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The Vyalikaval House Building Co-Operative Society v. V. Chandrappa And Others
Factual and Procedural Background
This review petition challenges the order dated 17.1.2000 in Writ Appeal No. 2294/99. By that order the writ appeal was allowed, setting aside the learned Single Judge's order dated 11.11.1998 in W.P. No. 30622/98, allowing that writ petition and quashing the notification and acquisition proceedings insofar as the appellants were concerned. The learned Single Judge had earlier dismissed a writ petition filed by respondents 1 and 2 inter alia on the ground of delay and laches. The order under review followed a judgment in W.A. No. 2188/98 (disposed on 17.1.2000) which in turn was based on a judgment in W.A. No. 506/96 (reported in 1999 (4) Kar. L.J 143). The revision petitioner is a house building co-operative society. The review petition was dismissed by the Court.
Legal Issues Presented
- Whether the order dated 17.1.2000 in W.A. No. 2294/99 is susceptible to review.
- Whether the observations in paragraph 10 of W.A. No. 506/96 were not followed and, if so, whether that justifies review.
- Whether delay and laches should bar relief to the society or whether allegations of fraud/bogus membership preclude relief irrespective of delay.
Arguments of the Parties
Revision Petitioner's Arguments
- Learned Senior Counsel Sri R.N. Narasimha Murthy contended that observations made in paragraph 10 of W.A. No. 506/96 were not followed and this justified review of the order dated 17.1.2000.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| 1999 (4) Kar. L.J 143 | Prior judgment (W.A. No. 506/96) serving as basis for subsequent orders and discussion of paragraph 10. | The Court noted the order under review was based on that judgment and held that the contention regarding paragraph 10 had been considered and could not be a ground to deny relief to owners. |
| Narayana Reddy v. State of Karnataka | Authority relied upon concerning inquiry findings on the society's conduct and membership. | The Court relied on this decision and the Inquiry Report of G.V.K. Rao to hold the petitioner society had enrolled bogus/ineligible members and was a bogus society; hence the Court would not assist it. |
| Lazarus Estates Limited v. Beasley | Effect of fraud: "Fraud unravels everything"—fraud vitiates judgments, contracts and transactions. | The Court cited Lord Denning's passage to support the proposition that once fraud is proved it vitiates orders and declarations, precluding relief to the fraudulent party. |
| Express Newspapers Pvt. Ltd. v. Union of India. 1986 1 SCC 133 | Principle that fraud on power voids an order; distinction between bona fide exercise and misuse in bad faith (paragraph 118 quoted). | The Court relied on this exposition to hold that misuse of power or fraudulent exercise vitiates orders and to justify refusal of relief to the petitioner society. |
| S. Partap Singh v. State Of Punjab (1964) 4 SCR 733; AIR 1964 SC 733 | Example of misuse of power in bad faith (illustrative authority cited within Express Newspapers). | Referred to within the quoted passage to illustrate misuse in bad faith; used to reinforce the Court's view on fraud/mala fide exercise of power. |
| General Assembly of Free Church of Scotland v. Overtown; 1904 SC 515 | Principle that powers must be used bona fide for the purposes for which they are conferred (cited in Express Newspapers quote). | Cited via Express Newspapers to support the principle that action taken in bad faith is inoperative; applied to deny relief to a party tainted by fraud. |
| Short v. Poole Corporation, (1926) 1 CH 66 | Statement that no public body has statutory authority to act in bad faith or from corrupt motives (cited in Express Newspapers quote). | Quoted in support of the proposition that actions committed in bad faith are inoperative; relied on in the Court's reasoning on fraud. |
| Collinus v. Blantern (2) (1976) (2) Wils, K.B 342 | Authority cited by Lord Denning illustrating that deeds are vitiated by fraud (cited in Lazarus Estates passage). | Referenced as part of Lord Denning's enumeration that fraud vitiates deeds; used to underpin the Court's reliance on the fraud doctrine. |
| Duchess of Kingston's case (3) (1776) (1 Leach 146) | Authority cited by Lord Denning illustrating that judgments can be vitiated by fraud (cited in Lazarus Estates passage). | Referred to in support of the general proposition that fraud vitiates judicial instruments; applied in reasoning against the petitioner. |
| Master v. Miller (4) (1791) (4 Term Rep. 320) | Authority cited by Lord Denning illustrating that contracts can be vitiated by fraud (cited in Lazarus Estates passage). | Used within Lord Denning's analysis to show the broad effect of fraud; the Court relied on this principle to deny relief to the fraudulent society. |
Court's Reasoning and Analysis
The Court examined the review challenge to the 17.1.2000 order and observed that the order rested on prior judgments (including W.A. No. 506/96 and W.A. No. 2188/98). The specific contention that paragraph 10 of W.A. No. 506/96 was not followed was considered and rejected. The Court relied on Narayana Reddy v. State of Karnataka and the Inquiry Report of G.V.K. Rao, which stated that the petitioner society had enrolled large numbers of bogus and ineligible members and was a bogus society engaged in fraudulent acquisition of land; for that reason the Court would not assist the society. The Court applied the established principle that fraud vitiates orders and transactions, citing Lazarus Estates Limited v. Beasley and Express Newspapers Pvt. Ltd. v. Union of India (paragraph 118) to show that fraud on power or mala fide exercise of power renders acts inoperative. The Court further noted that acquisition proceedings for some owners had already been quashed so that the land was not available to the society, that the land involved in the present matter was only "1 acre 5 guntas," and that the society bore the stigma of bogus membership. On these bases the Court found no ground for review.
Holding and Implications
Review petition dismissed.
Direct effect: the order dated 17.1.2000 in W.A. No. 2294/99 stands and the review petition is denied; the Court refused to grant relief to the petitioner society on the ground that it was shown to be bogus and engaged in fraudulent activities. The opinion does not announce any novel legal principle beyond application of established doctrines that fraud vitiates orders and that courts will not aid parties guilty of fraud.
Gopala Gowda, J.:—
This review petition is filed to review the order dated 17.1.2000 in Writ Appeal No. 2294/99 passed by this Court. By that order the writ appeal was allowed setting aside the order of the learned Single Judge dated 11.11.1998 in W.P No. 30622/98, allowed the said Writ Petition, quashed the notification and the acquisition proceedings impugned therein only in so far as the appellants therein are concerned. The learned Single Judge dismissed the Writ Petition filed by respondents 1 and 2 inter-alia on the ground of delay and laches. That was the subject matter in W.A No. 2294/99, the order passed therein is sought to be reviewed as stated above.
2. The order sought to be reviewed was passed following the judgment of this Court in W.A No. 2188/98 disposed of on 17.1.2000 That judgment was based on another judgment dated 16.1.1998 in W.A No. 506/96, reported in 1999 (4) Kar. L.J 143. The ground sought to be made out by Sri R.N Narasimha Murthy, learned Senior Counsel for the revision petitioner is that the observations made in paragraph 10 in W.A No. 506/96 is not followed. But, the said contention has been considered and it has been held that those observations cannot be ground for denying relief to the owners.
3. The question of delay and laches cannot be gone into and considered as this Court relied upon the decision in the case of Narayana Reddy v. State of Karnataka. In that case the Inquiry Report of G.V.K Rao was taken into consideration. In that report it is stated that the present revision petitioner house building co-operative society had enrolled large number of bogus and ineligible members illegally and it is a bogus society. Such being the case, this Court cannot come to the aid of petitioner society, which is held to be engaged in fraudulent acquisition of land for its bogus members. Since the society being bogus, is not entitled to acquire land. Interests of landowners cannot be thrown out on the ground of delay and laches especially when this Court granted relief to similarly placed persons. There cannot be different decisions on the same subject matter although parties approach the Court belatedly.
4. Since petitioner society is involved in fraudulent activities, it cannot raise hyper-technical issues like delay and laches. The effect of fraud has been considered in the leading judgment of Lord Denning in the case of Lazarus Estates Limited v. Beasley as hereunder:
“No Court in this land will allow a person to keep an advantage which he has obtained by fraud. 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. The Court is careful not to find fraud unless it is distinctly pleaded and proved, but once it is proved it vitiates judgments, contracts and all transactions whatever, see as to deeds, Collinus v. Blantern (2) (1976) (2) Wils, K.B 342) as to judgments, Duchess of Kingston's case (3) (1776) (1 Leach 146), and as to contracts Master v. Miller (4) (1791) (4 Term Rep. 320). So here I am of opinion that if this declaration is proved to have been false and fraudulent, it is a nullity and void and….”
In the case of Express Newspapers Pvt. Ltd. v. Union of India . 1986 1 SCC 133 it is stated in paragraph 118 thus:
“118. Fraud on power voids the order if it is not exercised bona fide for the end design. There is a distinction between exercise of power in good faith and misuse in bad faith. The former arises when an authority misuses its power in breach of law, say, by taking into account bonafide, and with best of intentions some extraneous matters or by ignoring relevant matters. That would render the impugned act or order ultra vires. It would be a case of fraud on powers. The misuse in bad faith arises when the power is exercised for an improper motive, say to satisfy a private of personal grudge or for wreaking vengeance of a Minister as in S. Partap Singh v. State Of Punjab. (1964) 4 SCR 733; (AIR 1964 SC 733). A power is exercised maliciously if its repository is motivated by personal animosity towards those who are directly affected by its exercise. Use of a power for an ‘alien’ purpose other than the one for which the power is conferred is mala fide use of that power. Same is the position when an order is made for a purpose other than that which finds place in the order. The ulterior alien purpose clearly speaks of the misuse of the power and it was observed as early as 1904 by Lord Lindley in General Assembly of Free Church of Scotland v. Overtown, 1904 SC 515, ‘that there is a condition implied in this as well as in other instruments which create powers, namely that the powers shall be used bona fide for the purpose for which they are conferred’. It was said by Warrington, C.J in Short v. Poole Corporation, (1926) 1 CH 66 that:
‘No public body can be regard as having statutory authority to act in bad faith or from corrupt motives, and any action purporting to be of that body, but proved to be committed in bad faith or from corrupt motives, would certainly be held to be inoperative.”
5. There is one more reason not to grant relief in favour of the revision petitioner. It is an admitted fact that acquisition proceedings pertaining to some of the owners, who were the petitioners in earlier Writ Petitions, had been quashed thereby their lands are not available to the petitioner society. The land involved in this case is 1 acre 5 guntas only as is clear from the averments in the Writ Petition out of which this revision arose. Such a small peace of land will not be useful to the society in any way. More over, with the sticker attached to the society that its members are bogus and the society is engaged in illegal and unlawful activities, the petitioner should have desisted itself from further litigating the matter. We feel sad that inspite of all these draw-backs and stigma the petitioner society is still prosecuting the case.
6. There is no ground for review of the order under review. The Review Petition is wholly misconceived and devoid of merit.
7. Review petition stands dismissed.
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