Sterlite Technologies Ltd vs Dhar Industries

Sanjay Yadav, J.

Review of order dated 12.4.2012 passed in Writ Petition No. 8653/2011 is being sought vide this Review Petition.

Writ Petition No. 8653/2011 filed by the petitioner was directed against the order dated 31.7.2010 passed by the Council on an application u/s 17 of the Micro Small and Medium Enterprises Development Act, 2006 Act (referred to as Act of 2006) preferred by the respondent for claim of Rs. 36,32,508/- along with Rs. 26,15,605/- towards interest.

The claim by respondent was for recovery in lieu of the penalty allegedly imposed by the Commercial Tax Department for late submission of ''C'' form. The said C Form was in lieu of goods supplied during 2005-06 to the tune of Rs. 87,99,332/- supplied by the petitioner, a manufacturer of Optical Fiber Jelly Filled Copper Telecom Cables and Power Conductors and Galvanized Steel Tapes used for packing by manufacturing industries. This would be evident from paragraph 3 of the order dated 31.7.2010 which states the facts in following term:

36,52,308/ 26,15,605 (Interest calculated @ of 24% p.a. upto 31-3-2009 payable to commercial tax department)

The claim in turn was based on order dated 27.12.2008 allegedly issued by Assistant Commissioner, Commercial Tax Indore, directing recovery of Rs. 60,29,963/-. The Council while discarding the objections raised by the petitioner, allowed the claim of respondent in following terms:

M/s. Sterlite Technologies Ltd. (Formerly M/s. Sterlite Optical Technologies Ltd.) Survey No. 209, Piparia Industrial Estate, Silvassa-396230 (UT of D&NH)

The petitioner being aggrieved preferred an appeal u/s 34 of the Arbitration and Conciliation Act, 1996 before XIth Additional District Judge (Fast Tract Court) Bhopal, wherein petitioner was directed to deposit 75% of the amount awarded. Aggrieved whereof petitioner filed a writ petition W.P. No. 8653/2011 which was disposed of on 12.4.2012 with an observation that on compliance of provisions of Section 19 of the Act, 2006, the petitioner would be at liberty to raise all the grounds.

It is contended that abiding by the directions the petitioner deposited 75% with the Appellate Court. It is urged that subsequent to disposal of writ petition, petitioner came in possession of an order dated 17.3.2009 passed in the Case No. 40/2006 (Central) being the assessment case of respondent No. 1 for the period 1.4.2006 to 31.3.2006 whereby the penalty of Rs. 500/- was imposed on the respondent. It is urged that a doubt cropped up in the mind of the petitioner as to whether the order dated 27.12.2008 ever existed. This led the petitioner to seek shelter under Right to Information Act, 2005 by filing an application before Public Information Officer, Commercial Tax Department, seeking specific information as to whether the competent authority vide assessment order dt. 27.12.2008 under Central Sale Tax Act had called upon the respondent No. 1 to deposit tax and whether tax was recovered and if the order dated 27.12.2008 is not passed then the information regarding relevant order which was passed. It is contended that the application was opposed at by the respondent which resulted in rejection of application. However, the appellate authority vide order dated 29.9.2012 directed for supplying of required information, which was supplied to the petitioner in the following term on 9.10.2012 along with copy of order dated 17.3.2009.:

Regarding the querry No. 1 that:

The answer given by the Commercial Tax Department was:

Whereas regarding querry No. 2 that:

The answer given

It is further contended for ascertaining further as to whether the information divulged was certain, one more application was filed on 2.8.2012; whereby following details were sought:

(i) Kindly confirm whether the enclosed Assessment order is passed by Assistant Commissioner, Commercial Tax Department Indore or not?

(ii) If yes, kindly confirm the details of payment (if any), finally paid by/recovered from Dhar Industries Ltd. towards the enclosed Assessment order;

(iii) In case the enclosed Assessment order is passed by Assistant Commissioner, Commercial Tax Department, Indore whether an appeal against the same was made (is pending) before any appellate authority?

Responding to above query the Public Relation Officer, Office of Assistant Commissioner, Indore Circle II gave the following reply:

It is contended on behalf of the petitioner that armed with these facts that the order dated 27.12.2008 did not exist nor the respondent No. 1 was subjected to a penalty of Rs. 36,32,508/- and interest thereon of Rs. 26,15,605/- and that the penalty imposed on the respondent for the year 2005-06 was Rs. 500/- only, petitioner approached the Council for review of its order dated 31.7.2010 as the same was obtained by playing fraud, i.e., on the basis of a forged order dated 27.12.2008. The Council vide communication dated 12.12.2012 informed the petitioner that since the matter is sub-judice in an appeal u/s 19 of 2006 Act the review cannot be entertained. It is urged that left with no alternative the petitioner has filed this review petition seeking review of order dated 12.4.2012.

In nutshell the contention of the petitioner is that the respondent No. 1 having obtained the order dated 31.7.2010 from the Council on the basis of forged document dated 27.12.2008 and has thus played fraud, the order, therefore, deserves to be quashed as it is no order in the eyes of law.

The respondent No. 1 despite of repeated opportunity has chosen not to counter the contentions, however, the respondent No. 1 who is represented through the Counsel has been granted opportunity to put forth the submission. Learned counsel for respondent raised an objection as to maintainability of the review petition on the ground that it was the Council who had passed an order and the order being sub-judice in appeal u/s 19 of 2006 Act, it is the Appellate Authority which will have the jurisdiction to dwell upon the issue raised vide this Review Petition. It is further contended that the Commercial Department having not been impleaded it cannot with certitude be asserted that the order dated 27.12.2008 on the basis whereof the claim was put-forth before the Council is a forged order. It is accordingly contended that the Review Petition deserves to be dismissed.

Regarding scope of review petition, following verdict by a Division Bench of this Court in High Court of Madhya Pradesh v. State of M.P. and others; Writ Appeal No. 123/2006 decided on 13.4.2009 can profitably be taken note of:

So far as the first challenge to the maintainability of this appeal as noted hereinabove is concerned, we are unable to hold that the appeal would not be maintainable against order dated 02/09/2004 passed in a clarification proceeding akin to a review proceeding. It would be apt to quote the observations of the Apex Court in the matter of Shivdeo Singh and Others Vs. State of Punjab and Others, wherein their Lordships have held as follows:

(At page of AIR 1911 8) It is sufficient to say that there is nothing in Article 226 of the Constitution to preclude a High Court from exercising the power of review which inheres in every court of plenary jurisdiction to prevent miscarriage of justice or to correct grave and palpable errors committed by it.

The Apex Court had clearly laid down that a review of an order passed in a writ petition under Article 226 would not be a proceeding initiated u/o. 47 R 1 of the Civil Procedure as was sought to be contended by Shri Shrivastava, learned Counsel for respondent No. 4. We are unable to hold that the order dated 02/09/2004 would fall in the realm of an order passed u/o. 47 R 1 of the Code rather it would be an order passed in exercise of powers under Article 226 of the Constitution of India but we may hasten to add that the scope of review inherent under Article 226 would be guided by the principles embodied u/o. 47 R 1 of the Code. In other words one may say that in review proceeding the High Court must be guided by the parameters prescribed u/o. 47 R 1 of Code but to say that a review proceedings per se is a proceeding emanating from Order 47 would be wholly incorrect. Accordingly we hold that a writ appeal would lie against an order passed in review proceeding. Thus, the first preliminary objection raised by the learned Senior Counsel for respondent No. 4 must be rejected.

In view whereof, in the considered opinion of this Court the exercise of power in a petition whereby the review of order passed in a writ petition under Article 226 of the Constitution of India is sought is not confined to examine as to error on the face of record but it would be within the jurisdiction to examine the case in its entirety. Moreso, when a review is sought on the ground of fraud being committed.

Regarding contention that the order dated 27.12.2008 on the basis whereof the proceedings were initiated before the Council was non-existing and was forged and that the respondent No. 1 was not penalised by the Commercial Tax Department to the extent of Rs. 36,52,308/- and interest thereon of Rs. 26,15,605/- in respect of the transactions entered into between the petitioner and the respondent No. 1 and the penalty imposed was only to the tune of Rs. 500/-, there is no denial of these facts which are well supported by the documents on record, which leaves no iota of doubt that the respondent No. 1 has pressed in service a non-existing order by forging the same with a motive to have illegitimate gain.

It has come to be settled that the party who secures a decision by fraud cannot be allowed to enjoy its fruits.

In Hamza Haji Vs. State of Kerala and Another, , it has been held:

Thus, it appears to be clear that if the earlier order from the Forest Tribunal has been obtained by the appellant on perjured evidence, that by itself would not enable the Court in exercise of its power of certiorari or of review or under Article 215 of the Constitution of India, to set at naught the earlier order. But if the Court finds that the appellant had founded his case before the Forest Tribunal on a false plea or on a claim which he knew to be false and suppressed documents or transactions which had relevance in deciding his claim, the same would amount to fraud. In this case, the appellant had purchased an extent of about 55 acres in the year 1968 under Document No. 2685 of 1968 dated 2.6.1968. He had, even according to his evidence before the Forest Tribunal, gifted 5 acres of land to his brother under a deed dated 30.1.1969. In addition, according to the State, he had sold, out of the extent of 55.25 acres, an extent of 49.93 acres by various sale deeds during the years 1971 and 1972. Though, the details of the sale deeds like the numbers of the registered documents, the dates of sale, the names of the transferees, the extents involved and the considerations received were set out by the State in its application for review before the High Court, except for a general denial, the appellant could not and did not specifically deny the transactions. Same is the case in this Court, where in the counter affidavit, the details of these transactions have been set out by the State and in the rejoinder filed by the appellant, there is no specific denial of these transaction or of the extents involved in those transactions. Therefore, it stands established without an iota of doubt as found by the High Court that the appellant suppressed the fact that he had parted with almost the entire property purchased by him under the registered document through which he claimed title to the petition schedule property before the Forest Tribunal. In other words, when he claimed that he had title to 20 acres of land and the same had not vested in the State and in the alternative, he bona fide intended to cultivate the land and was cultivating that land, as a matter of fact he did not have either title or possession over that land. The Tribunal had found that the land was a private forest and hence has vested under the Act. The Tribunal had granted relief to the appellant only based on Section 3(31) of the Act which provided that so much extent of private forest held by an owner under a valid registered document of title executed before the appointed day and intended for cultivation by him and that does not exceed the extent of the ceiling area applicable to him u/s 82 of the Kerala Land Reforms Act could be exempted. Therefore, unless, the appellant had title to the application schedule land and proved that he intended to cultivate that land himself, he would not have been entitled to an order u/s 3(3) of the Act. It is obvious that when he made the claim, the appellant neither had title nor possession over the land. There could not have been any intention on his part to cultivate the land with which he had already parted and of which he had no right to possession. Therefore, the appellant played a fraud on the Court by holding out that he was the title holder of the application schedule property and he intended to cultivate the same, while procuring the order for exclusion of the application schedule lands. It was not a case of mere perjured evidence. It was suppression of the most vital fact and the founding of a claim on a non-existent fact. It was done knowingly and deliberately, with the intention to deceive. Therefore, the finding of the High Court in the judgment under appeal that the appellant had procured the earlier order from the Forest Tribunal by playing a fraud on it, stands clearly established it was not a case of the appellant merely putting forward a false claim or obtaining a judgment based on perjured evidence. This was a case where on a fundamental fact of entitlement to relief, he had deliberately misled the Court by suppressing vital information and putting forward a false claim, false to his knowledge, and a claim which he knew had no basis either in fact or on law. It is therefore clear that the order of the Forest Tribunal was procured by the appellant by playing a fraud and the said order is vitiated by fraud. The fact that the High Court on the earlier occasion declined to interfere either on the ground of delay in approaching it or on the ground that a Second Review was not maintainable, cannot deter a Court moved in that behalf from declaring the earlier order as vitiated by fraud.

(emphasis supplied)

In Hip Foong Hong vs. H. Neotia and Company (1918 Appeal Cases 888) the Privy Council held that if a judgment is affected by fraudulent conduct it must be set aside. In Rex vs. Recorder of Leicester (1947(1) KB 726) it was held that a certiorari would lie to quash a judgment on the ground that it has been obtained by fraud. The basic principle obviously is that a party who had secured a judgment by fraud should not be enabled to enjoy the fruits thereof. In this situation, the High Court in this case, could have clearly either quashed the decision of the Forest Tribunal in OA No. 247 of 1979 or could have set aside its own judgment in MFA No. 328 of 1981 dismissing the appeal from the decision of the Forest Tribunal at the stage of admission and vacated the order of the Forest Tribunal by allowing that appeal or could have exercised its jurisdiction as a court of record by invoking Article 215 of the Constitution to set at naught the decision obtained by the appellant by playing a fraud on the Forest Tribunal. The High Court has chosen to exercise its power as a court of record to nullify a decision procured by the appellant by playing a fraud on the court. We see no objection to the course adopted by the High Court even assuming that we are inclined to exercise our jurisdiction under Article 136 of the Constitution of India at the behest of the appellant.

(emphasis supplied)

In A.V. Papayya Sastry and Others Vs. Government of A.P. and Others, , it has been held:

Now, it is well settled principle of law that if any judgment or order is obtained by fraud, it cannot be said to be a judgment or order in law. Before three centuries, Chief Justice Edward Coke proclaimed;

"Fraud avoids all judicial acts, ecclesiastical or temporal".

Fraud may be defined as an act of deliberate deception with the design of securing some unfair or undeserved benefit by taking undue advantage of another. In fraud one gains at the loss of another. Even most solemn proceedings stand vitiated if they are actuated by fraud. Fraud is thus an extrinsic collateral act which vitiates all judicial acts, whether in rem or in personam. The principle of finality of litigation'' cannot be stretched to the extent of an absurdity that it can be utilized as an engine of oppression by dishonest and fraudulent litigants.

The above principle, however, is subject to exception of fraud. Once it is established that the order was obtained by a successful party by practising or playing fraud, it is vitiated. Such order cannot be held legal, valid or in consonance with law. It is non-existent and non est and cannot be allowed to stand. This is the fundamental principle of law and needs no further elaboration. Therefore, it has been said that a judgment, decree or order obtained by fraud has to be treated as nullity, whether by the court of first instance or by the final court. And it has to be treated as non est by every Court, superior or inferior.

{See K.D. Sharma Vs. Steel Authority of India Ltd. and Others, ; State of Chhatisgarh and Others Vs. Dhirjo Kumar Sengar, }.

In the case at hand various documents filed by the petitioner including the information given under Right to Information Act, 2005 by the office of Assistant Commissioner, Commercial Tax, Indore and being not denied by respondent No. 1 goes to establish the fact that the order dated 27.12.2008 was non existence and the respondent No. 1 forged for illegitimate gain which he succeeded by letting the Council to believe that he has been penalized to the tune of Rs. 36,32,508/- and interest thereon of Rs. 26,16,405/- because of the failure on the part of the petitioner to furnish ''C'' form in time in respect of the transaction which took place between the petitioner and respondent in financial year 2005-2006.

The question would be as to what relief the petitioner would be entitled for besides the quashment of order dated 31.7.2010.

In Chandra Shashi Vs. Anil Kumar Verma, it has been held:

The stream of administration of justice has to remain unpolluted so that purity of court''s atmosphere may give vitality to all the organs of the State. Polluters of judicial firmament are, therefore, required to be well taken care of to maintain the sublimity of court''s environment; so also to enable it to administer justice fairly and to the satisfaction of all concerned.

Anyone who takes recourse to fraud, deflects the course of judicial proceedings; or if anything is done with oblique motive, the same interferes with the administration of justice. Such persons are required to be properly dealt with, not only to punish them for the wrong done, but also to deter others from indulging in similar acts which shake the faith of people in the system of administration of justice.

To enable the courts to ward off unjustified interference in their working, those who indulge in immoral acts like perjury, prevarication and motivated falsehoods have to be appropriately dealt with, without which it would not be possible for any court to administer justice in the true sense and to the satisfaction of those who approach it in the hope that truth would ultimately prevail. People would have faith in courts when they would find that (truth alone triumphs) is an achievable aim there; or (it is virtue which ends in victory) is not only inscribed in emblem but really happens in the portals of courts.

In view of above pronouncement of law and the given facts of present case, this Court is of considered opinion that the order dated 12.4.2012 passed in W.P. No. 8653/2011 deserves to be and is hereby recalled and the order dated 31.7.2010 passed by the Council having been obtained by committing fraud being non est in the eyes of law is hereby quashed.

The Council who has been led to believe the existence of order dated 31.7.2010 ought to have taken up application filed by the petitioner seeking review on the ground of fraud and ought not have rejected the same stating that the impugned order has been appealed at. Be that as it may.

Furthermore, the Council is directed to take up the matter with the Commercial Tax Department in respect of the forgery committed by respondent No. 1 by forging an order dated 27.12.2008 for launching a criminal prosecution against him.

In the result the Review Petition as also the writ petition No. 8653/2011 are allowed with cost of Rs. 20,000/- on respondent No. 1 of which Rs. 15,000/- be deposited with High Court Legal Aid for the poor and Rs. 5,000/- be paid to the petitioner. Besides, the cost of Rs. 5,000/- which was imposed on 20.3.2013 shall also be deposited by the respondent No. 1 with the High Court Legal Aid for the Poor.

That, the petitioner would be entitled to withdraw 75% of the amount awarded deposited with the Appellate Court u/s 19 of 2006 Act.