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CASE NO.: Appeal (civil)  4461 of 2005

PETITIONER: The State of Andhra Pradesh & Anr.                       

RESPONDENT: T. Suryachandra Rao                                              

DATE OF JUDGMENT: 25/07/2005

BENCH: ARIJIT PASAYAT & C.K. THAKKER

JUDGMENT: J U D G M E N T (Arising out of SLP (C) No. 7944 of 2004)

ARIJIT PASAYAT, J.

       Leave granted.

                The State of Andhra Pradesh and the Mandal Revenue  Officer (in short the ’Revenue Officer’) Peddapuram, East  Godavari  call in question legality of the judgment rendered  by a learned Single Judge of the Andhra Pradesh High Court.   By the impugned order the High Court held that the Land  Reforms Appellate Tribunal, East Godavari, Kakinada (in  short "the Appellate Tribunal") and the Land Reforms  Tribunal, Kakinada (in short the "Tribunal") were not  justified in holding that the respondents had fraudulently  taken advantage by suppression of facts; thereby taking  benefit under the Andhra Pradesh Land Reforms (Ceiling on  Agricultural Holdings) Act, 1973, (in short ’the Act’).   Basic features of the case which need to be noted are  as under:          The respondent as declarant submitted a declaration as  regards determination of his ceiling limit of land under the  Act. The Appellate Tribunal passed an order dated 16.11.1978  determining the ceiling limit of the declarant to be surplus  and declared 0.4388 S.H. land to be in excess of the ceiling  limit on the notified date. Thereafter, certain lands were  surrendered and surrender was accepted by order dated  8.5.1991 by the Additional Revenue Divisional Officer, Land  Reforms Kakinada. Subsequently, it was noticed that the land  which was surrendered had already been acquired in  proceedings under the Land Acquisition Act, 1898 (in short  the ’L.A. Act’).  Therefore, a notice was issued on 8.2.1995  proposing to consider declaration of alternative lands as  surplus in lieu of the lands which were earlier surrendered.   The Tribunal passed order in this regard after verifying the  records of the land acquisition proceedings. An appeal was  carried to the Appellate Tribunal and the same was  dismissed.  A revision was carried under Section 21 of the  Act before the High Court, which by the impugned order held  that it was for the Tribunal to have considered the  correctness of the declaration made by the declarant. After  having accepted the land to be surrendered, it was not to

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open to the Tribunal to vary the order.  It was held that  even though power was available to the Tribunal to reopen  the matter and pass necessary orders when fraud was  practiced, in the instant case the Tribunal having accepted  the matter after enquiry, it was not open to take a  different view.

       Though the High Court accepted on principle that the  Tribunal has ample power to reopen the matter when the error  is apparent on the face of record, it held that once the  enquiry had been conducted question of reopening the matter  did not arise.  It was held that under Section 10(3) of the  Act the Tribunal has to make an enquiry after statement  relating to surrender is filed. Merely because in the  statement it was indicated that some land was proposed to be  surrendered there was no scope for reopening the matter even  though the land was not available to be surrendered.

       Learned counsel for the appellants submitted that the  approach of the Tribunal is clearly erroneous.  There is no  dispute that the land which was offered for surrender had  already been acquired under the L.A. Act and there was no  scope for the respondent to again offer the said land.  This  was clearly fraudulent act and, therefore, the High Court  was not justified in its view.  

       In response, learned counsel appearing for the  respondent submitted that having accepted the land offered  for surrender after enquiry, it was not open to the Tribunal  to take note of any acquisition earlier.

       The order of the High Court is clearly erroneous. There  is no dispute that the land which was offered for surrender  by the respondent had already been acquired by the State and  the same had vested in it. This was clearly a case of fraud.    Merely because an enquiry was made, Tribunal was not  divested of the power to correct the error when the  respondent had clearly committed a fraud.

       By "fraud" is meant an intention to deceive; whether  it is from any expectation of advantage to the party  himself or from the ill will towards the other is  immaterial.  The expression "fraud" involves two elements,  deceit and injury to the person deceived.  Injury is  something other than economic loss, that is, deprivation of  property, whether movable or immovable or of money and it  will include and any harm whatever caused to any person in  body, mind, reputation or such others. In short, it is a  non-economic or non-pecuniary loss.  A benefit or advantage  to the deceiver, will almost always call loss or detriment  to the deceived. Even in those rare cases where there is a  benefit or advantage to the deceiver, but no corresponding  loss to the deceived, the second condition is satisfied.   (See Dr. Vimla v. Delhi Administration (1963 Supp. 2 SCR  585) and Indian Bank v. Satyam Febres (India) Pvt. Ltd.  (1996 (5) SCC 550).           A "fraud" is an act of deliberate deception with the  design of securing something by taking unfair advantage of  another.  It is a deception in order to gain by another’s  loss. It is a cheating intended to get an advantage.  (See  S.P. Changalvaraya Naidu v. Jagannath (1994 (1) SCC 1).         "Fraud" as is well known vitiates every solemn act.   Fraud and justice never dwell together.  Fraud is a conduct  either by letter or words, which includes the other person  or authority to take a definite determinative stand as a

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response to the conduct of the former either by words or  letter.  It is also well settled that misrepresentation  itself amounts to fraud. Indeed, innocent misrepresentation  may also give reason to claim relief against fraud.  A  fraudulent misrepresentation is called deceit and consists  in leading a man into damage by willfully or recklessly  causing him to believe and act on falsehood. It is a fraud  in law if a party makes representations, which he knows to  be false, and injury enures therefrom although the motive  from which the representations proceeded may not have been  bad.  An act of fraud on court is always viewed seriously.   A collusion or conspiracy with a view to deprive the rights  of the others in relation to a property would render the  transaction void ab initio. Fraud and deception are  synonymous.  Although in a given case a deception may not  amount to fraud, fraud is anathema to all equitable  principles and any affair tainted with fraud cannot be  perpetuated or saved by the application of any equitable  doctrine including res judicata.  (See Ram Chandra Singh v.  Savitri Devi and Ors. (2003 (8) SCC 319). "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’s Third New International  Dictionary "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 policy 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 with 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 Concise Oxford  Dictionary, 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.  Section 17 of the  Indian Contract Act, 1872 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. In a leading English case i.e.  Derry and Ors. v. Peek (1886-90) All ER 1 what constitutes  "fraud" was described thus: (All ER p. 22 B-C) "fraud"  is proved when it is shown that a false representation has  been made (i) knowingly, or (ii) without belief in its  truth, or (iii) recklessly, careless whether it be true or  false".  But "fraud" in public law is not the same as  "fraud" in private law.  Nor can the ingredients, which  establish "fraud" in commercial transaction, be of  assistance in determining fraud in Administrative Law.  It  has been aptly observed by Lord Bridge in Khawaja v.  Secretary of State for Home Deptt. (1983) 1 All ER 765,

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that it is dangerous to introduce maxims of common law as  to effect of fraud while determining fraud in relation of  statutory law.  "Fraud" in relation to statute must be a  colourable transaction to evade the provisions of a  statute.  "If a statute has been passed for some one  particular purpose, a court of law will not countenance any  attempt which may be made to extend the operation of the  Act to something else which is quite foreign to its object  and beyond its scope.  Present day concept of fraud on  statute has veered round abuse of power or mala fide  exercise of power. It may arise due to overstepping the  limits of power or defeating the provision of statute by  adopting subterfuge or the power may be exercised for  extraneous or irrelevant considerations.  The colour of  fraud in public law or administration law, as it is  developing, is assuming different shades.  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. The misrepresentation must be in  relation to the conditions provided in a section on  existence or non-existence of which the power can be  exercised.  But non-disclosure of a fact not required by a  statute to be disclosed may not amount to fraud.  Even in  commercial transactions non-disclosure of every fact does  not vitiate the agreement.  "In a contract every person  must look for himself and ensures that he acquires the  information necessary to avoid bad bargain. In public law  the duty is not to deceive.  (See Shrisht Dhawan (Smt.) v.  M/s. Shaw Brothers, (1992 (1) SCC 534).         In that case it was 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’s Third New International Dictionary  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  policy 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 with 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 Concise Oxford Dictionary, 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.   Section 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

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true.  The representation to become fraudulent must be of  the fact with knowledge that it was false.  In a leading  English case Derry v. Peek [(1886-90) ALL ER Rep 1: (1889)  14 AC 337 (HL)] what constitutes fraud was described thus :  (All Er p. 22 B-C)

       ’Fraud is proved when it is shown that a false  representation has been made (i) knowingly, or (ii) without  belief in its truth, or (iii) recklessly, careless whether  it be true or false’."

       This aspect of the matter has been considered recently  by this Court in Roshan Deen v. Preeti Lal (2002 (1) SCC  100) Ram Preeti Yadav v. U.P. Board of High School and  Intermediate Education (2003 (8) SCC 311), Ram Chandra  Singh’s case (supra) and Ashok Leyland Ltd. v. State of T.N.  and Another (2004 (3) SCC 1).

       Suppression of a material document would also amount to  a fraud on the court. (see Gowrishankar v. Joshi Amba  Shankar Family Trust (1996 (3) SCC 310) and S.P.  Chengalvaraya Naidu’s case (supra).         "Fraud" is a conduct either by letter or words, which  induces the other person or authority to take a definite  determinative stand as a response to the conduct of the  former either by words or letter.  Although negligence is  not fraud but it can be evidence on fraud; as observed in    Ram Preeti Yadav’s case (supra).         In Lazarus Estate Ltd. v. Beasley (1956) 1 QB 702,  Lord Denning observed at pages 712 & 713, "No judgment of  a Court, no order of a Minister can be allowed to stand if  it has been obtained by fraud. Fraud unravels everything."   In the same judgment Lord Parker LJ observed that fraud  vitiates all transactions known to the law of however high  a degree of solemnity.          Considering the aforesaid principles of law and the  background facts, the Tribunal was justified in modifying  the earlier order and varying it. The Appellate Tribunal did  not commit any error in upholding it. The High court’s order  is clearly unsustainable and is set aside.

       The appeal is allowed with no orders as to costs.