THE HON’BLE SRI JUSTICE B. CHANDRA KUMAR APPEAL SUIT No. 2430 of 2001 Date: 24th September, 2010 Between: Elthuri Swaroopa and others. Appellants. And Madikonda Swamydas. Respondent. THE HON’BLE SRI JUSTICE B. CHANDRA KUMAR APPEAL SUIT No. 2430 of 2001 JUDGMENT: This Appeal Suit arises out of the decree and judgment in O.S.No.181 of 1997 dated 3.9.2001 passed by the Principal Senior Civil Judge, Warangal (hereinafter referred to as ‘trial Court’). The appellants herein are defendants and the respondent herein is the plaintiffs in the Original Suit. For the sake of convenience, the parties will be referred to as they were arrayed before the trial Court. 2. The brief facts of the case are as follows;- The plaintiff purchased 416 square yards of site at Parkal, Warangal District, under two different sale deeds and constructed a house bearing No.20-1-G3/F4 (‘suit schedule property’, for brevity) and as such, he is the owner of the suit schedule property. The plaintiff’s case is that he is an illiterate and that the defendants are known to him and that the husband of second defendant and the third defendant promised to help him in obtaining loan and that believing their version, he had handed over the original documents pertaining to the suit schedule property to them. However, defendants informed him that loan was not sanctioned to the plaintiff. It is his further case that in September 1993, the third defendant took him to a hotel and supplied liquor to him and while he was under intoxication, he was taken to a lawyer’s house and his signatures were obtained on some blank papers. It is also his case that on 26.08.1996, he issued legal notice to the defendants when the defendants started collecting rents from the suit schedule property and that the defendants had set up a false claim that the second defendant purchased the suit schedule property from the plaintiff and later on gave it to first defendant. It is also his case that the defendants informed him in the reply notice that they filed a suit against the plaintiff in O.S.No.40 of 1993 on the file of the District Munisif, Parkal, and obtained decree and that the plaintiff filed the written statement admitting the suit claim. The plaintiff’s specific case is that the defendants played fraud and that he did not engage any advocate in the said suit and that he had not filed any written statement. It is also alleged that the defendants had incorrectly shown the value of the suit schedule property at Rs.24,000/- and paid the Court fees accordingly and they have deliberately shown the lesser value of the suit schedule property and thus cheated the Court. The plaintiff’s further case is that the defendants falsely contended in the said suit that they purchased the suit schedule property from him long back and that the cause of action arose on 12.09.1993. It is also his contention that no cause of action arose on 12.09.1993. It is also his contention that O.S.No.40 of 1993 was filed on 21.09.1993 and the suit was posted to 05.10.1993 and on the same day, according to the defendants, written statement was filed and decree was passed and these circumstances show that fraud was played on him. It is also his case that the defendants successfully grabbed the suit schedule property and collecting the rents from the tenants and preventing the plaintiff to enjoy the suit schedule property basing on the decree in O.S.No.40 of 1993. It is also the case of the plaintiff that he learnt about the decree passed against him in O.S.No.40 of 1993 only from the reply notice sent by the defendants dated 12.09.1996 and, therefore, the suit is within the limitation prescribed under Article 59 of the Limitation Act, 1963. The plaintiff filed the suit to cancel and set aside the decree and judgment dated 05.10.1993 in O.S.No.40 of 1993 on the file of the District Munisif, Parkal, and for consequential relief of recovery of possession and costs. 3. The sum and substance of the case of the defendants’ is that the plaintiff agreed to sell the suit schedule property to them for a total sale consideration of Rs.2,30,000/- and accordingly, an amount of Rs.50,000/- was paid to the plaintiff on 15.01.1993 and that the plaintiff executed an agreement of sale in the presence of Sambaiah, K.Saraiah and G.Sadanandam and that the agreement of sale was scribed by one Sreeramulu. It is also their case that as per the agreement of sale, defendants agreed to pay Rs.50,000/- by 05.02.1993 and the remaining amount of Rs.1,30,000/- by 15.04.1993 and that later on, the defendants paid the entire sale consideration amount to the plaintiff. It is also their case that though money was paid by the first defendant, later on, in view of the understanding between the parties, the agreement of sale was obtained in the name of the second defendant, but subsequently, the possession of the suit schedule property was given to the first defendant as she paid the sale consideration amount through her husband. It is also their case that subsequently, the plaintiff offered to refund the sale consideration amount and that the defendants did not agree for the same and, therefore, the first defendant filed suit in O.S.No.40 of 1993 on the file of the District Munisif, Parkal, for declaration of title and later on, on the advise of elders, the matter was amicably settled between the parties and, accordingly, the plaintiff filed written statement in O.S.No.40 of 1993 on 05.10.1993 admitting the claim of the first defendant and the said suit was accordingly decreed. Thus, the specific case of the defendants is that no fraud was played on the plaintiff and that the decree and judgment dated 05.10.1993 in O.S.No.40 of 1993 on the file of the District Munisif, Parkal, was not obtained by playing fraud. The defendants have specifically denied the allegations of the plaintiff that the plaintiff handed over them the original sale deed when they offered him to assist him in obtaining the loan and subsequently the third defendant made the plaintiff to consume liquor and took him to the office of an advocate and obtained his signatures on the blank papers. Thus, all the material allegations made by the plaintiff have been denied by the defendants. 4. The trial Court framed necessary issues, the main issues being whether the decree dated 05.10.1993 in O.S.No.40 of 193 on the file of the District Munisif, Parkal, can be cancelled and set aside; whether the plaintiff is entitled for the recovery of possession of the suit house; and whether the suit is barred by limitation. 5. On behalf of the plaintiff, the plaintiff himself was examined as P.W.1 and one O.Ankush was examined as P.W.2 and Exs.A.1 to A.10 were marked. On behalf of the defendants, the first and the third defendants were examined as D.W.1 and D.W.2 respectively besides examining D.Ws.3 to 7 and Exs.B.1 to B.17 were marked. 6. The trial Court, on appreciation of oral and documentary evidence, came to the conclusion that by the date of filing of O.S.No.40 of 1993 on the file of the District Munisif, Parkal, there were no disputes between the parties and that the first defendant ought to have obtained registered sale deed from the plaintiff and that though the value of the suit schedule property was Rs.2,30,000/-, the defendants have valued the suit schedule property at Rs.24,000/- and paid lesser Court fee and that the District Munisif, Parkal, had no jurisdiction to try the suit where the value of the property is more than Rs.1,00,000/- and thus the defendants have played fraud and obtained decree in O.S.No.40 of 1993. The trial Court also held that the defendants failed to prove that the plaintiff had knowledge about the decree in O.S.No.40 of 1993 prior to receiving of reply notice by him and, therefore, the suit is within the period of limitation. Accordingly, the trial Court decreed the suit as prayed for. 7. The main submission of the learned counsel for the appellants/defendants is that when the plaintiff/respondent had taken a specific plea that the defendants obtained decree in O.S.No.40 of 1993 by playing fraud, he must have specifically pleaded as to how fraud was played. It is further submitted that when the plaintiff (P.W.1) had admitted about the execution of agreement of sale in the presence of attestors, the burden lies on him to prove that his signatures were obtained on it by playing fraud. It is also his submission that the plaintiff studied up to eighth standard and as such, he cannot be treated as illiterate. Learned counsel further submitted that the plaintiff, for a valid consideration and with full knowledge, executed the agreement of sale and that in the suit, the plaintiff himself appointed an Advocate and filed written statement admitting the case of the defendants and in the above circumstances, the suit filed against him in O.S.No.40 of 1993 was decreed, and hence, no fraud is played by the defendants. It is further submitted that the very fact that the plaintiff was not collecting rents from the tenant (D.W.2) from the year 1993 shows that he had voluntarily executed the agreement of sale in favour of D.W.1 on 15.1.1993. The other submission made by the learned counsel for the appellants/defendants is that the very fact that the plaintiff himself had handed over the original sale deed of the site to the defendants and subsequently he had not taken any steps to take back the original sale deed shows that the version of plaintiff is not correct. It is also argued that if any fraud was played on the plaintiff and the original documents were illegally retained by the defendants, the plaintiff would have taken steps against the defendants in the year 1993 itself. It is also submitted that D.W.3 is one of the attestors and D.W.1 himself admitted the presence of D.W.3 at the time of execution of the agreement of sale deed and the evidence of D.W.3 proves that the plaintiff executed Ex.A.1. It is further argued that the version of the plaintiff that he came to know about the passing of the ex parte decree only after receiving reply notice on 12.9.1996 is an afterthought version put forth for the purpose of bringing the suit within the period of limitation. It is further argued that in the plaint averments, the plaintiff did not specifically mention as to how and when he got knowledge about the passing of the ex parte decree against him. It is further submitted that the burden lies on the plaintiff to prove that the contents of Ex.B.1 – Agreement of sale are not genuine. It is also argued that if at all the tenants were not paying rents to the plaintiff or that they were obliging the defendants, the plaintiff would not have kept quiet for a period of more than three years. It is also his submission that when fraud is alleged, burden lies on the plaintiff to prove the same. It is also submitted that if at all the version of the plaintiff is accepted, it reveals that the advocate appointed by him in the suit had also played fraud, but however, in the plaint averments, the plaintiff did not make any specific allegations against his advocate. It is also argued that in the normal circumstances, the plaintiff would not have kept quiet for more than three years and the conduct of plaintiff in keeping quiet for more than three years itself shows that the allegations made by him with regard to fraud are false. It is further argued that the very prayer of the plaintiff seeking a direction to the defendants to deliver the possession of the suit schedule property shows that the plaintiff is not in possession of the suit schedule property and that he did not specifically mention as to when he lost possession over the suit schedule property. 8. His further submission is that mere suspicion is not sufficient to prove fraud and there must be sufficient evidence to prove fraud and that except the evidence of P.W.1 (plaintiff), there is no other evidence to support the case of the plaintiff. It is also submitted that the evidence of P.W.2 is not believed by the trial Court for valid reasons. It is also argued that the plaintiff should have specifically pleaded that the contents of Ex.B1 are false. Thus the main submission of the learned counsel for the appellants/defendants is that the findings of the trial Court are perverse and not based on record. It is also argued that when the plaintiff claimed that he is in possession of the suit schedule property, he is not entitled for the relief of recovery of possession. 9. In support of his contentions, learned counsel for the appellants/defendants had relied on the decisions of the Apex Court in cases between A.C.Anantha Swami Vs. Boraiah[1] and Kona Kanthamma Vs. Guntamukkala Srinivasa Rao[2]. 10. Per contra, Sri S.Laxma Reddy, learned counsel for the respondent/plaintiff submits that once it is proved that the defendants have played fraud, the entire proceedings are vitiated and even if fraud is not challenged in regular appeal, it can be challenged in collateral proceedings. It is further argued that the plaintiff never executed the alleged agreement of sale and that he had approached the defendants for the purpose of securing loan and that the defendants, by making a false promise that they would secure loan from L.I.C and other private creditors, took the original documents pertaining to the suit schedule property from him and subsequently, the plaintiff was made to consume liquor and while he was under the influence of the liquor, he was taken to the office of an advocate and there also the signatures of the plaintiff were obtained on some papers. It is further submitted that no summons in O.S.No.40 of 1993 were served on the plaintiff and when summons were not served, the question of engaging an advocate by the plaintiff and filing written statement does not arise. It is further argued that the vakalat on which the signature of the plaintiff was obtained is from the office of the advocate of the defendants and these circumstances clearly show that from the very inception, fraud was played not only on the plaintiff, but also on the Court. It is also argued that admittedly the defendants have shown lesser value of the suit schedule property in O.S.No.40 of 1993 and thereby played fraud while paying less Court fees and they have also played fraud by bringing the suit within the pecuniary jurisdiction of the Court i.e. the Court of the District Munisif, Parkal, which had no jurisdiction, by showing incorrect value of the suit schedule property. 11. Learned counsel placed reliance on the judgments in Smt. Shrisht Dhawan v. M/s.Shaw Brothers[3], Gram Panchyat of Village Naulakha v. Ujagar Singh and others[4] a n d Jai Narain Parasrampuria (Dead) and others v. Pushpa Devi Saraf and others[5] in support of his contentions. 1 2 . While explaining the kinds of fraud, it is submitted that there are two kinds of fraud, one is in public law and another is in private law and in the instant case, the defendants have committed fraud in both public law and private law. He had relied on the judgment in Smt.Shrisht Dhawan Vs. M/s.Shaw Brothers (3 Supra), wherein, fraud in public law and fraud in private law have been explained. 13. The main submission of Sri.S.Laxma Reddy, learned counsel for the respondent/plaintiff, is that fraud can be challenged at any stage, even before the Apex Court by way of special leave petition. It is also his submission that there is no necessity to plead about fraud. His main submission is that the trial Court has not taken into consideration the recitals of Ex.B1 – Agreement of sale and that the admissions made by P.W.1 and recitals of Ex.B.1 themselves prove the fraud. 14. In the light of the above rival contentions, the only point that arises for consideration is:- (1) Whether the decree dated 5.10.1993 in O.S.No.40 of 1993 was obtained by playing fraud and consequently whether it is liable to be cancelled? 15. As seen from the pleadings of the parties and the evidence let in, the specific case of the defendants is that the plaintiff agreed to sell the suit schedule property to them and the sale consideration was fixed at Rs.2,30,000/- at their house on 15.01.1993. It is also their case that on the date of agreement of sale, an amount of Rs.50,000/- was paid to the plaintiff towards advance and subsequently, the third defendant paid the entire sale consideration and obtained receipts from the plaintiff (P.W.1) and his wife in the presence of the Sambaiah, Chitti Saraiah and one Sreeramulu. Exs.B.2 to B.7 are the receipts obtained from P.W.1 at the time of paying balance of sale consideration in installments. Their further case is that after the sale consideration amount was paid to P.W.1, he had handed over the possession of the suit schedule property to them and now they have been residing in the said house. It is also their case that about four or five years after selling the house, P.W.1 raised a dispute that the entire sale consideration amount was not paid and then they called the above referred persons who were present at the time of execution of agreement of sale and in their presence, P.W.1 himself admitted that he received the entire sale consideration amount under Exs.B.1 to B.7. Their further case is that P.W.1 informed them that he would admit the suit claim if defendants file a suit against him and, therefore, they filed O.S.No.40 of 1993 on the file of the District Munisif, Parkal, and that P.W.1 engaged an advocate and filed written statement admitting the suit claim and accordingly, the suit was decreed. The photocopy of the plaint in O.S.No.40 of 1993 dated 5.10.1993 is marked as Ex.B.8, written statement was marked as Ex.B.9 and the decree was marked as Ex.B.10. Ex.B.11 is the certified copy of the Vakalat filed by P.W.1 through his advocate Sri Samba Siva Reddy of Parakal and Ex.B.12 is the certified copy of the judgment in the said suit. 16. The plaintiff’s case is that he is illiterate and that he had learnt to scribe his signature with the help of his son and that he is having 416 square yards of residential plot at Parkal, which he had purchased under two different sale deeds and then he constructed R.C.C building in the plinth area of 1094 square feet that he has been paying house tax and water tax for the said house. The further case of P.W.1 is that one Dr.K.Kumaraswamy, husband of the first defendant – E.Swaroopa and the third defendant – Saraiah promised that they would arrange loan from L.I.C to enable him to construct house and by making such promise, they had taken the registered sale deed of the site and L.I.C Policy from him, but they did not get the loan even after three months. It is also his case that in September 1993, the third defendant – Saraih and the said Kumaraswamy had taken him to Annapurna Hotel at Parkal and he made him to consume liquor and then they took him to the house of an Advocate by name Malla Reddy of Parkal and obtained his signatures on three or four white papers promising that they would arrange loan from L.I.C office. Thus, the specific case of P.W.1 is that he never executed any agreement of sale and that he never sold the suit schedule property to the defendants and that he has no knowledge about filling of suit in O.S.No.40 of 1993 and that he did not engage any advocate to defend his case and did not file any written statement in the said suit admitting the suit claim, and, therefore, the decree in O.S.No.40 of 1993 is not binding on him. Thus the specific case of P.W.1 is that in the above circumstances, he filed the suit for cancellation of the decree in O.S.No.40 of 1993 and recovery of possession. Of course, it is also his case that he was in possession of the suit schedule property on the date of giving evidence before the Court. 17. While dealing with the issue of fraud, the Apex Court, in case between Smt. Shrisht Dhawan Vs. M/s.Shaw Brothers (3 supra), observed as follows:- “Fraud and collusion vitiate even the most solemn proceedings in any civilized system of jurisprudence. It is a concept descriptive of human conduct. Michael Levi likens a fraudster to Milton's sorcerer, Comus, who exulted in his ability to'wing me into the easy- hearted man and trap him into snares'. It has been defined as an act of trickery or deceit. In Webster fraud in equity has been defined as an act or omission to act or concealment by which one person obtains an advantage against conscience over another or which equity or public forbids as being prejudicial to another. In Black's Legal Dictionary, fraud is defined as an intentional perversion of truth for the purpose of inducing another in reliance upon it to part some valuable thing belonging to him or surrender a legal right; a false representation of a matter of fact whether by words or by conduct, by false or misleading allegations, or by concealment of that which should have been disclosed, which deceives and is intended to deceive another so that he shall act upon it to his legal injury. In Oxford, it has been defined as criminal deception, use of false representation to gain unjust advantage; dishonest artifice or trick. According to Halsbury's Laws of England, a representation is deemed to have been false, and therefore a misrepresentation, if it was at the material date false in substance and in fact. S. 17 of the Contract Act defines fraud as act committed by a party to a contract with intent to deceive another. From dictionary meaning or even otherwise fraud arises out of deliberate active role of representator about a fact which he knows to be untrue yet he succeeds in misleading the representee by making him believe it to be true. The representation to become fraudulent must be of fact with knowledge that it was false.” “The colour of fraud in public law or administrative law, as it is developing, is assuming different shade. It arises from a deception committed by disclosure of incorrect facts knowingly and deliberately to invoke exercise of power and procure an order from an authority or tribunal. It must result in exercise of jurisdiction which otherwise would not have been exercised. That is misrepresentation must be in relation to the conditions provided in a section on existence or non-existence of which power can be exercised. But non- disclosure of a fact not required by a statute to be disclosed may not amount to fraud.” 18. In the same judgment, It was further observed as follows:- “The law does not protect either party whose actions are tainted by fraud”…. “Fraud is essentially a question of fact, the burden to prove which is upon him who alleges it.” 19. The Apex Court, in the judgment Jai Narain Parasrampuria (5 supra) held as follows:- “If a judgment or decree is vitiated by fraud, the same would be a nullity. In such an event, Section 44 of the Evidence Act would be attracted. As a plea of fraud can be raised even in a collateral proceeding and the trial court having recorded a specific finding that the jurisdiction of the Delhi Court was created artificially by including a Delhi property, in respect whereof there was no dispute, the said decree must be held to have been obtained by Sarafs by concealment of material facts and by a collusive and fraudulent exercise.” “It is now well settled that fraud vitiates every solemn act. Any order or