Holding

A court or tribunal has inherent power to recall an order obtained by fraud, and a writ petition under Article 226 is maintainable to challenge such an award.

Summary

The Motor Accident Claims Tribunal awarded compensation to Rajendra Singh and his son Sanjay Singh for injuries allegedly sustained in a 1993 road accident involving an insured vehicle. United India Insurance Co. later discovered police reports indicating the claimants were actually injured in a separate tractor accident, constituting fraud. The insurer filed applications under CPC Sections 151‑153 seeking recall of the awards, which the Tribunal dismissed, and subsequently approached the Allahabad High Court via a writ petition under Article 226, which was also dismissed on the ground that fraud was a factual issue unsuitable for writ jurisdiction. The Supreme Court examined whether a court or tribunal possesses inherent power to set aside an order obtained by fraud, and whether a writ petition can be entertained despite the alleged factual nature of the fraud. Relying on precedents that a judgment procured by fraud is a nullity and that courts have inherent authority to recall such orders, the Court held that the High Court erred in refusing jurisdiction. Consequently, the Supreme Court allowed the appeals, quashed the Tribunal's awards, and directed a fresh consideration of the claims with an opportunity for the insurer to prove its allegations.

Issues considered

Whether a court or tribunal has inherent power to recall or set aside an award obtained by fraud notwithstanding statutory limitations.
Whether a writ petition under Article 226 of the Constitution is maintainable to challenge an award on the ground of fraud, despite the contention that fraud is a question of fact.
Whether Sections 151, 152 and 153 of the Code of Civil Procedure provide a basis for recalling an award on the ground of fraud.
Whether an award obtained by fraud is a nullity and can be challenged in any court.

Legislation cited

Code of Civil Procedure, 1908s. 151, s. 152, s. 153
Constitution of Indias. Article 226

Subjects

fraudrecall of orderinherent jurisdictionwrit jurisdictionArticle 226CPC Sections 151-153motor accident claims tribunalinsurancepublic moneynullity of judgment

Judgment

I
.,;lii

A UNITED INDIA INSURANCE CO. LTD.
v.
RAJENDRA SINGH AND ORS. ETC.

MARCH 14, 2000

B [K.T. THOMAS AND D.P. MOHAPATRA, JJ.]

Constitution of India, 1950 : Article 226.

Writ Jurisdiction-Power of High Court to recall order or decree ob-
tained by fraud.
c
Code of Civil Procedure, 1908: Sections 151, 152and153.

Fraud-Power of court to recall orders obtained by fraud.

Insurance Company-Insured-Awards obtained by fraud-Applications
D for review of awards by Insurance Company-Dismissal by Tribunal-Writ for
recalling awards-Dismissal by High Court-Appeal before Supreme Court-
Held Insurance Company was justified in approaching the Tribunal-High
Court ought not to have refused to consider grievance of Insurance Com-
pany-The remedy to move for recalling the order on the basis of the newly
E d.iscovered facts amounting to fraud of high degree cannot be foreclosed.

Maxim-Frans et jus nunquam cohabitant-Meaning and applicability.
of

The first respondent in both these appeals (father and son) obtained a
separate award from the Motor Accident Claims Tribunal, Bulandshahar
F
for a sum of Rs. 3,55,000 and Rs. 1,52,000 respectively alongwith interest
@12% from the date of claim. Their claim was based in respect of an
accident which occurred on 9.11.1993. In their claiin petition they stated
that the motor cycle on which they were travelling collided with an ambas-
sador· car as a result of which injuries were caused to both of them.
G Subsequent to the passing of awards the Insurance Company came to know
that the respondents have committed fraud in obtaining the awards be-
cause they have not received injuries as alleged in their petitions. Instead
they received injuries in different circumstances at a different place alto-
gether i.e. while they were operating their own tractor its trolly had slipped
H into the pit. Therefore, the appellant Insurance Company moved applica-
264
lJNITED INDIA INSURANCE CO. v. RAJENDRA SINGH 265

tions before the Tribunal for recall of the awards on the ground that they A
were obtained by playing fraud. The allegation of fraud was not specifically
denied by the respondent-claimants. Instead they contested the applica-
tions for recall of awards on the ground that the Tribunal has no power to
recall its orders except to correct any error in calculating the amount of
compensation. The Tribunal accepted the said plea and dismissed the
B
applications for recalling of awards. A writ petition filed by the Insurance
Company before the Allahabad High Court for quashing the awards was
dismissed on the ground that writ jurisdiction was not a proper forum for
deciding a question of fact viz. whether a fraud has been played. There-
fore, the Insurance Company may avail the legal remedy as may be
available to him. Hence this appeal. c
Allowing the appeals and setting aside the impugned order, this
Court

HELD : 1. The remedy to move for recalling the order on the basis of
the newly discovered facts amounting to fraud of high degree cannot be D
foreclosed. 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. [270-H]

2. ''Fraud and justice never dwell together." (Frans et jus nunquam E
cohabitant) is a pristine maxim ~hich has never lost its temper over all
these centuries. For a High Court in India to say that it has no power even
to consider the contention that the awards secured are the by-products of
stark fraud played on a Tribunal, the plenary power conferred on the High
Court by the Constitution may become a mirage and people's faith in the F
efficacy of the High Courts would corrode. 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 become
a conduit to enrich the imposter unjustly? The High Court while indicat-
G
ing about some other alternative remedy did not unfortunately spell out
what is the other remedy which the appellant Insurance Company could
pursue with. [262-B; C; 269-F]

3. No one can possibly faulttlie Insurance Company for persistently H
A
266 SUPREME COURT REPORTS [2000] 2 S.C.R.
pursuing the matter up fo 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 to have refused to
consider their grievances. (269-G]
8
4. 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
c claimants when they were called upon to file objections to the applications -~

for recalling of the awards. Therefore, the claim must be allowed to be
resisted, on the ground of fraud alleged by the Insurance Company. If the
Insurance Company is not afforded an opportunity to S\lbstantiate their
contentions it might certainly lead to serious misc~rriage of justice. The ...,
Tribunal is directed to consider the claims put forth by the claimants afresh
D after affording a reasonable opportunity to the appellant Insurance Com-
pany to substantiate their allegations. (271-B-C] ::,

Lazaris Estate Ltd. v. Beasley, (1956] 1 QB 702, referred to.
I

S.P. Clzengalvaraya Naidu (dead) by. Lrs. v. Jagannath (dead) by Lrs. &
E Ors., (1994) 1SCC1 and Indian Bank v. S'atyam Fibres (India) P. Ltd., (1996]
5 sec 550, relied on.
I

\ .....
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2087 of 2000
Etc.
F From the Judgment and Order dated 7.4.99 of the Allahabad High Court .
in C.M.W.P. No. 36169 of 1998. ,,.i
Vishnu Mehra and B .K. Satija for the Appellant.

A.V. Palli, Atul.Sharma and Mrs. Rekha Palli for the Respondents.
G
The Judgment of the Court was delivered by

THOMAS, J. Leave granted.

If what the appellant-Insurance Company now says is true, then a rank
ff fraud had been played by two claimants and wangled two separate Awards
UNITED INDIA INSURANCE CO. 1; RAJENDRA SINGH [THOMAS, J.] 267

from a Motor Accident Claims Tribunal for a bu!~ sum. But neither the A
Tribunal nor the High Court of Allahabad, before which the Insurance
Company approached for annulling the awards, opened the door but ex-
pressed 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 B
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" (l.Azarus Estate
l.Jd. v. Beasley, [1956] 1 QB 702). C
·-
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 Comt by the
Constitution may become a mirage and people's faith in the efficacy of the
High Comts would corrode. We would have appreciated if the Tribunal or ' D
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, tl1is Comt has to step in and
salvage the situation.

Facts are these: One Rajendra Singh and his son Sanjay Singh (first E
respondent in the respective appeals) filed two separate claim petitions
before the Motor Accident Claims Tribm1al, Bulandsahar (for short 'tl1e
Tribunal') in 1994 praying for awarding compensation in respect of an
accident which happened on 9.11.1993. The claimants put fmth-identiciil
averments regarding the accident which are in substance the following:
F
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
Singh's 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 pa1ty in the claim
proceedings before the Tribunal. Though the owner of the Car as well as the H
268 SUPREME COURT REPORTS [2000] 2 S.C.R.
A 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 vicariousiy liable for
the damages payable to the injw-ed 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 0th.er in favour of Sanjay Singh in a sum of Rs. 1,52,000.
8 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.

c 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 Assistapt
Sub-Inspector of Police, Subzi Mandi, Police Station, Delhi on 9.11.1993 in
D which contained a narration that Sanjay Singh and Rajendra Singh received
the i~juries 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
E details of the above accident only on a condition that his identity would be
kept in anonymity.

On receipt of the said inf01mation. the Divisional Otlice 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
F Police Station, Delhi, on 9.11.1993. Such statements contained the narration
that the injmies were sustained by Rajendra Singh and Sanjay Singh in the
accident which h:tppened when the trailor trolly had slipped into the pit.

Almost immediately after obtaining the above information, the appel-
lant Insurance Company moved the Tribunal with two petitions purportly
G under Sections 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 cmrect any error in calculating
H the amount of compensation and hence the Tribunal cannot recall the awards.
UNITED INDIA INSURANCE CO. v. RAJENDRA SINGH [THOMAS, J.] 269

It appears that the Tribunal accepted the said stand of the claimants and A
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 B
Writ petition as per ~ 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 C
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 liim.
The writ petition is accordingly dismissed. There will be, however,
no order as to costs".
D
(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 E
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 unfortu· F
nately spell out what is the other remedy which tl1e 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. G
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 Coutt ought not to 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? H
270 SUPREME COURT REPORTS [2000] 2 S.C.R.
A In S.P. Chengalvaraya Naidu (dead) by LRs. v. Jagannath (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
B 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 infe1ior. It can be challenged in any court even in collateral
proceedings ... "
c In Indian Bank v. Satyam Fibres (India) Pvt. Ltd., [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:

D "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. Simi-
larly, where the Court is misled by a pa1ty or the Comt itself
commits a mistake which prejudices a party, the Court has the
E
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
F 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
G
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 amolinting to fraud of high
degree, cannot be foreclosed in such a situation. No court or tribunal can be
H regarded as powerless to recall its own order if it is convinced that the order
-
UNITED INDIA INSURANCE CO. v. RAJENDRA SINGH [THOMAS, J.] 271

was wangled through fraud or misrepresentation of such a dimension as A
would affect the very basis of the claim.

The allegation made by the appellant Insurance Company, that claim-
ants 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 B
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 C
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 D
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 E

- merits of the allegations.

T.N.A. Appeals allowed.