IMPORTANT POINT
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.

Headnote:(i) Consumer Dispute-Consumer Protection Act, 1986-Section 22 r/ws 13(iv) and (v)-Uniform Rules for collection made by International Chamber of Commerce- Deficiency in service-Respondent entered into contract with French Firm for supply of goods-Goods shipped to Buyer-Respondent drew two Bills of Exchange on Buyer-Draft mentioned that Bills of Exchange had to be co-accepted by Buyer s bank-Respondent entrusted operation of collection to appellant-Appellant, while forwarding Bills of Exchange to French Bank omitted to indicate that Bills had also to be co-accepted by French Bank-Plea of appellant that respondents letter accompanying the Bills of Exchange did not mention that co-acceptance of French Bank had to be obtained- Letter placed on record specifically mentioning that co-acceptance had to be obtained was a letter forged by respondent-Appellant was justified in not mentioning co-acceptance by French Bank-Claim of respondent of value of goods shipped to Buyer at France, from appellant, being false, based on fabricated evidence has to be dismissed.
       Held : that the Commission fell into a serious error in treating the "Remitting Bank" as the Collecting Bank" and, then, fastening liability on the appellant by observing that the appellant had not acted in accordance with Article 15 of the ICC Rules under which it was the responsibility of the Presenting Bank to see that the Documents were accepted in accordance with the instructions of the "Principal". The Commission thus treated appellant not only as the "Remitting Bank" but also as the "Collecting Bank" and "Presenting Bank" which is not permissible as the identity of "Remitting Bank" is different and distinct from that of the "Collecting Bank and/or the "Presenting Bank". (Para 16)
       The main judgment of the Commission is based on the ground that there was letter dated 26.8.91 which contained specific instruction that there had to be co-acceptance by the Foreign Bank. (Para 17)
       As pointed out earlier, the main judgment of the Commission is based on the ground that there was letter dated 26.8.91 which contained specific instruction that there had to be co-acceptance by the Foreign Bank.
       As against this, there is, admittedly, another letter of 26th August, 1991 from the respondent to the appellant which does not contain this instruction. When this letter was filed before the Commission and a review of the judgment was sought on the ground that the letter containing the instruction for obtaining co-acceptance of the French Bank was never issued to the appellant and that the only letter issued on that date was the letter in which this instruction was not mentioned, the Commission, instead of deciding the controversy as to whether the other letter relied upon by the respondent was, at all, sent or issued to the appellant, proceeded to decide the controversy on the ground that even if no such letter was issued, the recital in the Bill of Exchange about co-acceptance by the French Bank was enough and the appellant having not acted in terms of the Bill of Exchange and having not obtained the co-acceptance of the French Bank, was liable to pay to the respondent the entire price of the goods supplied to the Buyer to whom the documents would not have been delivered had it been mentioned that before delivering the documents to the Buyer, co-acceptance by the French Bank was necessary, as in that event, the documents would have been either returned, as was done on previous occasions, or the French Bank would have given co-acceptance and thus made payment of the entire amount to the respondent. (Para 18)
       In view of the findings recorded by us that under the ICC Rules, it is the responsibility of the "Principal" to give or send specific and precise instructions to the Bank besides sending the "Commercial/Financial Documents", Commission was under a duty to decide as to whether the appellant had issued the letter containing the requirement of co-acceptance by the French Bank. The Commission could not legally avoid to decide this question particularly as the appellant had contended before the Commission that the letter No. 2776 of 26th August, 1991 was forged and fabricated by the respondent and that the only letter issued by the respondent was letter No. 2775 dated 26th August, 1991. (Para 19)
       We must say immediately that the circumstances, in the instant case, are glaring and the intrinsic evidence available on the record is clinching, so much so, that no other inference is possible except to hold that the letter No. 2776 of 26th August, 1991 was forged by the respondent in order to obtain a decree from the Commission for a huge amount of French Francs 4,10,000/-. (Para 42)
       (ii) Fraud And Forgery- Authorities, be they Constitutional, Statutory or Administrative possess power to recall their judgments or orders if they are obtained by fraud- Forgery-Meaning-Fraud is essential ingredient of forgery-Inherent powers of Court to recall its judgment if obtained by fraud on Court. (Paras 20, 22, 23, 25, to 32)

JUDGMENT

S. Saghir Ahmad, J.-These are two appeals against the judgments of the National Consumer Disputes Redressal Commission, New Delhi.

2. The facts on record indicate that the respondent had entered into Contract No. 31/89 with a French Firm M/s. STE Kolori (for short, Buyer ) for supply of 1 lac metres of cotton grey sheeting of the value of French Franc 4,37,500/-. In due course, the goods were shipped to the Buyer and on 09.06.90, respondent drew two Bills of Exchange on the Buyer for French Franc 3,50,000/- and French Franc 87,500/-. The draft mentioned at the top that the Bills of Exchange had to be co-accepted by the Buyer s bank. These documents were sent by the appellant to that Bank on 18.6.90 as requested by the respondent but on 9.7.90, the documents were returned unpaid. However, on the instructions of the respondent, the documents were re-presented to Banque Leumi, Paris on 13.7.90. On 9.4.91, on the instructions of the respondent, a telex was sent to Banque Leumi, Paris to transfer the documents to another French Bank, namely, Societe Lyonnaise De Banque. Lyon, France, and on the same day, fresh Bills of Exchange dated 6.3.91 were sent to the French Bank at the request of the respondent. In these Bills of Exchange, there was no clause for co-acceptance by the French Bank which, however, returned the documents unpaid on 9.8.91.

3. On 26th August, 1991, respondent forwarded a fresh set of Bills of Exchange for being sent to the French Bank. The Bills of Exchange, on their face, specifically provided for acceptance by the Buyer and co-acceptance by the French Bank.

4. It appears that the Buyer, namely, M/s STE Kolori went under liquidation and an order was passed by the Commercial Court at Lyon, France for winding up the firm. The Court also appointed a Liquidator who wrote to the respondent to file its claim.

5. On 1st January, 1992, Napean Sea Road Branch of the appellant at Bombay wrote a letter to the French Bank that payment of the Bills of Exchange forwarded to it earlier may be made. The French Bank wrote on 9.1.92 that the Bills of Exchange had not been paid as the Buyer was under liquidation. The Bank also, during course of correspondence, wrote that under French Law, co-acceptance by the Bank, was not permissible nor would it have given the Bank Guarantee, even it a request was made in that regard by the appellant for and on behalf of the respondent. It was, at this stage, that respondent gave a notice dated 26.3.92 to the appellant claiming the entire amounts of the Bills of Exchange and subsequently filed a complaint before the National Consumer Disputes Redressal Commission at New Delhi (for short, Commission ) claiming the value of the goods shipped to the Buyer at France, from the appellant. The Commission by its judgment and order dated 16.11.93 allowed the claim with the direction to the appellant to pay to the respondent French Francs 4,10,000/- with interest (in rupees) at the rate of 18 on the rupee equivalent of the above amount with effect from 31st December, 1989 together with a sum of Rs. 10,000/- as costs to the respondent. It was against this judgment that the claimant filed, in this Court, Civil Appeal No. 1737 of 1995. The connected Civil Appeal No. 1334 of 1995 has been filed against the judgment and order dated 13.12.94 by which the Commission has rejected the Review Petition filed by the appellant. Both the appeals were admitted by this Court on 20.2.95 and are being disposed of by this judgment.

6. It may be stated that the Commission, while decreeing the claim of the respondent, had relied upon the Uniform Rules for Collection made by the International Chamber of Commerce as also the covering letter of the respondent dated 26th August, 1991 accompanying the two Bills of Exchange, which, according to the Commission, on the face of it, indicated that co-acceptance of the French Bank had to be obtained and since the appellant, while forwarding the Bills of Exchange to the French Bank,

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1996 Supreme(SC) 1235

IMPORTANT POINTSince 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.

Cases Referred (7)

IMPORTANT POINT
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.