V. Prasad Reddy and Another vs M. Gurumoorthy and Others

Bilal Nazki, J.—OS Nos. 6 of 1996, 16 of 1996, 17 of 1996 and 18 of 1996 were decided by a common judgment by the III-Additional District Judge, Chittoor at Tirupati on 31-8-1998. This judgment became subject-matter of appeals in AS.Nos. 1713, 1715, 1716 of 1998 and 371 of 1999 and also subject-matter of CRP Nos. 1687 and 1688 of 1999. All of them were disposed of by a common judgment by a learned Single Judge of this Court. Now these LPAs have been filed against the judgment of the learned Single Judge of this Court.

Before going to the main appeals, since the matter was heard against the common judgment of the learned Single Judge and the advocates appearing in appeals which are time barred were also heard, the delay in representing some LPAs is condoned and the requirement of furnishing certified copies of judgment is also dispensed with.

All the suits were filed mainly for declaration that the judgment and decree in OS No. 161 of 1979 was not binding on the plaintiffs and injunction with respect to suit schedule property was also sought. The decree in OS No. 161 of 1979 was challenged on the ground that it was collusive, but the Trial Court held that the decree in OS No. 161 of 1979 was not collusive and the transactions in favour of plaintiffs were hit by Section 52 of the Transfer of Property Act. The suits were dismissed. In appeal the learned Single Judge came to the conclusion:

"For the foregoing discussion, in the normal course, the appellants have to succeed in these appeals, but the Counsel for the respondent brought to my notice that instead of setting aside the preliminary decree, if the final decree proceedings are set aside in OS.No. 161 of 1979, and the Trial Court is directed to pass a final decree, by working out equities, the ends of justice will be met, as sufficient land remained unsold even now and the interests of the appellants can be protected."

The only question which was to be decided by the Courts was whether the decree in OS No. 161 of 1979 was obtained by collusion and fraud and if this question was answered in the affirmative, then all sales made during the pendency of the suits would be hit by lis pendens. On the other hand, if the question was negative, that would have no effect on the sales. The Trial Court came to the conclusion that the decree in OS.No. 161 of 1979 was not result of collusion and fraud, but the learned Single Judge came to the conclusion that the decree in OS.No. 161 of 1979 was result of fraud, but still he did not set aside the preliminary decree in OS.No. 161 of 1979 and on the other hand the learned Single Judge set aside the final decree and asked the Trial Court to pass a final decree by working out equities. Most of the parties before us were not parties in OS.No. 161 of 1979. Therefore we fail to understand as to how the equities could be worked out on OS.No. 161 of 1979 between the parties before us. The learned Counsel appearing for the appellants has also drawn our attention to various judgments to canvass that a Counsel''s admission on a point of law was not binding on a Court. In this connection he refers to a judgment of Privy Council reported in AIR 1940 90 (Privy Council) It is a settled position of law that some thing illegal cannot be allowed to be done by the Courts on admissions of party. Their Lordships held:

"Their Lordships find it difficult to believe that there was not some misunderstanding on appeal as to the acceptance by Counsel for the Bank of all the Trial Judge''s findings. But if Counsel did accept such a finding, it could only amount to an admission of a point of law which cannot be binding upon a Court; and their Lordships do not consider themselves precluded from deciding the rights of the parties on a true view of the law."

Since the decree in OS No. 161 of 1979 was found by the learned Single Judge to be result of fraud, on the basis of such a decree no equities could be worked out a fraud would vitiate everything. However, learned Counsel for the respondents submits that, as a matter of fact, there was no fraud, fraud has to be pleaded and proved as a fact and in order to prove a transaction to be result of fraud, the onus is on the person who pleads such a fraud. There is no dispute for such a proposition of law, but the fact remains that once the learned Single Judge comes to the conclusion that the decree in OS No. 161 of 1979 was result of fraud, in our view, no equitable reliefs could be granted on the basis of that decree. Fraud vitiates everything and the decree obtained by fraud cannot become a basis for any equitable relief particularly for those who committed fraud on the Court. There are dozens of judgments which can be cited for the principle that fraud vitiates everything and avoids all judicial acts, ecclesiastical or temporal, but suffice to refer to the judgment of the Supreme Court reported in S.P. Chengalvaraya Naidu (dead) by L.Rs. Vs. Jagannath (dead) by L.Rs. and others, . Since the learned Single Judge had come to the conclusion that the decree in OS No. 161 of 1979 was result of fraud, we are of the view that no reliefs could be granted to the parties on the basis of such a decree. But the learned Counsel for the appellants submits that as a matter of fact the finding of the learned Single Judge that the decree in OS No. 161 of 1979 was result of fraud was not correct and on facts fraud had not been proved.

For these reasons, we allow these LPAs, set aside the judgment and decree of the learned Single Judge and remand the case back to the learned Single Judge for a fresh judgment. All pleas which maybe available to the parties can be raised before the learned Single Judge. The observations made in this judgment shall not be taken as expression of opinion over the question as to whether really the decree in OS No. 161 of 1979 was result of fraud. It will be open to the party concerned to canvass before the learned Single Judge that the decree was not result of fraud. No costs.