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  • Section 5, Subsection 2 of the 1983 Income Tax Act
  • Code of Civil Procedure (CPC)
  • Order 41 Rule 27 of the Code of Civil Procedure (for short “CPC”)
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Citation Codes
Equivalent Citations
citation codes
Case Number
Disposition
Advocates
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Acts
  • Section 5, Subsection 2 of the 1983 Income Tax Act
  • Code of Civil Procedure (CPC)
  • Order 41 Rule 27 of the Code of Civil Procedure (for short “CPC”)
Smart Summary

Factual and Procedural Background

Respondent 1, Pushparani Jain, was allotted Plot No. 251, Major Shopping Centre, Zone II, Habibganj, Bhopal by the Bhopal Development Authority (BDA). Because she resided in the United States, she executed a power of attorney in favour of her brother, Jinendra Jain, on 28-8-1981, enabling him to complete allotment formalities and obtain possession.

The appellant, Harjas Rai Makhija, asserted that Pushparani executed a second power of attorney on 30-4-1983 in favour of Jinendra Jain. Relying on this alleged document, Jinendra Jain agreed on 16-10-1988 to sell the plot to Makhija, with execution of the sale deed stipulated for 30-4-1989.

Upon learning of this agreement, Pushparani filed Suit No. 51-A/1999 seeking (i) a declaration that the 16-10-1988 agreement was unauthorised, (ii) recovery of possession, and (iii) mesne profits. Makhija filed Suit No. 52-A/1999 for specific performance of the same agreement. Both suits were tried together; on 4-10-1999 the District Judge decreed Pushparani’s suit, declared the agreement illegal, ordered Makhija to hand over possession and pay compensation, and dismissed Makhija’s suit.

Makhija appealed (FA Nos. 607 & 638 of 1999) and filed an application under Order 41 Rule 27 CPC to adduce additional evidence—specifically, an application allegedly filed with the BDA on 1-6-1983 for a no-objection certificate. The High Court dismissed both appeals and the application in 2003, holding that no genuine power of attorney dated 30-4-1983 was proved. Special Leave Petitions and review petitions in the Supreme Court were dismissed on 25-7-2003 and 9-9-2003 respectively.

Undeterred, Makhija filed Suit No. 471-A/2008 before the Additional District Judge, Bhopal, producing a certified copy of the alleged 30-4-1983 power of attorney and seeking a declaration that the 1999 decree was fraudulently obtained and void. The suit was dismissed on 28-9-2010. His appeal (FA No. 961/2010) was dismissed by the High Court on 3-4-2012, which rejected the document as mere photocopied secondary evidence and found no fraud. The present Supreme Court appeal challenges that dismissal.

Legal Issues Presented

  1. Whether the decree dated 4-10-1999, affirmed up to the Supreme Court, was obtained by fraud through concealment of an authentic power of attorney dated 30-4-1983.
  2. Whether the certified copy/photocopy of the alleged 30-4-1983 power of attorney constitutes admissible evidence sufficient to reopen the concluded litigation.
  3. Whether Makhija could, through a subsequent suit, collaterally seek relief that effectively revives his earlier dismissed claim for specific performance.

Arguments of the Parties

Appellant's Arguments

  • Asserted that Pushparani concealed a genuine power of attorney dated 30-4-1983, thereby committing fraud on the court when obtaining the 1999 decree.
  • Invoked the principle that a decree obtained by fraud is a nullity and can be challenged at any time, relying on A.V. Papayya Sastry v. State of A.P. (2007) 4 SCC 221 and Union of India v. Ramesh Gandhi (2012) 1 SCC 476.
  • Contended that the certified copy of the alleged power of attorney, now produced, warranted an inquiry and justified setting aside the earlier decree.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
A.V. Papayya Sastry v. State of A.P. (2007) 4 SCC 221 A decree obtained by fraud is a nullity and can be challenged at any stage. Court accepted the proposition but held that fraud must be pleaded and proved; the appellant failed to do so.
Union of India v. Ramesh Gandhi (2012) 1 SCC 476 Court is empowered to inquire into allegations that a prior judgment was procured by fraud. Reaffirmed inquiry is permissible, but emphasised that intent to deceive must be established, which was absent here.
Meghmala v. G. Narasimha Reddy (2010) 8 SCC 383 Explains the legal concept of fraud in obtaining judicial orders. Cited to underscore that fraud has a specific, stringent meaning and must be proved with evidence.
Bhaurao Dagdu Paralkar v. State of Maharashtra (2005) 7 SCC 605 Elaborate discussion on the nature and proof of fraud. Referenced to demonstrate the high threshold for proving fraud, unmet by the appellant.
State of Orissa v. Harapriya Bisoi (2009) 12 SCC 378 Further discussion on fraud and its legal consequences. Used to reinforce that mere allegation without cogent proof cannot invalidate a decree.

Court's Reasoning and Analysis

The Supreme Court observed that:

  • The 4-10-1999 decree, confirming Pushparani’s title and dismissing Makhija’s specific-performance suit, had already attained finality after dismissal of appeals and SLPs.
  • Makhija’s subsequent suit constituted a collateral attack seeking indirectly to revive the barred claim for specific performance.
  • The plaint in Suit No. 471-A/2008 contained no specific, pleaded particulars of fraud allegedly practised by Pushparani; mere assertions were insufficient.
  • The evidence proffered—a certified copy of a photocopy of the alleged 30-4-1983 power of attorney—was inadmissible even as secondary evidence; hence there was “very thin” material to substantiate fraud.
  • Established jurisprudence (as discussed in the cited precedents) requires fraud to be proved by cogent evidence and intent to deceive, not simply alleged.
  • Because fraud was neither properly pleaded nor proved, the trial court and High Court rightly rejected the claim; the Supreme Court found no reason to interfere.

Holding and Implications

Appeal Dismissed with Costs of Rs 50,000.

The dismissal upholds the High Court’s determination that the alleged power of attorney was inadmissible and that no fraud tainted the 1999 decree. The consequence is final closure of litigation over the plot: Pushparani retains possession and Makhija cannot seek specific performance or collateral relief. The judgment reiterates, without creating new precedent, that allegations of fraud must be specifically pleaded and supported by admissible evidence.

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    Harjas Rai Makhija (Dead) Through Legal Representatives v. Pushparani Jain And Another

    Madan B. Lokur, J.— The appellant (Harjas Rai Makhija represented by his legal representatives) is aggrieved by the judgment and order dated 3-4-2012 passed by the High Court of Madhya Pradesh at Jabalpur in Harjas Rai Makhija v. Pushparani Jain 2012 SCC OnLine MP 2198 whereby his appeal has been dismissed with costs of Rs 25,000.

    2. Respondent 1, Pushparani Jain (Pushparani) was allotted Plot No. 251 in Major Shopping Centre Zone II, Habibganj, Bhopal under Scheme No. 13 of the Bhopal Development Authority (for short “BDA”). Since she was a resident of the United States of America and had some difficulty in completing the formalities with regard to the allotment, she appointed her brother Jinendra Jain as her attorney on or about 28-8-1981. This was communicated by her to the Chairman of BDA by a letter of the same date. On the basis of the communication sent by Pushparani to BDA, and on the basis of the power of attorney given by her to Jinendra Jain, she was able to obtain possession of the plot allotted to her and complete the necessary formalities.

    3. According to the appellant Harjas Rai Makhija (Makhija), another power of attorney had been executed by Pushparani on 30-4-1983 in favour of Jinendra Jain. The original of this document has not been produced by anybody. Be that as it may, on the basis of the alleged power of attorney dated 30-4-1983, an agreement was entered into between Jinendra Jain and Makhija on 16-10-1988 to sell the plot allotted to Pushparani in favour of Makhija. In terms of the agreement, the sale deed was to be executed on or before 30-4-1989.

    4. When Pushparani came to know about the agreement for sale in respect of the plot allotted to her, she filed a civil suit before the District Judge, Bhopal and that suit subsequently came to be numbered as Suit No. 51-A of 1999. The prayer made by Pushparani in the plaint was for a declaration that the agreement for sale dated 16-10-1988 was without any authority given to Jinendra Jain. She also made a prayer for recovery of possession and grant of mesne profits since possession of the plot had been given by Jinendra Jain to Makhija.

    5. Makhija also filed a civil suit before the District Judge which subsequently came to be numbered as Suit No. 52-A of 1999. The prayer made by Makhija was for specific performance of the agreement dated 16-10-1988 entered into by him with Pushparani through her attorney Jinendra Jain.

    6. Both the suits, one filed by Pushparani and the other by Makhija, were taken up and heard together. By a judgment and decree dated 4-10-1999 the suit filed by Pushparani was decreed with the result that the agreement for sale dated 16-10-1988 was declared to be illegal. It was also decreed that Makhija shall hand over possession of the suit property to Pushparani and pay monthly compensation of Rs 5000 per month. The suit filed by Makhija was dismissed.

    7. Feeling aggrieved by the result of the two suits mentioned above, Makhija preferred two appeals before the High Court being FA No. 607 of 1999 and FA No. 638 of 1999 challenging the decree granted in favour of Pushparani and the dismissal of his suit.

    8. During the pendency of the aforesaid appeals, Makhija filed an application before the High Court under Order 41 Rule 27 of the Code of Civil Procedure (for short “CPC”) for adducing additional evidence. By virtue of this application, Makhija sought to bring on record an application said to have been filed by Jinendra Jain with BDA on behalf of Pushparani as her attorney for the grant of a no-objection certificate in respect of the suit property. According to the averment made in the application, Jinendra Jain had moved the application before BDA on 1-6-1983.

    9. By a judgment and order dated Harjas Rai Makhija v. Pushpa Rani First Appeal No. 607 of 1999 the High Court dismissed both the appeals filed by Makhija as well as the application under Order 41 Rule 27 CPC. While dismissing the appeals and the application, the High Court held that no document was produced before the trial court to establish that Pushparani had executed a power of attorney in favour of Jinendra Jain on 30-4-1983. The High Court also noted that according to Makhija what was produced before BDA as the power of attorney dated 30-4-1983 was in fact a photocopy of the alleged power of attorney. Therefore, the High Court took the view that a photocopy produced before it was a photocopy of another photocopy (filed before BDA) and as such it could not even be considered as secondary evidence. Even otherwise, the High Court concluded that there was no material to indicate that Jinendra Jain was authorised to enter into an agreement for sale of the suit property on behalf of Pushparani.

    10. Feeling aggrieved by the dismissal of the appeals as well as the application, Makhija preferred SLPs (C) Nos. 524-25 of 2003 which came to be dismissed by this Court on 25-7-2003 SLPs (C) Nos. 524-25 of 2003. The review petitions filed by Makhija also came to be dismissed by this Court on 9-9-2003.

    11. Notwithstanding the dismissal of Makhija's case, he was unrelenting and filed yet another suit before the Additional District Judge, Bhopal which came to be numbered as Suit No. 471-A of 2008. In this suit, he produced a certified copy of the power of attorney dated 30-4-1983 allegedly filed by Jinendra Jain before BDA. The prayer made in the plaint filed by Makhija was for a declaration that the decree dated 4-10-1999 passed in favour of Pushparani was obtained in a fraudulent manner and is void and not worthy of being executed. This suit came to be dismissed by the Additional District Judge by the judgment and decree dated 28-9-2010.

    12. Feeling aggrieved by the dismissal of the suit filed by him, Makhija preferred FA No. 961 of 2010 in the High Court of Madhya Pradesh. The appeal was taken up for consideration by the High Court and by the judgment and order dated 3-4-2012 2012 SCC OnLine MP 2198 (impugned) the appeal was dismissed. The High Court took the view that the alleged power of attorney dated 30-4-1983 could not be accepted as a valid piece of documentary evidence being a certified copy of a photocopied document. It was also held that Makhija had an opportunity to raise the same issue when the application for leading additional evidence was filed but did not do so and cannot have a second shot for the same purpose. The allegation of fraud levelled by Makhija was not accepted by the High Court.

    13. The learned counsel for Makhija raised quite a few submissions before us but in our opinion, the present appeal deserves to be dismissed on the ground that no fraud has been alleged in the plaint filed by Makhija or found in respect of the decree dated 4-10-1999.

    14. There is no doubt that a decree was passed in favour of Pushparani by the District Judge on 4-10-1999 after a full-fledged trial and that decree was upheld not only by the High Court but also by this Court. Makhija made an application before the High Court to produce additional evidence to suggest that the agreement for sale entered into by him with Pushparani through her attorney Jinendra Jain on 16-10-1988 was genuine and based on the power of attorney given by her to Jinendra Jain on 30-4-1983. Not only was the application for bringing on record additional evidence dismissed by the High Court but the decree dismissing the suit for specific performance of the agreement for sale filed by Makhija was dismissed by the High Court. That dismissal attained finality when the petitions for special leave to appeal filed by Makhija were dismissed by this Court.

    15. It is significant to note that Makhija has not sought (and indeed could not seek) to reopen the proceedings pertaining to the dismissal of his suit for specific performance. As such, as mentioned above, the decree dismissing his suit for specific performance of the agreement dated 16-10-1988 has become final. Therefore, under no circumstances can Makhija now collaterally pray for a decree of specific performance in respect of that agreement.

    16. Through a collateral attack, Makhija has now sought to deprive Pushparani of her allotment of the suit property by alleging that she had concealed the power of attorney executed by her in favour of Jinendra Jain on 30-4-1983 and had thereby committed a fraud on the courts.

    17. We have been taken through the plaint filed by Makhija in Suit No. 471-A of 2008 and find that he has nowhere made any specific allegation of a fraud having been played by Pushparani on the trial court while obtaining the decree dated 4-10-1999.

    18. During the course of submissions, it was contended on behalf of Makhija that it is a settled proposition of law that a decree obtained by playing fraud on the court is a nullity and that such a decree could be challenged at any time in any proceedings. Reliance was placed on A.V Papayya Sastry v. State of A.P (2007) 4 SCC 221 This proposition is certainly not in dispute.

    19. The learned counsel also placed reliance on Union of India v. Ramesh Gandhi (2012) 1 SCC 476 which reads as under:

    “27. If a judgment obtained by playing fraud on the court is a nullity and is to be treated as non est by every court, superior or inferior, it would be strange logic to hear that an enquiry into the question whether a judgment was secured by playing fraud on the court by not disclosing the necessary facts relevant for the adjudication of the controversy before the court is impermissible. From the above judgments (2007) 4 SCC 221, it is clear that such an examination is permissible. Such a principle is required to be applied with greater emphasis in the realm of public law jurisdiction as the mischief resulting from such fraud has larger dimension affecting the larger public interest.”
    (emphasis supplied)

    20. We agree that when there is an allegation of fraud by non-disclosure of necessary and relevant facts or concealment of material facts, it must be inquired into. It is only after evidence is led coupled with intent to deceive that a conclusion of fraud could be arrived at. A mere concealment or non-disclosure without intent to deceive or a bald allegation of fraud without proof and intent to deceive would not render a decree obtained by a party as fraudulent. To conclude in a blanket manner that in every case where relevant facts are not disclosed, the decree obtained would be fraudulent, is stretching the principle to a vanishing point.

    21. What is fraud has been adequately discussed in Meghmala v. G. Narasimha Reddy (2010) 8 SCC 383. Unfortunately, this decision does not refer to earlier decisions where also there is an equally elaborate discussion on fraud. These two decisions are Bhaurao Dagdu Paralkar v. State of Maharashtra (2005) 7 SCC 605 and State of Orissa v. Harapriya Bisoi (2009) 12 SCC 378. In view of the elaborate discussion in these and several other cases which have been referred to in these decisions, it is clear that fraud has a definite meaning in law and it must be proved and not merely alleged and inferred.

    22. Insofar as the present appeal is concerned, there is no doubt that Makhija had an opportunity to prove the allegation of fraud when he filed an application under Order 41 Rule 27 CPC. However, he missed that opportunity right up to this Court. Makhija took a second shot at alleging fraud and filing another suit against Pushparani. However, the evidence that he relied upon was very thin and could not even be considered as secondary evidence. Accordingly, both the trial court as well as the High Court rejected the allegation of fraud by not accepting the evidence put forward by Makhija to allege that fraud had been committed by Pushparani when she obtained the decree dated 4-10-1999.

    23. Fraud not having been proved but merely alleged, we do not find any reason to differ with the judgment and order passed by the High Court and the trial court.

    24. The appeal is dismissed with costs quantified at Rs 50,000.

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    Harjas Rai Makhija (Dead) Through Legal Representatives v. Pushparani Jain And Another
    (Jan 2, 2017)