SAHAKARI AWSA NIRMAN EVAM VITTA NIGAM LTD vs LIFE INSURANCE CORPORTION OF INDIA on 16 August 2024

**JUDGMENT**

1. 1. The case was finally heard on 02.7.2024 and after hearing the parties at length, the case was reserved for pronouncement of Order.

2. 2. The present Misc Application has been filed on 20.07.2022 under section 22(2) read with 19 (25) of the RDB, Act 1993 for recall of order dated 21.6.2022 passed in O.A 715 of 2019.

3. 3. The applicant stated that the Misc. Application for recall of the order dated 21.6.2022 has been filed within limitation. He submits that during pandemic Covid-19, the O.A.715 of 2019 was take-up for hearing on 03.02.2022 through video conferencing and was reserved for judgment on 22.5.2022, the order was pronounced after a gap of more than four months i.e. order pronounced on 21.6.2022 which is beyond 90 days from the date on which the case was reserved for order, according to the provisions under Order XX Rule 1 C.P.C, it is a settled position of law that the judgment has to be pronounced within 30 days from the date on which the hearing of the case was concluded which can be extended to 60 days in extraordinary circumstances, failing which the court is bound to release the order and fix a date for re-hearing for proper adjudication of the case on merits. He submits that the applicant to the M.A. who was defendant to the decided O.A. No.715/2019 was not provided with a proper opportunity to defend the case and plead its case on merits as the applicant to the M.A. faced technical connectivity error, further due to the time constrain of arguing the matter 

through virtual hearing, the matter was not heard properly and the necessary documents and case law which were important for the adjudication of the case on merits were not placed before this Tribunal.

1. 4. The applicants further stated that the said order had been obtained by the Defendant "Life Insurance Corporation of India" on misconceived facts by hiding & concealing the most important documents which do not support the claim of F.I and even an exorbitant amount has been claimed in the O.A and that too without any proper calculation, the F.I has acted in a pick & choose manner and had deliberately failed to bring on record the complete documents which were necessary for the proper adjudication of the matter on merits and the recovery suit "O.A" suffers from non-joinder of necessary parties to the proceedings (names of which are mentioned at page 64-to-76 of the O.A), hence the order obtained by the F.I is itself illegal and is liable to be recalled.

2. 5. The applicant further stated that under the garb of the said order, the F.I is trying to cover their high handedness and the fraud done by the officials of the F.I in the security documents and as a result of which it is only the applicant to this M.A who are the ultimate sufferer. He submits that it is a well settled position under the law that an order/decreed obtained by concealing the actual facts tantamount to a fraud being played upon the Court and as such the order / decree obtained by fraud is nullity in the eyes of law and to liable to be set-aside by the Court at any stage of the proceedings. The said principle has been laid down by the Hon'ble Supreme Court in the matter of "*A.V. Papayya Sastry & Ors vs Government Of A.P. & Ors* ". He submits that the applicant has filed a supplementary affidavit alongwith annexures to bring on record the facts and documents to establish that the order dated 21.6.2022 has been obtained by fraud and concealment. He prayed that the order dated 21.6.2022 which had been obtained by fraud and concealment and is based on manipulated averments be recalled and the matter be heard on merits before deciding the same on merits.

3. 6. Per Contra, the Counsel appearing on behalf of the F.I "Life Insurance Corporation of India" stated that the M.A filed under section 22(2) read with section 19(25) of the RDB Act 1993 is misconceived and not maintainable, this Tribunal has duly considered the rehearing application dated 19.05.2022, filed by the applicant herein, after the judgment was reserved and then duly rejected it as not maintainable and thereafter it proceeded to decide the O.A finally. He further submits that the Tribunal is not bound by the Civil Procedure Code. The O.A. has not been allowed ex-parte, but the same has been allowed after granting due opportunity to the applicant herein.

the applicant failed to file their defense in the O.A. within the prescribed time limit. He submits that the Tribunal duly considered the rehearing application dated 19.05.2022 filed by the applicant herein, after the judgment was reserved and then duly rejected it as not maintainable and thereafter proceeded to decide the O.A finally; thus, complete opportunity was given to the applicant herein to defend the O.A. He submits that under the present recall application, the applicant is trying to argue the case on merits, the said issues are not open to be raised in the present recall application.

1. 7. The F.I further submits that section 20 of the RDB Act 1993, provides for an appeal to appellate tribunal against an order passed by DRT under the RDB Act. Further Section 21 provides that an appeal shall not be entertained unless the appellant has deposited 50% of the amount of Debt due from him as determined by DRT under section 19, which can be reduced to 25%, for reasons to be recorded in writing, and in order to evade such statutory deposit, the applicant has attempted to bypass the said statutory remedy, by filing the present application. He submits that the applicant herein is a defaulter, against whom there is huge outstanding of more than Rs.74 crores, which has also been adjudicated and determined by this Tribunal, which the present applicant has failed to pay even after the direction of this Hon'ble Tribunal passed in order dated 21.06.2022 and the instant application is another effort of the present applicant to evade and delay the payment of the said huge outstanding amount, thus the present application is liable to be dismissed with exemplary cost. He further submits that the case law being relied upon by the applicant i.e., A.V. Papayya Shastry & Ors. Vs. Government of A.P., is absolutely inapplicable in the facts and circumstances of the present case and on the contrary, the applicant is committing fraud by making false and misconceived pleadings and is abusing the due process of law, despite being a defaulter of huge amount of public money and thus the present application is absolutely misconceived, illegal and completely devoid of any merits, consequently the applicant is not entitled for any relief either interim or final and the application is liable to be rejected with exemplary costs.

Heard the parties to the proceeding and gone through the record.

1. 8. Brief fact of the case as per applicant to the M.A. is that the order dated 21.6.2022 had been obtained by "Life Insurance Corporation of India" by fraud and concealing, the most important facts and documents which are necessary for the proper adjudication of the case on merits were intentionally not brought on record by the F.I and the OA suffers from Non-Joinder of necessary Parties to the proceedings, the order dated 21.6.2022 cannot be

executed against the applicant. Hence the Order dated 21.6.2022 deserves to be recalled and thereafter the O.A be heard and decided on merits. On the other hand the F.I strongly opposes the contentions raised by the applicant and argued that the order dated 21.6.2022 is not an ex-parte order, opportunity of filing WS was given to the applicant as per the provision of section 19[5(i)] of the RDB Act,1993 but the applicant filed their WS beyond the prescribed time frame, therefore, the same was not considered and now when the order dated 21.6.2022 has been passed, the applicant are trying to argue the case on merits under the guise of the present MA, the MA is devoid of merits and is gross abuse of the process of law, consequently liable to be dismissed with exemplary cost.

1. 9. As per the records adduced by the applicant to the M.A, it cannot be denied that the F.I had omitted to bring on record the actual facts of the case and documents therein, which could have directly affected the merits of the case. This Tribunal concur with the pleadings and the arguments advanced by the applicant to the M.A that F.I has obtained the order dated 21.6.2022 by misrepresentation and concealment and thereby tried to play fraud with the Tribunal. For deciding the M.A, the provisions of Section 22(2) of the RDB Act, 1993 has to be read with the provisions of section 19(25) which is set forth as "*The Tribunal may make such orders and give such directions as may be necessary or expedient to give effect to its orders or to prevent abuse of its process or to secure the ends of justice.*"

2. 10. While dealing with the provisions of section 19(25) and the powers of the Tribunal to entertain application U/s 19(25) of the RDB Act,1993, the Division Bench of Bombay High Court in Anil Nandkishor Tibrewala & Anr. v. Jammu and Kashmir Bank Ltd. [ 2007(3) Bom.C.R.941 ] interpreting Section 19(25) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short 'RDB Act') held as follows:

*"A reading of this provision would indicate that there is a power in the Tribunal to give orders or directions to prevent abuse of its process or to secure the ends of justice. It is open to the Tribunal to lay down its own procedure and it is not hide bound by the procedural provisions of Code of Civil Procedure. At the same time, certain provisions of the Code of Civil Procedure, have been conferred on the Tribunal. The expression "prevent abuse of its process" "or to secure the ends of justice" in our opinion would be wide enough to cover a case where a financial institution has obtained an order or the certificate pursuant to a mortgage created by the judgment debtor based on a fraudulent document, like for instance the property not belonging to the judgment debtor. If such party comes before the*

Court and points out to the Court that the mortgage created is sham and/or bogus, the Tribunal to prevent abuse of its process, can assume jurisdiction under Section 19(25) to decide that issue and for that purpose exercise powers conferred under Section 22 of the Act. On a aggrieved person being allowed to participate in the proceedings, it will be open to the Tribunal to review the order or pass such other order to secure the ends of justice. We are, therefore, of the clear view that in those cases where the Recovery Officer cannot go beyond the certificate, a party like the petitioners who claims title in the property or interest in the property can move the Tribunal by invoking jurisdiction of the Tribunal under Section 19(25), and in such cases if a prima facie case is disclosed before the Tribunal, the Tribunal is bound to consider the application so moved and dispose it according to law, after giving an opportunity to all parties before it."

The Division Bench of Hon'ble Gujarat High Court vide its Judgment dated 3.3.2009 passed in the case of "Lalit Kumar Jiabhai Thakkar & Another Vs. State bank of India & others [2009(2) drtc450(Guj)] has held that

" *Recovery of Debts Due to Banks and Financial Institutions Act, 1993, Section 19 (25)— Debts Recovery Tribunal-Empowerment to issue directions so that its process be not abused- Question regarding abuse of process of Tribunal can be brought to the notice of Tribunal even by a third party-Mortgage created fraudulently and sham and bogus documents produced before Tribunal to get favourable orders to the prejudice of a third party-That fact can always be brought to notice of Tribunal by a third party.*"

11. The Hon'ble Supreme court in numerous of its judgment has repeatedly held that :- "Now, it is well settled principle of law that if any judgment or order is obtained by fraud, it cannot be said to be a judgment or order in law. Before three centuries, Chief Justice Edward Coke proclaimed; "Fraud avoids all judicial acts, ecclesiastical or temporal".

" It is thus settled proposition of law that a judgment, decree or order obtained by playing fraud on the Court, Tribunal or Authority is a nullity and non est in the eye of law. Such a judgment, decree or order by the first Court or by the final Court has to be treated as nullity by every Court, superior or inferior. It can be challenged in any Court, at any time, in appeal, revision, writ or even in collateral proceedings". In the leading case of *Lazarus Estates Ltd. v. Beasley*, (1956) 1 All ER 341 (1956) 1 QB 702 : (1956) 2 WLR 502, Lord Denning observed:

"No judgment of a court, no order of a Minister, can be allowed to stand, if it has been obtained by fraud"

*" If a judgment obtained by playing fraud on the court is a nullity and is to be treated as non est by every court, superior or inferior, it would be strange logic to hear that an enquiry into the question whether a judgment was secured by playing fraud on the court by not disclosing the necessary facts relevant for the adjudication of the controversy before the court is impermissible. From the above judgments, it is clear that such an examination is permissible. Such a principle is required to be applied with greater emphasis in the realm of public law jurisdiction as the mischief resulting from such fraud has larger dimension affecting the larger public interest."*

Reference to the above settled principle of law is drawn from the Judgement of Hon'ble Supreme Court passed in the case of (i) *A.V. Papayya Sastry & Ors vs Government Of A.P. & Ors*, (ii) *S.P. Chengalvaraya Naidu (dead) by LRs. V. Jagannath (dead) by LRs. & Ors.* (1994) 1 SCC 1 : JT 1994 (6) SC 331 AND *Union of India v. Ramesh Gandhi* ( 2012) 1 SCC 476.

1. 12. It is also held in the matter of *Kamar Mohammed Khan V. Begum Sabiha Sultan*, 2016(2)ICC400(MP) that *" If a favorable judgment and decree or order is obtained from a court by concealing important facts, it amounts to playing fraud with the Court and the judgment and decree can be assailed at any stage. There is no period of Limitation for setting aside judgment and decree which is nullity"*.

2. 13. The Misc. Application filed for recall of the order dated 21.6.2022 is maintainable and this Tribunal has 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 and 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. This Tribunal agree that when there is an allegation of fraud by non-disclosure of necessary and relevant facts or concealment of material facts, it must be inquired and all these facts can only be inquired and adjudicated only when the M.A is allowed and the order dated 21.6.2022 is recalled.

3. 14. Taking into consideration the facts of the case, documents available on record, submission made by the parties and the various Judgments pronounced by Hon'ble Supreme Court and Hon'ble High Court which are quoted above, this Tribunal is of the considered view that the order dated 21.6.2022 deserves to be recalled. Hence the Misc. Application is accordingly **allowed** without cost and the order and decree passed on dated 21.6.2022 in O.A 715 of 2019 is also accordingly recalled.

4. 15. The O.A. 715 of 2019 is restored to its original number for adjudicating the claim of the F.I as per the norms permissible under the Law after affording proper opportunity of hearing to the parties. The next date of hearing of

O.A.715 of 2019 shall be fixed by the Registry of this Tribunal and thereafter during the proceedings, the parties may adduce their respective evidence which they deem fit and necessary for the disposal of the case on merits.

1. 16. Since, the M.A. has itself been finally disposed-off, hence all the other pending applications are also accordingly disposed-off.

Let copy of this order be supplied to the parties as per Rules.

File be consigned to record room.

(A.H. Khan) Presiding Officer