Supreme Court on the Effect of Playing 'Fraud' on Judicial Proceedings

  

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, 14^th 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.