My Palace Mutually Aided Co Operative Society vs B. Mahesh & Ors.

MY PALACE MUTUALLY AIDED …APPELLANT(S) CO­OPERATIVE SOCIETY VERSUS

B. MAHESH & ORS. …RESPONDENT(S)

JUDGMENT

N. V. Ramana, CJI

1. Leave granted.

2. The present Civil Appeal has been filed by the appellant against

impugned final judgment and order dated 21.09.2021, passed by

the High Court of Telangana in Interlocutory Application No.

5/2020 in Application No. 837/2013 in CS No. 7/1958.

3. The brief facts of this case necessary for the disposal of the appeal Signature Not Verified Digitally signed by Rajni Mukhi Date: 2022.08.23

are as follows: the present dispute relates to Sy. No. 57 (Old Sy. 17:18:34 IST Reason:

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No. 274) in Shamsguda Village, Ranga Reddy District, Telangana

forming part of S. No. 252 of the list of Mukthas in the preliminary

decree dated 06.04.1959 by the erstwhile High Court of Andhra

Pradesh in CS No. 7/1958.

4. The underlying original suit was filed in 1953 before the City Civil

Court, Hyderabad by one Smt. Sultana Jahan Begum, the

daughter of Nawab Moinuddowla Bahadur. The plaintiff was

seeking partition of properties of the Nawab known as ‘Asman Jahi

Paigah’. This suit was ultimately transferred to the file of the High

Court numbered as C.S. No. 7/1958. The suit along with certain

applications were disposed of by a preliminary­cum­final decree

dated 06.04.1959 passed by the learned Judge of the High Court

of Andhra Pradesh. The judgment recorded that the plaintiff

withdraws the suit against defendant Nos. 27 to 49. It also

recorded that a compromise was affected amongst some of the

defendants. The litigation relating to this original suit

subsequently enters a complicated phase, wherein several different

parallel proceedings take place. Suffice to state, that even after 60

years, the issues in the same are not settled.

5. It is the say of the present appellant that they acquired the property

in Sy. No. 57 of Shamsguda Village under an Assignment Deed 2 dated 16.09.2000 executed by the earlier predecessor­in­interest

under the preliminary decree. The predecessors­in­interest had

also executed a Conveyance Deed dated 03.08.2003 in favour of

the appellant, conveying the schedule property with specific

boundaries. As the earlier Assignment Deed dated 16.09.2000 and

Conveyance Deed dated 03.08.2003 were unregistered documents,

the predecessors­in­interest also executed a registered document

in favour of the appellant, namely a ‘Deed of Declaration/

Confirmation’ dated 12.08.2011.

6. On the above basis, an application (No. 837/2013) was filed in C.S.

No. 7/1958 by the appellant herein along with a party (not before

us) for passing a final decree in their favour in respect of property

measuring Acs 92.56 cts. and Acs. 27.00 gts land in Sy. No. 57 of

Shamsguda Village, Balanagar Mandal, Ranga Reddy District. A

further prayer was made for a direction to deliver the physical

possession of the said properties.

7. The learned Single Judge of the High Court of Andhra Pradesh

allowed the said Application in part vide final decree dated

19.09.2013 as sought by the appellant, and granted a declaration

that they are the absolute owners of Acs. 92.56 cts in Sy. No. 57 of

Shamsguda Village.

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8. The State of Andhra Pradesh challenged the said order in OSA SR

No. 3744 of 2014. After formation of the State of Telangana on the

bifurcation of the composite State of Andhra Pradesh, the State of

Telangana filed IA No. 2 of 2016 seeking condonation of delay of

182 days in filing the Appeal. Responding to the said IA, the

appellant stated that the delay in filing of the Appeal is much

longer, amounting to 729 days. Thereafter, I.A. No. 2 of 2017 was

filed by the State of Telangana to condone a delay of 913 days in

filing the Appeal.

9. By order dated 22.12.2020, the Division bench of the High Court of

Telangana dismissed the two applications for condonation of delay

in filing the appeal, being I.A. No. 2 of 2016 and I.A. No. 2 of 2017.

As a consequence of the same, the State of Telangana’s appeal,

OSA SR No. 3744 of 2014 was dismissed.

10. In these circumstances, after lapse of nearly 7 years since the final

decree was granted in favor of the appellant herein, the

respondents herein filed 6 IAs (in Application 837/2013 in CS No.

7/1958) before the High Court of Telangana in 2020. The details of

the applications are as follows:

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I.A No. Prayer 1/2020 To grant leave to the respondents to file implead petition

in the above­mentioned application.

2/2020 To dispense with the filing of a neatly typed copy of

material papers in application filed in the

abovementioned application

3/2020 To allow impleadment

4/2020 To allow impleadment.

5/2020 To recall the order dated 19.09.2013 passed in the

above­mentioned application and to set aside and pass

such other order or orders as deemed fit and proper in

the circumstances of the case

6/2020 To direct the appellant to not to alienate, not to

interfere, not to change peaceful possession, not register

any documents in scheduled property in Sy No.57 and

any subdivision numbers in Sy No 57 of Shamsguda in

the above­mentioned application.

11. A Division Bench of the High Court of Telangana vide order dated

05.01.2021, allowed IA No. 1/2021 preferred by the respondents

and granted them leave to file the application recalling the final

5 decree dated 19.09.2013, passed by the learned Single Judge of

the High Court in Application No. 837/2013 in C.S No. 7/1958.

12. The aforesaid order was challenged before this Court in an earlier

Special Leave Petition, being SLP(C) No. 8025/2021. This Court, by

order dated 06.07.2021, dismissed the said petition and gave the

parties liberty to raise all objections when the substantial

application for recalling the final decree was being heard.

13. After hearing the submissions of the parties, the Division Bench of

the High Court in I.A No. 5/2020 in Application No. 837 of 2013 in

CS No. 7 of 1958, passed the impugned order dated 21.09.2021,

allowing the recall of the final decree dated 19.09.2013.

14. One of the primary objections taken by the appellant herein before

the Division Bench of the High Court related to the fact that the

senior member of the Bench hearing the recall application was

presiding over the Bench which had heard and dismissed the

appeal filed by the State of Telangana against the same final

decree dated 19.09.2013. On this issue, the Division Bench held

that the earlier appeal filed by the State of Telangana had been

dismissed as a consequence of the dismissal of the application for

condonation of delay in filing the appeal filed by the State. There

was no discussion on the merits of the matter, particularly the 6 claim of the appellant. Further, the Division Bench held that as

per the roster prepared by the Hon’ble Chief Justice of the High

Court of Telangana, all matters arising out of C.S. No. 7 of 1958

were placed before it. As such, the Division Bench held that there

were no strong reasons put forth by the appellant for the said

member of the Bench to recuse from the hearing of the present

matter.

15. The High Court, on merits, held that the appellant had obtained the

final decree dated 19.09.2013 by suppressing certain information

and by exercising its powers under Section 151, Code of Civil

Procedure, 1908 (“CPC”), has recalled its earlier final decree dated

19.09.2013. At the same time, the High Court clarified that

recalling of the order would not enure to the benefit of the State of

Telangana, whose appeal had already been dismissed, or the

respondents, who would have to establish their right, title and

interest in the subject property in appropriate proceedings.

16. Aggrieved by the impugned judgment of the High Court recalling the

final decree dated 19.09.2013, the appellant has approached this

Court by way of the present Civil Appeal.

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17. It is appropriate to mention here that the State of Telangana,

despite dismissal of its appeal in 2020, and the specific

observations of the High Court in the impugned order, initially

filed an impleadment application, being IA No. 98965/2022, in the

present Civil Appeal. This Court dismissed the abovementioned

application for impleadment vide order dated 22.07.2022.

18. The State of Telangana also filed separate Special Leave Petitions

challenging the present impugned order dated 22.12.2020, as well

and the earlier order dated 22.12.2020 dismissing their intra court

appeal [SLP (C) No. 13453 of 2022 and SLP (C) No. 13454­ 13456

of 2022]. These Special Leave Petitions were heard on 01.08.2022

by this Court and were dismissed in light of the observations made

by the High Court in paragraph 116 of the impugned order. In any

case, the claim of the State over the scheduled property is not

sufficiently supported by any documentary evidence.

19. Dr. A. M. Singhvi, learned Senior Counsel appearing on behalf of

the appellant, submitted as follows:

(i) No recall application could have been filed by the respondents.

Their only remedy was a separate civil suit for declaration of

title.

(ii) The preliminary decree in the matter was passed on

06.04.1959 and the final decree in favour of the appellant was 8 passed on 19.09.2013. The appeal preferred by the State of

Telangana challenging the final decree was dismissed by the

High Court on 22.12.2020. The respondents’ application for

recall of final decree, in which the impugned order has been

passed, was filed before the High Court on 16.12.2020, raising

issues of fraud for the first time. The High Court ought to have

dismissed the application for recall on the grounds of delay.

(iii) A reading of the impugned order shows that the survey

numbers claimed by the respondents are distinct from those

claimed by the appellant.

(iv) The Senior Judge heading the Division Bench, Justice M.S.

Rama Chander Rao who passed the impugned judgment

appeared on behalf of one of the parties who were claiming

possession in parallel proceedings relating to the subject

property, which party had also filed an FIR against the

appellant herein.

(v) The respondents alleged fraud on the basis of non­disclosure

of certain orders passed against the appellant. The first such

order is of 10.06.2003, whereby the High Court set aside

recognition of the assignment deed in favor of the appellant.

The second order is of 26.08.2013, passed in injunction

9 proceedings preferred by the appellant against the revenue

authorities. However, both these orders were passed at a time

when the assignment deed in favour of the appellant was

unregistered. At the time when final decree was passed in

2013 the appellant had a registered assignment deed in their

favour with respect to the subject property. The earlier orders

are therefore not relevant.

(vi) The fact that the subject property had certain proceedings

pending against it was recorded in the preliminary decree, and

the same was in the notice of the learned Single Judge at the

time of passing of the final decree in 2013. No fraud can be

alleged on this ground by the respondents.

20. Mr. Dushyant Dave, learned Senior Counsel also appearing on

behalf of the appellant, submitted as follows:

(i) After the final decree was passed on 19.09.2013, the

respondents, who are rank outsiders to the proceedings, filed

the application for recall only in 2020. The respondents have

neither provided an explanation as to the delay, nor have they

filed any application for condonation of delay.

(ii) The affidavit supporting the application for recall was filed by

power of attorney holders. The person who signs the affidavit

10 must have personal knowledge of the facts. Without such

personal knowledge, such an affidavit could not have been

filed.

(iii) The present litigation is nothing but a proxy litigation.

Unrelated third parties are seeking to interfere in the present

matter as the value of the subject property is very high.

(iv) The allegations of fraud were never taken before any forum

until the impugned recall application before the High Court.

Such plea taken by the third party without any supporting

documents cannot be raised at a belated stage.

(v) Once the State’s appeal against the final decree was dismissed

on grounds of delay, the respondents’ recall application

should have been similarly dismissed.

21. Mr. C. S. Sundaram, learned Senior Counsel appearing on behalf

of respondent No. 1, submitted as follows:

(i) respondent No.1 is claiming through the original pattedar of the

property. The recall applications were filed soon after his

possession over the property was sought to be disturbed.

Therefore, the question of delay does not arise.

(ii) The preliminary decree indicates that the title to the suit

property was conditional. The respondents’ claim was upheld

11 in the Atiyat Court, which was not shown before the learned

Single Judge at the time of passing of the final decree on

19.09.2013.

(iii) Respondents had also filed another application seeking leave

to file the recall application, which was allowed by the High

Court on 05.01.2021. The Special Leave Petition against the

same was dismissed by this Court on 06.07.2021 and, as

such, the locus of the parties to file recall application cannot

be questioned at this stage.

(iv) The Court always has the power to recall its order, if such an

order was obtained by playing fraud upon the Court.

(v) Ultimately, the impugned order does not decide the title of the

parties. The parties have been relegated to file a civil suit to

decide title. The appellant may exercise its right and do the

same.

22. Mr. V. Giri, learned Senior Counsel appearing on behalf of the

respondents no. 3 to 8, submitted as follows:

(i) The preliminary decree was a conditional decree as it was subject

to pending Revenue Court proceedings.

(ii) The respondents are the pattedars of the property who were

owners in possession.

12 (iii) The appellant’s earlier application seeking delivery of the

property on the basis of assignment deed was remanded to the

Single Judge and subsequently dismissed for non­prosecution

as it was not pressed. They abandoned their original

application. Additionally, the civil suit filed by the appellant for

injunction in 2007 was also dismissed.

(iv) None of these facts and findings against the appellant were

disclosed by them in 2013 when the final decree was sought. It

is a clear case of fraud on the Court.

(v) In any event, no final decree could have been passed on the

assignment deed as no order for partition of property was ever

passed.

(vi) These points moved the learned Division Bench in allowing the

recall application filed by the respondents. The impugned order

therefore, merits no interference by this Court.

23. Mr. Yatin Oza, learned Senior Counsel appearing on behalf of the

respondent no. 4, submitted as follows:

(i) The conduct of the appellant is clear for all to see. They

committed fraud on the Court to have the final decree dated

19.9.2013 passed in their favour by supressing judgement of

Nazim Atiyat.

13 (ii) The fundamental principle of equity is that the parties must

come to Court with clean hands. In the present case, this

Court should not show any indulgence to the appellant by

interfering with the well­reasoned impugned judgment of the

High Court under Article 136 of the Constitution.

24. We have heard the learned Senior counsel on either side, perused

the entire material on record. Though several grounds have been

raised, the first ground taken is that the High Court erred in

exercising jurisdiction under Section 151 of the CPC, when

alternate remedies exist under the CPC. Second ground is that the

Senior Judge on the Bench, who appeared for one of the parties,

ought not to have heard the matter.

25. In response to the first leg of challenge, i.e., on the procedural

aspect, we may note that the recall application was filed under

Section 151 of the CPC against the final decree dated 19.09.2013.

It is in this context that we must ascertain whether a third party to

a final decree can be allowed to file such applications, by invoking

the inherent powers of the Court under Section 151 of the CPC.

26. Section 151 of the CPC provides for Civil Courts to invoke their

inherent jurisdiction and utilize the same to meet the ends of

14 justice or to prevent abuse of process. Although such a provision is

worded broadly, this Court has tempered the provision to limit its

ambit to only those circumstances where certain procedural gaps

exist, to ensure that substantive justice is not obliterated by hyper

technicalities. As far back as in 1961, this Court in Padam Sen v.

State of U.P., AIR 1961 SC 218, observed as under:

“8. …The inherent powers of the Court are in addition to the powers specifically conferred on the Court by the Code. They are complementary to those powers and therefore it must be held that the Court is free to exercise them for the purposes mentioned in Section 151 of the Code when the exercise of those powers is not in any way in conflict with what has been expressly provided in the Code or against the intentions of the Legislature. It is also well recognized that the inherent power is not to be exercised in a manner which will be contrary to or different from the procedure expressly provided in the Code.” (emphasis supplied)

27. In exercising powers under Section 151 of the CPC, it cannot be

said that the civil courts can exercise substantive jurisdiction to

unsettle already decided issues. A Court having jurisdiction over

the relevant subject matter has the power to decide and may come

either to a right or a wrong conclusion. Even if a wrong conclusion

is arrived at or an incorrect decree is passed by the jurisdictional

15 court, the same is binding on the parties until it is set aside by an

appellate court or through other remedies provided in law.

28. Section 151 of the CPC can only be applicable if there is no

alternate remedy available in accordance with the existing

provisions of law. Such inherent power cannot override statutory

prohibitions or create remedies which are not contemplated under

the Code. Section 151 cannot be invoked as an alternative to filing

fresh suits, appeals, revisions, or reviews. A party cannot find

solace in Section 151 to allege and rectify historic wrongs and

bypass procedural safeguards inbuilt in the CPC.

29. The respondents in the present case had access to recourse under

Section 96 of the CPC, which allows for appeals from an original

decree. It must be remembered that the present matter was being

heard by the High Court exercising its original jurisdiction. The

High Court was in effect conducting a trial, and the final decree

passed by the High Court on 19.09.2013 was in effect a decree in

an original suit. As such, there existed a right of appeal under

Section 96 of the CPC, for the respondents. Though they were not

parties to the suit, they could have filed an appeal with the leave of

the Court as an affected party. Section 96 of the CPC reads as

under:

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96. Appeal from original decree .­(1) Save where otherwise expressly provided in the body of this Code or by any other law for the time being in force, an appeal shall lie from every decree passed by any Court exercising original jurisdiction to the Court authorized to hear appeals from the decisions of such Court.

(2) An appeal may lie from an original decree passed ex parte.

(3) No appeal shall lie from a decree passed by the Court with the consent of parties.

[(4) No appeal shall lie, except on a question of law, from a decree in any suit of the nature cognizable by Courts of Small Causes, when the amount or value of the subject­matter of the original suit does not exceed [ten thousand rupees.]

30. Sections 96 to 100 of CPC deals with the procedure for filing

appeals from original decrees. A perusal of the above provision

makes it clear that the provisions are silent about the category of

persons who can prefer an appeal. But it is well settled legal

position that a person who is affected by a judgment but is not a

party to the suit, can prefer an appeal with the leave of the Court.

The sine qua non for filing an appeal by a third party is that he

must have been affected by reason of the judgment and decree

which is sought to be impugned.

31. In the light of the above, it can be safely concluded any aggrieved

party can prefer an appeal with the leave of the Court.

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32. The High Court, in the impugned judgment, relied on the judgment

of this Court in Indian Bank vs Satyam Fibres (India) Pvt. Ltd.,

(1996) 5 SCC 550, wherein this Court acknowledges the possibility

of maintaining a recall application against a judgement if it is

obtained by fraud on the Court. However, it went on to hold that in

cases of fraud, the Court may direct the affected party to file a

separate suit for setting aside the decree obtained by fraud. The

Court held as follows:

“22. The judiciary in India also possesses inherent power, specially under Section 151 CPC, to recall its judgment or order if it is obtained by fraud on court. In the case of fraud on a party to the suit or proceedings, the court may direct the affected party to file a separate suit for setting aside the decree obtained by fraud…”

33. The subsequent judgment of this Court in Ram Prakash Agarwal

v. Gopi Krishan, (2013) 11 SCC 296 further clarifies the law on

the use of the power under Section 151 of the CPC by the Court in

cases of fraud and holds as follows:

“13. Section 151 CPC is not a substantive provision that confers the right to get any relief of any kind. It is a mere procedural provision which enables a party to have the proceedings of a 18 pending suit conducted in a manner that is consistent with justice and equity. The court can do justice between the parties before it. Similarly, inherent powers cannot be used to re­open settled matters. The inherent powers of the Court must, to that extent, be regarded as abrogated by the legislature. A provision barring the exercise of inherent power need not be express, it may even be implied. Inherent power cannot be used to restrain the execution of a decree at the instance of one who was not a party to suit. Such power is absolutely essential for securing the ends of justice, and to overcome the failure of justice. The Court under Section 151 CPC may adopt any procedure to do justice, unless the same is expressly prohibited.

Xxx

19. In view of the above, the law on this issue stands crystallised to the effect that the inherent powers enshrined under Section 151 CPC can be exercised only where no remedy has been provided for in any other provision of CPC. In the event that a party has obtained a decree or order by playing a fraud upon the court, or where an order has been passed by a mistake of the court, the court may be justified in rectifying such mistake, either by recalling the said order, or by passing any other appropriate order. However, inherent powers cannot be used in conflict of any other existing provision, or in case a remedy has been provided for by any other provision of CPC.

Moreover, in the event that a fraud has been played upon a party, the same may not be a

19 case where inherent powers can be exercised.” (emphasis supplied)

34. The High Court, relying upon the above judgments of this Court

which recognizes the power to recall, seems to have lost sight of

the restrictions imposed while exercising jurisdiction under

Section 151 of the CPC, which were elaborately discussed by this

Court in the above referred judgment about exercising of the power

under Section 151 of the CPC being only in circumstances where

alternate remedies do not exist.

35. Therefore, we are of the firm opinion that recalling a final decree in

such circumstances cannot be countenanced under Section 151 of

the CPC. The High Court erred in exercising its jurisdiction under

Section 151 of the CPC, to hear and pass a detailed judgment

recalling its earlier final decree dated 19.09.2013, rather than

directing the respondents to pursue the effective alternate

remedies under law. Having said the above, we must clarify that

we are not, in any way, doubting the proposition of law that fraud

nullifies all proceedings, or that the Court has power to recall an

order which was passed due to a fraud played on the Court.

However, while exercising the power under Section 151 CPC for

20 setting aside the final judgment and decree, the Division Bench

should have taken into consideration the restriction which was

observed by this Court in the captioned judgment. Once we have

come to the irresistible conclusion that exercising power under

Section 151 CPC in the facts and circumstances of the case is bad,

we are not inclined to go into further issues that were extensively

argued.

36. The other ground that the learned senior judge who passed the

present impugned order had represented one of the opposite

parties in certain collateral proceedings related to the subject

property, merits some discussion. It appears that although the

appellant raised this ground before us, it was neither raised before

the High Court nor brought to the attention of the learned senior

Judge. The party ought to have raised this issue also at the time of

arguments, particularly when the issue of recusal of the learned

Judge had been specifically raised on the other ground that he had

been the presiding member of the Bench which had dismissed the

appeal filed by the State.

37. When an issue was not raised before the learned Division Bench,

we do not wish to spill much ink on this issue. However, the

21 material placed on record by the counsel for the appellant cannot

be ignored. Annexure P8 of the appeal paper book indicates that

the Senior Judge heading the Division Bench, while being an

advocate, had represented the Andhra Pradesh State Financial

Corporation in one of the connected proceedings related to this

case.

38. Although we have no doubt in our mind about the absence of bias

of any form of the learned senior Judge, we must at the same time

also look at the issue of whether right minded persons could

consider there exists any real likelihood of bias. In the case of

State of West Bengal v. Shivananda Pathak, 1998 5 SCC 513,

this Court held as under:

“34. In Metropolitan Properties Co. v. Lannon [(1968) 1 WLR 815 : (1968) 1 All ER 354] it was observed “whether there was a real likelihood of bias or not has to be ascertained with reference to right­minded persons; whether they would consider that there was a real likelihood of bias”. Almost the same test has also been applied here in an old decision, namely, in Manak Lal v. Dr Prem Chand Singhvi [AIR 1957 SC 425 : 1957 SCR 575] . In that case, although the Court found that the Chairman of the Bar Council Tribunal appointed by the Chief Justice of the Rajasthan High Court to enquire into the misconduct of Manak Lal, an advocate, on the complaint of one Prem Chand was not biased

22 towards him, it was held that he should not have presided over the proceedings to give effect to the salutary principle that justice should not only be done, it should also be seen to be done in view of the fact that the Chairman, who, undoubtedly, was a Senior Advocate and an ex­Advocate General, had, at one time, represented Prem Chand in some case. These principles have had their evolution in the field of administrative law but the courts performing judicial functions only cannot be excepted from the rule of bias as the Presiding Officers of the court have to hear and decide contentious issues with an unbiased mind. The maxim nemo debet esse judex in propria sua causa and the principle “justice should not only be done but should manifestly be seen to be done” can be legitimately invoked in their cases.”

(emphasis supplied)

39. It is a well­established principle, both in our jurisprudence and

across the world, that “[N]ot only must justice be done; it must also

be seen to be done”.1 In the present circumstances, it may have

been more apposite for the concerned Judge to have recused from

this case. The appellant should have brought it to the notice of the

learned senior Judge at the very first instance, and not at this

belated stage.

1 R v. Sussex Justices, ex parte McCarthy, 1924 (1) KB 256.

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40. In the above circumstances, we are of the opinion that the High

Court should not have decided the recall application filed by the

respondents, let alone pass such extensive orders which has the

effect of unsettling proceedings and transactions which have a

history of more than 60 years in a proceeding, basing on an

application filed under Section 151 of the CPC.

41. In view of the above, the appeal is allowed by setting aside the order

dated 21.09.2021 passed in I.A No. 5/2020 in Application No. 837

of 2013 in CS No. 7 of 1958.

............................CJI.

(N. V. RAMANA)

..…..........................J. (KRISHNA MURARI)

.........…………….......J. (HIMA KOHLI)

NEW DELHI;

AUGUST 23, 2022.

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