Babu @ Baburao S. Padnad and Ors., the relevant paragraphs are 10 and 11 which are as under :
'Para 10 : It is well settled principles that the Civil Court has got jurisdiction to entertain the suit by virtue of Section 9 of CPC which as all civil in nature. In view of the provisions of Section 23 Rule 3A the appellants are not being the parties in O.S. No. 16/91 and the said suit having been properly represented by the appellants father-Ramappa Padnad, it is not open for the appellant to question the said compromise decree. That apart, the appellants are not being the parties in O.S. No. 16/91 also have no locus standi to file Miscellaneous Application. It is, accordingly, the learned Civil Judge, Athani who has rightly dismissed the Miscellaneous Application No. 8/95 filed under Section 151 of CPC and also rejected the plaint in O.S. No. 4/96.
Para 11: It is pertinent to note that O.S. No. 4/96 filed by the appellants is for claiming 1/6th share. We have already pointed out that the appellants' father-Ramappa Padnad was a party represented in the suit and filed the compromise petition duly signed. In that view of the matter, it is not open for the appellants to take any other defence or to reopen the compromise as the same is found duly executed by their father-Ramappa Padnad and thereby the same is binding. The appellants being the L.Rs of Ramappa Padnad are entitled only to the share of their father and nothing more. Even on this count also that the compromise decree passed does not call for interference.'
23. It was held by the Division Bench of this Court that in view of the specific provisions under Order 23 Rule 3, CPC no separate suit could be filed questioning the compromise decree on the ground of fraud.
24. In : AIR1981Bom357 (Anant Mahadeo Godbole v. Achut Ganesh Godblole and Ors.) at head not it is held as under :
'Rule 3 A bars the remedy of a second suit on the cause of action that the compromise which resulted in the passing of the decree was not lawful. By their very nature, the words 'not lawful' are wise enough and would take in the cases where parties set up want of authority or exceeding of authority in the matters of agreements or compromises on the basis of which the decrees are made. All those types of challenges cannot now, because of bar to suit under Rule 3A be the subject matter of a second suit. A party to a suit, which was decreed after accepting the compromise, is only relegated to the remedy of questioning the same in an appeal under Rule 1A of Order 43 and a second suit based on the cause of action that the compromise itself was not lawful is clearly barred.'
25. The learned Counsel for the respondent herein relies upon the following three decisions :
26. In : AIR1976Delhi137 (Addisons Paints and Chemicals Ltd. v. Sant Ram Parma Nand and Ors.) at head note it is held as under :
'The consent/compromise decree being only the contract between the parties with the seal of the Court super added to it, a suit may lie to set aside that decree on any of the grounds of which the contract is voidable such as fraud or misrepresentation, but such a question cannot be raised in the Executing Court. The question relating to misrepresentation or fraud do not relate to the execution of a decree but relate to impeaching the decree itself; as being voidable or void having been obtained on a compromise which itself was obtained by fraud or misrepresentation. Section 47 is not intended to be used for the purpose of investigating matters relating to the validity of the decree itself when on the face of it there is nothing illegal about the decree. The Court executing the decree is not competent to embark on an enquiry into facts, which if established, will tend to show that the Court passing the decree had no jurisdiction to do so. The executing Court can only go into the question whether or not the decree is a nullity, where on the face of the decree it is apparent that the Court passing the decree had no jurisdiction or there are patent reasons for doubting the inherent jurisdiction of the Court.'
27. In : AIR1986Kant1 (S. G. Thimmappa v. T. Anantha and Ors.) it is held at paras 10 and 18-A as under :
'Para 10 : In letters patent appeal, while granting leave to appeal, Hegde, J., framed the following question :
'Where a compromise decree passed by a Court of competent jurisdiction contains a term which is opposed to law or public policy and that decree has not been set aside in proper proceedings, can that decree be pleaded as constituting estoppel by res judicata in a subsequent proceeding between the same parties.' After examining several decisions of various High Courts, it was held that where a compromise decree passed by a competent jurisdiction contains a term which is opposed to law or public policy and that decree has not been set aside in proper proceedings, it operates as resjudicata in subsequent proceedings between the same parties.
It is to give effect to this pronouncement that Order 23 Rule 3A is enacted; in other words, the lawfulness of the decree cannot be agitated in a subsequent suit. By lawful it means it is not contrary to law, public policy or void ab initio, or unlawful, but it cannot include the grounds like fraud, undue influence, coercion, by which the decree can be avoided, treating it as voidable. Till it is avoided and displaced it can be treated as lawful for the limited purpose of Order 23 Rule 3, CPC.
Para 18-A : A contract or agreement may be lawful but it can still be challenged on the ground that it was entered into or achieved by exercising fraud, undue influence or coercion and can be avoided. This aspect of the matter is not covered by the words 'not lawful' occurring in Rule 3A of Order 23, CPC. Therefore, to hold that the compromise decree cannot be challenged on the ground of fraud, undue influence or coercion under Rule 3A would not be correct. In my opinion, the Court below has erred in holding to the contrary.'
28. In : AIR1985Cal379 , Gosto Behari Pramanik v. Smt. Malati Sen and Ors., it is held at para 12 as under :
'It is well known that the consent or compromise decree can only be set aside in separate suit or proceedings on the ground that the consent was obtained by fraud or coercion, and such consent or compromise decree resulted in serious and substantial injustice.'
29. By going through the decisions referred to by the learned Counsel for the revision petitioner and also for the respondent herein, it is very clear from the decision of the Apex Court in : AIR1993SC1139 and the Division Bench of this Court in : AIR2000Kant21 and also ILR 1985 Karnataka 2931 and 1994(3) KU 538 that neither a review petition nor a separate suit could be filed questioning the compromise decree on the ground of nullity. On the other hand referring to Order 43 Rule 1A and under Order 23 Rule 3A of CPC, the Apex Court in : AIR1993SC1139 , Banwarilal's case held that party challenging a compromise can file a petition under proviso to Rule 3 of Order 23 or an appeal under Section 96(1) of CPC in which he can now question the validity of compromise in view of Order 43 Rule 1A of the Code. If the agreement or the compromise itself is fraudulent then it shall be deemed to be void within the meaning to the explanation of the proviso to Order 23 Rule 3 and as such not lawful.
30. In order to come to conclusion whether fraud was played or not, there has to be an opportunity to the party who comes to the Court with the allegation of fraud being played on him. No doubt though the allegation of fraud was raised as long back as 2.7.1999, the specific prayer to hold an inquiry with regard to the said allegation was sought only in 2001. While considering the allegation of fraud on merits, the executing Court can definitely consider the question of delay and laches on the part of the applicant on merits.
31. From the discussion made above, it is clear subsequent to 1976 amendment to CPC the executing Court can also look into the validity of the decree if allegation of fraud is attached to such decree by one of the parties to the compromise. Under these circumstances though the Trial Court was right in saying generally executing Court cannot go beyond the decree, but in exceptional cases as the case on hand such dispute could be gone into by an enquiry by the executing Court.
32. Accordingly, the revision petition is allowed setting aside the orders on memo dated 30.11.2001 rejecting the prayer of the revision petitioners to hold enquiry into the allegation of fraud. The Court shall give opportunity to both the parties to lead evidence and dispose of the dispute on merits within 3 months from today before proceeding with the execution proceedings.