Full Judgment Text
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CASE NO.:
Special Leave Petition (civil) 8479 of 1999
PETITIONER:
UNITED INDIA INSURANCE CO. LTD.
Vs.
RESPONDENT:
RAJENDRA SINGH & ORS,
DATE OF JUDGMENT: 14/03/2000
BENCH:
K.T. THOMAS & nD.P. MOHAPATRA
JUDGMENT:
THOMAS,J.
Leave granted.
L...I...T.......T.......T.......T.......T.......T.......T..J
If what the appellant-Insurance Company now says is
true, then a rank fraud had been played by two claimants and
wangled two separate Awards from a Motor Accident Claims
Tribunal for a bulk sum. But neither the Tribunal nor the
High Court of Allahabad , before which the Insurance Company
approached for annulling the awards, opened the door but
expressed helplessness even to look into the matter and
hence the Insurance Company has filed these appeals by
Special leave.
Fraud and justice never dwell together.(Frans et jus
nunquam cohabitant) is a pristine maxim which has never lost
its temper over all these centuries. Lord Denning observed
in a language without equivocation that no judgment of a
Court, no order of a Minister can be allowed to stand if it
has been obtained by fraud, for, fraud unravels everything(
(Lazarus Estate Ltd. Vs. Beasley 1956(1) QB 702.)
For a High Court in India to say that it has no power
even to consider the contention that the awards secured are
the byproducts of stark fraud played on a Tribunal, the
plenary power conferred on the High Court by the
Constitution may become a mirage and peoples faith in the
efficacy of the High Courts would corrode. We would have
appreciated if the Tribunal or at least the High Court had
considered the plea and found them unsustainable on
merits,if they are meritless. But when the Courts pre-
empted the Insurance Company by slamming the doors against
them, this Court has to step in and salvage the situation.
Facts are these: One Rajendra Singh and his son Sanjay
Singh (first respondent in the respective appeals) filed two
separate claim petitions before the Motor Accident Claims
Tribunal, Bulandsahar (for short the Tribunal) in 1994
praying for awarding compensation in respect of an accident
which happened on 9.11.1993. The claimants put
forth-identical averments regarding the accident which are
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in substance the following:
Rajendra Singh, the father was travelling on the pillion
of a two wheeler motorcycle which was then ridden by his son
Sanjay Singh and an Ambassador Car (DL 2C-9793) driven by
Jai Prakash collided with the motorcycle of the claimants
and caused injuries to both of them. The ambassador car was
owned by the second respondent.
Rajendera Singh made a claim for more than Rs. 4 lacs
and Sanjay Singhs claim was even above that (Rs.5.5 lacs).
As the ambassador car was, at the relevant time, covered by
a policy of Insurance with the appellant Company, the
claimants made the appellnat Company also a party in the
claim proceedings before the Tribunal. Though the owner of
the Car as well as the Insurance Company resisted the claims
on the premise that there was no negligence on the part of
the driver of the Car, the Tribunal found the driver guilty
of negligent driving. Hence, the owner was held vicariously
liable for the damages payable to the injured
claimants.Accordingly, two awards were passed on 15.1.1998,
one in favour of Rajendra Singh in a sum of Rs.3,55,000/-
and the other in favour of Sanjay Singh in a sum of Rs.
1,52,000/-. Both the awards were to carry interest at the
rate of 12% per annum from the date of claim. An interim
order was passed already for covering no fault liability
and we are told that the amount towards that had been paid
by the appellant Company.
The awards became final as neither the owner of the
ambassador car nor the Insurance Company filed any appeal
thereon. Thus far, there was no problem for the awardees.
Hardly four months elapsed after passing the awards, a
gentleman visited the Divisional Office of the appellant
Company at Gaziabad and delivered the photocopy of a report
prepared by the Assistant Sub-Inspector of Police, subzi
Mandi, Police Station, Delhi on 9.11.1993 in which contained
a narration that Sanjay Singh and Rajendra Singh received
the injuries in a different circumstance at a different
place altogether (i.e. while they were operating their own
tractor, it jutted into a ditch and in the jerk the
occupants of the tractor slipped down and sustained
injuries). The gentleman who delivered the said report to
the company was prepared to disclose further details of the
above accident only on a condition that his identity would
be kept in anonymity.
On receipt of the said information, the Divisional
Office of the appellant Company made frenetic inquiries and
they came across statements attributed to the claimants and
prepared by the Sub-Inspector of Police, Subzi Mandi Police
Station, Delhi, on 9.11.1993. Such statements contained the
narration that the injuries were sustained by Rajendra Singh
and Sanjay Singh in the accident which happened when the
trailor trolly had slipped into the pit.
Almost immediately after obtaining the above
information, the appellant Insurance Company moved the
Tribunal with two petitions purportly under Section 151,152
and 153 of the Code of Civil Procedure in which the
appellant prayed for recall of the awards dated 15.1.1998 on
the revelation of new facts regarding the injuries sustained
by the claimants. Those applications were resisted by the
claimants solely on the ground that the Tribunal has no
power of review except to correct any error in calculating
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the amount of compensation and hence the Tribunal cannot
recall the awards. It appears that the Tribunal accepted
the said stand of the claimants and dismissed the
application for recalling the awards. It was in the above
background that the appellant Insurance Company moved the
High Court of Allahabad with a Writ petition for quashing
the awards as well as the steps taken pursuant thereto.
Learned Single Judge of the Allahabad High Court who
dismissed the Writ petition as per a short order passed by
him stated thus:
Heard learned counsel for the petitioner. The present
Writ petition has been filed against the order rejecting
review application. There is no power of review in the
Statute. Learned Counsel for the petitioner argues that
fraud has been played. It is a question of fact, for which
writ jurisdiction is not the proper forum. The petitioner
may avail himself of such legal remedy as may be available
to him. The writ petition is accordingly dismissed. There
will be, however, no order as to costs.
(underlining supplied)
Thus the Tribunal refused to open the door to the
appellant Company as the High Court declined to exercise its
writ jurisdiction which is almost plenary for which no
statutory constrictions could possibly be imposed. If a
party complaining of fraud having been practised on him as
well as on the court by another party resulting in a decree,
cannot avail himself of the remedy of review or even the
writ jurisdiction of the High Court, what else is the
alternative remedy for him? Is he to surrender to the
product of the fraud and thereby became a conduit to enrich
the imposter unjustly? Learned Single Judge who indicated
some other alternative remedy did not unfortunately spell
out what is the other remedy which the appellant Insurance
Company could pursue with.
No one can possibly fault the Insurance Company for
persistently pursuing the matter up to this court because
they are dealing with public money. If they have discovered
that such public fund, in a whopping measure, would be
knocked off fraudulently through a fake claim, there is full
justification for the Insurance Company in approaching the
Tribunal itself first. At any rate the High Court ought not
have refused to consider their grievances. What is the
legal remedy when a party to a judgment or order of court
later discovered that it was obtained by fraud?
In S.P. Chengalvaraya Naidu (dead) by L.Rs. Vs.
Jagnnath (dead) by Lrs. & ors. {1994 (1) SCC 1} the two
Judges Bench of this Court held:
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
In Indian Bank Vs. Satyam fibres (India) Pvt. Ltd.
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{1996 (5) SCC 550} another two Judges bench, after making
reference to a number of earlier decisions rendered by
different High Courts in India, stated the legal position
thus:
Since fraud affects the solemnity, regularity and
orderliness of the proceedings of the Court and also amounts
to an abuse of the process of Court, the Courts have been
held to have inherent power to set aside an order obtained
by fraud practised upon that Court. Similarly, where the
Court is misled by a party or the Court itself commits a
mistake which prejudices a party, the Court has the inherent
power to recall its order.
It is unrealistic to expect the appellant company to
resist a claim at the first instance on the basis of the
fraud because appellant company had at that stage no
knowledge about the fraud allegedly played by the claimants.
If the Insurance Company comes to know of any dubious
concoction having been made with the sinister object of
extracting a claim for compensation, and if by that time the
award was already passed, it would not be possible for the
company to file a statutory appeal against the award. Not
only because of bar of limitation to file the appeal but the
consideration of the appeal even if the delay could be
condoned, would be limited to the issues formulated from the
pleadings made till then.
Therefore, we have no doubt that the remedy to move for
recalling the order on the basis of the newly discovered
facts amounting to fraud of high degree, cannot be
foreclosed in such a situation. No court or tribunal can be
regarded as powerless to recall its own order if it is
convinced that the order was wangled through fraud or
misrepresentation of such a dimension as would affect the
very basis of the claim.
The allegation made by the appellant Insurance Company,
that claimants were not involved in the accident which they
described in the claim petitions, cannot be brushed aside
without further probe into the matter, for, the said
allegation has not been specifically denied by the claimants
when they were called upon to file objections to the
applications for recalling of the awards. Claimants then
confined their resistance to the plea that the application
for recall is not legally maintainable. Therefore, we
strongly feel that the claim must be allowed to be resisted,
on the ground of fraud now alleged by the Insurance Company.
If we fail to afford to the Insurance Company an opportunity
to substantiate their contentions it might certainly lead to
serious miscarriage of justice.
In the result, we allow these appeals, set aside the
impugned orders and quash the awards passed by the Tribunal
in favour of the claimants. We direct the Tribunal to
consider the claims put forth by the claimants afresh after
affording a reasonable opportunity to the appellant
Insurance Company to substantiate their allegations.
Opportunity must be afforded to the claimants also to rebut
the allegations.
We make it clear that while disposing of the claims
afresh the Tribunal shall not be trammeled by any of the
observations, if any, made by us on the merits of the
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allegations.