INTRODUCTION
Today, I will talk about the case of Smriti
Madan Kansagra v. Perry Kansagra, 2021 SCC OnLine SC 909, wherein the
Hon’ble Supreme Court discussed the consequences of obtaining a decree or
an order by playing ‘fraud’ over the Court.
After listening to this show, the audience would
know about the meaning of fraud and the effect it has upon any judicial
proceedings. The facts of the case are not necessary for the purposes of the
show and hence, the same are not being discussed here.
MEANING OF ‘FRAUD’
Now, before adverting any further, let us understand
the meaning of ‘fraud’ with the help of the observations made in the present
case.
Firstly, the Court observed that “fraud is
an act of deliberate deception with the design of securing something by taking
unfair advantage of another. In fraud one gains at the loss and cost of
another. Even the 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.”
Secondly, the Court noted that “fraudulent
misrepresentation is called deceit and consists in leading a man into damage by
wilfully or recklessly causing him to believe and act on falsehood. It is a
fraud in law if a party makes representations which he knows to be false, and
injury ensues therefrom.”
Thirdly, the Court cited Story’s Equity
Jurisprudence, 14th Edition, wherein it was explained that “fraud
indeed, in the sense of a Court of Equity, properly includes all acts, o missions,
and concealments which involve a breach of legal or equitable duty, trust, or
confidence, justly reposed, and are injurious to another, or by which an undue
and unconscientious advantage is taken of another.”
Fourthly, the Court also explained that “fraud
must be actual positive fraud, a meditated and intentional contrivance to keep
the parties and the court in ignorance of the real facts of the case and
obtaining that decree by that contrivance.”
Fifthly, the Court opined that “suppression
of a material document would also amount to a fraud on the court. Although,
negligence is not fraud, but it can be evidence on fraud.” It was
further noted that “the expression ‘fraud’ involves two elements, deceit
and injury to the person deceived. It is a cheating intended to get an
advantage.”
And lastly, the Court stated that “fraud and
justice never dwell together, and it is a pristine maxim which has never lost
its temper over all these centuries.”
Those were the observations by the Court in
relation to the meaning of ‘fraud’. I hope that the same is clear by now. Now,
let us move on to the question of the effect of ‘fraud’ that is played upon the
Court. The pertinent observations by the Court in this regard are: -
OBSERVATIONS BY THE COURT
Firstly, according to the Court, “the
judiciary in India also possesses inherent power…. to recall its judgment or
order if it is obtained by fraud on court. 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.”
Secondly, the Court discussed that “since
fraud affects the solemnity, regularity and orderliness of the proceedings of
the court and also amounts to an abuse of the process of court, the courts have
been held to have inherent power to set aside an order obtained by fraud
practised upon that court. Similarly, where the court is misled by a party or
the court itself commits a mistake which prejudices a party, the court has the
inherent power to recall its order.”
Thirdly, the Court emphasized that “in order
to sustain an action to impeach a judgment, actual fraud must be shown; mere
constructive fraud is not, at all events after long delay, sufficient”
as “detection/discovery of constructive fraud at a much belated stage may
not be sufficient to set aside the judgment procured by perjury.”
Fourthly, the Court noted that “no judgment
of a court, no order of a Minister, can be allowed to stand if it has been
obtained by fraud. Fraud unravels everything.”
SUMMARY AND CONCLUSION
And lastly, following is the summary of the effects
when a decree or an order is obtained by playing fraud over the Court: -
a. Parties are liable to come to the Court with
clean hands.
b. A decree obtained by fraud is a nullity and non
est in the eyes of law.
c. Suppression of a material document would also
amount to a fraud on the court.
d. Even the doctrine of Res Judicata cannot save a
committal of fraud.
e. Fraud is proved when it is shown that a false
representation has been made knowingly, or without belief in its truth, or recklessly
and carelessly whether it be true or false.
f. When a story is buttressed on the edifice of
fraud, then what is pyramided on fraud is bound to decay.
That was all about fraud and its effect when an
order/decree is secured by playing fraud upon the Court. I expect that the meaning
of fraud and its consequences are clear by now.
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