Fraud vitiates everything, and a decree obtained by fraud is non-est in the eye of the law. The court emphasized that the plaintiff and its partners engaged in sharp practices, misrepresented facts, and committed fraud on the Court.

JUDGMENT :

G.S. Patel, J.

1. The appeal is directed against an order dated 2nd June 2020 of a learned Single Judge (N.J. Jamadar, J.) made on a Notice of Motion filed by Shri Sankalp Co-operative Housing Society Limited (“the Society”), the sole Defendant to the Suit, supported by 14 Respondents, all claiming membership of the Society. The Motion, filed in 1999, sought an order setting aside a consent decree passed by this Court on 19th April 1993 and amendments to the Consent Decree allowed by orders dated 28th September, 1993, 20th February 1996, 19th December 1996 and 17th February 1999. The Motion also sought to have set aside a conveyance of the Society’s property purportedly executed in favour of the Plaintiff. By the impugned order, the learned single Judge allowed the Notice of Motion and set aside the consent decree. He returned a finding of fraud.

2. The dispute began with a works contract that the Society entrusted to the Plaintiff, Time Field Corporation, a partnership firm of contractors and developers/builders. Time Field Corporation claimed that it was owed amounts under the works contract by the Society. The Society was registered in 1968. For the purposes of repairs and possible redevelopment of its property at Plot No.23/B/2, Subhash Road, Vile Parle (East), Mumbai, the Society entered into an agreement dated 20th April 1975 with Time Field Corporation. The agreement was a works contract for a lump-sum consideration of Rs.2,68,000/-. There was a supplementary agreement of the same date allowing Time Field Corporation to construct on the 4th floor at the cost of Rs.60/- per sq ft. Time Field Corporation had the right to sell the 4th floor units with the Society’s consent. The works contract said that the work was to be completed within three months. It remained incomplete. Disputes arose. A further agreement was executed on 30th April 1976. By this, Time Field Corporation and the Society agreed that the remaining work would be done by Time Field. The Society agreed that it owed Time Field Corporation Rs.40,000/- and that the Time Field Corporation would have the right to sell the 4th floor flats. If the Society defaulted in payment of Rs.40,000/-, there was to be a charge on the property of the Society (evidently to the extent of that claim). Time Field Corporation claimed that it did the necessary work. It got its bills certified by one Chemburkar, the then Architect of the Defendant Society. Time Field Corporation said that the Society did not pay its bills, in the amount of Rs.1,73,350/-.

3. This is the cause for institution of the Short Cause Suit No. 469 of 1978 by Time Field Corporation. It sought inter alia a declaration that there existed a charge on the Society’s premises in the amount of Rs.1,87,998.50 (the unpaid bill plus interest); that Time Field Corporation was entitled to sell the 4th floor flats; and that the Society was bound to accept such third party flat purchasers as its members. There was also a prayer for a money decree for Rs.1,87,998.50 with further interest. This plaint was verified by one Padma Yashwant Jawale (“Padma”) in her capacity as a partner of Time Field Corporation.

4. The suit did not go uncontested. The Society entered a written statement on 10th January 1979. It said that Time Field Corporation’s claim was false and exaggerated. On the contrary, the Society claimed a recovery of Rs.40,206/-, said to have been paid in excess.

5. In parallel, according to Time Field Corporation, members of the Society executed what is said to be an irrevocable power of attorney in favour of Yashwant Y. Jawale and DW Ayre on 8th October 1984. Yashwant Jawale (“Yashwant”) was Padma’s husband. She affirmed the plaint. That power of attorney apparently permitted Time Field Corporation to inter alia sell and transfer the flats allotted to the members who had given Yashwant and Ayre that power of attorney. The power of attorney is also said to have empowered Yashwant and Ayre to represent the Society