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CASE NO.: Special Leave Petition (civil) 8479  of  1999

PETITIONER: UNITED INDIA INSURANCE CO. LTD.

       Vs.

RESPONDENT: RAJENDRA SINGH & ORS,

DATE OF JUDGMENT:       14/03/2000

BENCH: K.T. THOMAS & nD.P. MOHAPATRA

JUDGMENT:

THOMAS,J.

Leave granted. L...I...T.......T.......T.......T.......T.......T.......T..J

   If  what  the  appellant-Insurance Company now  says  is true, then a rank fraud had been played by two claimants and wangled  two  separate Awards from a Motor  Accident  Claims Tribunal  for a bulk sum.  But neither the Tribunal nor  the High Court of Allahabad , before which the Insurance Company approached  for  annulling the awards, opened the  door  but expressed  helplessness  even  to look into the  matter  and hence  the  Insurance  Company has filed  these  appeals  by Special leave.

   Fraud  and justice never dwell together.(Frans et  jus nunquam cohabitant) is a pristine maxim which has never lost its  temper over all these centuries.  Lord Denning observed in  a  language without equivocation that no judgment of  a Court,  no order of a Minister can be allowed to stand if it has been obtained by fraud, for, fraud unravels everything( (Lazarus Estate Ltd.  Vs.  Beasley 1956(1) QB 702.)

   For  a  High Court in India to say that it has no  power even  to consider the contention that the awards secured are the  byproducts  of  stark fraud played on a  Tribunal,  the plenary   power  conferred  on  the   High  Court   by   the Constitution  may become a mirage and peoples faith in  the efficacy  of  the High Courts would corrode.  We would  have appreciated  if the Tribunal or at least the High Court  had considered   the  plea  and   found  them  unsustainable  on merits,if  they  are  meritless.  But when the  Courts  pre- empted  the Insurance Company by slamming the doors  against them,  this Court has to step in and salvage the  situation. Facts  are  these:   One Rajendra Singh and his  son  Sanjay Singh (first respondent in the respective appeals) filed two separate  claim  petitions before the Motor Accident  Claims Tribunal,  Bulandsahar  (for short the Tribunal)  in  1994 praying  for awarding compensation in respect of an accident which   happened   on   9.11.1993.     The   claimants   put forth-identical  averments regarding the accident which  are

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in substance the following:

   Rajendra Singh, the father was travelling on the pillion of a two wheeler motorcycle which was then ridden by his son Sanjay  Singh  and an Ambassador Car (DL 2C-9793) driven  by Jai  Prakash  collided with the motorcycle of the  claimants and caused injuries to both of them.  The ambassador car was owned by the second respondent.

   Rajendera  Singh made a claim for more than Rs.  4  lacs and  Sanjay Singhs claim was even above that (Rs.5.5 lacs). As  the ambassador car was, at the relevant time, covered by a  policy  of  Insurance  with the  appellant  Company,  the claimants  made  the appellnat Company also a party  in  the claim  proceedings before the Tribunal.  Though the owner of the Car as well as the Insurance Company resisted the claims on  the premise that there was no negligence on the part  of the  driver of the Car, the Tribunal found the driver guilty of negligent driving.  Hence, the owner was held vicariously liable   for   the   damages    payable   to   the   injured claimants.Accordingly,  two awards were passed on 15.1.1998, one  in  favour of Rajendra Singh in a sum of  Rs.3,55,000/- and  the  other  in favour of Sanjay Singh in a sum  of  Rs. 1,52,000/-.   Both the awards were to carry interest at  the rate  of  12% per annum from the date of claim.  An  interim order  was passed already for covering no fault  liability and  we are told that the amount towards that had been  paid by the appellant Company.

   The  awards  became  final as neither the owner  of  the ambassador  car  nor the Insurance Company filed any  appeal thereon.   Thus far, there was no problem for the  awardees. Hardly  four  months  elapsed after passing  the  awards,  a gentleman  visited  the Divisional Office of  the  appellant Company  at Gaziabad and delivered the photocopy of a report prepared  by  the Assistant Sub-Inspector of  Police,  subzi Mandi, Police Station, Delhi on 9.11.1993 in which contained a  narration  that Sanjay Singh and Rajendra Singh  received the  injuries  in  a different circumstance at  a  different place  altogether (i.e.  while they were operating their own tractor,  it  jutted  into  a  ditch and  in  the  jerk  the occupants   of  the  tractor   slipped  down  and  sustained injuries).   The gentleman who delivered the said report  to the  company was prepared to disclose further details of the above  accident only on a condition that his identity  would be kept in anonymity.

   On  receipt  of  the said  information,  the  Divisional Office  of the appellant Company made frenetic inquiries and they  came across statements attributed to the claimants and prepared  by the Sub-Inspector of Police, Subzi Mandi Police Station, Delhi, on 9.11.1993.  Such statements contained the narration that the injuries were sustained by Rajendra Singh and  Sanjay  Singh in the accident which happened  when  the trailor trolly had slipped into the pit.

   Almost   immediately   after     obtaining   the   above information,  the  appellant  Insurance  Company  moved  the Tribunal  with two petitions purportly under Section 151,152 and  153  of  the  Code  of Civil  Procedure  in  which  the appellant prayed for recall of the awards dated 15.1.1998 on the revelation of new facts regarding the injuries sustained by  the claimants.  Those applications were resisted by  the claimants  solely  on  the ground that the Tribunal  has  no power  of review except to correct any error in  calculating

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the  amount  of compensation and hence the  Tribunal  cannot recall  the  awards.  It appears that the Tribunal  accepted the   said  stand  of  the   claimants  and  dismissed   the application  for recalling the awards.  It was in the  above background  that  the appellant Insurance Company moved  the High  Court  of Allahabad with a Writ petition for  quashing the awards as well as the steps taken pursuant thereto.

   Learned  Single  Judge of the Allahabad High  Court  who dismissed  the Writ petition as per a short order passed  by him stated thus:

   Heard  learned counsel for the petitioner.  The present Writ  petition  has been filed against the  order  rejecting review  application.   There  is no power of review  in  the Statute.   Learned  Counsel for the petitioner  argues  that fraud  has been played.  It is a question of fact, for which writ  jurisdiction is not the proper forum.  The  petitioner may  avail himself of such legal remedy as may be  available to  him.  The writ petition is accordingly dismissed.  There will be, however, no order as to costs.

                                  (underlining supplied)

   Thus  the  Tribunal  refused  to open the  door  to  the appellant Company as the High Court declined to exercise its writ  jurisdiction  which  is almost plenary  for  which  no statutory  constrictions  could possibly be imposed.   If  a party  complaining of fraud having been practised on him  as well as on the court by another party resulting in a decree, cannot  avail  himself of the remedy of review or  even  the writ  jurisdiction  of  the  High Court, what  else  is  the alternative  remedy  for  him?  Is he to  surrender  to  the product  of the fraud and thereby became a conduit to enrich the  imposter unjustly?  Learned Single Judge who  indicated some  other  alternative remedy did not unfortunately  spell out  what is the other remedy which the appellant  Insurance Company could pursue with.

   No  one  can  possibly fault the Insurance  Company  for persistently  pursuing  the matter up to this court  because they are dealing with public money.  If they have discovered that  such  public  fund, in a whopping  measure,  would  be knocked off fraudulently through a fake claim, there is full justification  for the Insurance Company in approaching  the Tribunal itself first.  At any rate the High Court ought not have  refused  to  consider their grievances.  What  is  the legal  remedy  when a party to a judgment or order of  court later discovered that it was obtained by fraud?

   In  S.P.   Chengalvaraya  Naidu  (dead)  by  L.Rs.   Vs. Jagnnath  (dead) by Lrs.  & ors.   {1994 (1) SCC 1} the two Judges Bench of this Court held:

   Fraud  avoids  all  judicial  acts,  ecclesiastical  or temporal-  observed  Chief Justice Edward Coke  of  England about three centuries ago.  It is the settled proposition of law  that a judgment or decree obtained by playing fraud  on the court is a nullity and non est in the eyes of law.  Such a  judgment/decree-  by  the first court or by  the  highest court-has to be treated as a nullity by every court, whether superior  or  inferior.  It can be challenged in  any  court even in collateral proceedings

   In  Indian  Bank Vs.  Satyam fibres (India)  Pvt.   Ltd.

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{1996  (5)  SCC 550} another two Judges bench, after  making reference  to  a  number of earlier  decisions  rendered  by different  High  Courts in India, stated the legal  position thus:

   Since  fraud  affects  the  solemnity,  regularity  and orderliness of the proceedings of the Court and also amounts to  an  abuse of the process of Court, the Courts have  been held  to have inherent power to set aside an order  obtained by  fraud  practised upon that Court.  Similarly, where  the Court  is  misled by a party or the Court itself  commits  a mistake which prejudices a party, the Court has the inherent power to recall its order.

   It  is  unrealistic to expect the appellant  company  to resist  a  claim at the first instance on the basis  of  the fraud  because  appellant  company  had  at  that  stage  no knowledge about the fraud allegedly played by the claimants. If  the  Insurance  Company  comes to know  of  any  dubious concoction  having  been  made with the sinister  object  of extracting a claim for compensation, and if by that time the award  was already passed, it would not be possible for  the company  to file a statutory appeal against the award.   Not only because of bar of limitation to file the appeal but the consideration  of  the  appeal even if the  delay  could  be condoned, would be limited to the issues formulated from the pleadings made till then.

   Therefore,  we have no doubt that the remedy to move for recalling  the  order on the basis of the  newly  discovered facts  amounting  to  fraud  of   high  degree,  cannot   be foreclosed in such a situation.  No court or tribunal can be regarded  as  powerless  to recall its own order  if  it  is convinced  that  the  order  was wangled  through  fraud  or misrepresentation  of  such a dimension as would affect  the very basis of the claim.

   The  allegation made by the appellant Insurance Company, that  claimants were not involved in the accident which they described  in  the claim petitions, cannot be brushed  aside without  further  probe  into  the  matter,  for,  the  said allegation has not been specifically denied by the claimants when  they  were  called  upon to  file  objections  to  the applications  for  recalling of the awards.  Claimants  then confined  their resistance to the plea that the  application for  recall  is  not legally  maintainable.   Therefore,  we strongly feel that the claim must be allowed to be resisted, on the ground of fraud now alleged by the Insurance Company. If we fail to afford to the Insurance Company an opportunity to substantiate their contentions it might certainly lead to serious miscarriage of justice.

   In  the  result, we allow these appeals, set  aside  the impugned  orders and quash the awards passed by the Tribunal in  favour  of  the claimants.  We direct  the  Tribunal  to consider  the claims put forth by the claimants afresh after affording   a  reasonable  opportunity   to  the   appellant Insurance   Company  to   substantiate  their   allegations. Opportunity  must be afforded to the claimants also to rebut the allegations.

   We  make  it  clear that while disposing of  the  claims afresh  the  Tribunal shall not be trammeled by any  of  the observations,  if  any,  made  by us on the  merits  of  the

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allegations.