IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE HARUN-UL-RASHID MONDAY, THE 18TH OCTOBER 2010 / 26TH ASWINA 1932 WP(C).No. 10693 of 2006(W) ----------------------------------- EP.92/2003 IN OS.99/2002 of MUNSIFF COURT, KALPETTA .................... PETITIONER(S): --------------- VENGAPPALLY GRAMA PANCHAYATH, REP. BY THE SECRETARY, GRAMA PANCHAYATH OFFICE, VENGAPPALLY, VENGAPPALLY AMSOM OF VYTHIRI TALUK. BY ADV. SRI.MANOJ RAMASWAMY RESPONDENT(S): --------------- TOMY.E.F, S/O.PAPPACHAN, ILLIKKAMURI HOUSE, KOTTATHARA.P.O, KOTTATHARA VILLAGE, WAYANAD DISTRICT. BY ADV. SRI.P.K.RAMKUMAR THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 18/10/2010, ALONG WITH WPC NO. 23283 OF 2005 WPC NO. 23278 OF 2005 WPC NO. 10791 OF 2006 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: SVS/ WP(C).No. 10693/006(W) APPENDIX PETITIONER'S EXHIBITS: P1: COPY OF THE COMMON ORDER IN C.R.P. NO.804/2005 ALONG WITH C.R.P. NO.805/2005 OF THIS HON'BLE COURT. P2: COPY OF THE COMPROMISE DECREE AND JUDGMENT DATED 28/02/03 IN O.S. NO.99/2002 OF THE MUNSIFF COURT, KALPETTA. P3: COPY OF THE COMMON ORDER IN I.A. 1298/2003 IN O.S.97/2002 AND I.A. 1299/2003 IN O.S.99.2002. P4: COPY OF THE ORDER IN C.M.A.NO.17/2004 OF THE SUB COURT, SULTHANBATHERY. RESPONDENT'S EXHIBITS NIL /TRUE COPY/ P.A. TO JUDGE SVS/ HARUN-UL-RASHID, J. ------------------------ W.P.(C).Nos.10693/2006, 10791/2006, 23278/2005 & 23283/2005 ---------------------- Dated this the 18th day of October, 2010. J U D G M E N T Writ petition Nos.10693/2006, 10791/2006 are filed seeking to set aside Ext.P2 judgment and decree in O.S.No.97 & 99 of 2005, to set aside Exts.P3 order in I.A.Nos.1298 & 1299 of 2003 and Ext.P4 order in C.M.A.No.17 & 18 of 2004 respectively and to remand the case to the trial court for disposing afresh in accordance with law. Petitioners are the plaintiffs in O.S.No.97 & 99 of 2002 on the file of the Munsiff Court, Kalpetta. 2. The respondent in writ petition Nos.10693 of 2006 and 23283 of 2005 is the defendant in O.S.No.99 of 2002 on the file of the Munsiff Court, Kalpetta. In the connected writ petitions, namely, 10791 of 2006 and 23278 of 2005, respondent is the defendant in the connected suit namely, O.S.No.97 of 2002 of the same court. Since there are four connected writ petitions, the position of the parties and the exhibits produced in W.P.(C). No.10693 of 2006 is referred in the body of this judgment common to all writ petitions. W.P.(C).No.10693/06 and connected cases ::2:: 3. Petitioner herein filed O.S.No.97 & 99 of 2002 against the respondents in respective cases to recover an amount of Rs.37,500/- and Rs.45,000/- with 24% interest. The amount claimed by the plaintiff Panchayath is the balance amount due to the Panchayath in the auction conducted in relation to the sand collection. The defendants in the suits raised counter claims of Rs.38,000/- and Rs.40,000/- with 12% interest. The suits were dismissed and the defence of the plaintiff in the counter claims was struck out as per order in I.A.No.132 & 131 of 2003. The court at the instance of the defendants in the suits directed the Panchayath to produce a document within a specified date. The document was not produced by the Panchayath and therefore the court dismissed the suit and struck out the defence of the plaintiff in the counter claim. Subsequently, by decree and judgment dated 28.2.2003 the court allowed the counter claim directing the plaintiff to pay Rs.40,000/- & Rs.38,000/- with 12% interest from 1.3.2003 till realisation with costs. The decree was passed based on the compromise petition filed by the parties. Accepting the compromise the court passed a decree in the W.P.(C).No.10693/06 and connected cases ::3:: counter claim as stated above. Ext.P2 is the judgment and decree in the counter claim. 4. The defendants in the suits filed I.As for production of the minutes book of the Panchayath. It is alleged that the then Panchayath Secretary with the ulterior motive colluded with the defendant, kept the minutes book with him without producing it before the court though the court issued a direction to produce the same. 5. The trial court dismissed the suit for non-compliance of the order and struck out the defence of the plaintiff in the counter claim which was posted for ex-parte evidence. It is the case of the petitioner Panchayath that the then Secretary without the authority of the Panchayath colluded with the defendant in the suit filed a compromise petition agreeing to refund the counter claims of Rs.40,000/- & Rs.38,000/- with interest to the defendant. The trial court accepted the compromise petition and passed Ext.P2 compromise decree. Panchayath filed I.A.Nos.1298 and 1299 of 2003 in O.S.Nos.97 & 99 of 2002 to recall the compromise judgment and decree. According to the W.P.(C).No.10693/06 and connected cases ::4:: Panchayath there was no decision by the Panchayath to forgo its claim nor was there any decision to pay any amount to the respondents. It is alleged that the failure to produce the minutes book of the Panchayath as directed by the court and the filing of compromise petition admitting the counter claims are actions of the then Secretary of the Panchayath who practiced fraud with the active connivance of the defendants in the suits. In the circumstances, the above said I.As are filed. Ext.P3 is the order passed by the Munsiff Court in the said I.As. The Panchayath preferred appeal as C.M.A.Nos.17 & 18 of 2004 before the Sub Court, Sulthan Batheri. The appellate court upheld the decision of the learned Munsiff. Ext.P4 is the order passed by the appellate court. The writ petitions 10693 & 10791 of 2005 are filed seeking to set aside Ext.P2 decree and judgment in the respective suits namely, O.S.Nos.97 & 99 of 2002, Ext.P3 & P4 orders. Ext.P3 is the order in I.A.Nos.1298 & 1299 of 2003. Ext.P4 is the order passed by the lower appellate court in C.M.As. 6. Learned Munsiff considered the contentions of the parties in detail. Two suits, namely, O.S.Nos.97 & 99 of 2002, W.P.(C).No.10693/06 and connected cases ::5:: were filed seeking to recover Rs.37,500/- and Rs.45,000/- respectively which were allegedly due from the defendant in the said suits. The defendant in the suits is the same contractor who had bid the right to collect sand from the river in the auction conducted by the plaintiff Panchayath. The amount claimed in the suit is the balance amount due from the defendant. Defendant contested the suits and filed counter claim in both suits seeking to realise Rs.38,000/- and Rs.40,000/- with 12% interest in the two suits. The defendant in the suits filed I.As for a direction to the Panchayath to produce the minutes book in court. The court allowed the I.As, but, the Secretary of the Panchayath failed to produce the minutes book. That conduct of the Panchayath led to the passing of the further order dismissing the suit and striking out the defence of the Panchayath in the counter claim. On 26.2.2003 a compromise petition was filed by the plaintiff and defendant in the suits, the plaintiff admitted the counter claim of the defendant and agreed to pay the counter claim with 12% interest. I.A.Nos.1298 & 1299 are filed by the present Secretary of the Panchayath finding that the non- W.P.(C).No.10693/06 and connected cases ::6:: production of the minutes book before the court and the filing of the compromise petition admitting the counter claim of the defendant are the result of fraud practiced by the then Secretary with the connivance of the defendant in the suits. It is alleged that the settlement was entered without any sanction from the Panchayath. The Panchayath had no occasion to take a decision to compromise the suits by admitting the counter claim. It is further alleged that the then Secretary has no authority to file a compromise petition for and on behalf of the panchayath compromising the counter claim. It is also contented that the compromise is against Rule 5(4) of the Kerala Panchayath Raj (Granting of Remission to Contractors and Lessees) Rules. Therefore it is prayed that the terms of the settlement and consequential decree and judgment in both suits are liable to be set aside in the interest of justice and to restore the suits on file for a decision on merits in accordance with law. The defendants in the suits opposed the prayer in the application and contented that there was no fraud, collusion or illegality in the compromise entered between the parties. W.P.(C).No.10693/06 and connected cases ::7:: 7. The Panchayath adduced oral and documentary evidence in support of I.A.Nos.1298 & 1299 of 2003. The present Secretary was examined as PW1. He tendered evidence in terms of the averments in the respective I.As. He testified before the court that the defendant in the suits in collusion with the then Secretary and some other officers of the Panchayath at the relevant time, forged the minutes book of the Panchayath and that the then Secretary of the Panchayath without any legal authority had executed the compromise agreement. He also testified that the said compromise is void, illegal and without authorisation or sanction from the Panchayath and Ext.P2 judgment and decree was happened to be passed on the basis of the said compromise by decreeing the counter claim of the respondent. PW1 also testified before the court that he verified the records and found that the Panchayath had not taken a resolution for refund of the deposit made by the defendant in the suits. Finding that the records were manipulated complaints are lodged before the Vigilance Department and Deputy Director of Panchayath to initiate action against those persons who made W.P.(C).No.10693/06 and connected cases ::8:: entires in the Panchayath's minutes book. It is said that the complaints are pending consideration. From the evidence of PW1 it can be seen that compromise was entered on the basis of some manipulated entries made in the Panchayath record. PW1 also testified that no resolution was passed by the Panchayath to compromise the case and that decision numbers 6 & 7 in the minutes book are forged and fabricated. The specific case of the Panchayath is that the defendants entered into a conspiracy with the officers of the Panchayath and falsely entered in resolution No.16/99 in order to obtain a decree in their favour. 8. Petitioner also examined PWs 2 & 3 in support of the averments in the I.As and also marked Exts.A1 to A52. 9. PW2 is the then Secretary who is the signatory to the compromise agreement. He testified before the court that he had signed in the compromise petition as requested by the counsel for the Panchayath. PW2 deposed that the counsel of the Panchayath issued Ext.A27 letter directing him to compromise the case. He also testified that the counsel advised him to settle the matter since it is beneficial for the Panchayath. The W.P.(C).No.10693/06 and connected cases ::9:: compromise agreement was produced and marked as Ext.A24. He admitted that he had not obtained any sanction from the Panchayath before signing the compromise agreement. He also admitted that he had signed under the impression that the counsel would not take a decision against the Panchayath. PW3 is the then President of the Panchayath. She testified before the court that the Panchayath has not taken any decision to return the amount to the defendant in the suits and that the refund of the amount of the defendant was not included in the agenda of the meeting. She also testified that the decision numbers 6, 7 & 8 in resolution No.16/99 had not been taken in the Panchayath meeting. 10. The respondent though opposed the prayer in the I.As did not adduce any evidence, both oral and documentary. 11. From the evidence of PWs 1, 2 & 3 and the documents produced in support of the grievance of the panchayath and from the documents produced, it is clear that the compromise entered between the petitioner and the defendants in the suits are unlawful and that the then Secretary of the Panchayath has no W.P.(C).No.10693/06 and connected cases ::10:: authority to enter into compromise without sanction on behalf of the Panchayath. The then Secretary has no case that he entered into a compromise with the defendant on the basis of any authorisation or on the basis of any decision taken by the Panchayath. All the witnesses testified before the court that the Panchayath has not taken any decision to settle the dispute between the Panchayath and the defendant in the suits. The circumstances leading to the execution of the compromise petition would show that the non-production of the minutes book as directed by the trial court is willful and is made with ulterior motive. The non-production of the minutes book led to the dismissal of the suit and striking out the defence of the Panchayath in the counter claim. In spite of the overwhelming evidence adduced by the petitioner Panchayath by examining PWs 1 to 3 and Exts.A1 to A52 documents, the learned Munsiff held that there is no evidence before the court to prove that the compromise entered between the Panchayath and the defendant in the suits is unlawful and on the basis of forged documents. In fact the evidence adduced by the petitioner Panchayath will lead W.P.(C).No.10693/06 and connected cases ::11:: to the conclusion that the then Secretary has no authority to enter into a compromise. The plaintiff in the case is Panchayath. Unless the Panchayath has taken a decision to compromise the case, the Secretary of the Panchayath has no authority to settle the case by filing a compromise petition. It is for the Panchayath to decide as to whether the case pending before the court has to be settled with the defendant in the suits. Nobody has a case that the Panchayath has decided to settle the case between the parties. On the other hand the evidence shows that some of the records of the Panchayath are manipulated. The evidence of the present Secretary as PW1 and the then President who was examined as PW3 shows that the decision numbers 6, 7 & 8 in resolution No.16/99 had not been taken in the Panchayath meeting. The subsequent events leading to the compromise also probabilises the case of the panchayath that the minutes book was not produced purposely in order to defeat the interest of the Panchayath. In the circumstances, the trial court is not justified in finding that there is no evidence before the court to show that the compromise entered between the parties were unlawful and W.P.(C).No.10693/06 and connected cases ::12:: on the basis of a forged document. 12. The suits were dismissed on 21.2.2003 finding that the minutes book was not produced as directed by the court. The court posted the counter claim to 28.2.2003 to adduce ex-parte evidence in the counter claim. On that day compromise petition was filed admitting the counter claim and agreeing to pay the amount to the defendant in the suits. The reasons stated by the court for disallowing the prayer in I.A.No.1298 & 1299 are without any basis and was passed overlooking the oral and documentary evidence adduced by the petitioner. Trial court observed that the Panchayath had already initiated enquiry against the forged entry in the Panchayath register. That also was taken as a reason for not allowing the prayer of the petitioner Panchayath. From the evidence on record it is clear that the dismissal of the suit, striking out the defence and subsequently passing of Ext.P2 judgment and decree are all happened as a result of the foul play and misconduct on the part of the Panchayath officials done with the connivance of the defendant in the suits. The said circumstance is sufficient to W.P.(C).No.10693/06 and connected cases ::13:: allow the prayer of the Panchayath in I.A.Nos.1298 & 1299 of 2003. Instead of allowing the application, the trial court proceeded and observed that even though the Secretary of the Panchayath had exceeded the powers the Panchayath has taken appropriate proceedings against him for the misconduct on the part of the then Secretary. It is true that the Panchayath can proceed against the then secretary for the misconduct and other acts if any done by him in manipulating the records. That does not mean that the court is powerless in not granting the reliefs in appropriate cases in the interest of justice. The appellate court also simply followed the decision of the learned Munsiff and for the very same reason confirmed Ext.P3 order passed by the learned Munsiff. 13. The trial court as well as the lower appellate court failed to appreciate in the right perspective the gravity of the problem and the seriousness of the situation leading to the passing of Ext.P2 judgment and decree and Exts.P3 & P4 orders. The Panchayath filed the suit claiming recovery of an amount of Rs.37,500/- and Rs.45,000/- with 24% interest. By the W.P.(C).No.10693/06 and connected cases ::14:: compromise entered into by the then Secretary which is per se unlawful the Panchayath is loosing the amount claimed in the suit and is bound to pay the claim of the defendant in the counter claim. The conduct on the part of the then Secretary which I have discussed in detail in the preceding paragraphs led to such situation. On the basis of the oral and documentary evidence adduced by the petitioner Panchayath it can be safely concluded that the non-production of the minutes book before the court and recording of the compromise are done with ulterior motive of helping the defendant in the suits. The Panchayath is not going to gain anything by settling the dispute with the defendant. In fact the counter claim is agreed to be paid by signing the compromise petition. In fact by signing the compromise petition the then Secretary acted against the interest of the Panchayath. The net result is that the Panchayath lost the chance of contesting the suit and contesting the counter claim. The witnesses testified before the court that the forgery was made in the minutes book to answer the minutes of the Panchayath in the decisions 6, 7 & 8 as per resolution No.16/99 with the connivance W.P.(C).No.10693/06 and connected cases ::15:: of the officials of the Panchayath. The witnesses who are PWs 1 to 3 responsible officers testified before the court on the strength of the registers and other documents concerned that there was no decision of the Panchayath and the entries made as if item Nos.6, 7 & 8 as per resolution No.16/99 is manipulated entries. 14. W.P.(C).Nos.23278 & 23283 of 2005 were filed by the Panchayath against the defendants in the two suits seeking to set aside the order passed in I.A.Nos.930 & 931 of 2004 respectively and directing the appellate court to decide C.M.A.Nos.25 & 26 of 2004 on merits, to set aside the order dated 21.2.2003 passed by the learned Munsiff and to restore the respective suits on the file of the trial court. The dismissal of the order in I.A.No.130 of 2003 and 131 of 2003 in the respective suits is also illegal for the reason stated in the preceding paragraphs. Therefore, it is not necessary for the petitioner Panchayath to prosecute the order dated 21.2.2003 in the said I.A.Nos.130 & 131 of 2003 before the appellate court. The said order is also liable to be set aside. The petitioner is entitled to the relief of restoration of the suit after setting aside the order dated 21.2.2003. Therefore, the W.P.(C).No.10693/06 and connected cases ::16:: orders passed in I.A.Nos.930 and 931 of 2004 in C.M.A.Nos.25 & 26 of 2004 are set aside. 15. Accordingly, Exts.P2, P3 and P4 in W.P.(C).Nos.10693 & 10791 of 2006 are set aside. The judgment and decree passed by the Munsiff court dismissing the suit and striking out the defendant of the Panchayath are also set aside. The learned Munsiff shall consider the case afresh, proceed with the trial and dispose of the case on merits in accordance with law. The suit shall be disposed of within a period of nine months from the date of receipt of a copy of this judgment. Writ petitions are disposed of as above. HARUN-UL-RASHID, Judge. bkn/-