Y.S. Manchanda vs Nand Singh & Ors
2010 Latest Caselaw 5327 Del

         THE HIGH COURT OF DELHI AT NEW DELHI

%                         Judgment Reserved on: 11.11.2010
                          Judgment Pronounced on: 23.11.2010

+            IA No. 7398/2009 in CS(OS) No.826/2004

Y.S. MANCHANDA                                        .....Plaintiff

                                       - versus -

NAND SINGH & ORS                                    .....Defendants

Advocates who appeared in this case:
For the Plaintiff: Mr. S.C. Nigam, Advocate.

For the Defendant: Mr. Ravinder Sethi, Sr. Advocate with
Mr. Puneet Sharma and Mr. Rajeev Kumar, Advocates for
defendants No.2 to 5.

CORAM:-
HON'BLE MR JUSTICE V.K. JAIN

1. Whether Reporters of local papers may
   be allowed to see the judgment?                                Yes

2. To be referred to the Reporter or not?                         Yes

3. Whether the judgment should be reported                        Yes
   in Digest?

V.K. JAIN, J

1.           This is an application for recalling the compromise

order dated 5th October, 2005 passed on an application

under Order 23 Rule 1 of CPC read with Section 151 thereof

being IA No.8006/2005.

2.           Under the settlement, the Agreement to Sell dated


IA NO.7398/2009 in CS(OS)NO.826/2004                        Page 1 of 20
 17th December, 2002 which the defendants had executed in

favour of the plaintiff stood cancelled subject to the

defendants paying an amount of Rs.30 lacs to the plaintiff.

Since a sum of Rs.8 lacs had already been paid to the

plaintiff, five cheques for a total amount of Rs.22 lacs were

handed over to the plaintiff in Court on that date. The suit

was dismissed as withdrawn subject to the cheques given to

the plaintiff being honoured.

3.           It has been alleged in the application that during

the pendency of this suit, the vendors had been threatening

and coercing the plaintiff who then was 69 years old and

was otherwise ill, by threatening that they wanted the

property for their own use and will never part with the same

and thereby prevailed upon the plaintiff to call off the

agreement and compromise the suit.            It has also been

alleged in para 12 of the application that the vendors had

applied pressure and threat of criminal prosecution by filing

fabricated documents on the Court file purporting to be

transcript of some taped incriminating conversation with

the plaintiff.      It has also been alleged that the defendants

sold the property within five months of obtaining the

compromise order by executing four separate sale deeds in

IA NO.7398/2009 in CS(OS)NO.826/2004                   Page 2 of 20
 respect of four portions of the building, for a total sale

consideration          of     Rs.1,55,00,000/-       as    against       the

consideration of Rs.3,07,00,000/- which the plaintiff had

agreed to pay to them and thereby they have caused loss of

revenue to the Government in the form of stamp duty and

income tax by taking a few crores of rupees over and above

the agreed sale consideration.              The plaintiff has sought

annulment of the sales effected by the vendors in favour of

respondents No.6 and 7 and has also sought conveyance of

the property to him against the agreed sale consideration of

Rs.3,07,00,000/- along with physical possession of the

property. It has been further prayed that if the Court is of

the opinion that directing sale of the property to the plaintiff

is not possible, in that case he may be awarded

compensation amounting to Rs.1,73,55,000/- along with

interest thereon at the rate of 8% per annum.

4. The application has been opposed by defendants

No.2 to 5. It has been pointed out in the reply that the

plaintiff had failed to obtain an interim injunction from this

Court and realizing the futility of pursuing a false and

frivolous litigation, he had entered into a compromise out of

his own free will on return of the sum of Rs.30 lacs which

he had furnished as security money and which the

defendants were otherwise entitled to forfeit in terms of the

agreement. It has also been stated in the reply that a

compromise order can be recalled only for the reason of a

fraud being practiced on the Court and not on account of

fraud having been practised by one party on the other. It

has been pointed out that the applicant has failed to specific

how and in what manner he was threatened and coerced

into compromising the suit. The respondents/defendants

No.2 to 5 have also denied the alleged threat or coercion.

According to the respondents, the applicant, after receiving

a sum of Rs.30 lacs under the compromise, has turned

dishonest and filed this application at a belated stage with a

mala fide intention of drawing an unfair advantage over the

answering defendants. It has also been stated in the reply

that the applicant who is a builder is in the habit of filing

such false and frivolous litigation against unsuspecting

people with an intention of pressurizing them to submit to

his illegal and mala fide demands. The contesting

defendants have denied having intimidated the

plaintiff/applicant with initiation of criminal prosecution by

filing fabricated documents. It has also been stated in the

reply that the plaintiff/applicant, prior to institution of the

suit had resorted to threatening the answering defendants

and the conversation which took place between the parties

on 12th March, 2006 was recorded by them with a view to

expose the plaintiff/applicant.

5. Order 23 Rule 3A of the Code of Civil Procedure

provides that no suit shall lie to set aside a decree on the

ground that the compromise on which the decree is based

was not lawful. The Explanation to Rule 3 of Order 23 of

the Code provides that an agreement or compromise which

is void or voidable under the Indian Contract Act, 1872

shall not be deemed to be lawful within the meaning of that

Rule. It would be pertinent to note here that Rule 3

provides for passing of a decree by the Court where it is

specified that a suit has been adjusted wholly or in part by

any lawful agreement or compromise in writing and signed

by the parties. Therefore, the agreement or compromise

between the parties to a suit needs to be lawful before it can

be accepted by the Court and a decree can be passed in

terms thereof. In view of the Explanation referred above, if

an agreement is either void or voidable, it shall not be a

lawful agreement. Therefore, the Court cannot pass a

compromise decree on the basis of an agreement or

compromise which is either void or voidable. In view of the

provisions of Rule 3A, if a decree is sought to be challenged

on the ground that the compromise on which it was based

was void or voidable and, therefore, was not lawful, no suit

can be filed for setting aside such a decree. As a necessary

corollary, the only remedy available to a party who seeks to

challenge a decree on the ground that the compromise on

which it was based was void or voidable and therefore,

unlawful, is to go back to the Court which had passed the

decree on the basis of such a compromise. In view of the

provisions of Rule 3A of Order 23 when read with the

Explanation to Rule 3, there is no scope for an

interpretation that a compromise decree which is voidable

and not void can be challenged by filing a separate suit.

6. The question whether a compromise decree

obtained by playing fraud upon a party to the suit came up

for consideration before the Supreme Court in Pushpa Devi

Bhagat (D) through LR Smt. Sadhan Rai Vs. Rajinder

Singh and others JT 2006 (6) SC 235. The Supreme Court

held that no independent suit can be filed for setting aside

compromise decree on the ground that the compromise was

not lawful in view of the bar contained in Order XXIII of

Code of Civil Procedure and the only remedy available to a

party to a consent decree to avoid such consent decree is to

approach the court which recorded the compromise and

made a decree in terms of it, and establish that there was

no compromise. It was further held that in that event the

court which recorded the compromise will itself consider

and decide the question as to whether there was a valid

compromise or not.

7. On the other hand, in the case of Dadu Dayal

Mahasabha Vs. Sukhdev Arya and Anr.; (1990) Supreme

Court Cases 189, the Court held that if a party makes an

application before the court for setting aside the decree on

the ground that he did not give his consent, the court has

the power and duty to investigate the matter and to set

aside the decree if it is satisfied that the consent as a fact

was lacking and the court was induced to pass the decree

on a fraudulent representation made to it that the party had

actually consented to it. The Supreme Court further held

that if the case of the party challenging the decree is that he

was in fact a party to the compromise petition filed in the

case but his consent has been procured by fraud, the court

cannot investigate the matter in the exercise of its inherent

power and the only remedy to the party is to institute a suit.

8. In Banwari Lal Vs. Smt. Chando Devi (through

L.R.) and another; AIR 1993 SC 1139, the Supreme Court,

inter alia, held as under:-

"On 3rd April, an application was filed on behalf of the plaintiff-appellant in the said suit that he had engaged Shri Soran Ram, Advocate, Karnal, to appear on his behalf, who had told the appellant that the date fixed for the hearing of the suit was 5.3.1991. When the appellant went to him on 5.3.1991 the counsel informed him that the case had been adjourned to 2.4.1991. On 2.4.1991 the appellant learned from the cause list that the case was not on the cause list. Then he approached his counsel aforesaid Shri Soran Ram along with Shri I.D. Swamy, a retired IAS Officer. His counsel informed him that the suit has been dismissed as withdrawn. The appellant got the records of the case inspected which revealed that Shri Soran Ram, Advocate of the appellant, in collusion with defendant No.2 of the said suit had played a fraud on the appellant by filing a fabricated petition of compromise although no compromise had been effected between the appellant and the respondent. Further details of fraud were mentioned in the said petition and it was stated that as the alleged compromise itself was void, illegal and against the requirement of Rule 3 of Order 23 of the CPC (hereinafter referred to as "the Code"), the order recording such compromise be recalled and suit be restored and be heard on merit. About his counsel aforesaid Shri Soran Ram, it was said that the appellant had learned that he had cheated several persons and because of that a case had been registered against him.

9. In Gram Panchayat of Village Naulakha Vs.

Ujagar Singh & Ors; IV (2000) CLT 242 (SC), the Supreme

Court referring to the provisions of Section 44 of Indian

Evidence Act which provides that any party to a suit or

proceedings may show that any judgment or order or decree

which is relevant under Sections 40,41, 42 and which has

been delivered by a Court not competent to deliver it or was

obtained by fraud or collusion, was of the view that it is not

necessary to file an independent suit to raise such a

contention. It was observed that in order to contend in a

latter suit or proceedings that an earlier judgment was

obtained by collusion, it is not necessary to file an

independent suit.

10. In S.P. Chengalvaraya Naidu (dead) by L.R.s Vs.

Jagannath (dead) by L.Rs. and others; AIR 1994 Supreme

Court 853,

"Jagannath filed a suit for partition of the property and obtained a preliminary decree. During the pendency of the suit, the appellants did not know that Jagannath had no locus standi to fie the suit because he had already executed a registered release deed, relinquishing all his rights in respect of the property in dispute, in favour of Chunilal Sowcar. It was only at the hearing of the application for final decree that the

appellants came to know about the release deed and, as such, they challenged the application on the ground that non-disclosure on the part o9f Jagannath that he was left with no right in the property in dispute, vitiated the proceedings and, as such, the preliminary decree obtained by Jagannath by playing fraud on the court was a nullity."

It was held that a litigant, who approaches the

court, is bound to produce all the documents executed by

him which are relevant to the litigation. If he withholds a

vital document in order to gain advantage on the other

side then he would be guilty of playing fraud on the court

as well as on the opposite party.

11. In United India Insurance Co.Ltd. Vs. Rajendra

Singh & Ors., Etc.; II (2000) CLT 25 (SC), Supreme Court

observed that the remedy to move for recalling the order on

the basis of newly discovered facts amounting to fraud or

high degree cannot be foreclosed. It was also observed that

no Court or Tribunal can be regarded as powerless to recall

its own order if it is convinced that the order was obtained

through fraud or misrepresentation of such a dimension as

would affect the very basis of the claim.

12. In A.V. Papayya Sastry and Others Vs. Govt. of

A.P. and others; (2007) 4 Supreme Court Cases 221,

Supreme Court observed that if any judgment or order is

obtained by fraud, it cannot be said to be a judgment or

order in law. It was held that a judgment, decree or order

obtained by playing fraud on the Court, Tribunal or

Authority is a nullity and non est in the eyes of law and can

be challenged in any Court at any time, in appeal, revision,

writ or even in collateral proceedings.

13. The learned counsel for the defendants No.2 to 5

has referred to the decisions of this Court in Uri Civil

Contractor AB Vs. Mrs. Pampa Mukherjee; 56 (1994)

Delhi Law Times 608 and Tara Chand Jain Vs. Saroj

Gupta; 130 (2006) Delhi Law Times 617. In the case of Uri

Civil Contractor AB (supra), this Court was of the view

that in the case of fraud practised by one party on the other,

the party cannot approach the Court under Section 151 of

CPC for setting aside the compromise decree on the basis of

fraud and the only course open to the said party would be to

file a suit for declaration for getting the said decree declared

as null and void. It was further held that in case of fraud

practised on the Court, the Court would be fully competent

to investigate the said fraud and set aside the said decred

on an application under Section 151 of CPC moved by a

party, if it comes to the conclusion that it would be a case of

fraud practised on the Court. A similar view was taken in

the case of Tara Chand Jain (supra).

14. The learned counsel for the defendants has also

referred to the decision of the Andhra Pradesh High Court in

Smt. Anita Vs. R. Rambilas (exact citation not given),

where it was held that if the evidence on record discloses

that one party has played fraud on the other party at any

stage, the only remedy left over to the party against whom

the fraud is played is to file a separate suit for setting aside

the decree obtained by fraud whereas if it is proved that one

of the parties had played fraud on the Court, then only a

review petition is maintainable under Section 151 of CPC.

However, in view of the authoritative pronouncement of

Supreme Court in the case of Pushpa Devi Bhagat's case

(supra) and the specific provisions contained in Order 23

Rule 3A of the Code of Civil Procedure read with the

Explanation to Rule 3 thereof, there is no escape from

concluding that irrespective of whether a fraud is played

upon the Court or by one party to the litigation on the other,

no independent suit lies for setting aside the compromise

decree on the ground that the compromise on which the

decree was based was unlawful. Such a decree can be

challenged before a Court which passed the decree based on

compromise by filing appropriate application under Section

151 of CPC.

15. Coming to the merits of this application, the case

of the applicant is based upon coercion though the heading

of the application refers to deception and misrepresentation.

In the application, there is no allegation of fraud or

deception either on the Court or on the applicant. Similarly,

there is no allegation of any misrepresentation either to the

Court or to the applicant. Order VI Rule 4 of CPC provides

that in all cases in which the party pleading relies on any

misrepresentation, fraud, breach of trust, wilful default or

undue influence and any of other cases in which particulars

may be necessary beyond such as are exemplified in the

aforesaid forms, particulars shall be stated in the pleadings.

16. In Ranganayakamma and another Vs. K.S.

Prakash (dead) by LRs. and others; (2008) 15 Supreme

Court Cases 673, the Supreme Court referring to the

provisions contained in Order VI Rule 4 of the CPC held that

when a fraud is alleged, the particulars thereof are required

to be pleaded. It was observed that when a contract is said

to be voidable by reason of any coercion, misrepresentation

or fraud, the particulars thereof are required to be pleaded.

17. In Ramesh B. Desai Vs. Bipin Vadilal Mehta;

(2006) 5 SCC 638, Supreme Court observed that Order VI

Rule 4 of CPC requires that complete particulars of fraud

shall be stated in the pleadings. A similar view was taken in

Sangramsinh P. Gaekwad Vs. Shantadevi P. Gaekwad;

(2005) 11 scc 314.

18. Coercion is defined in Section 15 of the Indian

Contract Act as committing or threatening to commit any

act forbidden by the Indian Penal Code, or the unlawful

detaining or threatening to detain any property to the

prejudice to any person whatever, with the intention of

causing any person to enter into an agreement. The

definition of `coercion' contained in Section 15 of the Indian

Contract Act is intended solely for the purpose of

considering whether the consent in a given case was a free

consent falling within Section 14 thereof. The expression

"any act forbidden by the Indian Penal Code" obviously

refers to acts which amount to an offence under the Indian

Penal Code. To threaten another person with criminal

prosecution is not per se forbidden by Indian Penal Code.

Such an act is forbidden only when it amounts to a false

charge. If a person is threatened with criminal prosecution

and fearing the result of prosecution he enters into an

agreement with the person threatening him with

prosecution, it cannot be said that the consent of the person

threatened with prosecution was obtained by coercion. If,

however, the threat given is of false prosecution or forging or

fabricating evidence, that would amount to coercion being

an act forbidden by the Indian Penal Code.

19. When coercion is alleged, the allegation like fraud

or misrepresentation must be supported by particulars. It

is only after complete particulars of the alleged coercion are

given that the Court can inquire into it and decide whether

it stands proved or not.

20. In the case before this Court, the allegations of

what could constitute coercion are contained in paragraphs

8 and 12 of the application. In paragraph 8 it is alleged that

the vendors had been threatening and coercing the plaintiff

during pendency of the suit and they prevailed upon him to

call off the agreement and compromise the suit. No

particulars of the alleged threat or coercion has been given

in this paragraph of the application. It does not disclose

when the plaintiff/applicant was threatened, by whom the

threat was given and what was the place at which the

plaintiff/applicant was threatened. It does not disclose

what was the mode of the alleged threat and coercion and

what exactly was the threat given or coercion applied on the

plaintiff/applicant. In any case, if the defendants told the

plaintiff that they required the property for their use and

will not part with it, it does not amount to `coercion' as

defined in Section 15 of the Contract Act. The allegations

made in paragraph 8 of the application do not meet the

requirement of Order VI Rule 4 of CPC and, therefore, are

liable to be rejected on this ground alone.

21. It has been alleged in paragraph 12 of the

application that the vendors had applied pressure and

threat of criminal prosecution by filing fabricated document

on the Court file, purporting to be the transcript of some

taped incriminating conversation with him. The application

does not disclose when and where the conversation, if any,

took place between the parties. It does not disclose what

exactly was contained in the transcript which is alleged to

have been used to threaten the plaintiff/applicant and

where, when and by whom the alleged fabricated taped

conversation was played to the plaintiff/applicant or its

transcript was given to him. The plaintiff/applicant does

not claim to have been supplied with any transcript of the

alleged taped conversation. No such transcript has been

placed on record by him. The application does not indicate

what was contained in the alleged fabricated transcript of

the taped conversation. The case of the contesting

defendants is that the conversation which took place

between them, the plaintiff and one Smt. Khanna (a broker)

on 16.3.2006 was recorded by them in order to expose the

threat given to them by the plaintiff prior to institution of

the suit. This averment made by the defendants No.2 to 5

in paragraph 12 of their reply has not been controverted in

paragraph 12 of the rejoinder by the plaintiff/applicant.

While filing the rejoinder, the plaintiff/applicant did not

claim that the alleged fabricated transcript pertained to a

conversation prior to the date 5th October, 2005 when the

compromise order was passed by this Court. If the

transcript pertains to a conversation which took place after

5th October, 2005, it cannot be said that the

plaintiff/applicant was coerced into entering into a

compromise recorded on 5th October, 2005, using a

fabricated transcript of his conversation with the

vendors/defendants. Thus, even the allegations made in

paragraph 12 of the application do not meet the

requirement of Order VI Rule 4 of CPC.

22. A perusal of IA No.8006/2005 filed under Order 23

Rule 1 of CPC would show that it is signed not only by the

plaintiff but also by his counsel, Shri S.C. Nigam who

continues to represent him even in these proceedings. The

application was also supported by an affidavit of the

plaintiff/applicant which was sworn before an Oath

Commissioner and at the time of attestation of his affidavit,

the plaintiff/applicant was identified by his present counsel,

Shri S.C. Nigam.

23. A perusal of the order passed by this Court on 5 th

October, 2005, would also show that Shri S.C.Nigam,

counsel for the plaintiff was present in the Court when this

order was passed. This is not the case of the plaintiff that

Mr. Nigam was not acting on instructions from him. He has

not disputed either his signature on the application or the

affidavit sworn by him. The cheques which were given to

the plaintiff in the Court on 5th October, 2005 have

admittedly been got encashed by him. If the

plaintiff/applicant was coerced into compromising with the

defendants, nothing prevented him from not encashing

these cheques. There is no explanation from the

plaintiff/applicant as to why he chose to encash five

cheques for a total sum of Rs.22 lacs, in case he had not

given a free consent to the compromise with the

defendants/vendors.

24. The compromise order was passed on 5th October,

2005, whereas this application has been filed on 18 th May,

2009, i.e., after more than 3 ½ years of the compromise

order being passed by the Court. There is no explanation

from the plaintiff/applicant as to why he waited for more

than 3 ½ years to come to the Court to complain of the

alleged coercion seeking annulment of the compromise

order.

25. In Shanti Budhiya Vesta Patel and Others Vs.

Nirmala Jayprakash Tiwari and Others; (2010) 5 Supreme

Court Cases 104, the Supreme Court held that the burden

to prove that a compromise arrived at under Order 23 Rule

3 of CPC was tainted by coercion or fraud lies upon the

party who alleges the same and in order to make out a case

of fraud or coercion there must be (a) an express allegation

of coercion or fraud and (b) all the material facts in support

of such allegations must be laid out in full and with a high

degree of precision. The application does not meet these

requirements of law and, therefore, needs to be rejected.

26. In these circumstances, there is no escape from

the conclusion that there was no coercion applied upon the

plaintiff/applicant and that he wants to go back on his

compromise with the defendants No.2 to 5, presumably on

account of the value of the property having substantially

gone up between the date on which the compromise order

was passed and the date on which he has filed this

application. The application is nothing but a gross abuse of

the process of the Court and is hereby dismissed with costs

assessed at Rs.20,000/-.

(V.K. JAIN) JUDGE

NOVEMBER 23, 2010 vk