Mr. Praveen Kumar vs Vikas Batra & Anr.
2014 Latest Caselaw 6247 Del

*            IN THE HIGH COURT OF DELHI AT NEW DELHI

+                      CM(M) No. 873/2012 & CM(M) No.879/2012


%                                                    27th November, 2014

1.    CM(M)No. 873/2012 & CM No. 13222/2012(stay)

MR. PRAVEEN KUMAR                                   ......Petitioner
                Through:                 Mr. B.L.Wali & Mr. Sarul Jain,
                                         Advocates.


                            VERSUS

VIKAS BATRA & ANR.                                  ...... Respondents

                  Through:               Mr. I.A.Rahmani, Advocate.

2.    CM(M)No. 879/2012 & CM No. 13331/2012 (stay)

SUNNY BERI                                          ......Petitioner
                            Through:     Mr. B.L.Wali & Mr. Sarul Jain,
                                         Advocates.


                            VERSUS

VIKAS BATRA & ANR.                                  ...... Respondents
                  Through:               Mr. I.A.Rahmani, Advocate.

CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA

To be referred to the Reporter or not?





 VALMIKI J. MEHTA, J (ORAL)

1. Challenge by means of this petition under Article 227 of the

Constitution of India is to the impugned order of the trial court dated

17.7.2012 by which the application filed by the petitioner under Order I Rule

10 of the Code of Civil Procedure, 1908 (CPC), in a petition under Section 9

of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the

Act') has been dismissed. Petitioner/applicant was dispossessed of his

vehicle Three Wheeler Scooter (TSR) on account of an ex parte order passed

by the court in the petition under Section 9 of the Act.

2(i) Counsel for the petitioner, and who was the applicant in the

application under Order I Rule 10 CPC filed before the court below in the

petition under Section 9 of the Act, argues two basic aspects before this

Court. First aspect which is argued is with reference to the legal notice dated

12.8.2011 issued by the petitioner in the petition under Section 9 of the Act

the Act viz the alleged lender, to the respondent in the petition under

Section 9 of the Act, viz the alleged borrower, and in which notice the lender

has claimed a sum of Rs.3,96,000/- from the borrower. It is argued that

however in the petition filed under Section 9 of the Act in para 5 it is stated

by the lender that only a sum of Rs.1,98,000/- was due on 15.12.2011 ie it is

argued that the difference of Rs.3,96,000/- and Rs.1,98,000/- is the amount

which has been paid by the present petitioner to the lender and that a fraud

has been played upon the present petitioner that the vehicle has been taken

from his possession in proceedings to which he was not a party and in which

only the respondents being the lender and the alleged borrower inter se were

parties.

(ii) The second aspect which is argued is that the petitioner has

power to seek recall of all the orders which are passed in the petition under

Section 9 of the Act in view of the ratio of the judgment of the Supreme

Court in the case of Budhia Swain & Ors. Vs. Gopinath Deb & Ors. (1999)

4 SCC 396 which allows a person to seek recall of the order when the order

is obtained from the court by practicing fraud and the aggrieved party has no

other remedy by filing of an appeal etc and therefore he has to approach the

same court which had passed the order. The following paragraphs of the

judgment in the case of Budhia Swain (supra) are relied upon being

paragraphs 6 to 8 and which paragraphs read as under:-

"6. What is a power to recall? Inherent power to recall its own order vesting in tribunals or courts was noticed in Indian Bank v. Satyam Fibres India Pvt. Ltd. (1996) 5 SCC 550 . Vide para 23, this Court has held that the courts have inherent power to recall and set aside an order

(i) obtained by fraud practised upon the Court,

(ii) when the Court is misled by a party, or

(iii) when the Court itself commits a mistake which prejudices a party.

In A.R. Antulay v. R.S. Nayak and Anr. (1988)2 SCC 602 (vide para

130) , this Court has noticed motions to set aside judgments being permitted where

(i) a judgment was rendered in ignorance of the fact that a necessary party had not been served at all and was shown as served or in ignorance of the fact that a necessary party had died and the estate was not represented,

(ii) a judgment was obtained by fraud,

(iii) a party has had no notice and a decree was made against him and such party approaches the Court for setting aside the decision ex debito justitiae on proof of the fact that there was no service.

7. In Corpus Juris Secundum (Vol. XIX) under the Chapter "Judgment - Opening and Vacating" (paras. 265 to 284 at pages 487-510) the law on the subject has been stated. The grounds on which the courts may open or vacate their judgments are generally matters which render the judgment void or which are specified in statutes authorising such actions. Invalidity of the judgment of such nature as to render it void is a valid ground for vacating it at least if the invalidity is apparent on the face of the record. Fraud or collusion in obtaining a judgment is a sufficient ground for opening or vacating it. A judgment secured in violation of an agreement not to enter judgment may be vacated on that ground. However, in general, a judgment will not be opened or vacated on grounds which could have been pleaded in the original action. A motion to vacate will not be entered when the proper remedy is by some other proceedings, such as by appeal. The right to vacation of a judgment may be lost by waiver or estoppel. Where a party injured acquiesces in the rendition of the judgment or submits to it, waiver or estoppel results.

8. In our opinion a tribunal or a court may recall an order earlier made by it if

(i) the proceedings culminating into an order suffer from the inherent lack of jurisdiction and such lack of jurisdiction is patent,

(ii) there exists fraud or collusion in obtaining the judgment,

(iii) there has been a mistake of the court prejudicing a party or

(iv) a judgment was rendered in ignorance of the fact that a necessary party had not been served at all or had died and the estate was not represented.

The power to recall a judgment will not be exercised when the ground for re-opening the proceedings or vacating the judgment was available to be pleaded in the original action but was not done or where a proper remedy in some other proceeding such as by way of appeal or revision was available but was not availed. The right to seek vacation of a judgment may be lost by waiver, estoppel or acquiescence.

(iii) Finally, it is argued on behalf of the petitioner that in fact

respondent no.1 is undoubtedly guilty of playing fraud and which becomes

crystal clear because till date arbitration proceedings have also not

commenced although the petition under Section 9 of the Act was disposed of

way back on 30.4.2012.

3. Counsel for the petitioner/applicant in an application under

Order I Rule 10 CPC, argues that in reply to this petition in this Court the

respondent no.1/lender is once again claiming not an amount of

Rs.1,98,000/- but an amount of Rs.3,96,000/- and which indicates that the

fraud is played upon the petitioner who had in fact got re-financed the

vehicle which was originally financed by respondent no.1 to respondent

no.2.

4. Counsel for the petitioner also states that since admittedly the

original receipts of payment to the lender were with the petitioner and

which could not be if the present petitioner was not the borrower and this

aspect clearly demonstrates that it is the petitioner who had got re-financed

the vehicle/TSR which was originally financed by respondent no.2 from

respondent no.1.

5. Learned counsel for respondent no.1/lender on the other hand

very vehemently argued that petitioner was not a party to the agreement

between the respondent no.1/lender and respondent no.2/borrower, and

therefore, the vehicle/TSR was not financed to the petitioner as claimed by

him. It is argued that once the petitioner was not a party to the agreement

between respondents no.1 and 2 which contains the arbitration clause, and

pursuant to which arbitration clause, the subject proceedings under Section 9

of the Act were filed in the court below by the respondent no.1 against the

respondent no.2, the petitioner had no right to become a party.

6. In my opinion, the arguments urged on behalf of the petitioner

carry a lot of substance and this petition is liable to be allowed for the

reasons given hereinafter by noting at the outset that the relief granted to the

petitioner is limited to the time till substantial proceedings are decided in

favour of the lender/respondent no.1 which may hold that the vehicle was

financed not to the present petitioner but to the respondent no.2.

7. The first reason for allowing this petition becomes clear from

the above referred paras of the judgment of the Supreme Court in the case of

Budhia Swain (supra) which says that once there is a fraud and collusion in

obtaining a judgment and as a result of the court order there is prejudice to a

party such as the petitioner herein and such a party has no remedy by filing

appeal etc, then such a party as the present petitioner can always seek recall

of the orders which are passed which prejudiced him. In the present case,

without making the applicant a party, ex parte orders were passed, in a

petition under Section 9 of the Act and possession of the vehicle was taken

from him ie from a person who was not a party to the proceedings and that

too because of an ex parte order. Putting it in another words there is no

determination of rights as against the petitioner qua the TSR and in favour of

the respondent no.1 but the respondent no.1 by an ex parte order obtained in

a petition under Section 9 of the Act took forcibly possession of the vehicle

from the petitioner.

8. Secondly, not only the vehicle/TSR was taken forcibly from the

petitioner and by playing a fraud upon him, the actions of the respondent

no.1 smack of malafides because now though over two years have expired

after passing of the orders in a petition under Section 9 of the Act, but it is

not disputed that the main arbitration proceedings have not even

commenced. I must note that even if a person is not a party to a main case,

but if interim orders are passed in such a case, surely such a person can file

an application to become a party to a limited extent to seek recall of the

orders because his vital rights are prejudiced by the ex parte order which is

effectively against him. In the present case, there are serious questions of

financing, repayment and ownership of the vehicle/TSR and the effect of

dispossessing the petitioner (applicant under Order I Rule 10 CPC) of the

vehicle/TSR is that effectively by one ex parte order all the rights of the

petitioner are extinguished once and for all ie as if on one day the case was

listed, same day it is decreed, same day decree is executed and that no

further actions to recall orders can be taken as per the respondent no.1 by the

petitioner who has lost all his rights pursuant to one ex parte order obtained

by the respondent no.1 (and which order admittedly was not against the

petitioner but only against the respondent no.2). Since the order which

effectively was against the petitioner was obtained in the absence of the

petitioner, therefore I have no hesitation in observing that the petitioner was

entitled to file an application under Order I Rule 10 CPC in the subject

proceedings under Section 9 of the Act, inasmuch as, not only his rights

were vitally affected, all his rights being the issues of ownership and

possession of the vehicle were taken away from him by one stroke of pen in

the form of passing of an ex parte order, and which surely cannot be because

a person who has vital rights cannot be left remediless especially in view of

the judgment of the Supreme Court in the case of Budhia Swain (supra).

9. The arguments urged on behalf of the lender/respondent no.1

that the petitioner was not party to the arbitration agreement and therefore he

could not have filed an application under Order I Rule 10 CPC, is an

argument of sheer desperation inasmuch as surely if vital rights of a person

are snatched in a legal proceeding where he has not been made a party and

that too ex parte, surely in such a proceeding, a person whose rights are

vitally affected can always seek to be impleaded and can always seek recall

of the orders which have effectively destroyed his rights of control and

possession of the vehicle in question.

10. In view of the above, the impugned order of the court below

dated 17.7.2012 is set aside. Not only the petitioner will be made a party to

the petition under Section 9 of the Act, but the proceedings under Section 9

of the Act will be revived including by first handing over possession back of

the vehicle/TSR bearing No. DL-1RL-0698, Chasis No.

MD2AAAFZZRWD08725, Engine No. AAMBRD30814 Make Bajaj TSR

Model 2008 to the petitioner.

11. The subject vehicle be delivered to the petitioner by the

respondent no.1 within a period of two weeks from today, failing which

respondent no.1 will be liable to be proceeded against with for contempt of

court.

12. Petition is allowed and disposed of in terms of the aforesaid

observations and now the petition under Section 9 of the Act will be decided

afresh after hearing the case of the petitioner including after allowing parties

to lead evidence if so required.

CM(M)No. 879/2012 & CM No. 13331/2012

13. This petition will also stand allowed in terms of the discussion

given while allowing CM(M) No. 873/2012 and respondent no.1 will be

liable to return the subject vehicle bearing no.DL-1RL-5945, Chasis No.

MD2AAAFZZRWL28512, Engine No. AAMBRL29851 Make Bajaj TSR

Model 2009 within two weeks from today and the other directions/orders

will be the same as passed in CM(M) 873/2012.

NOVEMBER 27, 2014                            VALMIKI J. MEHTA, J.
ib