Where An Allegation Of Fraud Is Made, The Said Allegation Would Have To Be Proved Beyond Any Reasonable Doubt: Andhra Pradesh High Court

Brief Facts of the case

The Petitioner had constructed a multi storied commercial complex in the suit schedule property under a development agreement with APSRTC. The petitioner provided a part of the complex for 10 years on sub-license to the respondent for hotel and hospitality services. The Respondent defaulted in payment of license fee. As a consequence, the Petitioner filed a suit against the respondent for recovery of Rs. 2,05,11,560/- and for a direction to respondent to vacate the plaint schedule property.

The trial was conducted and the suit was decreed in favour of the petitioner. The petitioner moved Execution Petition (EP) for execution of the judgment but the respondent then moved Execution Appeal (EA) under Section 47 read with Section 151 C.P.C to declare the judgment to be a nullity and which cannot be executed.

In the EA, the respondent had contended that the petitioner fabricated the written agreement on made up terms and conditions which suited the petitioner and the document was improperly stamped and unregistered. In order to get over this lacunae, the petitioner had raised a false plea that the original was with respondent. But later the petitioner produced the original document before court.

The Executing Court under EA passed orders in favour of respondent and granted it the opportunity to defend the case during course of trial. Aggrieved by the orders of the Executing Court, the petitioner moved the civil revision petition.

Mr. M.V.S. Suresh Kumar, senior counsel appearing for the petitioner contended that there was no fraud made out against the petitioner. The trial court had recorded the admissions made by the respondent that the respondent had signed the agreement and it never denied the existence of the sub-license agreement. The counsel further contended that the orders passed by the Executing Court under Execution Appeal are beyond the jurisdiction.

One of the contentions of Mr. V.S.R. Anjaneyulu, Senior Counsel appearing for respondent, was that once the Executing Court had found that there was fraud, the natural consequences of such finding is that the judgment becomes a nullity and incapable of execution.

Issue

In A.V. Papayya Sastry and Ors. v. Government of AP, 2007 (4) SCC 221, the Supreme Court has held that judgment or order obtained by fraud, is a non-est in the eyes of law. It can be challenged in any court, at any time, in appeal, revision, writ or even in collateral proceedings.

Now, the issue was whether the facts show that there is fraud during the course of proceedings.

Consideration of Court

The respondent had contended that petitioner has created a false document and came up with false story that the original of the document was in custody of respondent.

The court observed that from the proceedings it is clear that the respondent had stated that it had signed the agreement. Furthermore, the respondent admitted that the petitioner had called upon the respondent to execute a formal deed in the name and style of leave and license agreement.

In light of the aforesaid admissions, it became clear that the contention of respondent that there is no written document is incorrect.

The second contention of the respondent is that the petitioner earlier stated that it did not possess the original copy of the agreement but later produced the original document and this amounts to fraud. The court noted that it is a settled position of law that allegation of fraud has to be proved beyond reasonable doubt. The respondent has not proved the fraud beyond reasonable doubt at any stage.

Moreover, the Court said that the Executing Court did not give any finding on the question of fraud committed by petitioner but on a totally irrelevant ground held that the judgment or decree is a nullity. The court ruled that the entire exercise is a gross abuse of the process of the Court.

The civil revision petition was allowed and the order of Executing Court was set aside with exemplary costs of Rs. 50,000/- payable by Respondent.

Cause Title: Balina Srimannarayana Versus S.R.R.Hospitalities Pvt.Ltd.

Citation: 2022 LiveLaw (AP) 11

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