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2014 DIGILAW 1208 (CAL)

Prem Lal Jain v. Chhabi Dey

2014-12-24

NADIRA PATHERYA

body2014
ORDER 1. This is an application filed under Section 47 of the Code of Civil Procedure by two of the judgment debtors seeking to set aside the award dated 29th July, 2005. 2. The case of the applicants is that by a sale agreement dated 9th May, 2005 the predecessor-in-interest of the applicants agreed to sell the subject property to the decree-holder Prem Lal Jain. The parent agreement did not contain an Arbitration Clause and subsequently an arbitration agreement was entered into on 2nd July, 2005. On 5th July, 2005 a reference was filed by the applicant s predecessor-in-interest through her Constituted Attorney one Mr. Achintya Kumar Banga and as a counter statement was filed on 9th July, 2005 an award was passed on 29th July, 2005. The said award was confirmed by the applicant s predecessor-in-interest Kamala on 2nd August, 2005. The said award was thereafter in December, 2008 sought to be executed and the execution application was served on the applicant wherefrom the applicant came to know of the award dated 29th July, 2005. 3. The aforementioned was done in hot-haste and only after Kamala died on 10th September, 2005. The said documents are back-dated. A Will was executed by Kamala on 22nd May, 1995 and in 2006 PLA 50 of 2006 was filed for grant of Probate by the executors of the said Will. An interim application was also filed for grant of Letters of Administration and the Letters of Administration was granted in favour of Indira Mullick one of the daughters of Kamala. An order of injunction was also passed on 28th February, 2006. Two notices were put up by the Special Officer pursuant to order passed in PLA 50 of 2006 dated 12th July, 2006. In fact it has been disclosed by the decree-holder that an advance payment of Rs. 1 Lac was made in February, 2006 to the judgment-debtor No.3 and the letter of confirmation has also been signed by him. In the said letter of confirmation although the agreement of 9th May, 2005 finds mention but there is no mention of the award of July, 2005, therefore the award and the documents, namely, statement of claim and counter statement are nothing but back-dated documents. In the said letter of confirmation although the agreement of 9th May, 2005 finds mention but there is no mention of the award of July, 2005, therefore the award and the documents, namely, statement of claim and counter statement are nothing but back-dated documents. The Constituted Attorney of Kamala has also filed PLA 133 of 2006 wherein there is also no mention of the award on the contrary the Moore Avenue property which is the subject matter of the Sale Agreement has been included in the schedule of assets, therefore the decree is a nullity and by seeking to execute the same fraud is being perpetrated on Court. The issue of nullity can be raised in proceedings filed under Section 47 of the CPC and as fraud unravels all, therefore the decree is void. Fraud has been committed not only on Kamala but also her legal heirs and representatives. In fact the arbitration agreement, reference, award and acceptance have all occurred after the demise of Kamala. It is unbelievable that a party which suffers an award will confirm the same in writing. Therefore it is nothing but fraud committed which renders the decree void. 4. Reliance is placed on AIR 2007 SC 1546 , 2010 (8) SCC 383 : (2010 AIR SCW 5281), 2001 (8) SCC 187 : ( AIR 2001 SC 2849 ), 2002 (3) CHN 482 : (AIR 2004 (NOC) 175 (Cal)), 2003 (8) SCC 565 , AIR 1996 Delhi 191 and AIR 2004 Cal 207 . 5. The question of fraud can be raised and decided by the Executing Court as held in AIR 1977 SC 1201 and accordingly orders be passed as sought. 6. Opposing the said application counsel for the decree-holder submits that there is no challenge to the Agreement for Sale nor the authority of Achinta Kumar Banga. No case has been made out that the arbitration agreement was entered into after the death of Kamala. In fact the award of July, 2005 has been acted upon as the cheque was issued in August, 2005 and subsequent thereto Kamala died. The arbitration agreement has not been challenged in these proceedings though challenged before the City Civil Court. 7. In paragraph 11(e) of the application under Section 47 the arbitral proceedings has been challenged. In fact the award of July, 2005 has been acted upon as the cheque was issued in August, 2005 and subsequent thereto Kamala died. The arbitration agreement has not been challenged in these proceedings though challenged before the City Civil Court. 7. In paragraph 11(e) of the application under Section 47 the arbitral proceedings has been challenged. Section 9 of the Limitation Act will be a bar to filing of proceedings as limitation is to run from the letter of acceptance and no application under Section 34 of the 1996 Act has been filed within 120 days therefore the case of fraud has been made out. The arbitration agreement remains as it has not been disputed. It is only the conduct of the parties which has been found irregular. If the arbitration agreement and Award has not been challenged by the parties i.e. Kamala and Prem Lal Jain and both have also not challenged conduct, therefore, a third party cannot challenge it. In this regard Section 34(a)(ii) of the 1996 Act be considered. The maintainability of Section 47 is not in doubt but the issues raised cannot be decided, as Kamala could not have raised these issues except in proceedings filed under Section 34 of the 1996 Act. The petitioner as the legal heir and representative of Kamala cannot also raise it. The petitioner has no title nor is in possession and is not also claiming under the testatrix therefore is not entitled to question her capacity. 8. The grounds pleaded in paragraph 11 of the petition are similar to Section 34(2)(a) and Section 34(2)(b) of the 1996 Act. Lack of inherent jurisdiction has not been pleaded. All that is pleaded is fraud on court and parties. There is no challenge to the Power of Attorney or the arbitration agreement therefore case of lack of jurisdiction has not been made out. Fraud on parties has been alleged, as then there will be no restriction of time. The plea of fraud has been taken only to remove the restriction imposed by Section 9 of the Limitation Act and Section 5 of the 1996 Act but this will not bar filing of application under Section 34 and therefore the points raised ought to have been decided in proceedings initiated under Section 34 of the 1996 Act and not by Section 47 application. It has not been pleaded that fraud has been committed by Banga. There is no allegation made against him in respect of the award except of collusion. There is no pleading with regard to fraud on Tribunal or by Tribunal. In fact the grounds which Kamala could have taken has not been taken here of inherent lack of jurisdiction. 9. Reliance is placed on (1999) 1 SCC 558 : ( AIR 1999 SC 246 ), (2004) 2 Arbitration Law Reporter 469 which deals with constructive res judicata and AIR 1956 Cal 321 . 10. Fraud has to be pleaded. As per Section 141 of the Code of Civil Procedure, the provisions of CPC are to apply to an application under Section 47. Therefore fraud as alleged must be pleaded. Order 6, Rules 1 and 4, CPC deals with pleading in a plaint and written statement and is to apply by virtue of Section 141 of the CPC to all miscellaneous proceedings. 11. Reliance is placed on AIR 1951 SC 280 . (2003) 8 SCC 565 is distinguishable on facts while AIR 2007 SC 1546 is not applicable to the facts of the case. Similarly AIR 1977 SC 1201 and (2010) 8 SCC 383 : (2010 AIR SCW 5281) will not to apply to the facts of this case. (2001) 8 SCC 187 : ( AIR 2001 SC 2849 ) will also not apply. There is no case made out that some of the disputes are beyond the scope of arbitration as held in AIR 2004 Cal 207 . Similarly (2002) 3 CHN 482 : (AIR 2004 (NOC) 175 (Cal)) is not to apply, as the petitioner is making a claim under Kamala and not by virtue of any independent right. AIR 1996 Delhi 191 was a case under the 1940 Act and is distinguishable as Sections 4 and 5 of the 1996 Act was not considered. Therefore, this application merits no order. 12. In reply it has been submitted by counsel for the petitioner that by virtue of paragraph 11 of the petition a doubt has been sought to be raised. The letter of acceptance of Kamala could not have been challenged under Section 34 of the 1996 Act. Sanjoy De could not be a judgment-debtor as his mother is the judgment debtor No. 1. The letter of acceptance of Kamala could not have been challenged under Section 34 of the 1996 Act. Sanjoy De could not be a judgment-debtor as his mother is the judgment debtor No. 1. He is the executor with Banga in the second Will in respect of which PLA 133 of 2006 has been filed and is pending adjudication. Santana Banga is the wife of Achintya Kumar Banga and daughter of Kamala. The letter of acceptance is an act of fraud committed and in view of the decisions reported in (1968) 72 CWN 733, AIR 2003 Cal 405 and ILR 2002 Karnataka 322 orders be passed as sought. AIR 1951 SC 280 and AIR 2006 SC 372 (sic) are distinguishable on facts. In (2004) 2 Arbitration Law Reporter 469, (2003) 8 SCC 565 has not been considered. (1999) 1 SCC 558 : ( AIR 1999 SC 246 ) is distinguishable on facts as the ground for setting-aside decree was limitation. Section 141, CPC is to apply to miscellaneous proceedings. (1968) 72 CWN 733 is distinguishable so also AIR 1963 Cal 405 wherein proceedings were filed under the 1940 Act. 13. Having considered the submissions of the parties G.A. 404 of 2009 is an application filed by the judgment-debtor Nos. 9 and 12 under Section 47 of the CPC for declaring the award dated 29th July, 2005 a nullity and for recall of order dated 18th December, 2008. According to the applicants, they became aware of the award only on receipt of the Tabular Statement. The award proceeds on the basis of an agreement for sale executed between Kamala Bala Paul and Prem Lal Jain, dated 9th May, 2005. The said agreement is a part of the pleadings, viz., the affidavit filed by the decree-holder/respondent. 14. In the said agreement it has been accepted that clearance is pending under the Urban Land Ceiling Act 1976 (1976 Act) before the Authority and that the consideration will be paid after the subject premise is free from encumbrances under the 1976 Act and removal of tenants. 15. According to Clause 6 of the sale agreement it was the decree-holder Jain who was to take steps to obtain clearance from the Competent Authority. 15. According to Clause 6 of the sale agreement it was the decree-holder Jain who was to take steps to obtain clearance from the Competent Authority. "Clause 6 : That all necessary clearance from the Urban Land Ceiling Authority, erection of boundary walls eviction of unauthorized occupiers will be taken by the Purchaser at his cost on behalf of the Confirming Party and the Vendor." 16. Once clearance was obtained and tenants evicted the purchaser Jain would pay the consideration of Rs. 1 lakh. 17. Disputes arose between the parties and an Arbitration agreement was executed between Kamala through her constituted attorney and purchaser Jain and arbitrator appointed. An Award was passed by the Arbitrator on 29th July, 2005 by virtue whereof the responsibility to obtain clearance under the 1976 Act stood shifted to Kamala and pursuant thereto an appeal was filed in August 2005 before the authorities under the 1976 Act. The relevant clause of the Award is set out below: "Clause 9 : In the instant dispute, from the contract itself it is clear that it was the responsibility of the Claimant to obtain the ULC Clearance and handover peaceful and vacant possession to the Respondent. Accordingly, I hold that the Claimant has all responsibility in this regard. The Trespasser Settlement must also be done by the Claimant at her own cost." 18. The claimant under the Award of 2005 was Kamala. The said Award of 2005 was accepted by Kamala by letter dated 2nd August, 2005 wherein Kamala has specifically stated that the Award shall be binding on her. 19. The said Award has also been acted upon by Kamala by deposit of the original documents of title and other related papers in respect of the subject property. A sum of Rs. 1,00,000/- was also received by Kamala from purchaser Jain on account of consideration. The application for re-call of order dated 13th December, 1982 and restoration of appeal was filed by Kamala in 2005 before the Appellate authority, Urban Development Department, West Bengal. 20. Kamala died on 10th September, 2005 and during her lifetime did not seek to set-aside the Award instead accepted the same and acted thereon. This, therefore, would not entitle the petitioners who are the legal heirs and representatives to challenge the same when their predecessor-in-interest took no step to do so. 21. 20. Kamala died on 10th September, 2005 and during her lifetime did not seek to set-aside the Award instead accepted the same and acted thereon. This, therefore, would not entitle the petitioners who are the legal heirs and representatives to challenge the same when their predecessor-in-interest took no step to do so. 21. But for the proceedings under the 1976 Act which was challenged by Kamala under Article 226 of the Constitution of India. By order dated 2nd December, 1981 all orders of the competent authority including the draft statement and final statement were set aside. Kamala filed a fresh objection which was also rejected by order dated 29th May, 1982 and a final statement under Section 9 of the 1976 Act was directed to be issued. The order dated 29th May, 1982 was challenged in appeal. During the pendency of the appeal, the final statement under Section 9 of the 1976 Act was issued. The appeal was dismissed for non-appearance on 13th December, 1982 and thereafter restored in 2005. Kamala died and, therefore, her legal heirs and representatives were issued notice, and after giving a hearing to the parties the said appeal was rejected by order dated 27th July, 2009 and the order dated 29th May, 1982 confirmed. The said order dated 27th July, 2009 was not challenged. Therefore, the order of vesting exists. 22. It is true that the Award was passed during Kamala s lifetime, i.e. on 29th May, 2005. The basis of the Award is an arbitration agreement executed between the parties for resolving disputes which had arisen. The agreement dated 9th May, 2005 was admittedly executed by and between the parties after the order dated 29th May, 1982 and also after issuance of the final statement under Section 9 of the 1976 Act. 23. The applicants herein have sought a declaration that the Award is a nullity on two grounds namely : (i) Lack of authority of Kamala to sell the subject property in view of proceedings under the 1976 Act. (ii) Fraud. 24. Fraud has been alleged against the power of attorney holder of Kamala, i.e. Achintya Kumar Banga. No fraud has been alleged to purchaser Jain. The other instances of fraud pleaded do not constitute fraud. Therefore, fraud will not constitute one of the grounds for setting aside the Award if at all. 25. The other ground canvassed is more germane. 24. Fraud has been alleged against the power of attorney holder of Kamala, i.e. Achintya Kumar Banga. No fraud has been alleged to purchaser Jain. The other instances of fraud pleaded do not constitute fraud. Therefore, fraud will not constitute one of the grounds for setting aside the Award if at all. 25. The other ground canvassed is more germane. By the said Award an attempt was made by Kamala to deal with the property which had come to vest in the State of West Bengal and of which she had been deprived. 26. Even if assumed that Kamala could have executed the sale agreement with purchaser Jain but this would be subject to the proceedings under the 1976 Act. The appeal on restoration was dismissed in July, 2009. 27. The Award was passed in 2005. At this time the order of 29th May, 1982 was subsisting. There was no appeal pending nor re-call application filed, which was filed after the Award. 28. The Award if allowed to exist will nullify the rights which have accrued to the State under the 1976 Act. The sale agreement of May 2009 has also recognized the necessity to take clearance under the 1976 Act, who is to take the clearance is not important at this stage as under the agreement of 2005 it was purchaser Jain and under the Award-Kamala but the fact remains that no clearance was taken and without such clearance to execute the Award and take physical possession by evicting trespassers through the agency of Court would be not only in gross suppression of material facts but a fraud on Court, which ought not to be encouraged. 29. There is no dispute with the proposition laid down in AIR 2007 SC 1546 and (2010) 8 SCC 383 : (2010 AIR SCW 5281) that fraud nullifies all and persons who played fraud ought not to be allowed to bear the fruit or benefit thereof. 30. Although no application was filed under Section 34 of the 1996 Act by Kamala but the issue of executability of a decree can be raised under Section 47 of the CPC as held in AIR 1996 Delhi 191 and AIR 2004 Cal 207 . 31. 30. Although no application was filed under Section 34 of the 1996 Act by Kamala but the issue of executability of a decree can be raised under Section 47 of the CPC as held in AIR 1996 Delhi 191 and AIR 2004 Cal 207 . 31. There is no dispute with the proposition laid down in AIR 1977 SC 1201 and (1999) 1 SCC 558 : ( AIR 1999 SC 246 ) as it is an accepted position that in case the decree is a nullity the executing Court can go behind it and set it aside. 32. In the decision reported in AIR 1956 Cal 321 the Full Bench was not considering an application filed under Section 47 of the CPC vis-a-vis the provisions of the Arbitration Act, be it 1940 or the 1996 Act, therefore, the said decision will not be applicable. 33. (2004) 2 Arb LR 469 is distinguishable on facts as in the reported decision an application had been filed under Section 34 of the 1996 Act. The application was considered at the trial stage and also in appeal. It is only, thereafter, that Section 47 proceedings had been filed. To bar a party from availing remedies under the general law of the land especially those applicable at the time of execution of decree and restricting a party to proceedings under Section 34 of the 1996 Act would amount to grave injustice to the wronged who as an aggrieved party will have no scope to challenge the Award at the execution stage and will have to accept the decree. In the reported decision fraud on statute was not in issue nor under consideration. 34. The Award in the absence of clearance under the 1976 Act is a nullity and in-executable. It is not only a fraud on statute but to seek execution by Court is to make the Court a party to such fraud and will amount to fraud on Court. The arbitrator was considering the sale agreement of May 2005 wherein reference had been made to clearances to be obtained under the 1976 Act. It is true that as Kamala had not challenged the Award in normal circumstances the legal heirs and representatives also could not have challenged the award but, where fraud has been committed on statute a Court of law will not shut its eyes by executing the decree. 35. It is true that as Kamala had not challenged the Award in normal circumstances the legal heirs and representatives also could not have challenged the award but, where fraud has been committed on statute a Court of law will not shut its eyes by executing the decree. 35. There is no dispute with the proposition of law laid down in AIR 1951 SC 280 or in (2002) 3 CHN 482 : (AIR 2004 (NOC) 175 (Cal)) and it has been held in (2002) 3 CHN 482 : (AIR 2004 (NOC) 175 (Cal)), in case of fraud the executing Court can go behind the decree. 36. In the reported decision of (2001) 8 SCC 187 : ( AIR 2001 SC 2849 ) Court remanded the issue of fraud and collusion to the executing Court for consideration, therefore, the said decision aids the applicants. 37. (2003) 8 SCC 565 is not applicable to the instant case. 38. In AIR 1963 Cal 405 the principle of pleading fraud has been dealt with as follows : Paragraph 7 : The next point taken is that no fraud has been pleaded in the plaint. This is a point without substance. The principle is not, that the fraud should be pleaded in the plaint but that in connection with the dispute between the parties, an allegation of fraud should be made against the plaintiff. 39. Particulars of fraud as pleaded may not evidence the fraud committed by the parties on each other but fraud on statute is evident ex facie and in seeking execution of such Award fraud on Court is apparent. This cannot be ignored or brushed aside on the ground of non-pleading. 40. In view of the aforesaid the decree dated 29th July, 2005 is set aside for it being a nullity. Accordingly, G.A. 404 of 2009 is allowed and succeeds. Petition allowed.