IN THE HIGH COURT OF JUDICATURE AT MADRAS DATE: 23.9.2008. CORAM THE HON'BLE MR.JUSTICE M.JEYAPAUL Application No.2882 of 2008 in C.S.No.227 of 1998 The Industrial Finance Corporation of India Ltd., Continental Chambers, 142, Mahatma Gandhi Road, Nungambakkam, Chennai 600 034. Applicant vs. 1. Das Lagerwey Wind Turbines Ltd., rep by Chairman and Managing Director, Plot No.35(S.P.), Guindy Industrial Estate, Chennai 600 032. 2. Patheja Forgings and Autoparts Manufacturers Limited by its Director Paramjeet Singh patheja 250-A, Boat Club Road, Sangamwadi, Pune, Maharashtra. 3. Patheja Brothers Forgings and Stampings Limited, by its Director Paramjeet Singh Patheja, 250-A, Boat Club Road, Sangamwadi, Pune 411 001. 4. Mansingh Patheja, 250-A, Boat Club Road, Sangamwadi, Pune 411 001. 5. P.V.S.Patheja, (Par Veender Singh Patheja), 250-A, Boat Club Road, Sangamwadi, Pune 411 001. 6. G.S.Patheja, 250-A, Boat Club Road, Sangamwadi, Pune 411 001. 7. V.S.Patheja, 250-A, Boat Club Road, Sangamwadi, Pune 411 001. 8. P.S.Patheja, 250-A, Boat Club Road, Sangamwadi, Pune 411 001. 9. Cholamandalam Investment & Finance Company Limited, Tiam House, 28, Rajaji Salai, Chennai 600 001. Respondents For Applicant : Mr.PL.Narayanan For Respondents : Mr.M.L.Joseph for M/s.Surana & Surana ORDER
This is an application filed by the eighth defendant after the termination of the suit in C.S.No.227 of 1998 seeking to set aside the judgment of this court dated 26.8.2002 dismissing the aforesaid suit as withdrawn and consequently restore the above suit to the file of this court.
2. The applicant/8th defendant has contended that the first respondent/plaintiff filed the suit for recovery of a sum of Rs.16,02,96,811.30 with interest from respondents 2 and 3/defendants 1 and 2 claiming first charge in the form of unpaid vendors lien on the 28 Wind Turbine Generators described in the schedule to the plaint. The first respondent/plaintiff is fully aware of the loan transactions respondents 2 and 3 entered into with the applicant. Such a fact has been set out in paragraphs 38 to 40 of the plaint. Respondents 2 to 8 had taken huge loan of Rs.19.50 crores from the applicant on the security of the Wind Turbine Generators claiming to be the absolute owners thereof. Though the first respondent had not sought any specific relief as against the applicant, the main endeavour in the above suit was to claim the first charge and first lien on the Wind Turbine Generators as against the exclusive charge of the applicant. The claim of the unpaid vendors lien made by the first respondent in the suit is unsustainable. The applicant has charge over the Wind Turbine Generators, but, without the participation of the applicant, a compromise was clinched between the respondents prejudicial to the rights and interest of the applicant over the Wind Turbine Generators. The consent memo would show that the respondents have dealt with the property charged in favour of the applicant to suit their convenience and have entered into an alleged compromise detrimental to the interest of the applicant. The applicant was not aware of the consent memo filed before the court. Unless the order passed in the main suit which is obtained by fraud is recalled and the suit is restored to file, the applicant will face hardship, it is contended.
3. In the counter filed by the first respondent/plaintiff, it has been contended that the application as filed is not maintainable either in law or on facts. The remedy for the grievance of the applicant lies somewhere else. As the suit has been dismissed as withdrawn, the present application is not maintainable. No consent decree was claimed by the applicant and therefore, the applicant cannot have any grievance about the withdrawal of the suit by the plaintiff. The applicant has to establish its right in a manner known to law before the forum concerned and cannot seek any relief before this court. In the compromise clinched between the parties, the rights of the first respondent was upheld by defendants 1 and 2. The settlement arrived at between the parties also had been acted upon. It is utter false to say that the applicant was not aware of the proceedings before this court. Inspite of the fact that the first respondent has unpaid vendor’s lien over the Wind Turbine Generators till date, the applicant has not taken any steps whatsoever to challenge the same. Therefore, the first respondent would contend that the application deserves to be dismissed.
4. Learned counsel appearing for the applicant would submit that a fraud has been played not only upon the applicant but also as against the court by the first respondent. Therefore, a fraudulent disposal of the suit will have to be necessarily reversed opening the door for the applicant to canvass his rights before this court. A compromise was clinched by the first respondent with the other respondents in order to knock away the right of charge over the Wind Turbine Generators which was offered as a security for the whopping loan lent by the applicant to respondents 2 and 3. When the applicant has shown before the court that fraud has been played upon the applicant and the court, there is no bar for withdrawing the judgment delivered by this court. No compromise can be clinched by other parties to the suit without the association of one of the parties detrimental to his interest. Therefore, he would submit that the applicant has made out a case for setting aside the judgment delivered by this court paving way for the applicant to work out his remedy before this court.
5. Learned counsel appearing for the first respondent/plaintiff would submit that the application is not at all maintainable as the suit has already been terminated by this court and the court has become functus officio. A plaintiff in a suit cannot be compelled to prosecute a suit when he exercises his prerogative to withdraw the suit. When no relief has been sought for against the applicant, he cannot have any grievance in withdrawal of the suit. The court has to bear in mind that the suit was not decreed in terms of the compromise arrived at between the parties. It is to be noted that the suit has been dismissed as settled out of court. The applicant cannot ride on the litigation laid by the plaintiff and seek remedy without making any counter claim or setoff paying necessary court fee. Therefore, he would submit that the application is totally unsustainable.
6. Here is a case where the first respondent, having arrived at a compromise with the other parties to the suit leaving behind the applicant, reported to the court that the matter had been settled and therefore, the suit might be dismissed as withdrawn. The court was pleased to record the fact that the suit dispute was compromised out of court and dismiss the suit enabling the first respondent to get half of the court fees. As rightly pointed out by the learned counsel appearing for the respondent, if the suit has been decreed in terms of the compromise entered into between the parties, then a party to the suit can come out with a plea that he had been completely sidelined from the compromise entered into between the parties and his right has not been protected. But, in the instant case, it is found that no relief has been sought in the suit as against the applicant. As he had got charge over the Wind Turbine Generators offered as a security by respondents 2 and 3, the applicant also was arrayed as one of the parties to the suit. The entire claim has been made as against respondents 2 and 3 in the suit. Nobody can stop the plaintiff from exercising his prerogative to withdraw the suit. It is also not a case where the applicant filed written statement specifically setting up a counter claim or setoff paying court fee. When such being the case, the applicant cannot ride on the cause of action shown by the first respondent to enforce his claim made against the second and third respondents. Nobody can dispute the fact the first respondent has got unpaid vendor’s lien over the Wind Turbine Generators supplied by the first respondent to the second and third respondents. Of course, the applicant has allegedly lent loan only on the basis of the security of those Wind Turbine Generators by the second and third defendants. If the second and third respondents have chosen to act detrimental to the interest of the applicant, he has to work out his remedy in a separate suit.
7. Further, the first respondent, who has got unpaid vendor’s lien over the Wind Turbine Generators, has exercised its lien and pressurized the second and third respondents to agree for a compromise formally. Such an act of the first respondent cannot be termed as a fraudulent venture. It is not a case where the first respondent, who has no lien over the subject property knocked away the same behind the back of a person who has got right over it. Inasmuch as the first respondent has got some right over the property on account of the unpaid vendor’s lien, he has chosen to persuade the second and third respondents and clinched the deal. Such a deal cannot be termed as a fraudulent one. No fraud has been committed as against this court as contended by the applicant inasmuch as a party to the suit has settled the dispute out of the court.
8. The first respondent, being the plaintiff, cannot be compelled by this court to keep the suit alive irrespective of the fact that the suit was compromised between the other parties. If an adverse party has set up a counter claim or setoff and the suit is surreptitiously withdrawn by the plaintiff, then the adverse party can seek to keep the suit pending so that such an adverse party can prosecute the claim made in the written statement as a separate suit.
9. The learned counsel appearing for the applicant submitted a decision in UNITED INDIA INSURANCE CO. LTD. v. RAJENDRA SINGH (2000 STPL (LE) 27659 SC) wherein it has been held that no court or Tribunal can be regarded as powerless to recall its own order if it is convinced that the order was wangled through fraud or misrepresentation of such a dimension as it would affect the very basis of the claim.
10. In the instant case, as already pointed out by this court, no relief has been sought as against the applicant. Therefore, the fraud or misrepresentation alleged as against the first respondent is not of such a magnitude as it would affect the very basis of the claim. Secondly, that was a case where two claimants, having projected before the Motor Accidents Claims Tribunal as though they sustained injury and the vehicle also received damage in a motor accident, claimed compensation independently and got awards in their favour. After passing the award, it had come to light that there was no motor accident as claimed by the petitioners in the said case. But, while the petitioners in that case were operating their own Tractor, the occupants of the Tractor slipped down and sustained injuries. The Insurance Company, which incurred huge loss on account of the fraudulent claim, was consistently knocking at the doors of the Tribunal to recall the order and to re-open the case. They also prayed to the High Court to let them explain the fraud committed not only as against the Insurance Company but also as against the court. But, surprisingly, the Tribunal as well as the High Court was pleased to slam the doors of justice against the Insurance Company. In such an extraordinary case of rank fraud and cheating, the Supreme Court laid down that such a situation warrants recall of the order. But, the above ratio laid down in the above peculiar circumstances of the case this case does not apply to the facts of the instant case.
11. It has been held in RAM CHANDRA SINGH v. SAVITRI DEVI & OTHERS (2003(7) SUPREME 267) that an act of fraud committed on the court is always viewed very seriously. A collusion or conspiracy with a view to deprive the rights of others in relation to a property would render the transaction void ab initio. It has been declared that fraud and deception are synonymous. Fraud and justice never dwells together. Even misrepresentation by itself would amount to fraud. That was a case where a fraud was played upon the court by suppressing the confirmation of auction sale. In such circumstances, the Supreme Court observed that a third party right cannot be set at naught by consent. But, in the instant case, no fraud has been committed as against the court. As regards the relief sought for by the first respondent, no consent is necessary from the applicant to compromise the matter with respondents 2 and 3. Therefore, the applicant cannot rely upon the ratio laid down by the Supreme Court to canvass his plea for setting aside the judgment which has reached finality.
12. The ratio laid down in Smt.RAISA SULTANA BENGAM AND OTHERS v. ABDUL QADIR AND OTHERS (AIR 1966 ALL 318) would be applicable only in a case where the suit was dismissed as withdrawn and thereafter, the plaintiff filed an application to revoke the withdrawal. But, here, the suit has been dismissed not as withdrawn but as settled out of court.
13. In NARPAT SINGH v. RAJASTHAN FINANCIAL CORPORATION (AIR 2008 SC 77), it has been held that once a case is finally disposed of, the court concerned becomes functus officio and thereafter, intra-court intervention lies ordinarily only for correcting clerical or accidental mistakes and not for clarification or direction of the court’s order.
14. It is held that once it is established that a fraud has been committed on the party and the court, the court cannot take a stand that it has become functus officio after passing the judgment. The court has to necessarily go to the rescue of the person aggrieved in such extraordinary circumstances and recall the judgment and reopen the case for fresh adjudication of the case. But, the facts and circumstances of the instant case do not fall under the extraordinary circumstances where fraud has been committed as against the party as well as the court. Therefore, the court finds that the application seeking to set aside the judgment passed by this court dismissing the suit as settled out of court is liable to be dismissed.
15. In view of the above, the application stands dismissed. There will be no order as to costs.
ssk.