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Smart Summary

Factual and Procedural Background

This appeal arises from a suit brought to set aside an ex parte decree obtained by the respondent. The ex parte decree was originally passed by the Madras City Civil Court on 5 April 1949 in Suit No. 555 of 1948, a suit by the respondent against the appellant for recovery of the price of goods sold and delivered. On 16 January 1951 the appellant filed a suit in the Court (before Mallick, J.) seeking to set aside that ex parte decree on the ground that it had been obtained by fraud. The learned trial Judge (P.C. Mallick, J.) dismissed the appellant's suit, finding that fraud had not been established. The appellant appealed; the present opinion (Bose, J., with Das Gupta, C.J. agreeing) assesses the correctness of the trial Judge's findings and dismisses the appeal.

Legal Issues Presented

  1. Whether the ex parte decree in Suit No. 555 of 1948 was obtained by fraud sufficient to justify reopening or setting aside the decree.
  2. Whether the order for substituted service (including posting notice on the Court notice board and advertising in the Statesman) was properly made and therefore constituted good service.
  3. Whether the plaintiff's claim for price of goods sold and delivered was a false claim (i.e., whether there was privity of contract or assignment enabling the plaintiff to sue) such that it supports an inference of fraud when coupled with alleged suppression/non-service of summons.

Arguments of the Parties

Appellant's Arguments

  • The appellant argued that the respondent deliberately misrepresented facts in the affidavit in support of the application for substituted service (specifically using the phrase "returned unserved") when in fact, according to evidence (chief accountant Radhakissen Sunderlal), the summonses had not been returned — this amounted to suppression and was intended to mislead the court into believing the defendant was evading service.
  • The appellant relied on the evidence of attempted service (citations to witness questions Q.43 and Q.54–68) to show that summonses were not returned and thus were suppressed, supporting a charge of intentional fraud to obtain substituted service and the consequent ex parte decree.
  • The appellant further argued that the plaintiff (respondent in the original suit) had no privity of contract with the defendant and therefore had no right to enforce the claim for the price of goods; thus the original suit was a false suit and the claim was a false claim. Combined with alleged misrepresentations about service, this should justify setting aside the ex parte decree.
  • The appellant relied on precedent (Tarachand v. Santosh Singh, A.I.R. 1935 Lahore 129) as persuasive authority for the proposition that an order for substituted service obtained by false representations can render service invalid and the resulting decree voidable.

Respondent's Arguments

This opinion does not contain a detailed account of the respondent's legal arguments in opposition; the text records the respondent as the plaintiff in the original suit and as respondent in the appeal but does not set out their submissions in detail.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Tarachand v. Santosh Singh, A.I.R. (1935) Lahore 129 An order for substituted service obtained by a false representation that defendants were deliberately avoiding service amounts to practising fraud on the court; substituted service obtained that way is invalid. The appellant relied on this decision. The court compared the facts and observed that the present case differed: one registered summons had indeed been returned unserved and the record and other evidence showed attempts at service, so Tarachand did not control the result here.
Kunja Behary Chakrabartty v. Krishna Dhan Majumdar, I.L.R. (1940) 2 Cal. 477 Summarises the law that a decree cannot be reopened merely because it was obtained by perjured evidence; a decree can be reopened by a new action only where the court was actually misled by fraud — defined as "actual positive fraud, a meditated and intentional contrivance..." Suppression of summons may constitute such contrivance where non-service is accompanied by a false claim, enabling an inference of deliberate suppression. The court adopted and agreed with this statement of law (with a small textual reservation about discretionary language). It used this principle to assess whether the appellant had proved the kind of "actual positive fraud" necessary to reopen the ex parte decree.
Mahamed Golab v. Mahamed Sulliman, I.L.R. 21 Cal. 612 Statement (by Petheram, C.J.) that a decree cannot be reopened on the ground that it has been obtained by perjured evidence — emphasising finality of litigation. Referred to in Kunja Behary's review of the law; the present court accepted the line of authority that a court is not to reopen decrees merely for perjured evidence unless the court was actually misled by fraud.
Lakshmi Narayan Shah v. Nur Ali, I.L.R. 38 Cal. 936 Criticised or distinguished earlier dictum (Mahamed Golab) as obiter; engages with the development of the law on reopening decrees. Cited in the Kunja Behary exposition of the authorities; the present court noted the history but followed the later line of authority summarised in Kunja Behary.
Mosuful Huq v. Surendra Nath Roy, 16 C.W.N. 1002 Critical analysis of earlier decisions related to reopening decrees and the question whether perjured evidence alone suffices to reopen a decree. Referred to in the review of authorities leading to the settled proposition adopted by the court: only actual, deliberate fraud that misleads the court can justify reopening.
Muktamala Devi v. Ram Chandra Dey, 31 C.W.N. 258 Provides a useful review of the relevant case law on reopening decrees for fraud. The court cited this review as part of the doctrinal background supporting the rule applied in the present case.
Kedar v. Hemanta, 18 C.W.N. 447 Authority concerning the principles discussed in Kunja Behary's case (as to reopening decrees and fraud). The court noted the appellant's reference to this case but observed that it had been exhaustively dealt with in Kunja Behary and therefore did not require further discussion.
Nanda Kumar Howladar v. Ram Jiban, 18 C.W.N. 681 Another case cited by appellant on related propositions concerning reopening decrees for fraud. The court said the propositions in this case were not in dispute and did not require detailed treatment for the decision at hand.

Court's Reasoning and Analysis

The court's analysis proceeded in stages, addressing first the allegations about service and possible suppression of summons, then the nature of the plaintiff's underlying claim, and finally whether the combined facts established the sort of deliberate, positive fraud that would justify reopening an ex parte decree.

1. On service and the allegedly misleading affidavit language: the appellant pointed to the affidavit paragraph that used the phrase "returned unserved" and to the Chief Accountant's evidence that summonses "were not returned." The court accepted that the phrase was misleading and "did not give a true picture of the situation," but it declined to infer intent to mislead. The court noted an endorsement on the original substituted-service order stating "Defendant's postal summons alone were once returned unserved," which suggested the trial judge was or could have been aware of the postal return. The court also relied on the bailiff's report from the Small Causes Court, Calcutta (printed in the record) and his viva voce evidence: the bailiff had attempted service at the defendant's addresses; the defendant's gomosta said the proprietor would not return before mid-March and refused to accept service unless a copy of the plaint was furnished. These facts supported the view that efforts to effect service were made in good faith and that there was no deliberate suppression by plaintiff or collusion among officers.

2. On substituted service and legal standard: the court referred to Or. 5, R. 20(1) of the Code of Civil Procedure, which permits substituted service where the court is satisfied that the defendant is keeping out of the way or that service in the ordinary way cannot be effected. Noting that one registered envelope had indeed come back unclaimed and that paragraph 4 of the affidavit said the defendant knew of the suit and was avoiding service, the court held it was open to the trial judge to conclude that grounds existed for substituted service by posting on the Court notice board and publication in the Statesman. Thus the court found the substituted service order justified by the materials.

3. On the nature of the plaintiff's claim (privity/assignment issue): the trial Judge had found the underlying claim for the price of goods sold was a genuine claim (the appellant had purchased goods from the firm of Kishinchand Chellaram), but also found the plaintiff company had no privity and that mere passing of a board resolution taking over assets did not effect a transfer of the right to enforce that claim. The court emphasized that the claim was not a wholly fictitious claim and there was no basis to say the plaintiff had instituted the suit knowing it had no right to enforce the claim.

4. On the standard for reopening an ex parte decree for fraud: the court accepted the doctrinal summary in Kunja Behary — that to sustain an action for setting aside a decree the fraud alleged must be "actual positive fraud, a meditated and intentional contrivance" to keep parties and court in ignorance — and observed that when non-service and a false claim are both proved, a court may ordinarily infer deliberate suppression. However, applying the facts here, the court found the evidence did not establish such deliberate suppression or an altogether false claim.

5. Conclusion of reasoning: weighing the misleading language in the affidavit, the contemporaneous record endorsement, the bailiff's report and evidence of genuine attempts to serve, together with the trial Judge's unchallenged finding that the claim itself was genuine (though possibly misconceived as to enforceability), the court concluded the appellant failed to establish the requisite deliberate fraud that would justify setting aside the ex parte decree.

Holding and Implications

Holding: The appeal is dismissed with costs.

Implications:

  • Direct effect: The trial Judge's dismissal of the appellant's suit to set aside the ex parte decree is affirmed; the appellant's claim of fraud was not established on the facts presented.
  • The substituted service order was held to be justifiable on the materials before the court (including one postal summons returned unserved and other evidence of attempts), and the ex parte decree was not shown to have been obtained by the kind of deliberate contrivance that would require reopening.
  • The court did not indicate that any new legal principle or precedent was being laid down; it applied established authorities (notably the exposition in Kunja Behary Chakrabartty) to the facts and reached a fact-based conclusion adverse to the appellant.

Disposition recorded in the opinion: Das Gupta, C.J., agreed with Bose, J.'s judgment.

    Nemchand Tartia v. Kishinchand Chellaram (India) Ltd. .

    Bose, J.:— This appeal is against a judgment and decree of P.C Mallick J., dismissing a suit to set aside an exparte decree on the ground of fraud. The exparte decree was passed by the Madras City Civil Court on April 5, 1949 in Suit No. 555 of 1948, which was brought by the respondent in this appeal against the appellant herein for recovery of price of goods sold and delivered. On 16th January, 1951 the present appellant filed a suit in this Court against the respondent for setting aside of the said exparte decree on the ground that the respondent obtained the said decree by fraud. This suit came up for hearing before Mallick, J. The learned Judge has come to the conclusion that the plaintiff has failed to establish the case of fraud set up by him and he has therefore dismissed the plaintiff's suit.

    2. Before us the learned counsel for the appellant has contended that the learned trial Judge is wrong in his finding that the case of fraud has not been established. The learned counsel has drawn our attention to the evidence given by Radhakissen Sunderlal, the Chief Accountant of the defendant company where this witness has deposed about the various attempts made to effect service of the Writ of Summons on the defendant Nemchand Tantia in the said Suit No. 555 of 1948 of the City Civil Court, Madras, (Q. 43 and Q. 54 to 68) and has submitted that although the definite evidence and admission of this witness in the box is that the Summonses issued for service were not returned; in the application which was made before the Madras City Civil Court for substituted service on 9th February, 1949 it was falsely stated in paragraph 3 of the affidavit filed on behalf of the plaintiff company in the said suit and which was affirmed by one Pandurangam Chetty, that two sets of Summonses which were taken out for service on the defendant had been “returned unserved” although the real fact is that the summonses had not been returned at all as admitted by the witness Sunderlal in the box. It is argued that this false representation was made deliberately with a view to mislead the Court into thinking that the defendant Nemchand Tantia was evading service and thereby inducing the Court to pass an order for substituted service. The learned trial Judge has interpreted the expression “returned unserved” to mean that no service was effected of the summonses issued and the learned judge felt that although the language might not have been strictly correct, he would not be justified in taking the view that it was meant to mislead the Court or it did in fact mislead the court. We are unable to persuade ourselves to take a different view with regard to this matter. That the expression was a misleading one and it did not give a true picture of the situation admits of no doubt. But whether it actually misled the court or not is another matter. It appears from the original order which was made by the court for substituted service on 17th February, 1949 that there is an endorsement to the effect “Defendant's postal summons alone were once returned unserved”. So it is reasonable to presume that the learned judge's attention had been drawn to this fact before he made the order for substituted service. Now even assuming that the learned judge's attention was not drawn to this fact and he was to a certain extent misled by the unhappy expressions used in paragraph 3 of the affidavit, we are unable to hold that the plaintiff had any intention of actually misleading the Court by the use of these incorrect expressions. The fact that the plaintiff company was making repeated attempts and all possible endeavour to effect service on the defendant, clearly negatives, the theory that there was any attempt at fraudulent suppression of the summons. The summonses were attempted to be served through Court, and summonses enclosed in registered envelopes properly addressed to the defendant, were sent through Court, and it is puerile to suggest that the Court officers and officers or employees of the postal department, had all entered into an unholy conspiracy to suppress the service of the summons.

    3. The report of the bailiff of the Small Causes Court, Calcutta, who was entrusted with the service of the summons and which report is printed at page 165 of the Paper book shows very clearly that the bailiff actually went to the defendants' address at 15 Noormull Lohia Lane and 140A, Cross Street and attempted to effect service on the defendant but the defendant's gomosta told him that the proprietor was not expected to come back from Bombay before the middle of March and the Gomosta himself refused to accept service unless a copy of the plaint was supplied to him. This bailiff has given evidence at the hearing before Mallick, J. and no reason has been shown why his evidence cannot be accepted. So these are circumstances which lead us to hold that the case of the appellant before us that the respondent is guilty of fraudulent suppression of the summons and that the summons was not served on the appellant, is not true.

    4. The learned counsel for the appellant has placed reliance on a decision of a single Judge of the Lahore High Court reported in (1) A.I.R (1935) Lahore 129 (Tarachand v. Santosh Singh). In that case the facts were that the plaintiff who had brought a suit against four defendants was asked by the Court to supply the addresses of the defendants for the purpose of sending the summons to the defendants by registered post. The plaintiff knew about the whereabouts of the defendants but without supplying the addresses to the court for service of the summons by registered post, he applied for and obtained an order for substituted service by making a false representation that the defendants were deliberately avoiding service. The Court therefore held that the order for substituted service had been obtained by practising fraud upon the court and so the defendants had not been properly served as required by law.

    5. In the case before us the fact remains that one of the summonses referred to in paragraph 3 of the affidavit in support of the application for substituted service which had been sent by registered post came back unserved on 8th December, 1948. So part of the representations in paragraph 3 of the affidavit is true. Apart from that in paragraph 4 of the affidavit it was stated that the defendant knew about the suit and was avoiding service. It is possible that the learned judge who made the order for substituted service was satisfied on perusal of paragraph 4 and the fact that the registered envelope came back unclaimed that grounds had been made out for making an order for substituted service. Or. 5, R. 20(1) of the Code of Civil Procedure provides that if the court is satisfied that the defendant is keeping out of the way for the purpose of avoiding service or for any other reason the summons cannot be served in the ordinary way the court can make an order for substituted service in the manner prescribed in the said Rule or in any other manner it thinks fit. In the present case the Court thought fit to make an order for substituted service by posting a notice on the Court Notice Board and by advertisement in the Statesman. We, therefore, fail to see why the service in the present case was not a good service. We are satisfied on the materials placed before us that the circumstances of this case justified an order for substituted service.

    6. The next point urged by the learned counsel for the appellant is that as the learned Judge has found that the plaintiff company in Suit No. 555 of 1948 had no privity of contract with the defendant and the plaintiff had no right to enforce the claim for price of goods sold and delivered, the suit of the plaintiff was a false suit and its claim in the suit was a false claim, and coupled with the fact that certain misrepresentations of facts had been made in the application for substituted service, there had been sufficient case of fraud made out to justify the learned judge in setting aside the exparte decree.

    7. Now the law which has bearing on this point has been summarised in the following words in the case of Kunja Behary Chakrabartty v. Krishna Dhan Majumdar (2) (I.L.R (1940) 2 Cal. 477) at pages 487-488:—

    “It is now well-settled that a decree cannot be re-opened on the ground that it has been obtained by perjured evidence. In Mahamed Golab v. Mahamed Sulliman (I.L.R 21 Cal. 612), Sir Comer Petheram, C.J laid down that proposition and pointed out that if the law was otherwise, there would be no finality to litigation. In Lakshmi Narayan Shah v. Nur Ali (I.L.R 38 Cal. 936), however, the observations of Petheram, C.J in Mahomed Golab's case were discarded on the ground that they were obiter, the learned judges proceeding further to observe that in the light of later decisions of the English Courts it cannot be said that the law was laid down correctly by Petheram, C.J The reasoning adopted and the English decisions relied on there were subjected to critical analysis in Mosuful Huq v. Surendra Nath Roy (16 C.W.N 1002) and Petheram, C.J's dictum was followed. The later cases of this Court have all along accepted the dictum of Petheram, C.J as sound and have either criticised or distinguished Lakshmi Narayan's case (supra). A useful review of the case law is given in Muktamala Devi v. Ram Chandra Dey (31 C.W.N 258). The proposition is well settled that a decree can be reopened by a new action when the Court passing it had been misled by fraud, but it cannot be reopened when the Court is simply mistaken; when the decree was passed by relying upon perjured evidence, it cannot be said that the Court was so misled. (Kerr on Fraud and Mistake, p. 425, 6th Ed.). To us it seems that to sustain an action for setting aside a decree, the fraud alleged and proved 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 ease and obtaining that decree by that contrivance’………….. In the case of exparte decrees when the defendant had never appeared, the contrivance may consist in suppressing the summons. The fact of suppression would itself be the contrivance, and indeed a most effective contrivance for keeping the defendant in ignorance of his rights and from placing his case before the Court. Mere non-service would not do. But when the fact of non-service of summons is proved by the plaintiff in the later action and the claim on which the decree was passed is proved to be a false one, the Court may and should ordinarily infer deliberate and hence fraudulent suppression, for the last mentioned circumstance supplies the motive for the suppression and indicates that the suppression itself is fraudulent.”

    8. We are in agreement with this statement of the law except that it would have been better if the words “should ordinarily” had been omitted therefrom, and the discretion of the court left at large.

    9. The learned counsel for the appellant also referred to the cases reported in 18 C.W.N 447 (3) (Kedar v. Hemanta) and in 18 C.W.N 681 (4) (Nanda Kumar Howladar v. Ram Jiban), but as the former case has been dealt with exhaustively in Kunja Behari's case (2) (1940) 2 Cal. at p. 489-491 and the propositions laid down in the latter case are not in dispute, these cases need not be dealt with in detail in this judgment.

    10. The learned trial Judge in the case before us has found that the claim for the price of goods sold is not a false claim. He has found that the appellant before us brought the goods from the firm of Kishinchand Chellaram and the claim in respect of the price was a genuine claim.

    11. This finding has not been challenged before us. But the learned Judge has also found that the plaintiff company had no right to claim the price as there was no privity of contract between the plaintiff company and the buyer and the claim for price had not been assigned by the firm of Kishinchand Chellaram to the plaintiff company. The claim for price is therefore not a ficitious claim, but it may be that the plaintiff company had misconceived its rights to enforce the claim. It appears that a resolution was passed by the Board of Directors of the plaintiff company for taking over the assets of the firm of Kishinchand Challaram and it was thought that by this process the plaintiff company had acquired the right to enforce this claim but the learned Judge has found that by mere passing of a resolution no transfer of assets could take place. So it cannot be said that the plaintiff had filed the suit knowing that the plaintiff had no right to enforce the claim nor can it be said that the claim is an altogether fictitious claim. We have also indicated already that the other facts and circumstances do not justify us in holding that there has been any fraudulent suppression of summons.

    12. In our view learned trial Judge was right in his conclusion that the appellant before us has failed to establish the case of fraud alleged by him, and he has rightly dismissed the suit.

    13. In the result this appeal fails and it is dismissed with costs.

    Das Gupta, C.J:— I agree.

    S.N.G

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    Comments

    Nemchand Tartia v. Kishinchand Chellaram (India) Ltd. .
    (Apr 9, 1959)