CS(OS) 749/1994 & EX.P. 92/2019 Page 1 of 49 * IN THE HIGH COURT OF DELHI AT NEW DELHI % Pronounced on: 17th March, 2025 + I.A. 20538/2014 (Application under Section 151 CPC read with the Limitation Act for Condonation of Delay) & I.A.20535/2014 (Application under Section 151 XPC read with Section 44 of the Evidence Act for setting Aside Compromise Decree Dated 28.03.2003) in CS(OS) 749/1994 along with I.A. 20536/2014, I.A. 20537/2014, I.A. 20539/2014, I.A. 20540/2015, I.A. 21460/2014, I.A. 21462/2014, I.A. 7353/2020 and I.A. 2487/2022 AJAY RELAN S/o Shri N.D. Relan C/o M/s Sharda Motor Industries Limited, B-23A, Okhla Industrial Area Phase I, New Delhi. .....Plaintiff Through: Mr. Sudhir Makkar, Senior Advocate with Ms. Meghna Mishra, Mr. Tarun Sharma, Ms. Palak Sharma, Ms.Yashodhara Gupta & Ms. Saumya Gupta, Advocates Versus (1) PRANAY SOMAIA s/o Late Sh. K.D.Somaia (2) ILA VASANI, d/o late Sh. K.D. Somaia (3) DIPTI POOJARA d/o late Sh. K.D. Somaia (4) SUJATA MORAJARIA d/o late Sh. K.D. Somaia Digitally Signed By:ANIL KUMAR BHATT Signing Date:25.03.2025 16:44:39 Signature Not Verified CS(OS) 749/1994 & EX.P. 92/2019 Page 2 of 49 (5) M/S DURGA BUILDERS PVT. LTD. Having its Registered Office At 609-610, Inderprakash, 21, Barakhamba Road, New Delhi (6) RAVINDER KUMAR NANDA s/o Sh. Dev Raj Nanda resident of B-5, Geetanjali, New Delhi (7) PROMOILA NANDA w/o Sh. Ravinder Kumar Nanda R/o B-5, Geetanjali, New Delhi .....Defendants Through: Mr. Siddharth Yadav, Senior Advocate with Mr. Wasim Ashraf & Mr. Narinder Lodiwal, Advocates for defendants No.1 & 2 Mr. Satvik Verma, Mr. Sachin Dubey, Mr. Manuj Syal, Mr. Mohit Jain, Mr. Mudit Marwah, Mr. Rahul Mohan Gautam & Mr. Sukesh Tyagi, Advocates for defendant No.5 + EX.P. 92/2019, EX.APPL.(OS) 682/2020, EX.APPL. (OS) 3214/2022, EX.APPL.(OS) 3619/2022 & EX.APPL. (OS) 3620/2022 AJAY RELAN .....Plaintiff Through: Mr. Sudhir Makkar, Senior Advocate with Ms. Meghna Mishra, Mr. Tarun Sharma, Ms. Palak Sharma, Ms.Yashodhara Gupta & Ms. Saumya Gupta, Advocates Versus Digitally Signed By:ANIL KUMAR BHATT Signing Date:25.03.2025 16:44:39 Signature Not Verified CS(OS) 749/1994 & EX.P. 92/2019 Page 3 of 49 CE CONSTRUCTION LTD. .....Defendant Through: Mr. Gaurav Kumar, Mr. Abhishek Handa & Mr. Rahul, Advocates CORAM: HON'BLE MS. JUSTICE NEENA BANSAL KRISHNA J U D G M E N T NEENA BANSAL KRISHNA, J. I.A. 20538/2014 (under Section 151 CPC read with Limitation Act, 1963 on behalf of Defendant No.5 seeking Condonation of Delay) 1. The present Application dated 13.10.2014 has been filed by Defendant No. 5- DBPL through its Director-Divij Mehra for condonation of delay in filing IA No. 20535/2014 to seek recall of the Compromise Decree dated 23.03.2003. 2. It is submitted in the Application that the Compromise Decree dated 23.03.2003 has been challenged on various grounds, including that it was nullity in law on account of lack of inherent jurisdiction, fraud and collusion between the compromising parties and lack of authority of Sh. R.K.Nanda, in taking part in the proceedings on behalf of DBPL. 3. Reliance has been placed upon Supreme Court‟s decision in Kiran Singh Vs. Chaman Paswan AIR 1954 SC 340 wherein it has been held that an Order passed without jurisdiction is a nullity ab initio void as if non est which can be challenged at any time or at any stage of that or other proceedings. Furthermore, where the Suit is in nullity on account of fraud, Digitally Signed By:ANIL KUMAR BHATT Signing Date:25.03.2025 16:44:39 Signature Not Verified CS(OS) 749/1994 & EX.P. 92/2019 Page 4 of 49 then it can be challenged at any time de hors the limitation. Therefore, the original concept of limitation, does not apply. 4. The present Application for condonation of delay has been filed as a measure of abundant caution to seek the intervention of this Court to decide the Company Application, in the interest of substantive justice. 5. Furthermore, even if it is assumed, without admitting, that jurisdiction was conferred upon the Court by the consent of the parties who were party to the Compromise Decree, the judicial authority which is without any jurisdiction, cannot become valid merely by consent of the Parties. 6. Reliance is placed upon decision in Vithalbhai (P) Ltd. Vs. Union Bank of India (2005) 4 SCC 315 to assert that no amount of waiver or consent can confer jurisdiction on a court which lacks jurisdiction. 7. Similar observations were made by the Supreme Court in Budhia Swain Vs. Gopinath Deb (1994) 4 SCC 396. 8. It is further explained that the Applicant-Company was unable to approach this Court earlier as it was awaiting the outcome of the proceedings before the Company Law Board which ultimately culminated vide Order dated 11.03.2014. 9. Even otherwise, owing to the mala fide of some of the Respondents, the Applicants have been involved in numerous hearings before the Company Law Board, before this Court under Section 340 Cr.P.C. and also the Hon‟ble Supreme Court in various criminal proceedings before various Courts, including investigations by the Delhi Police and other litigations. Thus, multiple litigations prevented the Applicants from preferring the accompanying Application earlier because the time and resources had to be Digitally Signed By:ANIL KUMAR BHATT Signing Date:25.03.2025 16:44:39 Signature Not Verified CS(OS) 749/1994 & EX.P. 92/2019 Page 5 of 49 spent on the above matters, which were equally vital. On this ground as well, there is just and sufficient cause in filing the present Application. 10. The Applicants have further placed reliance upon decision in Sree Rajendra Mills Ltd. Vs. IOCEE Exports Ltd. 2011 3 Co, LJ 235 Madras, wherein while condoning the delay of 1,392 days, it was observed that if the explanation does not smack of mala fides or it is not put forth as part of dilatory strategy, the Court concerned must show the utmost consideration for the Suitor. 11. The Applicants were not a party of any kind of mala fide strategy, nor had they indulged in any dilatory strategy; the Application has been moved at the earliest and their interest would be squarely jeopardized if the impugned Order continues to stand. The Supreme Court has observed that an Order which is in nullity, may be ignored by all concerned and it is only when “the shoe pinches”, that it may be agitated at the appropriate forum even in collateral proceedings. 12. Reliance has also been placed upon decisions in Mandeep Singh Vs. Santosh Sharma 2018 SCC OnLine Del 12754; and Satyawan Vs. UOI & Ors. 2015 SCC OnLine 12757. 13. Reliance is placed on Mehboob Sahab v. Syed Ismail & Ors. (1995) 3 SCC 693 wherein the Apex Court has observed that if a party obtains a decree from the Court by practicing fraud or collusion then he cannot be allowed to take the defence that the matter is res judicata and cannot be reopened. 14. Further reliance is placed on Ram Chandra Singh v. Savitri Devi & Ors. (2003) 8 SCC 319; Hamzi Haji v. State of Kerala AIR 2006 SC 3028; Digitally Signed By:ANIL KUMAR BHATT Signing Date:25.03.2025 16:44:39 Signature Not Verified CS(OS) 749/1994 & EX.P. 92/2019 Page 6 of 49 AV Papayya Sastry & Ors. v. Government of AP & Ors. AIR 2007 SC 1546; Ram Kumar v State of UP & Ors. 2022 SCC OnLine SC 1312; Bilkis Yakub Rasool v. Union of India 2024 SCC OnLine SC 25; Devas Multimedia Pvt. Ltd. V. Antrix Corporation (2023) 1 SCC 216; and SP Chengalvaraya Naidu (Dead) by LRs v. Janannath (Dead) by LRs (1994) 1 SCC 1 to support their proposition that fraud vitiates every solemn act. 15. It is thus, contended that the Applicant has vital stakes to be protected by the present Application and irreparable injury and harm would be caused if this Application is not allowed. Moreover, there is no conscious delay in filing the accompanying Application and the delay has not been intentional, but due to the circumstances mentioned above. 16. Reliance is placed on Perumon Bhagvathy Devaswom, Perinadu Village v. Bhargavi Amma (2008) 8 SCC 321 wherein the Apex Court has observed that condonation of delay is a matter of discretion of the Court as Section 5 of Limitation Act does not say that such discretion can be exercised only if the delay is within a certain limit. Acceptability of explanation for the delay, is the only criterion. 17. Further reliance is placed on Ram Nath Sao Alias Ram Nath Sahu and Ors v. Gobardhan Sao and Ors. (2002) 3 SCC 195; Krishna Bahadur Lal v. Gyanendra Pratap and Ors. 2024 SCC OnLine SC 508; Esha Bhattacharjee v. Managing Committee of Raghunathpur Nagar Academy and Ors. (2014) 2 SCC (LS) 595; Uttarakhand Transport Corporation v. Ram Sakal Mahto & Anr. 2012 SCC OnLine Del 1261; Mandeep Singh v. Santosh Sharma 2018 SCC OnLine Del 12754; Satyawan v. Union of India & Ors. 2015 SCC OnLine 12757; and Rajiv Agarwal v. Balmer Lawrie Co. Digitally Signed By:ANIL KUMAR BHATT Signing Date:25.03.2025 16:44:39 Signature Not Verified CS(OS) 749/1994 & EX.P. 92/2019 Page 7 of 49 Ltd. 2023 SCC OnLine Del 8106 to reiterate that only “sufficient cause” is required for condonation of delay under Section 5 of the Limitation Act, 1963. 18. It is, therefore, submitted that the accompanying Application for Recall of the Compromise Decree, be heard on merits and declare the said Decree as nullity in law. 19. The Respondent Ajay Relan (Plaintiff in the main Suit) in his Reply has asserted that the present Application is a blatant example of abuse of process of law in seeking recall of the consent Decree dated 28.03.2003. It is claimed that from the entire record it is evident that the alleged fraud as claimed by the Applicant, was well within his knowledge since 1987 and at best since 2003 and that for dishonest reasons, Applicant has not disclosed the date of knowledge of the alleged fraud. No explanation whatsoever has been given for the delay and thus, the only inference that can be drawn is that there is no bona fide reason but the delay is due to the recklessness, negligence and dishonest act of the Applicant. 20. It is further submitted that Article 59 of the Schedule to Limitation Act, 1963 provides that all Suits to set aside a Decree on fraud, has to be filed within a period of three years. The point of commencement of this limitation is the date from which the party gains the knowledge of the fraud. 21. Learned counsel on behalf of the Respondent has contended that the Applicant was all throughout aware of the Compromise Decree and in any case since 2003, when the Execution Petition in respect of the Compromise Decree got filed, despite which the present Application to challenge the Compromise Decree has been filed only in 2014. It is claimed to be patently Digitally Signed By:ANIL KUMAR BHATT Signing Date:25.03.2025 16:44:39 Signature Not Verified CS(OS) 749/1994 & EX.P. 92/2019 Page 8 of 49 barred by limitation. 22. Furthermore, he has approached the Court with unclean hands, dishonest intention and no liberty was taken by the Applicant while withdrawing the previous Application I.A. No.18011/2014 seeking the same relief. Hence, the principle of res judicata bars the present Application. 23. Even otherwise, new facts are sought to be brought in by virtue of this Application, which do not pertain to the Plaintiff and has no bearing on the adjudication in the present dispute. At best, it proves inter se dispute between the Applicant – DBPL represented through Divij Mehra and his father Arun Mehra, and CE Construction i.e. defendants No.5 to 7. The present proceedings cannot be used to adjudicate inter se disputes between them. The Plaintiff-Ajay Relan is not even a party to the inter se litigation between the Defendants. 24. Learned counsel on behalf of the Plaintiff/ Decree Holder Ajay Relan (non-Applicant) has further contended that the present Application is barred by limitation. On bare reading of the contents of the Application, it is evident that allegations of fraud made on behalf of Defendant No.5, were well within the knowledge of the Applicant since the year 1997 and at best, 2003. For dishonest reasons, the Applicant has not disclosed the date of alleged fraud either in the Application seeking condonation of limitation or the main Application. The present Application is, therefore, barred by delay and laches for which there is no cogent explanation. 25. The Application, therefore, is not maintainable insomuch as it fails to disclose the date of knowledge of alleged fraud and no explanation Digitally Signed By:ANIL KUMAR BHATT Signing Date:25.03.2025 16:44:39 Signature Not Verified CS(OS) 749/1994 & EX.P. 92/2019 Page 9 of 49 whatsoever has been given to explain the delay. The Application is therefore, sought to be rejected. 26. The Applicant/ Defendant No. 5-DBPL through Divij Mehra has denied that this alleged fraud, was ever within the knowledge of DBPL through him. 27. Submissions Heard and Record Perused. 28. The Applicant/Defendant No. 5-DBPL through Divij Mehra has contended that the impugned judgment dated 28.03.2003 is a nullity on account of fraud and lack of inherent jurisdiction. It is argued that where a judgment is a nullity in law, it can be challenged at any time, de hors the period of limitation for which reliance has been placed on the case of Kiran Singh (supra) wherein the Apex Court had observed that whenever and wherever a Decree has been passed by the Court without jurisdiction is nullity then it can be challenged even in collateral proceedings including the execution. Distinction between Fraud and Nullity 29. First and the foremost, it is significant to understand the distinction between a judgment claimed to be a nullity and that which is stated to be vitiated on account of fraud. 30. In the case of Kiran Singh (supra), it had been explained that where the judgment is passed by a Court without inherent jurisdiction, it is a nullity. However, when there is a defect of jurisdiction, whether pecuniary or territorial or in respect of subject matter of the action which strikes at the very Authority of the Court to pass any Decree, such defect cannot be cured even with the consent of the parties. Digitally Signed By:ANIL KUMAR BHATT Signing Date:25.03.2025 16:44:39 Signature Not Verified CS(OS) 749/1994 & EX.P. 92/2019 Page 10 of 49 31. On the other hand, fraud is an extrinsic collateral act which vitiates the most solemn proceedings of the Courts of Justice, as has been held in the case of Mahboob Sahab vs. Syed Ismail & Ors. (1995) 3 SCC 693. Once, it is established that the Order was obtained by a successful party by practicing or playing fraud, it stands vitiated and 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. 32. Referring to Lazarus Estates Ltd. vs. Beasley (1956) 1 All ER 341, the Apex Court in S.P. Chengalvaraya Naidu vs. Jagannath (1994) 1 SCC 1 which was followed by Division Bench of this Court in Devas Employees Mauritius Pvt. Ltd. vs. Antrix Corporation Ltd. 2023 SCC OnLine Del 1608, held that a judgment vitiated by a fraud, must be treated as a nullity by every Court. In State of Maharashtra vs. Prabhu (1994) 2 SCC 481 the Apex Court noted that the most solemn precedent in any civilized jurisprudence, is that fraud and collusion and justice never dwell together (fraus et jus nunquam cohabitant). 33. Having discussed the distinction between fraud and nullity, the second aspect which needs to be considered is whether the Compromise Decree challenged in the present case, is non-est on the ground of nullity or is vitiated on the ground of fraud. It is not as if the judgment has been passed by a Court with no inherent jurisdiction, but it is essentially a case of fraud which is pleaded by the Defendant No. 5-DBPL through Divij Mehra on the ground that the Compromise Decree was executed on behalf of DBPL through R.K. Nanda who in fact, had no authority to represent the Company and also that the Compromise Application did not bear the Digitally Signed By:ANIL KUMAR BHATT Signing Date:25.03.2025 16:44:39 Signature Not Verified CS(OS) 749/1994 & EX.P. 92/2019 Page 11 of 49 signatures of all the parties to the Suit. From the averments so made, it is evident that it is not a case of nullity on which the Compromise Decree has been sought to be avoided, but fraud. 34. Having so concluded, the next aspect which assumes significance is that to challenge a Decree on the ground of fraud, Application is necessarily required to be filed within a period of three years from the date of knowledge, in terms of A. 59 of Schedule to Limitation Act, 1963. The Application for setting aside the Judgement cum Compromise Decree dated 28.03.2003 has been filed on 13.10.2014. What needs to be reckoned is the date from which the period of limitation is to be calculated and if barred by limitation, is whether there exists sufficient grounds for condonation of Delay. 35. The Applicant has explained that even though the Compromise Decree had been executed with the consent of DBPL through R.K.Nanda, but there was a dispute whether Arun Mehra became the Director of the said Company. Even though there was an Agreement dated 19.05.1997 for transfer of shares of DBPL in favour of Arun Mehra, but that Agreement never got implemented. 36. The validity of the Agreement got challenged by R.K. Nanda by way of a Civil Suit No. CS(OS)961/2004 dated 06.09.2004, which ultimately got dismissed for want of evidence on 30.1.2009. 37. Furthermore, to assert that Arun Mehra had assumed the Directorship of DBPL, he had filed Company Petition No. No.54/2005 (CLB) in 2005 asserting that he has become the Director of DBPL having purchased the entire share holding of the Company from R.K. Nanda and Promila Nanda Digitally Signed By:ANIL KUMAR BHATT Signing Date:25.03.2025 16:44:39 Signature Not Verified CS(OS) 749/1994 & EX.P. 92/2019 Page 12 of 49 the two erstwhile Directors of DBPL. However, the Company Law Board in its judgment dated 02.02.2006 declined to accept Arun Mehra as a Director and dismissed the Company Law Petition. 38. Thereafter, the Company Appeal (Co. Apl. (SB) No.7/2006) was filed, but it also got dismissed vide Order dated 30.10.2006, by this Court by observing that all the issues raised on behalf of Arun Mehra shall be decided in CS(OS) 961/2004 (a suit filed by R.K. Nanda to challenge the validity of the Agreement dated 19.05.1997). 39. Arun Mehra filed SLP (Civil) No.20293/2006 against the Order in dated 30.10.2006 vide which his Appeal got dismissed, but there also he did not succeed. 40. After the Civil Suit 961/2004 filed by R.K. Nanda got dismissed vide Judgment dated 30.01.2009, Shri Arun Mehra filed a fresh Suit CS (OS) 354/2009 seeking Mandatory and Permanent Injunction against the Nanda‟s for acting for and on behalf of DBPL. However, this Suit got dismissed on 22.02.2010 under Order VII Rule 11 CPC. 41. Against the dismissal of his Suit, Arun Mehra preferred an Appeal vide RFA (OS) 62/2010 wherein it was observed that there was no controversy regarding the binding nature of the Agreement dated 19.05.1997, and it was disposed of by allowing the Appeal in its judgment dated 26.07.2013. 42. Once, the observation came from the Court recognising the validity of the Agreement dated 19.05.1997, Arun Mehra again filed a Company Petition No. 112/2013(CLB) in 2013 seeking rectification of the Register of Companies, to reflect the names of true and legitimate owners of DBPL, Digitally Signed By:ANIL KUMAR BHATT Signing Date:25.03.2025 16:44:39 Signature Not Verified CS(OS) 749/1994 & EX.P. 92/2019 Page 13 of 49 which got allowed on 11.03.2014 and the names of the correct owners were directed to be mentioned in the Register of Members in terms of the Agreement dated 19.05.1997. 43. This entire chain of litigation clearly reflects that Arun Mehra may have been aware of the Compromise Decree of 2003, but he had no locus standi to challenge the same as his name was registered in the Register of Members, only pursuant to the Order dated 11.03.2014 of CLB. He acquired the locus to challenge the judgment for and on behalf of DBPL for the first time only in 2014 when his name got entered in the Register of Members. Before then, even though he was aware of the Compromise Decree dated 28.03.2003, but there was no cause of action in his favour and he did not have the requisite locus to challenge the Decree on behalf of DBPL. Unless he assumed the position of Director in DBPL, he could not have possibly challenged the Decree. Therefore, the limitation period for him to challenge the Compromise Decree arose pursuant to CLB Order dated 11.03.2014. 44. The present Application has been filed on 13.10.2014 i.e. well within the limitation period of three years. Therefore, in the light of the aforesaid discussion it is held that the Application has been filed within limitation but if there is any delay, the same stands condoned in the light of multiple litigations undertaken to get the tile established as Director of DBPL. 45. The Application is accordingly disposed of. I.A. No. 20535/2014 (under Section 151 CPC read with Section 44 of the Evidence Act on behalf of the Defendant No.5 Company seeking Recall of the Collusively obtained Order/Judgment-cum-Decree dated 28.03.2003) Digitally Signed By:ANIL KUMAR BHATT Signing Date:25.03.2025 16:44:39 Signature Not Verified CS(OS) 749/1994 & EX.P. 92/2019 Page 14 of 49 46. The present Application dated 13.10.2014 on behalf of Defendant No.5-M/s Durga Builders Pvt. Ltd. (henceforth referred to as the “DBPL”), through its Director Divij Mehra, has been filed under Section 151 of the Code of Civil Procedure, 1908 („CPC‟ hereinafter) read with Section 44 of the Indian Evidence Act, 1872 seeking recall of the Judgment- cum-Decree dated 28.03.2003 on the ground of fraud and lack of jurisdiction. 47. Originally, Suit No.749/1994 was filed by the Plaintiff/Decree Holder-Ajay Relan against Defendant No.1 to 4, being Legal Heirs of Sh. K.D. Somaia; Defendant No.5-DBPL; Defendant No.6- Ravinder Kumar Nanda („R.K.Nanda‟) and his wife Defendant No.7- Promila Nanda, the two Directors of Defendant No.5, to seek Specific Performance of Agreement to Sell dated 30.04.1993 entered between the Plaintiff and Defendant No.5 Company through its Director, R.K.Nanda Defendant No.6. The Suit was decreed vide Judgment dated 28.03.2003 on the basis of compromise between the Plaintiff and Defendant No.5 through R.K. Nanda. 48. Execution No.321/2003 was filed by the Plaintiff/ Decree Holder in which eventually, the Conveyance Deed dated 23.07.2010 was executed in favour of the Plaintiff, though the Second Floor portion continued to be in possession of M/s CE Construction Ltd („CECON‟). 49. The Division Bench in EFA (OS) 05/2008, had vide Order dated 20.02.2008, directed that in case CECON succeeds in its Appeal, the Decree Holder/ Plaintiff- Ajay Relan would have the registration of the Sale Deeds in his favour, cancelled. 50. The Objections have been filed on behalf of Defendant No.5-DBPL Digitally Signed By:ANIL KUMAR BHATT Signing Date:25.03.2025 16:44:39 Signature Not Verified CS(OS) 749/1994 & EX.P. 92/2019 Page 15 of 49 through its present Director Sh. Divij Mehra, for setting aside the Compromise Decree dated 28.03.2003, essentially on the following grounds:- (i) That the Compromise Decree was a consequence of criminal conspiracy between Mr. Sharad Kumar Aggarwal, erstwhile Advocate of DBPL, Ajay Relan, the Plaintiff and R.K. Nanda - Defendant No.6, who had fraudulently projected himself as the Director of the Applicant Company and entered into collusive Compromise Decree. Pursuant to the Compromise inter se Defendant No.5 and Ajay Relan, it was agreed that Rs.10 lacs shall be paid to M/s Kumar Security Syndicate. Though, there was no plausible reason for Ajay Relan, the buyer, to have paid Rs.10 lacs to M/s Kumar Industrial Syndicate (of which Sharad Kumar Aggarwal was a Director) was out of the money payable to the Company. It is claimed that the Compromise Decree was the consequence of a collusion orchestrated and coordinated between Sharad Kumar Aggarwal and Defendant No.6 – R.K. Nanda. (ii) That