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IN THE HIGH COURT OF KARNATAKA(DHARWAD BENCH)
SURAJ GOVINDARAJ, J.
Smt. Renuka W/o Anand @ Anantsa Bakale – Appellant
Versus
Sri Ramanand S/o Ramkrishnasa Basawa – Respondent
Writ Petition No. 103766 of 2018 (GM-RES)
Decided on : 31-03-2022
FRAUD - Compromise Decree - Smt.Akkubai vs. Shri Venkatrao and Others [ILR 2014 KAR 2051] - The court discussed the fraudulent compromise entered into in a Lok-Adalat, highlighting the procedural irregularities and the need for proper verification of power of attorney and party identities. The court quashed the compromise decree and restored the case for fresh consideration.
Fact of the Case:
The petitioner sought to quash a compromise decree passed in a Lok-Adalat, alleging that the petitioner's interest in the suit property had been compromised without their knowledge by a person claiming to be their power of attorney holder.
Finding of the Court:
The court found that the compromise was entered into without proper authority and with procedural irregularities, leading to a fraudulent compromise decree. The court also highlighted the collusion between the power of attorney and the plaintiff, and the lack of notice and contestation by the petitioner.
Issues: The issues revolved around the validity of the compromise entered into by the power of attorney, the procedural irregularities in the Lok-Adalat process, and the lack of proper representation and contestation by the petitioner.
Ratio Decidendi: The court held that the compromise entered into before the Court and referred to Lok-Adalat was irregular and not in line with the Legal Services Authorities Act, 1987. The court emphasized the need for proper verification of identities and power of attorney, and the recording of compromise before the Court instead of Lok-Adalat.
Final Decision: The court allowed the petition, quashed the compromise decree, and restored the case for fresh consideration, leaving all issues open for further determination.
ORDER
1. The petitioner is before this Court seeking for the following relief:
2. The grievance of the petitioner is that a compromise petition was entered into in O.S. No.246/2014 pending on the file of the Principal Senior Civil Judge at Hubballi in the Lok-Adalat proceedings by a person claiming to be the power of attorney holder of the petitioner and as such the petitioner’s interest in the suit schedule property therein has been compromised without the knowledge of the petitioner and therefore a fraud has been committed on the petitioner by resorting to an abuse of the process of the Court and filing of a compromise petition in the Lok-Adalat.
3. Sri.Mahesh Wodeyar, learned counsel for the petitioner submits that the suit in O.S. No.246/2014 had been filed by respondent No.2 herein against the petitioner represented by the power of attorney holder seeking for specific performance of an alleged agreement of sale dated 25.04.2014 which is alleged to have been executed by the alleged power of attorney holder of the petitioner.
4. In the said suit upon notice being ordered without service of notice on the petitioner, respondent No.1 who claims to be the power of attorney holder of the petitioner had entered appearance and filed a compromise petition even before return of notice. The compromise petition having been filed before the Court, the matter was referred to the Lok-Adalat and in that Lok-Adalat a compromise was recorded by the conciliators and compromise decree was directed to be passed.
5. Sri.Mahesh Wodeyar submits that once earlier a power of attorney which had been issued in favour of the father of respondent No.1 as regards the said properties had been cancelled by a public notice dated 15.12.2012 published in the newspaper Sanjevani on 16th December, 2012.
6. The petitioner not having executed any power of attorney in favour of respondent No.1, the power of attorney claimed by respondent No.1 is fabricated one and as such neither the agreement of sale could be executed by respondent No.1 in favour of respondent No.2 nor could a compromise be entered into by the respondent No.1 with respondent No.2 for the Lok-Adalat to record. In the above background, he submits that the petition needs to be allowed and the compromise recorded by the Lok-Adalat be set aside as also the compromise decree drawn up in pursuance thereto.
7. Per contra, Sri.Padmanabha Mahale, learned Senior counsel appearing for the respondents would submit that respondent No.1 is the power of attorney holder of the petitioner and respondent No.1 has entered into a compromise with the knowledge and consent of the petitioner with respondent No.2. The compromise having been filed before the Court and the Court having forwarded the matter to the Lok-Adalat the compromise is one which is filed before the Court and as such the present petition is not maintainable since the trial Court having taken the compromise on record, only a suit challenging the compromise is maintainable.
8. He further submits that the alleged fabricated power of attorney has not been produced by the petitioner. Therefore the contention of the petitioner that there is fabrication of the power of attorney is not sustainable without production of such power of attorney. There is gross delay by the petitioner in challenging the compromise by filing of the above petition inasmuch as the compromise was entered into in the year 2014 and the present writ petition has been filed in the year 2018 and as such the petition is liable to be dismissed.
9. Further he submits that respondent No.2 has acted on the compromise and entered into further transaction which w
Proper verification of identities and power of attorney, and the recording of compromise before the Court instead of Lok-Adalat are essential to prevent fraudulent compromises.
Compromise decrees must be entered with proper representation and knowledge of all parties; if procured without consent, they are invalid.
Challenges to compromise decrees based on fraud must be made in the court that issued the decree, and such allegations require substantial proof.
A compromise decree passed by a Lok Adalat cannot be challenged on grounds of misrepresentation if official records affirm that the parties were read the terms in their known language and voluntarily....
Lok Adalat compromise decrees, though final under Section 21, can be set aside in writ jurisdiction if vitiated by fraud like non-service of summons and misrepresentation to illiterate disabled party....
(1) Compromise of suit – To recall a compromise that has been recorded would call for strong reasons. Terms of a compromise decree cannot be avoided, unless allegation of fraud has been proved.(2) Wh....
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