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1952 (5) TMI 27

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..... and in the description of the property at the foot of the mortgage bond it was stated that the annual rent including cesses was ₹ 19/12/3 (Ext. A.). 3. While the mortgagee was in possession, the landlords brought two suits for arrears of rent in respect of the mortgaged land and put up the holding to sale in execution of the decree, but the entire decretal amounts were deposited by the mortgagee (vide chalans Exts. B to B2) and the sales were averted. 4. According to the defendants, the landlords instituted the two rent suits, claiming rent at an enhanced jama of ₹ 23/7/3 and the mortgagee (Harihar) deposited the landlords' dues under the two decrees in order to protect his own interest. It is alleged that the plaintiff was asked to reimburse the defendants; and on her refusal to do so, the sons of Harihar (two of whom are defendants 1 and 2) instituted a money suit against the plaintiff and her son in 1941 for recovery of the excess amount and an 'ex parte' money decree (Ext. E) was obtained, and as the decree was not satisfied the mortgaged land was sold in execution of the money decree and auction-purchased by the sons of H .....

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..... a nullity on the ground of the fraud of the mortgagee and seek redemption of the mortgage without getting the sale set aside. The contention of Mr. P.R. Das, for the appellants, is that the money decree or the court sale not having been set aside within three years of the date of the plaintiff's knowledge of the fraud under Article 95 Limitation Act, the plea of nullity is not available to the plaintiff the court of appeal below had no jurisdiction to decide the question of fraud and record its finding thereon. He has accordingly urged that the finding of fraud must be ignored and the suit for redemption dismissed. Mr. Das has raised interesting questions of law but, on authorities, his contentions must, in my opinion, fail. 8. The allegation of the plaintiff in paragraph 9 of her plaint is that on 15-1-1946, the defendants expressed to have purchased the land in dispute at an auction sale in connection with some money decree, and in paragraph 10 of her plaint she puts her case thus: No kind of decree was, by any means, passed against the plaintiff, nor has the plaintiff got knowledge of any decree, nor was any summons or notice etc. or writ o .....

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..... is not barred by any express provision of the law. It has been contended that by reason of Order 21, Rule 92, Clause (3), Civil P. C. the plaintiff is not en titled to seek redemption unless the sale is set aside. There is, in my view, no force in this contention. Order 21, Rule 92 Clause (1), provides: where no application is made under Rule 89, Rule 90 or Rule 91, or where such application is made and disallowed, the Court shall make an order confirming the sale, and thereupon the sale shall become absolute. And Clause (3) provides: No suit to set aside an order made under this rule shall be brought by any person against whom such order is made. It is thus clear that the sale must stand if the case be governed by any of the rules mentioned in Order 21, Rule 92, Clause (1). 9. The case before us cannot fall either under Rule 89 or Rule 91. The bar of the Rule can be attract- ed only if the case falls under Rule 90. In my view, the provisions of Rule 90 also cannot apply because the sale is not challenged on the ground of material irregularity or fraud in publishing or conducting the sal .....

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..... oceedings pleads that the judgment was fraudulent, he cannot give evidence of it but must apply to the Court which pronounced the sentence to vacate the judgment (Vide -- 'Prudham v. Phillips' (1747) 27 ER 490 . In -- 'Huffer v. Allen' (1866) 2 Exch. 15 it was held that, while a judgment stands, it stops the plaintiff from denying the correctness of the judgment or of the execution. The facts of that case were shortly these : The plaintiff was indebted to the defendants in the sum of #28. The defendants commenced an action against the plaintiff in the Queen's Bench for the recovery of the debt by a writ specially endorsed and personally served. The plaintiff, before appearance and before Judgment, paid to the defendants, and the defendants accepted, the sum of #10 on account of the debt, but the defendants, after such payment, signed judgment for default of appearance for the full amount of the debt of # 28, and costs and sought to realise the full amount under the decree by the arrest of the plaintiff. The plaintiff was arrested and was compelled, in order to procure his discharge, to pay the full amount endorsed and the Sherrif .....

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..... decree made in another Court, upon which decree your adversary relies; and you may, either as actor or defender, object to the validity of that decree, provided it was pronounced through fraud, contrivance, or covin of any description, or not in a real suit; or if pronounced in a real and substantial suit, between parties who were really not in contest with each other. That it is undeniably true that the Court of Chancery has no right to review a decree of the Court of Exchequer; that nothing but a Court of Appeal can give redress if such decree is erroneous, is clear, and indeed nothing can be more true than such a proposition, but it is equally true, that if the decree has been obtained by fraud it shall avail nothing for or against the parties affected by it, to the prosecution of a claim, or to the defence of a right. These two propositions are undeniably true; they are recognised in practice, they are independent of each other, and they stand well together. That was the rule stated as deduced from all the authorities in a case which, having been decided in the Court of Arches, was subsequently the subject of discussion in another court. The question was, whether .....

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..... Any party to a suit or other proceeding may show that any judgment, order or decree- which is relevant under Section 40 41 or 42 and which has been proved by the adverse party, was delivered by a Court not competent to deliver it, or was obtained by fraud or collusion. 13. Section 40 relates to 'res judicata', Section 41 to judgments 'in rem' and Section 42 to judgments, orders or decree relating to matters of a public nature. Sections 41 and 42, therefore, have no application to the present case. But the application of Section 40 is attracted because the decree (Ext. E) on which the whole execution proceeding is founded and which was pleaded in bar as 'res judicata' under issue No. 3 is vitiated by the fraud of the mortgagee. The decree is, therefore, a nullity for the purpose of a collateral attack, and anything flowing from such a decree, must also be treated as nullity. The plaintiff can, therefore, ignore the sale and the effect of the decree on, the ground of fraud. The language of Section 44 is wide enough to allow a party to show the true nature of a decree or order which is pleaded in bar, notwithstanding the fact t .....

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..... ty to a suit can show that a decree obtained by opposite party against him in another suit was obtained by fraud, and it is not necessary for him to bring an independent suit for setting it aside. The Allahabad view is also on line with the view taken by the Calcutta High Court. In --'Bansi Lal v. Dhapo' 24 All 242 it was held that if a subsisting judgment, order or decree, which is relevant under Sections 40 41 or 42 of the Evidence Act, is set up by one party to a suit as a bar to the claim of the other party, it is not necessary for the party against whom such judgment, order or decree is set up to bring a separate suit to have the same set aside. It may be stated, that Sir John Stanley, as the Chief Justice of the Allahabad High Court, reiterated the view taken by him in 23 Cal 891 . The same view was taken by Sulaiman C. J. in -- 'Mt. Parbati v. Gajraj Singh' MANU/UP/0013/1936 : AIR 1937 All 28 (M)'. Dawson Miller, C. J. in -- 'Hare Krishna v. Umesh Chandra' MANU/BH/0198/1921 : AIR 1921 Pat 193 : 193, 197 (PB) (N), in repelling the argument based on 'res judicata', observed : It is nevertheless open to the pla .....

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..... 14. The word 'fraud' has not been defined in the Evidence Act. According to Story, fraud includes all acts, omissions and concealments, which involve a breach of legal or equitable duty, trust or confidence justly reposed and are injurious to another (Vide Story, Section 187). In the case of -- 'Biswambhar Biswas v. Nilambar Muhari', MANU/WB/0081/1929 : AIR 1930 Cal 263 (O), it was held that two elements are necessary to constitute fraud; deceit, that is to say, some one is deceived, and injury or loss to the same person . In the case before us, the plaintiff has proved deceit as well as injury arising from fraudulent concealments of legal proceedings by the mortgagee. In paying the decretal amount, the mortgagee discharged his own contractual obligation, and if it be held that the plaintiff has lost her right of redemption, the defendants must be held to take advantage of their own fraud to defeat the suit. Therefore, the plaintiff's right of redemption cannot be lost by reason of the sale because there was no Judge, but a person invested with the ensigns of a judicial office was misemployed in conducting the sale. The cour .....

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..... within the time limited by Article 95, Limitation Act, the judgment debtor can sue to set aside the decree and the sale in execution thereof ('MANU/WB/0310/1925 : AIR 1926 Cal 167 (Q)'; --'Moti Lal v. Russick Chandra' 26 Cal 326 Foot Note 3 (T); -- 'Nath Singh v. Jodha Singh' 6 All 406; -- 'Madho Saran v. Manna Lal'MANU/BH/0327/1933 : AIR 1933 Pat 473 (V)). Order 21, Rule 92, Civil P. C. will not be an obstacle to such a suit, as the fraud alleged is not an objection which comes within the provisions of any of the Rules 89, or 91 of Order 21 of the Code 26 Cal 326 . In the case before us the time limited by Article 95 has expired. 20. Section 44, Evidence Act, permits a Judgment, order or decree to be challenged collaterally on the ground that it was obtained by fraud. This provision does not make a fraudulent judgment, order or decree a nullity for all purposes. The power to challenge it is limited to cases in which the judgment, decree or order is relevant under Section 40 or 41 or 42 of the Act. Section 40 permits the use in evidence of a judgment, order or decree the existence of which prevents a Court from taking cognizance of a .....

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..... favour of Harihar Tewari in the money suit has not been put in evidence. The decree is Exhibit E. This is not for supporting a plea 'of 'res judicata' but to explain how the property came to be sold in execution. It is admissible for this purpose under Section 43, Evidence Act and therefore does not attract the application of Section 44 of the Act. The certificate of sale granted under Order 21, Rule 94, Civil P. C., which is all that is necessary to prove the execution sale, is not a judgment, order or decree within the meaning of Section 44. This is another reason why I think Section 44, does not apply. The order of the executing Court under Order 21, Rule 92 making the sale absolute is not an exhibit. Even if it had been put in evidence, it would not in my opinion come within the mischief of Section 44, for that section permits the judgment, order or decree to be attacked on the ground that it (the judgment, decree or order) was obtained by fraud . Under Order 21, Rule 92 the order cannot be challenged on the ground that it was obtained by fraud (-- 'Satish Chandra v. Makbelali Talukdar' 68 Cal LJ 431 and the challenge in this case is on the .....

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..... ff, that the sale held in the execution was a result of fraud and that the plaintiff was entitled to be granted a decree for redemption. In appeal the learned Subordinate Judge affirmed the findings of the Munsif. holding that the claim of the defendant in the money suit was dishonest and that the decree and the sale were fraudulent. 26. In second appeal the matter was argued before my Lord the Chief Justice and Reuben, J. in the first instance. The Chief Justice held that under Section 44, Evidence Act the plaintiff was entitled to show that the money decree and the sale in execution proceedings were vitiated by fraud and should be treated as nullity, and that the plaintiff was entitled to redeem. Reuben, J. however expressed a contrary view to the effect that the plaintiff cannot ignore the sale and redeem the mortgage on the ground that the decree in money suit was fraudulent. The learned Judge was of opinion that the money decree cannot be challenged in this suit since the period under Article 95, Limitation Act for setting it aside had expired. The learned Judge further held that Section 44, Evidence Act had no application and that the plaintiff c .....

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..... re facias against the defendant a shareholder in a company under 7 Wm. IV and I Vic., C.; 75, on a judgment obtained by the plaintiff in a previous action against the registered officer of the company, the Court held good a plea that the registered officer fraudulently and deceitfully and by connivance with the plaintiff suffered the judgment in order to change the defendant. These two cases were referred with approval by Willes, J. in -- Queen v. Saddler's Co.', (1863) 10 HLC 404 where he said; a judgment or decree obtained by fraud upon a Court binds not such Court nor any other; and its nullity upon this ground, though it has not been set aside or reversed, may be alleged, in a collateral proceeding. These cases demonstrate the principle that though a judgment is only voidable for fraud and though no suit has been brought to set it aside the judgment can be impeached in a collateral proceeding by a party who has suffered on account of the fraud. 30. A similar principle is enacted in Section 44, Evidence Act which states; Any party to a suit or other proceeding may show that .....

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..... plaintiff is entitled under Section 44 Evidence Act to show that both the decree and sale in the execution proceedings were vitiated by fraud of the mortgagee and should be ignored and treated as a nullity in the present suit. 31. I next turn to the argument pressed on behalf of the appellants that the suit was brought more than three years alter sale in execution proceedings and would be barred under Art 95, Limitation Act. It was argued that the plaintiff cannot invoke Section 44, Evidence Act since the money decree and the sale have not been set aside within three years of the date of the plaintiff's knowledge of fraud. In my opinion the argument is untenable. The language of Section 44 is very wide. The section lays down not merely a rule of law relating to evidence but it also lays down a rule of procedure as to how the judgment should be impeached. The section not merely declares that the judgment which is conclusive against a party may be impeached by such party on the ground of fraud or collusion. It also lays down that the party seeking to impeach it may impeach it in the very suit or proceeding in which the judgment is proved against him by his opponen .....

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..... n this suit in any way object or dispute the said decree. It was held by Latham, J. that defendants were entitled to set up such fraud and collusion in their defence in the suit. To a similar effect is -- 'Rangnath Sakharam v. Govind Narasing, in which the plaintiff sued in the year 1900 to recover from the defendant the amount due for interest or, a mortgage bond dated 15-4-1893 by sale of the mortgaged property. The defendant contended that he did not execute the bond with free consent, and that it was obtained from him under pressure of proceedings. It was held that the defendant was entitled to resist the claim made against him by pleading fraud and that he was entitled to urge that plea though he had not brought a suit to set aside the transaction. Again in MANU/BH/0198/1921 : AIR 1921 Pat 193 (FB) (N), the plaintiff sued for declaration of title and for possession of 8 annas share of an estate in Santal Parganas in respect of which Brajeswari Debi, the plaintiff's stepmother was recorded. The plaintiff alleged that he was brought up by Brajeswari after his father's death, that she acted as his de facto guardian, and i .....

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..... AIR 1914 Mad 361. 32. For the reasons I hold that upon the facts stated the plaintiff can ignore the sale on the ground that the decree in the money suit was fraudulent and that the plaintiff is entitled to be granted a decree for redemption of the mortgaged land. 33. The matter may also be approached from a different aspect. I think that the present case falls directly within the equitable principle embodied in Section 90, Trust Act which states: Where a tenant for life, co-owner, mortgagee or other qualified owner of any property by availing himself of his position as such, gains an advantage in derogation of the rights of the other persons interested in the property, or where any such owner, as representing all persons interested in such property, gains any advantage, he must hold, for the benefit of all persons so interested the advantage so- gained, but subject to repayment by such persons of their due share of the expenses properly incurred, and to an indemnity by the same persons against liabilities properly contracted, in gaining such advantage . The section is based on the equitable principle that no person who .....

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..... agee could not change his character as a mortgagee by taking a settlement from the landlord; for if he took a lease in his own name it must be held in law that he had taken it for the benefit of the mortgagor. To the same effect is -- 'Ram Rup Singh v. Jang Bahadur Singh' AIR 1951 Pat 566 in which the plaintiff had executed a sudhbharna bond and left the consideration money with the sudhbharnadars to satisfy a rent decree up to the properties. The sudhbharnadars did not pay the rent decree and the properties were sold in execution for the rent decree and purchased by the landlord who subsequently settled them with the sudhbharnadars. It was held that the sudhbharnadars held the decretal amount as trustee for the plaintiffs and having failed to avert the sale cannot claim a benefit arising from their own default and resist the right of redemption on the footing that the old tenancy had been extinguished by the rent sale. 35. Applying the principle to the present case it is manifest that the defendant cannot resist the suit for redemption on the ground that they had purchased the mortgage properties in execution of a fraudulent decree. Both the .....

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