HON’BLE SRI JUSTICE R.KANTHA RAO C.R.P.No.6364 of 2009 DATED: 31.12.2009 BETWEEN: National Hydro Electric Power Corpn.Ltd. .. Appellant And M/s Nagarjuna Finance Ltd. And others. .. Respondents HON’BLE SRI JUSTICE R.KANTHA RAO C.R.P.No.6364 of 2009 JUDGMENT:- This C.M.A. is filed challenging the order and decree dated 05.12.1994 passed by the II Additional Judge, City Civil Court, I.A.No.753 of 1993 in O.S.No.563 of 1992 Hyderabad. 2. The petition which was dismissed by the impugned order was filed under Order 21 Rule 58 C.P.C. and Section 151 C.P.C to declare that the decree of compromise dated 18.11.1992 passed in O.S.No.563 of 1992 between the first respondent and the respondents 2 and 3 as void against the appellant (petitioner) and to set aside the same and also to recall the said decree transmitted to the Court at Nainital in the State of Uttar Pradesh for execution. 3. I have heard the learned counsel appearing for the appellant (petitioner). None appears for the respondents. 4. Upon hearing the learned counsel for the appellant (petitioner) and on perusing the material papers available on record, I am of the view that against the impugned order C.M.A. does not lie and only revision lies. However, in view of the fact that there is no legal impediment to treat the C.M.A. as C.R.P., having to the facts and circumstances of the case, this Court treated the C.M.A. as revision. 5. For the sake of convenience parties will be referred as petitioner and respondents i.e. as they were arrayed in the I.A.No.753 of 1993 in O.S.No.563 of 1992 before the trial court. 6. The brief facts leading to filing of the C.M.A. (treated as C.R.P.) may be stated as follows: 7. The petitioner a Government of India undertaking incorporated under the companies Act, was entrusted with the work of construction of Tanakpur Hydro Electric Project at Banbassa in Nainital District of Uttar Pradesh State. The estimated cost of the said project is Rs.379 crores. The petitioner entrusted the contract work of construction of silt ejector and power channel from RD 250M including escape channel to the second respondent for a sum of Rs.8,58,99,000/- under an agreement dated 30.03.1988. As per the terms of the agreement, the second respondent has to comply the work within the stipulated period, but it failed to do so, and the agreement in such an event provided for termination of contract and to take possession of the site and machinery belonging to the second respondent on which the petitioner had lien for recovery of losses. There is also an arbitration clause in the agreement, but contrary to the said arbitration clause the second respondent filed O.S.No.158 of 1991 on the file of the Civil Judge of Nainital and obtained temporary injunction regarding the work and use of machinery. The petitioner took the matter in revision to the High Court, which was dismissed. Thereafter, it carried the matter to the Supreme Court and the Supreme Court in Civil Appeal No.3672 of 1991 set aside the orders of the High court and appointed Justice H.N.Seth, retired Chief Justice of Punjab and Haryana High Court as an arbitrator and directed that the work site shall continue without any interference. 8. Pursuant to the orders of the Supreme Court, the arbitrator commenced the proceedings in the course of which the second respondent filed a claim petition on 20.1.1992 seeking release of machinery. While the said petition was pending before the Arbitrator, the 1st respondent filed O.S.No.563 of 1992 on 17.6.1992 stating that the machinery belongs to the first respondent and the same was leased out to the second respondent under a lease deed. As per the version of the petitioner the said suit is a collusive suit filed apprehending that the machinery might be handed over by the arbitrator to the petitioner since the arbitrator by that time had already appointed technical surveyor to work out the value of the equipment. Subsequently, the first respondent and the second respondent filed a compromise petition and the suit was decreed in terms of compromise on 21.01.1993. 9. Subsequently, the second respondent got the decree transmitted to the District Judge Nainital, who made over the same to the IV Additional Judge, Nainital for execution and the executing Court in E.P.No.2 of 1993 appointed the Commissioner to take possession of the machinery. When the Commissioner appointed therein issued notice to the petitioner on2.7.1993, the petitioner came to know about the filing of the suit by the second respondent and the compromise decree passed therein. Thereafter, on5.7.1993 the petitioner filed a claim petition before the executing court and initially obtained an order granting stay. However, thinking it to be appropriate the petitioner filed I.A.No.753 of 1993 to set aside the compromise decree in O.S.No.563 of 1992 on the ground that the said decree is vitiated by fraud and suppression of fact in not disclosing the orders passed by the Supreme Court and also appointment of the arbitrator by the Supreme Court. However, the learned II Additional Judge, City Civil Court, Hyderabad dismissed the said I.A. against which the present appeal (treated as C.R.P.) is filed. 10. According to the petitioner the first respondent obtained a collusive decree on 18.11.1992 against the respondents 2 and 3. but the contention of the first respondent is that the entire plant/machinery installed at Tanakpur, Uttar Pradesh State belongs to it and it was leased out to the respondents 2 and 3 under an agreement dated 7.7.1988 on condition of their paying monthly rentals of Rs.1,86,420/- commending from 5.7.1988 for 36 months and that the lease period had expired on 5.6.1991, the respondents 2 and 3 paid only an amount of Rs.40,740/- on 5.9.1989, but committed the breach thereafter and subsequently, the first respondent instituted the suit which ultimately ended in compromise. 11. It was contended by the petitioner before the Court below that the alleged compromise entered into between the respondent and the respondents 2 and 3 is collusive and with a view to defeat the rights of the petitioner over the machinery, but, the learned Court below without considering the totality of the circumstances and without comprehensively understanding the back drop of the events held that the compromise decree was not the result of collusion and fraud practiced by the respondents and subsequently dismissed the application filed by the petitioner to set aside the compromise decree. 12. Having gone through the submissions made by the learned counsel appearing for the appellant (revision petitioner) and considering the entire material available on record the crucial aspects which were not considered by the learned trial Court are that the respondents though filed the compromise petition followed by a memorandum of compromise before the trial Court did not bring it it’s notice about the order passed by the Supreme Court on 18.09.1991 in civil Appeal No.3672 of 1991 setting aside the orders of the High court and appointing Justice H.N.Seth as arbitrator and also the arbitrator initiating proceedings pursuant to the orders passed by the Supreme Court. All the events which ultimately culminated in the order passed by the Supreme Court were well within the knowledge of the respondents 2 and 3. But they have not disclosed the said facts in their compromise petition. It is well settled that suppression of a material fact before the Court is nothing but fraud played on the Court. The respondents 3 and 4 obviously allowed the compromise decree to be passed by the trial Court to have an unfair advantage over the petitioner. The manner in which the suit was filed by the first respondent and the circumstances under which it was filed clearly indicate that it is a collusive suit. All the material facts have not been placed before the learned Court below. Under these circumstances I have no hesitation to hold that the compromise decree passed by the trial Court is the result of suppression of material facts and playing fraud by the parties to the suit, which is evident from the method and manner in which the compromise decree was obtained. The said decree and judgment are liable to be set aside in this revision. 13. In the result, the compromise decree passed in O.S.No.563 of 1992 is set aside. I.A.No.753 of 1993 in O.S.No.563 of 1992 is allowed. The C.R.P. is allowed with costs. __________________ R. KANTHA RAO,J Date:31.12.2009 kvrm HON’BLE SRI JUSTICE R.KANTHA RAO C.R.P.No.6364 of 2009 DATED: 31.12.2009