http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 5

CASE NO.:

Special Leave Petition (civil) 8479 of 1999

PETITIONER:

UNITED INDIA INSURANCE CO. LTD.

Vs.

RESPONDENT:

RAJENDRA SINGH & ORS,

DATE OF JUDGMENT: 14/03/2000

BENCH:

K.T. THOMAS & nD.P. MOHAPATRA

JUDGMENT:

THOMAS,J.

Leave granted.

L...I...T.......T.......T.......T.......T.......T.......T..J

If what the appellant-Insurance Company now says is

true, then a rank fraud had been played by two claimants and

wangled two separate Awards from a Motor Accident Claims

Tribunal for a bulk sum. But neither the Tribunal nor the

High Court of Allahabad , before which the Insurance Company

approached for annulling the awards, opened the door but

expressed helplessness even to look into the matter and

hence the Insurance Company has filed these appeals by

Special leave.

Fraud and justice never dwell together.(Frans et jus

nunquam cohabitant) is a pristine maxim which has never lost

its temper over all these centuries. Lord Denning observed

in a language without equivocation that no judgment of a

Court, no order of a Minister can be allowed to stand if it

has been obtained by fraud, for, fraud unravels everything(

(Lazarus Estate Ltd. Vs. Beasley 1956(1) QB 702.)

For a High Court in India to say that it has no power

even to consider the contention that the awards secured are

the byproducts of stark fraud played on a Tribunal, the

plenary power conferred on the High Court by the

Constitution may become a mirage and peoples faith in the

efficacy of the High Courts would corrode. We would have

appreciated if the Tribunal or at least the High Court had

considered the plea and found them unsustainable on

merits,if they are meritless. But when the Courts pre-

empted the Insurance Company by slamming the doors against

them, this Court has to step in and salvage the situation.

Facts are these: One Rajendra Singh and his son Sanjay

Singh (first respondent in the respective appeals) filed two

separate claim petitions before the Motor Accident Claims

Tribunal, Bulandsahar (for short the Tribunal) in 1994

praying for awarding compensation in respect of an accident

which happened on 9.11.1993. The claimants put

forth-identical averments regarding the accident which are

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 5

in substance the following:

Rajendra Singh, the father was travelling on the pillion

of a two wheeler motorcycle which was then ridden by his son

Sanjay Singh and an Ambassador Car (DL 2C-9793) driven by

Jai Prakash collided with the motorcycle of the claimants

and caused injuries to both of them. The ambassador car was

owned by the second respondent.

Rajendera Singh made a claim for more than Rs. 4 lacs

and Sanjay Singhs claim was even above that (Rs.5.5 lacs).

As the ambassador car was, at the relevant time, covered by

a policy of Insurance with the appellant Company, the

claimants made the appellnat Company also a party in the

claim proceedings before the Tribunal. Though the owner of

the Car as well as the Insurance Company resisted the claims

on the premise that there was no negligence on the part of

the driver of the Car, the Tribunal found the driver guilty

of negligent driving. Hence, the owner was held vicariously

liable for the damages payable to the injured

claimants.Accordingly, two awards were passed on 15.1.1998,

one in favour of Rajendra Singh in a sum of Rs.3,55,000/-

and the other in favour of Sanjay Singh in a sum of Rs.

1,52,000/-. Both the awards were to carry interest at the

rate of 12% per annum from the date of claim. An interim

order was passed already for covering no fault liability

and we are told that the amount towards that had been paid

by the appellant Company.

The awards became final as neither the owner of the

ambassador car nor the Insurance Company filed any appeal

thereon. Thus far, there was no problem for the awardees.

Hardly four months elapsed after passing the awards, a

gentleman visited the Divisional Office of the appellant

Company at Gaziabad and delivered the photocopy of a report

prepared by the Assistant Sub-Inspector of Police, subzi

Mandi, Police Station, Delhi on 9.11.1993 in which contained

a narration that Sanjay Singh and Rajendra Singh received

the injuries in a different circumstance at a different

place altogether (i.e. while they were operating their own

tractor, it jutted into a ditch and in the jerk the

occupants of the tractor slipped down and sustained

injuries). The gentleman who delivered the said report to

the company was prepared to disclose further details of the

above accident only on a condition that his identity would

be kept in anonymity.

On receipt of the said information, the Divisional

Office of the appellant Company made frenetic inquiries and

they came across statements attributed to the claimants and

prepared by the Sub-Inspector of Police, Subzi Mandi Police

Station, Delhi, on 9.11.1993. Such statements contained the

narration that the injuries were sustained by Rajendra Singh

and Sanjay Singh in the accident which happened when the

trailor trolly had slipped into the pit.

Almost immediately after obtaining the above

information, the appellant Insurance Company moved the

Tribunal with two petitions purportly under Section 151,152

and 153 of the Code of Civil Procedure in which the

appellant prayed for recall of the awards dated 15.1.1998 on

the revelation of new facts regarding the injuries sustained

by the claimants. Those applications were resisted by the

claimants solely on the ground that the Tribunal has no

power of review except to correct any error in calculating

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 5

the amount of compensation and hence the Tribunal cannot

recall the awards. It appears that the Tribunal accepted

the said stand of the claimants and dismissed the

application for recalling the awards. It was in the above

background that the appellant Insurance Company moved the

High Court of Allahabad with a Writ petition for quashing

the awards as well as the steps taken pursuant thereto.

Learned Single Judge of the Allahabad High Court who

dismissed the Writ petition as per a short order passed by

him stated thus:

Heard learned counsel for the petitioner. The present

Writ petition has been filed against the order rejecting

review application. There is no power of review in the

Statute. Learned Counsel for the petitioner argues that

fraud has been played. It is a question of fact, for which

writ jurisdiction is not the proper forum. The petitioner

may avail himself of such legal remedy as may be available

to him. The writ petition is accordingly dismissed. There

will be, however, no order as to costs.

(underlining supplied)

Thus the Tribunal refused to open the door to the

appellant Company as the High Court declined to exercise its

writ jurisdiction which is almost plenary for which no

statutory constrictions could possibly be imposed. If a

party complaining of fraud having been practised on him as

well as on the court by another party resulting in a decree,

cannot avail himself of the remedy of review or even the

writ jurisdiction of the High Court, what else is the

alternative remedy for him? Is he to surrender to the

product of the fraud and thereby became a conduit to enrich

the imposter unjustly? Learned Single Judge who indicated

some other alternative remedy did not unfortunately spell

out what is the other remedy which the appellant Insurance

Company could pursue with.

No one can possibly fault the Insurance Company for

persistently pursuing the matter up to this court because

they are dealing with public money. If they have discovered

that such public fund, in a whopping measure, would be

knocked off fraudulently through a fake claim, there is full

justification for the Insurance Company in approaching the

Tribunal itself first. At any rate the High Court ought not

have refused to consider their grievances. What is the

legal remedy when a party to a judgment or order of court

later discovered that it was obtained by fraud?

In S.P. Chengalvaraya Naidu (dead) by L.Rs. Vs.

Jagnnath (dead) by Lrs. & ors. {1994 (1) SCC 1} the two

Judges Bench of this Court held:

Fraud avoids all judicial acts, ecclesiastical or

temporal- observed Chief Justice Edward Coke of England

about three centuries ago. It is the settled proposition of

law that a judgment or decree obtained by playing fraud on

the court is a nullity and non est in the eyes of law. Such

a judgment/decree- by the first court or by the highest

court-has to be treated as a nullity by every court, whether

superior or inferior. It can be challenged in any court

even in collateral proceedings

In Indian Bank Vs. Satyam fibres (India) Pvt. Ltd.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 5

{1996 (5) SCC 550} another two Judges bench, after making

reference to a number of earlier decisions rendered by

different High Courts in India, stated the legal position

thus:

Since fraud affects the solemnity, regularity and

orderliness of the proceedings of the Court and also amounts

to an abuse of the process of Court, the Courts have been

held to have inherent power to set aside an order obtained

by fraud practised upon that Court. Similarly, where the

Court is misled by a party or the Court itself commits a

mistake which prejudices a party, the Court has the inherent

power to recall its order.

It is unrealistic to expect the appellant company to

resist a claim at the first instance on the basis of the

fraud because appellant company had at that stage no

knowledge about the fraud allegedly played by the claimants.

If the Insurance Company comes to know of any dubious

concoction having been made with the sinister object of

extracting a claim for compensation, and if by that time the

award was already passed, it would not be possible for the

company to file a statutory appeal against the award. Not

only because of bar of limitation to file the appeal but the

consideration of the appeal even if the delay could be

condoned, would be limited to the issues formulated from the

pleadings made till then.

Therefore, we have no doubt that the remedy to move for

recalling the order on the basis of the newly discovered

facts amounting to fraud of high degree, cannot be

foreclosed in such a situation. 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 would affect the

very basis of the claim.

The allegation made by the appellant Insurance Company,

that claimants were not involved in the accident which they

described in the claim petitions, cannot be brushed aside

without further probe into the matter, for, the said

allegation has not been specifically denied by the claimants

when they were called upon to file objections to the

applications for recalling of the awards. Claimants then

confined their resistance to the plea that the application

for recall is not legally maintainable. Therefore, we

strongly feel that the claim must be allowed to be resisted,

on the ground of fraud now alleged by the Insurance Company.

If we fail to afford to the Insurance Company an opportunity

to substantiate their contentions it might certainly lead to

serious miscarriage of justice.

In the result, we allow these appeals, set aside the

impugned orders and quash the awards passed by the Tribunal

in favour of the claimants. We direct the Tribunal to

consider the claims put forth by the claimants afresh after

affording a reasonable opportunity to the appellant

Insurance Company to substantiate their allegations.

Opportunity must be afforded to the claimants also to rebut

the allegations.

We make it clear that while disposing of the claims

afresh the Tribunal shall not be trammeled by any of the

observations, if any, made by us on the merits of the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 5

allegations.