A.V. Papayya Sastry & Ors Vs Government of A.P. & Ors (Supreme Court of India)
Summary: The Supreme Court upheld the Andhra Pradesh High Court’s decision recalling its earlier judgment after finding that the proceedings were affected by fraud and suppression of material facts. The dispute concerned about 18 acres and 39 cents of land in Visakhapatnam which the Port Trust proposed to acquire for construction of employee quarters. The landowners claimed that advance possession had been delivered to the Port Trust in 1972 and, relying on that position, they were declared non-surplus landholders under the Urban Land (Ceiling and Regulation) Act, 1976. Subsequent material, particularly a 1985 communication of the Chief Engineer of the Port Trust and a CBI report, indicated that actual physical possession had not been delivered as asserted and that tenants continued to occupy the land. The High Court consequently found that its earlier judgment had been obtained on a materially incorrect factual basis and recalled it.
The Supreme Court held that no interference with the recall order was warranted. It reiterated the fundamental principle that a judgment, decree or order obtained by fraud is a nullity and non est in the eye of law. Such an order, whether passed by the first court or the final court, must be treated as a nullity by every superior or inferior court and can be challenged in appeal, revision, writ or even collateral proceedings. Fraud is deliberate deception designed to secure an unfair or undeserved benefit and vitiates even the most solemn judicial proceedings. The principle of finality of litigation cannot be converted into an instrument protecting dishonest or fraudulent litigants.
The Court relied upon S.P. Chengalvaraya Naidu Vs Jagannath for the proposition that suppression of a vital document to gain an advantage constitutes fraud upon the court; Indian Bank Vs Satyam Fibres (India) Pvt. Ltd. for the inherent power of courts to recall fraudulently obtained orders; and United India Insurance Co. Ltd. Vs Rajendra Singh for the proposition that no court or tribunal is powerless to recall an order founded upon fraud or material misrepresentation. On the effect of dismissal of the earlier SLPs, the Court considered Abbai Maligai Partnership Firm Vs K. Santhakumaran and Kunhayammed Vs State of Kerala. It reiterated that the doctrine of merger ordinarily does not operate merely upon refusal of special leave at the first stage under Article 136, whereas merger applies after leave is granted and appellate jurisdiction is exercised. Fraud, however, constitutes an overriding exception: an order procured by fraud cannot acquire legal validity merely because an earlier SLP was dismissed.
The Court also upheld the State Government’s exercise of suo motu revisional power under Section 34 of the Ceiling Act. Although such power, where no limitation period is prescribed, must be exercised within a reasonable time, the 1985 Port Trust communication and subsequent discovery of alleged fraud justified the action in the peculiar circumstances. Finally, invoking the discretionary and equitable character of Article 136, the Supreme Court declined interference, while expressly clarifying that it had not decided the merits of the underlying land dispute. The appeals were dismissed with costs.
Cases Discussed
- S.P. Chengalvaraya Naidu (Dead) by LRs. Vs Jagannath (Dead) by LRs. & Ors. (Supreme Court) — Relied upon. A litigant approaching the court must disclose relevant material; withholding a vital document to secure an advantage amounts to fraud upon the court and the opposite party. A judgment or decree procured through fraud is a nullity.
- Indian Bank Vs Satyam Fibres (India) Pvt. Ltd. (Supreme Court) — Relied upon. Courts in India possess inherent power, including the power recognised under Section 151 CPC, to recall a judgment or order obtained by fraud upon the court.
- United India Insurance Co. Ltd. Vs Rajendra Singh & Ors. (Supreme Court) — Relied upon. No court or tribunal can be regarded as powerless to recall its own order where fraud or misrepresentation affects the very basis upon which that order was obtained.
- Abbai Maligai Partnership Firm & Anr. Vs K. Santhakumaran & Ors. (Supreme Court) — Considered. Examined while considering whether the High Court could entertain recall proceedings after dismissal of the earlier Special Leave Petitions.
- Kunhayammed & Ors. Vs State of Kerala & Anr. (Supreme Court) — Considered. The jurisdiction under Article 136 operates in two stages. Refusal of special leave at the first stage ordinarily does not attract the doctrine of merger; merger operates after leave is granted and appellate jurisdiction is invoked.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
All these appeals have been preferred by the appellants against common judgment and order passed in WAMP No. 1879 of 2001 in W.A. No. 109 of 1997, WAMP No. 1880 of 2001 in W.A. No. 292 of 1998 and Contempt Case No. 1008 of 2001. By the said order, the High Court recalled common judgment and order passed on April 27, 2000 in Writ Appeal Nos. 109 of 1997 and 292 of 1998. A direction was also issued to the authorities under the Urban Land (Ceiling and Regulation) Act, 1976 (hereinafter referred to as ‘the Ceiling Act’) to complete proceedings within the stipulated period.
The case has a long and checkered history starting from early seventies of the last century. Appellants herein are the owners of land bearing Survey Nos. 3/1, 3/2 and 4 admeasuring 18 acres, 39 cents of Village Kancharapalem, District Visakhapatnam. It was their case that Visakhapatnam Port Trust (‘Port Trust’ for short) wanted to acquire land for public purpose, namely, for construction of quarters for its employees. The Chairman of the Port Trust, therefore, sent a requisition letter to the District Collector, Visakhapatnam for acquiring land admeasuring 45 acres, 33 cents of Survey Nos. 1, 2, 3 and 4 of Kancharapalem Village. Advance possession of the land of the appellants, bearing Survey Nos. 3/1, 3/2 and 4 admeasuring 18 acres, 39 cents was taken over by the Estate Manager of the Port Trust on August 29, 1972 by private negotiations. The State Authorities, thereafter, were requested by the Port Trust Authorities to take appropriate proceedings for acquisition of land under the Land Acquisition Act, 1894. According to the appellants, in the statement recorded on August 29, 1972, Akella Suryanarayana Rao stated that he had handed over possession of the land to the Estate Manager of the Port Trust. Mr. Akella also stated that there was a dispute regarding land with tenant Koyya Gurumurthy Reddy under Andhra Pradesh Lands Tenancy Act. It was also the case of the appellants that the Port Trust deposited with the Government the amount of compensation payable to the owners of the land. The land acquisition proposals were approved by the Port Trust as also by the Government of India.
It was further case of the appellants that a preliminary notification under sub-section (1) of Section 4 of the Land Acquisition Act was for the first time issued on August 10, 1973 but nothing further was done in the matter. The Ceiling Act came into force in the State of Andhra Pradesh on February 17, 1976. It, inter alia, covered the Visakhapatnam Urban Agglomeration. The appellants filed their declarations taking the stand that possession of land had already been handed over to Port Trust Authorities even before the Act came into force and the provisions of the Ceiling Act, therefore, would not apply to such land. In the light of the above factual position and the case of the appellants, the Special Officer and Competent Authority, Urban Land Ceiling, Visakhapatnam vide his order dated May 25, 1981 in C.C. No. 6143 of 1976 declared that the land-owners of Survey Nos. 3/1, 3/2 and 4 were ‘non-surplus land holders’. Then the Government again issued notification under sub-section (1) of Section 4 of the Act on August 29, 1981. Urgency clause under Section 17(4) was not invoked since the possession of land was already with the Port Trust Authorities. A declaration under Section 6 was issued on October 12, 1982. No award, however, was passed.
According to the appellants, the Chief Engineer of Port Trust in reply to a query by the Land Acquisition Officer, clarified vide his letter dated December 19, 1985 that actual and physical possession of the land was not taken by Port Trust as the tenant did not vacate possession of the land. It appears that in view of the above letter that physical possession of land was not with the Port Trust Authorities, the Special Officer and Competent Authority, Urban Land Ceiling, Visakhapatnam referred the matter to the Commissioner, Land Reforms and Urban Land Ceiling, Government of Andhra Pradesh, Hyderabad in February, 1987 to take up the matter under Section 34 of the Ceiling Act in suo motu revision. The Collector, Visakhapatnam also vide his D.O. letter No. 433/78, dated June 27, 1987 requested the Commissioner to reopen the case and start enquiry. On August 21, 1989, Chairman, Visakhapatnam Port Trust addressed a letter to the Commissioner, Land Reforms & Urban Land Ceiling, Government of A.P. categorically stating that land admeasuring 18 acres, 39 cents of Survey Nos. 3/1, 3/2 and 4 of Kancherapalem village had already been taken over by the Port Trust and there was no cause to reopen the case under Section 34 of the Ceiling Act. Once again, the Government approved the proposal for acquisition of land and notification under Section 4(1) of the Land Acquisition Act was issued on May 17, 1991.
It appears that the proceedings for reopening of the case by invoking Section 34 of the Ceiling Act were initiated. On July 20, 1994, notice was issued to the owners to show cause as to why revisional powers should not be exercised and the order passed by the Special Officer and Competent Authority under the Ceiling Act should not be set aside. It was also stated in the notice that it was brought to the notice of the Government that title to the land was undisputedly with the declarants on the appointed day under the Ceiling Act as the Land Acquisition Proceedings were not concluded by that date. As such land was required to be computed in the holdings of the declarants even if it was admitted by the Port Trust Authorities that they were in possession of the land in 1972. The land-owners submitted the reply to the notice.
Meanwhile, however, the land-owners filed a petition being Writ Petition No. 11754 of 1994 praying therein that the High Court may direct the State Authorities to complete proceedings under the Land Acquisition Act and pass an award. During the pendency of the writ petition the revision was allowed by the State Government under Section 34 of the Ceiling Act on January 20, 1995 and the order passed by the Special Officer and Competent Authority, Urban Land Ceiling, Visakhapatnam declaring that the appellants had no surplus land had been set aside. The appellants, therefore, filed another petition, being Writ Petition No. 3102 of 1995 questioning the legality of the order passed in revision. The learned single Judge allowed both the petitions i.e. Writ Petition Nos. 11754 of 1994 and 3102 of 1995 and by order dated June 4, 1996 directed the authorities to complete Land Acquisition Proceedings and pass award within three months. The learned single Judge also held that the order under the Ceiling Act was passed by the Special Officer and Competent Authority, Urban Land Ceiling, Visakhapatnam in 1981 while suo motu revisional powers were exercised in 1994-95 i.e. after thirteen years. Such action was, therefore, illegal, unlawful and unwarranted. Accordingly, the order passed in revision was set aside. Writ appeals filed by the State were dismissed. A direction was issued by the Division Bench to fix market value on the basis of notification under Section 4(1) issued on May 17, 1991. Special Leave Petition (Civil) Nos. 14860-14861 of 2000 filed by the State Authorities were dismissed by this Court on October 20, 2000.
The State Authorities, thereafter, filed recall-applications on June 13, 2001. In the recall applications, it was stated inter alia that fraud was committed by the land-owners and material facts were suppressed by them. It was alleged that possession of land was never handed over to Port Trust Authorities, nor Port Trust Authorities received such possession of land and yet it was asserted by the owners that possession of land was given to Port Trust Authorities in 1972 which was not correct. It was only in December, 1985 that the correct fact came to the knowledge of the State Authorities from a letter by the Chief Engineer of Port Trust. Hence, the order was taken in suo motu revision under Section 34 of the Ceiling Act. It was further stated that even if the Port Trust Authorities would be deemed to be in possession of land on the day the Ceiling Act came into force, Land Acquisition Proceedings were not concluded and no award was passed. The Port Trust Authorities, in the circumstances, would be in possession of the land for and on behalf of the land-owners and the land was required to be declared surplus and vacant under the Ceiling Act.
It was further averred that the High Court ordered inquiry by the Central Bureau of Investigation (CBI) and Mr. Y. Anil Kumar, IPS, Superintendent of Police, CBI, Visakhapatnam submitted a detailed report in the High Court when the Writ Appeals were placed for hearing. Unfortunately, however, the attention of the Court was never invited to the said report which clearly revealed that there was total fraud on the part of the land-owners in collusion with Port Trust Officers as also Officers acting under the Ceiling Act. It was, therefore, submitted that the orders passed by the Division Bench on April 27, 2000 was required to be recalled by directing the authorities under the Ceiling Act to conclude proceedings.
The High Court, after hearing the learned counsel for the parties and considering the records and proceedings including the report submitted by CBI, held that the case was of a fraud and by suppressing material facts, several orders were passed and actions were taken. In view of correct and true facts and reports which clearly established that the authorities were misled, that proceedings were initiated to revise the order, dated May 25, 1981. The Court, therefore, held that the order passed by the Division Bench was required to be recalled and recall applications were allowed.
Mr. K.K. Venugopal, Senior Advocate, appearing for the appellants contended that the High Court committed an error in law in passing the impugned order. It was clear from the evidence on record and various communications that before the proposal was submitted by the Port Trust Authorities for acquisition of land for a public purpose, advance possession of land had been taken over by Port Trust Authorities and land-owners were not in possession of the property. It was also submitted that suo motu power was sought to be exercised after a decade. As per settled law, revisional powers should be exercised within ‘reasonable time’. By no stretch of imagination, more than ten years could be said to be ‘reasonable time’. It was further contended that after dismissal of Special Leave Petitions, neither was it open to the authorities to make an application for recalling earlier orders nor was it permissible for the Court to grant such relief.
The learned counsel for the State Authorities as also Port Trust Authorities supported the order passed by the High Court and action of recalling the earlier order. It was submitted that the authorities proceeded on the basis that advance possession of the land was given by land-owners to Port Trust Authorities in August, 1972, but that statement was not correct and the authorities were misled. The order passed by the Special Officer and Competent Authority under the Ceiling Act declaring that the owners did not possess surplus land was founded on the statement that the land-owners were not in possession of land, which was false.
Having given anxious consideration to the rival contentions of the parties, the Supreme Court held that no case had been made out by the appellants for interference with the order passed by the High Court allowing the applications and recalling the earlier order. The subsequent facts and the letter by Chief Engineer of Port Trust in 1985 revealed that possession of land was not handed over in the manner asserted. From the record, neither the land-owners nor the Port Trust Authorities were in actual or physical possession of land, but it was occupied by tenants and disputes were going on between the tenants and land owners. Therefore, the basis on which the Special Officer and Competent Authority, Urban Land Ceiling proceeded to decide the matter was non-existent and non est.
The Supreme Court further held that even if the statement of land-owners and Port Trust Authorities was believed and actual and physical possession of land was treated as having been handed over by land-owners and taken over by Port Trust Authorities, it did not change the legal position. Proceedings under the Land Acquisition Act had not been finalized and no award had been passed.
The Supreme Court further held that the State Government, in the facts and circumstances of the case, was right in exercising revisional jurisdiction under Section 34 of the Act. The Court accepted that even though no period of limitation was prescribed for exercise of revisional jurisdiction by the State Government suo motu, such power had to be exercised within a reasonable time. Taking into account the facts and circumstances in their entirety and particularly the letter of the Chief Engineer, Visakhapatnam Port Trust dated December 19, 1985 and subsequent developments concerning the alleged fraud, however, it could not be said that the power had not been exercised within a reasonable period.
The Court thereafter stated the settled principle that if any judgment or order is obtained by fraud, it cannot be regarded as a judgment or order in law. A judgment, decree or order obtained by playing fraud on a Court, Tribunal or Authority is a nullity and non est in the eye of law. Such a judgment, decree or order, whether 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.
The Court explained that fraud may be defined as an act of deliberate deception designed to secure some unfair or undeserved benefit by taking undue advantage of another. Even the most solemn proceedings stand vitiated if they are actuated by fraud. Fraud is an extrinsic collateral act which vitiates judicial acts, whether in rem or in personam. The principle of finality of litigation cannot be stretched to the extent that it can be utilised as an engine of oppression by dishonest and fraudulent litigants.
Referring to S.P. Chengalvaraya Naidu (Dead) by LRs. v. Jagannath (Dead) by LRs. & Ors., the Court reiterated that a litigant approaching a court is bound to produce all documents executed by him which are relevant to the litigation. If he withholds a vital document in order to gain an advantage over the other side, he would be guilty of playing fraud on the court as well as on the opposite party.
Referring to Indian Bank v. Satyam Fibres (India) Pvt. Ltd., the Court reiterated that the judiciary in India possesses inherent power, particularly under Section 151 CPC, to recall its judgment or order if it has been obtained by fraud on the Court.
The Court also considered United India Insurance Co. Ltd. v. Rajendra Singh & Ors., wherein it had been held that no Court or Tribunal could be regarded as powerless to recall its own order if it was convinced that the order had been obtained through fraud or misrepresentation of such dimension as would affect the very basis of the claim.
On the contention that the earlier Special Leave Petitions had already been dismissed, the Court considered Abbai Maligai Partnership Firm & Anr. v. K. Santhakumaran & Ors. andKunhayammed & Ors. v. State of Kerala & Anr. The Court reiterated that jurisdiction under Article 136 of the Constitution is divisible into two stages. The first stage extends up to disposal of the prayer for special leave to appeal. The second stage commences when leave to appeal is granted and the Special Leave Petition is converted into an appeal. The doctrine of merger does not apply at the first stage but applies once appellate jurisdiction has been invoked.
The Supreme Court, however, held that the above principle was subject to the exception of fraud. Once it is established that an order was obtained by a successful party by practising or playing fraud, it is vitiated. Such an order cannot be regarded as legal, valid or in consonance with law. It is non-existent and non est and cannot be allowed to stand. A judgment, decree or order obtained by fraud has to be treated as nullity whether it was passed by the court of first instance or by the final court and has to be treated as non est by every Court, superior or inferior.
Accordingly, even assuming that after dismissal of the Special Leave Petitions the respondents could not ordinarily have approached the High Court for recalling its earlier order, in view of the finding that fraud had been committed by the land-owners in collusion with officers of the Port Trust Authorities and Government, the Supreme Court found no fault with the approach adopted by the High Court. The High Court had rightly recalled its earlier order and remanded the matter to the authorities for fresh decision in accordance with law.
Finally, the Supreme Court emphasised that jurisdiction under Article 136 of the Constitution is discretionary and equitable in nature. Article 136 does not confer a right of appeal on any party but confers discretion upon the Supreme Court to grant leave in appropriate cases. The Supreme Court is not constituted as a regular Court of Appeal or Court of Error and intervenes where justice, equity and good conscience require intervention.
Keeping in view the totality of facts and circumstances, including the serious allegations of fraud said to have been committed by the land-owners in collusion with officers of the Port Trust and Government, the CBI report prima facie showing commission of fraud and initiation of criminal proceedings, the Supreme Court held that the High Court’s recall of the earlier order and its direction to the authorities to decide the matter afresh could not be regarded as causing miscarriage of justice warranting interference under Article 136.
The Supreme Court clarified that its observations had been made only for deciding the legality and validity of the High Court’s order and that it had not expressed any opinion on the merits of the underlying dispute. The authorities were required to decide the matter on its own merits without being inhibited by the observations in the judgment.
For the foregoing reasons, the appeals were dismissed with costs.
