M/S Black Cobra vs Govt Of Nct Of Delhi
2014 Latest Caselaw 7051 Del

*       IN THE HIGH COURT OF DELHI AT NEW DELHI

%                           Order delivered on: 22nd December, 2014

+       Ex.P. No.399/2010 & E.A. (OS) Nos.373/2012 & 243/2013

        M/S BLACK COBRA                          ..... Decree-holder
                     Through       Mr.S.K.Jain, Adv. with
                                   Mr.T.Singh, Adv.

                        versus

        GOVT OF NCT DELHI                       ..... Judgment-debtor
                     Through       Mr.Sushil Dutt Salwan, Adv.

        CORAM:
        HON'BLE MR.JUSTICE MANMOHAN SINGH

MANMOHAN SINGH, J.

1. The abovementioned application being E.A. (OS) No.243/2013 has been filed by the judgment-debtor under Section 47 CPC raising objections to the present execution petition as well as seeking release of the decreetal money deposited by the judgment-debtor to the decree-holder against the Award dated 27th July, 2010/5th August, 2010 passed by the learned Arbitrator.

2. The decree-holder in the present case has filed the execution petition under Order 21 CPC praying that:-

"The Learned Arbitrator Sh. S.M. Chopra passed an Award on 27.07.2010/05.08.2010, against Govt. of NCT, Delhi amounting to Rs.65,68,481/- and interest @ 15% p.a. on Rs.65,68,481/- from 17.10.2008 till the date of payment along with cost of Rs.80,000/-.

Presently a sum of Rs.87,83,237/- (Rupees Eighty Seven Lacks Eighty Three Thousands Two Hundred Thirty Seven only) is due under the Award as principal amount and interest till the date of filing the present execution petition. The Decree-holder reserves his rights to claim interest after 16.12.2010, if necessary.

The Decree-holder humbly prays that the warrant of attachment for a sum of Rs.87,83,237/- (Rupees Eighty Seven Lacks Eighty Three Thousands Two Hundred Thirty Seven only) may be issued against Judgment- debtor. The cost of this petition be also allowed along with interest from 16.12.2010 till its realization."

3. Brief facts of the matter are that the Arbitrator had passed the Award in favour of the decree-holder on 27th July, 2010/5th August, 2010. The judgment-debtor filed objections under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the "Act") which were dismissed on 26th August, 2011. After that, the present execution was filed.

4. By order dated 5th January, 2012, an attachment order of the cars of the judgment-debtor was passed and the matter was adjourned to 7th March, 2012. On the said date, the statement was made by the judgment-debtor before Court that the judgment-debtor had filed an appeal against the order passed by a Single Judge of this Court dismissing the objections under Section 34 of the Act which had been dismissed and the judgment-debtor intended to file a Special Leave Petition before the Supreme Court. The prayer was also made before Court to keep the order of attachment dated 5th January, 2012 in abeyance for two weeks from that date.

Considering the said request, the Court ordered for keeping the attachment order in abeyance, subject to the condition put on the judgment-debtor to deposit the amount in question with this Court and the matter was adjourned to 7th August, 2012. In the meanwhile, the decree-holder filed an application being E.A. (OS) No.373/2012 for release of the amount deposited by the judgment-debtor.

5. The Special Leave Petition filed by the judgment-debtor, being Special Leave Petition (Civil) No.18626/2012 was dismissed as withdrawn by order dated 13th July, 2012, on the statement of the judgment-debtor that the judgment-debtor would raise objections to the implementation of the Award before the Executing Court.

6. The decree-holder on 19th November, 2012 addressed the submissions before Court that in case the objections filed by the judgment-debtor are ultimately dismissed, the decree-holder would be entitled to interest on the principal amount as awarded by the learned Arbitrator till the date of payment. The said question was left open by the Court.

7. Later on, the judgment-debtor filed the objections being E.A. (OS) No.243/2013 under Section 47 CPC to the present execution. At the same time, the application filed by the decree-holder for release of the amount deposited by the judgment-debtor being E.A. (OS) No.373/2012 was also pending.

8. The decree-holder has also given the details of the calculation of the amount due as on 13th October, 2011 which read as under:-

(i) Award amount under Claim No.1 & 2 Rs.65,68,481.00

(ii) Interest as per Claim No.4 of Award Rs.29,55,816.40

from 17.10.2008 to 13.10.2011

(iii) Cost as per Claim No.5 Rs. 80,000.00 Awarded amount as on dated Rs.96,04,297.40 13.10.2011

9. Learned counsel for the decree-holder has also pressed that the decree-holder is entitled to the interest on the total amount of Rs.96,04,297.40p. @ 15% from 14th October, 2011 till the date of its realization.

10. As far as merit of the case is concerned, the award in question has attained finality upto the Apex Court. It has been contended by the judgment-debtor in the objections that the decree-holder has not approached this Court with clean hands. There was no valid and binding contract between the parties. The alleged contract is based on forged documents and fraudulent act committed by the decree- holder on judgment-debtor.

11. It is contended that as per letter dated 31st March, 2006 as well as clause 5.13 of the Tender, the decree-holder was required to submit the agreement on a non-judicial stamp paper of Rs. 100/- as per draft provided by the Hospital within 15 days from the date of issue of letter of acceptance of tender and in absence thereof, it was construed that there constitutes no valid and binding contract between the parties. In the absence of a written contract, no arbitration agreement existed. Relevant clause 5.13 reads as under:

"5.13 The Agency shall submit the Agreement of the contract on a non-judicial stamp paper of Rs 100/- as per draft to be provided by the Hospital. The successful tenderer shall enter into a contract/agreement with the

Hospital as per the terms and conditions of the tender within fifteen days from the date of issue of letter of acceptance of tender."

12. It is averred that the award of Security Agency Agreement was obtained by the decree-holder on false and fabricated document. It is alleged that when the Principal Secretary, Health and Family Welfare, Govt. of NCT of Delhi received complaints against the decree-holder, the documents submitted by the decree-holder were sent for verification. The decree-holder claimed itself to be a registered partnership firm registered with registration No.807/2000. The said documents submitted by him included the alleged Partnership Registration certificate and an alleged Experience Certificate purportedly issued by Modern Food Industries (India) Ltd. It was because of these documents that the decree-holder was considered eligible to participate in the tender bid process and won the bid.

13. It is stated that vide letter dated 19th May, 2006, the Addl. Secretary (Health) was informed by the Registrar of Firms that the decree-holder is not registered as a partnership firm and as per records one M/s Linkin Advertising Agency is registered under registration No. 807/2000 with Registrar of Firms. Similarly, on enquiry it was revealed that Experience Certificate submitted by the decree-holder at the time of the bid purportedly issued by Modern Food Industries (India) Ltd. was forged as decree-holder was never engaged by the latter.

14. Pursuant to the above, a show cause notice dated 20th July, 2006 was issued to the decree-holder to which decree-holder sent a vague reply dated 27th July, 2006.

15. It is averred by the judgment-debtor that decree-holder also failed to fulfil the conditions of clause 11.4 of the Tender whereby the latter was required to deploy only those persons whose antecedents had been verified by the Delhi Police Authorities. Further, a complaint was brought to the knowledge of Secretary Health regarding irregular award of security service at GTB Hospital vide letters dated 16th December, 2006, 19th December, 2006, 22nd December, 2006 and 29th December, 2006.

16. It has been contended that in order to cover up the illegal act of forgery, the decree-holder filed a suit for permanent injunction against the judgment-debtor restraining it from cancelling the award of contract and awarding it to another firm. That suit was dismissed as withdrawn vide order dated 26th March, 2007. Thereafter judgment- debtor vide letter dated 29th March, 2007 terminated the Assignment of Security Agency w.e.f. 31st March, 2007 midnight.

17. It is the case of the judgment-debtor that the award of the Arbitrator has been obtained by the decree-holder on basis of the forged documents thereby applying fraud on the learned Arbitrator, as a result whereof the decision arrived at by the learned Arbitrator is a nullity. A decision which is nullity in the eyes of law is no decree and as such cannot be executed.

18. Another objection of the judgment-debtor is that the wages for the month of January, February and March, 2012 were distributed by

the Hospital Administration to the Guards, as per directions of the Labour Department for which financial sanction was granted by the concerned Authority. Accordingly, jurisdiction of the Labour Court/ Labour Department has been invoked. Under these circumstances the learned Arbitrator lacked jurisdiction to hear the claim.

19. In view of these contentions, the judgment-debtor seeks withholding of release of the decreetal amount deposited by the judgment-debtor in the Court and also seeks refund of the said amount along with interest accrued thereupon.

20. On the other hand, in reply to this application, the decree- holder has averred that this application deserves to be dismissed as Section 47 CPC does not apply to the present Execution Petition. The said provision applies to decree or order passed by the Court. However, an Arbitral Tribunal is not a Court and an Award published by the Arbitral Tribunal is neither an 'Order' nor a 'Decree'. The same could have been challenged only under Section 34 of the Act.

21. The judgment-debtor has availed all the remedies provided under the Act to challenge the Award including filing of an SLP in the Supreme Court but to no avail. Filing of this application is merely an attempt to delay the execution proceedings.

22. It is averred that it has come on record that the counsel for the judgment-debtor on 13th October, 2011 on instruction from the judgment-debtor had informed this Court that the judgment-debtor is agreeable to pay the entire decreetal amount along with interest to the decree-holder within six weeks. On 1st December, 2011, the

counsel once again reiterated to pay the entire decreetal amount along with interest to the decree-holder within two weeks. It is accordingly prayed that the application of the judgment-debtor be dismissed and the decreetal amount deposited by the judgment- debtor in the Court be released to the decree-holder.

23. Learned counsel for the decree-holder has also informed the Court that he has already paid the huge amount to his employees and has spent the amount in order to complete the awarded work. The judgment debtor had full knowledge about the said documents and details. Thus, the objections filed by the judgment-debtors are an after-thought and without any substance. He says that the decree-holder is entitled for the decreetal amount against the work already completed and there is no justification to stop the payment which has already been spent by decree-holder from its own pocket.

24. Mr.Salwan, learned counsel for the judgment-debtor, on the other hand, states that the decree-holder has committed a fraud upon the judgment-debtor by obtaining the contract on the basis of the forged documents and by making the incorrect statement before the judgment-debtor. He says that this is an appropriate forum to decide the said objections filed by the judgment-debtor and under Section 47 CPC, this Court is the only Court who can consider the objections raised by the judgment-debtor, as earlier the issue of fraud and forging of documents could not have been considered and decided by the Court on filing of objections under Section 34 of the Act. He has relied upon the decision of the Supreme Court in the case of

Sarup Singh and another vs. Union of India and another, AIR 2011 Supreme Court 514, the relevant para whereof reads as under:-

"19. But, if a decree is found to be nullity, the same could be challenged and interfered with at any subsequent stage, say, at the execution stage or even in a collateral proceeding. This is in view of the fact that if a particular Court lacks inherent jurisdiction in passing a decree or making an order, a decree or order passed by such Court would be without jurisdiction and the same is non-est and void ab initio."

25. On the other hand, learned counsel for the decree-holder says that the appointment of the Arbitrator was made in the presence of the judgment-debtor; the objections if any ought to have raised at that time. Since the Award has already been passed which has been confirmed upto the Supreme Court, there is no force in the submissions of the judgment-debtor, who is delaying the payment of the decree-holder by raising the objections which have no relevancy after the award being upheld by the Supreme Court. Counsel however did not deny the scope of Section 47 CPC.

26. This Court is agreeable with the contentions of the learned counsel for the decree-holder to the extent that the decree-holder has executed the entire work to the satisfaction of the judgment-debtor. The Award was passed in favour of the decree-holder which is upheld upto the Supreme Court. The judgment-debtor admittedly has not paid the awarded amount to the decree-holder.

27. In compliance with the order dated 7th March, 2012, the judgment-debtor had deposited the following amount with the Registrar General of this Court:-

(i) Rs.63,48,481/- on 2nd May, 2012 in the name of the Registrar General of this Court which was invested in Fixed Deposits and the total amount due against the FDR as on 22nd December, 2014 is Rs.79,81,417/-.

(ii) Rs.34,89,506/- on 19th May, 2012 in the name of the Registrar General of this Court which was invested in Fixed Deposits and the total amount due against the FDR as on 22nd December, 2014 is Rs.43,71,397/-.

(iii) Original FDR of Rs.3 lacs in favour of Medical Superintendent, as refund of security amount. As on date, the total amount deposited by the judgment-debtor with this Court is Rs.1,23,52,814/- plus Rs.3 lacs as security amount.

28. Counsel for decree-holder argued that it was the duty of the judgment-debtor to point out the nature of the forgery and fraud, if any, committed by the decree-holder at the first instance who is now raising additional plea and filing new documents against the decree- holder. Therefore, the amount deposited by the judgment-debtor is liable to be released to the decree-holder to some extent.

29. In the judgment passed by the Supreme Court in A.V. Papayya Sastry and Ors. v. Government of A.P. and Ors., AIR 2007 SC 1546, it was observed as under:-

"19. Now, it is well settled principle of law that if any judgment or order is obtained by fraud, it cannot be said to be a judgment or order in law. Before three centuries, Chief Justice Edward Coke proclaimed;

"Fraud avoids all judicial acts, ecclesiastical or temporal".

It is thus settled proposition of law that a judgment, decree or order obtained by playing fraud on the Court, Tribunal or Authority is a nullity and non est in the eye of law. Such a judgment, decree or order - by the first Court or by the final Court - has to be treated as nullity by every Court, superior or inferior. It can be challenged in any Court, at any time, in appeal, revision, writ or even in collateral proceedings.

20. In the leading case of Lazarus Estates Ltd. v. Beasley, (1956) 1 All ER 341 : (1956) 1 QB 702 : (1956) 2 WLR 502, Lord Denning observed:

"No judgment of a court, no order of a Minister, can be allowed to stand, if it has been obtained by fraud."

21. In Duchess of Kingstone, Smith's Leading Cases, 13th Edn., p.644, explaining the nature of fraud, de Grey, C.J. stated that though a judgment would be res judicata and not impeachable from within, it might be impeachable from without. In other words, though it is not permissible to show that the court was 'mistaken', it might be shown that it was 'misled'. There is an essential distinction between mistake and trickery. The clear implication of the distinction is that an action to set aside a judgment cannot be brought on the ground that it has been decided wrongly, namely, that on the merits, the decision was one which should not have been rendered, but it can be set aside, if the court was imposed upon or tricked into giving the judgment. It has been said; Fraud and justice never dwell together (frais et jus nunquam cohabitant); or fraud and deceit ought to benefit none (fraus et dolus nemini patrocinari debent).

22. Fraud may be defined as an act of deliberate deception with the design of securing some unfair or undeserved benefit by taking undue advantage of another. In fraud one gains at the loss of another. Even most solemn proceedings stand vitiated if they are actuated by fraud. Fraud is thus an extrinsic collateral act which vitiates all judicial acts, whether in rem or in personam. The principle of 'finality of litigation' cannot be stretched to the extent of an absurdity that it can be utilized as an engine of oppression by dishonest and fraudulent litigants.

23. In S.P. Chengalvaraya Naidu (dead) by LRs. V. Jagannath (dead) by LRs. & Ors., (1994) 1 SCC 1 : JT 1994 (6) SC 331, this Court had an occasion to consider the doctrine of fraud and the effect thereof on the judgment obtained by a party. In that case, one A by a registered deed, relinquished all his rights in the suit property in favour of C who sold the property to B. Without disclosing that fact, A filed a suit for possession against B and obtained preliminary decree. During the pendency of an application for final decree, B came to know about the fact of release deed by A in favour of C. He, therefore, contended that the decree was obtained by playing fraud on the court and was a nullity. The trial court upheld the contention and dismissed the application. The High Court, however, set aside the order of the trial court, observing that "there was no legal duty cast upon the plaintiff to come to court with a true case and prove it by true evidence". B approached this Court. Allowing the appeal, setting aside the judgment of the High Court and describing the observations of the High Court as 'wholly perverse', Kuldip Singh, J. stated:

"The courts of law are meant for imparting justice between the parties. One who comes to the court, must come with clean-hands. We are constrained to say that more often than not, process of the court is

being abused. Property-grabbers, tax- evaders, bank-loan- dodgers and other unscrupulous persons from all walks of life find the court - process a convenient lever to retain the illegal-gains indefinitely. We have no hesitation to say that a person, who's case is based on falsehood, has no right to approach the court. He can be summarily thrown out at any stage of the litigation".

(emphasis supplied)

The Court proceeded to state: "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 he guilty of playing fraud on the court as well as on the opposite party".

The Court concluded: "The principle of 'finality of litigation' cannot be pressed to the extent of such an absurdity that it becomes an engine of fraud in the hands of dishonest litigants".

24. In Indian Bank v. Satyam Fibres (India) Pvt. Ltd., (1996) 5 SCC 550 : JT 1996 (7) SC 135, referring to Lazarus Estates and Smith v. East Elloe Rural District Council, 1956 AC 336 : (1956) 1 All ER 855 : (1956) 2 WLR 888, this Court stated;

"The judiciary in India also possesses inherent power, specially under Section 151 C.P.C., to recall its judgment or order if it is obtained by Fraud on Court. In the case of fraud on a party to the suit or proceedings, the Court may direct the affected party to file a separate suit for setting aside the Decree obtained by fraud. Inherent powers are powers which are resident in all courts, especially of superior jurisdiction. These powers spring not from legislation but from the nature and the Constitution

of the Tribunals or Courts themselves so as to enable them to maintain their dignity, secure obedience to its process and rules, protect its officers from indignity and wrong and to punish unseemly behaviour. This power is necessary for the orderly administration of the Court's business".

(emphasis supplied)

25. In United India Insurance Co. Ltd. v. Rajendra Singh & Ors., (2000) 3 SCC 581 : JT 2000 (3) SC 151, by practising fraud upon the Insurance Company, the claimant obtained an award of compensation from the Motor Accident Claims Tribunal. On coming to know of fraud, the Insurance Company applied for recalling of the award. The Tribunal, however, dismissed the petition on the ground that it had no power to review its own award. The High Court confirmed the order. The Company approached this Court.

26. Allowing the appeal and setting aside the orders, this Court stated;

"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".

(emphasis supplied)

30. From the material placed on record by the judgment-debtor as well as averments made in the objections filed under Section 47 CPC prima facie this Court is of the prima facie view that the decree-holder while obtaining the tender has certain documents which are not genuine and manipulated in nature in order to get the benefit of tender. Hence, the veracity of those documents are to be tested at the time of trial.

31. However, it is also the admitted position that the award has been upheld by the Apex Court and the decree-holder has completed the awarded work by spending huge amount from his own pocket.

32. It would be great injustice to the decree-holder if the entire decreetal amount be stalled in view of circumstances as explained above. In the interest of justice and equity, I am of the view that 80% of amount already deposited by the judgment-debtor be released to the decree-holder by the Registry (upto date) forthwith. The issue of remaining 20% of the amount and interest due as per award would be finally decided after the trial and final arguments of execution petition.

33. The following issues are framed:-

1) Whether the Arbitration Award dated 27th July, 2010/5th August, 2010 for the remaining amount is liable to be enforced in view of the objections raised by the judgment- debtor? OP-JD

2) Relief.

34. Both the parties shall lead their respective evidence on the above said issues. List the matter before the Joint Registrar on 9th April, 2015 for fixing the date for trial.

35. The findings of this order are just prima-facie and tentative which shall not have any bearing when the execution for remaining amount will be decided after the trial.

(MANMOHAN SINGH) JUDGE DECEMBER 22, 2014