The Hon’ble Apex Court in case of A.V. Papayya Sastry v. Govt. of A.P.; (2007) 4 SCC 221 held that Judgment or Order of a Court obtained by fraud is a nullity and non-est in law.
A bench comprising of C.K. THAKKER AND LOKESHWAR SINGH PANTA JJ. observed that such judgment and decree can be challenged in any court at any time and when a judgment is obtained by a fraud, this is an exception to Article 141 of the Constitution of India and doctrine of merger.
“If any judgment or order is obtained by fraud, it cannot be said to be a judgment or order in law. 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.”
the bench said.
While dismissing the appeals, the Apex Court further held that fraud may be defined as an act of deliberate deception with the design of securing some unfair or undeserved benefit by taking undue advantage of another. In fraud one at the loss of another. Even most solemn proceedings stand vitiated if they are actuated by fraud. Fraud is thus an extrinsic collateral act which vitiates all judicial acts, whether in rem or in personem. The principle of ‘finality of litigation’ cannot be stretched to the extent of an absurdity that it can be utilized as an engine of oppression by dishonest and fraudulent litigants.
Once it is established that an order of a Court was obtained by a successful party by practicing or playing fraud, it is vitiated. Such order cannot be held legal, valid or in consonance with law. It is non-existent and non est and cannot be allowed to stand. This is the fundamental principle of law and needs no further elaboration. Therefore, it has been said that a judgment, decree or order obtained by fraud has to be treated as nullity, whether by the court of first instance or by the final court. And it has to be treated as non est by every Court, superior or inferior.
The non-obstante clause of Article 136 of the Constitution of India are of overriding effect and clearly indicate the intention of the Framers of the Constitution that it is a special jurisdiction and a residuary power unfettered by any statute or other provisions of Chapter IV of Part V of the Constitution. It is extraordinary in its amplitude. Its limit, when it chases injustice, is the sky. Such power, therefore, may be exercised by the Apex Court whenever and wherever justice demands intervention by the highest Court of the country.
Article 136 of the Constitution does not confer a right of appeal on any party. It confers discretion on this Court to grant leave to appeal in appropriate cases. In other words, the Constitution has not made the Supreme Court a regular Court of Appeal or a Court of Error. The Supreme Court only intervenes where justice, equity and good conscience require such intervention.
Case Law Reference on Fraud
- Abbai Maligai Partnership Firm v. K. Santhakumaran,  7 SCC 386: JT (1998) 6 SC 396
- Baiganna v. Deputy Collector of Consolidation,  2 SCR 509:  2 SCC 461
- Duchess of Kingstone, Smith’s Leading Cases, 13th Edn.
- Indian Bank v. Satyam Fibres (India) Pvt. Ltd.  5 SCC 550; JT (1996) 7 SC 135
- Kunhayammed & Ors. v. State of Kerala & Anr.,  6 SCC 359: JT (2000) 9 SC 110
- Lazaras Estates Ltd. v. Beasley,  1 ALL ER 341: (1956) 1 QB 702: (1956) 2 WLR 502
- Lazarus Estates and Smith v. East Elloe Rural District Council (1956) AC 336:  1 ALL ER 855: (1956) 2 WLR 888
- Shanmugavel Nadar v. State of T.N. & Anr.,  8 SCC 361: JT  7 SCC 568
- S.P. Chengalvaraya Naidu (dead) by Lrs. v. Jagannath (dead) by Lrs. & Ors.,  1 SCC 1: JT (1994) 6 SC 331
- State of Gujarat v. Patel Raghav Natha  2 SCC 187
- United India Insurance Co. Ltd. v. Rajendra Singh & Ors.,  3 SCC 581 and JT (2000) 3 SC 151
K.K. Venugopal, Ankur, Y. Raja Gopala Rao and Y. Ramesh for the Appellants. Anoop G. Chaudhary, June Chaudhary, Manoj Saxena, Rajnish Kr. Singh, Rahul Shukla, T.V. George, K.V. Viswanathan, K.V. Venkataraman and V. Mohana, N. Annapoorani for the Respondents.
Equivalent Citations : AIR 2007 SC 1546 : (2007) 4 SCC 221 : JT 2007 (4) SC 186 : 2007 (4) Scale 88 : 2007 (3) SCR 603 : 2007 (4) MLW 139 : 2007 (2) Supreme 837 : 2007 (3) All WC 2538 : 2007 (2) PLJR 201 : 2007 AIR (SCW) 2212 : 2007 (3) MLJ 784 : 2007 (6) Andh LD 68 : 2007 (2) UPLBEC 1753 : 2007 (2) JLJR 183 : 2007 (1) RJ 500 : 2007 (3) CivilLJ 17 : 2007 (2) RAJ 451 : 2007 (2) RCR (Civil) 431 : 2007 (3) ICC 85