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2014 Supreme(Cal) 775
CALCUTTA HIGH COURT
NADIRA PATHERYA, J.
Prem Lal Jain – Appellant
Vs.
Chhabi Dey & Others – Respondents
G.A. No. 404 of 2009
Decided On : 24.12.2014
An award passed in respect of a property that has vested in the State under the Urban Land Ceiling Act, 1976, without obtaining the necessary clearances, is a nullity and in-executable, and seeking execution of such an award would amount to fraud on the Court.
Headnote:
ARBITRATION - AWARD - SETTING ASIDE - GROUNDS - FRAUD ON STATUTE AND COURT - EXECUTION PROCEEDINGS - SECTION 47 CPC - MAINTAINABILITY - APPLICABILITY OF SECTION 34 OF THE ARBITRATION AND CONCILIATION ACT, 1996.
Fact of the Case:
Application filed under Section 47 of the Code of Civil Procedure by two judgment debtors to set aside an award dated 29th July, 2005, on grounds of fraud and lack of authority of the predecessor-in-interest to sell the subject property due to proceedings under the Urban Land Ceiling Act, 1976.
Finding of the Court:
1. The award was passed during the lifetime of Kamala, the predecessor-in-interest of the applicants, and was accepted and acted upon by her. 2. The sale agreement between Kamala and the decree-holder was executed after the order vesting the property in the State of West Bengal under the Urban Land Ceiling Act, 1976. 3. The award attempted to deal with the property which had vested in the State and of which Kamala had been deprived. 4. The award, in the absence of clearance under the Urban Land Ceiling Act, 1976, is a nullity and in-executable. 5. Seeking execution of such an award would amount to fraud on the Court.
Issues: 1. Whether the award can be set aside on the grounds of fraud and lack of authority of the predecessor-in-interest to sell the subject property. 2. Whether the applicants, as legal heirs and representatives of Kamala, can challenge the award when Kamala herself did not take any steps to do so. 3. Whether the award is a nullity in view of the proceedings under the Urban Land Ceiling Act, 1976. 4. Whether the executing Court can go behind the decree and set it aside on the ground of fraud.
Ratio Decidendi: 1. Fraud nullifies all, and persons who played fraud ought not to be allowed to bear the fruit or benefit thereof. 2. An award passed in respect of a property that has vested in the State under the Urban Land Ceiling Act, 1976, without obtaining the necessary clearances, is a nullity and in-executable. 3. Seeking execution of such an award would amount to fraud on the Court. 4. The executing Court can go behind the decree and set it aside on the ground of fraud, even if no application under Section 34 of the Arbitration and Conciliation Act, 1996, has been filed.
Final Decision: The application under Section 47 of the Code of Civil Procedure is allowed, and the award dated 29th July, 2005, is set aside.
1. This is an application filed under Section 47 of the Code of Civil Procedure by two of the judgment debtors seeking to set aside the award dated 29th July, 2005.
2. The case of the applicants is that by a sale agreement dated 9th May, 2005 the predecessor-in-interest of the applicants agreed to sell the subject property to the decree-holder Prem Lal Jain. The parent agreement did not contain an Arbitration Clause and subsequently an arbitration agreement was entered into on 2nd July, 2005. On 5th July, 2005 a reference was filed by the applicant s predecessor-in-interest through her Constituted Attorney one Mr. Achintya Kumar Banga and as a counter statement was filed on 9th July, 2005 an award was passed on 29th July, 2005. The said award was confirmed by the applicant s predecessor-in-interest Kamala on 2nd August, 2005. The said award was thereafter in December, 2008 sought to be executed and the execution application was served on the applicant wherefrom the applicant came to know of the award dated 29th July, 2005.
3. The aforementioned was done in hot-haste and only after Kamala died on 10th September, 2005. The said documents are back-dated. A Will was executed by Kamala on 22nd May, 1995 and in 2006 PLA 50 of 2006 was filed for grant of Probate by the executors of the said Will. An interim application was also filed for grant of Letters of Administration and the Letters of Administration was granted in favour of Indira Mullick one of the daughters of Kamala. An order of injunction was also passed on 28th February, 2006. Two notices were put up by the Special Officer pursuant to order passed in PLA 50 of 2006 dated 12th July, 2006. In fact it has been disclosed by the decree-holder that an advance payment of Rs. 1 Lac was made in February, 2006 to the judgment-debtor No.3 and the letter of confirmation has also been signed by him. In the said letter of confirmation although the agreement of 9th May, 2005 finds mention but there is no mention of the award of July, 2005, therefore the award and the documents, namely, statement of claim and counter statement are nothing but back-dated documents. The Constituted Attorney of Kamala has also filed PLA 133 of 2006 wherein there is also no mention of the award on the contrary the Moore Avenue property which is the subject matter of the Sale Agreement has been included in the schedule of assets, therefore the decree is a nullity and by seeking to execute the same fraud is being perpetrated on Court. The issue of nullity can be raised in proceedings filed under Section 47 of the CPC and as fraud unravels all, therefore the decree is void. Fraud has been committed not only on Kamala but also her legal heirs and representatives. In fact the arbitration agreement, reference, award and acceptance have all occurred after the demise of Kamala. It is unbelievable that a party which suffers an award will confirm the same in writing. Therefore it is nothing but fraud committed which renders the decree void.
4. Reliance is placed on AIR 2007 SC 1546, 2010 (8) SCC 383 : (2010 AIR SCW 5281), 2001 (8) SCC 187 : (AIR 2001 SC 2849), 2002 (3) CHN 482 : (AIR 2004 (NOC) 175 (Cal)), 2003 (8) SCC 565, AIR 1996 Delhi 191 and AIR 2004 Cal 207.
5. The question of fraud can be raised and decided by the Executing Court as held in AIR 1977 SC 1201 and accordingly orders be passed as sought.
6. Opposing the said application counsel for the decree-holder submits that there is no challenge to the Agreement for Sale nor the authority of Achinta Kumar Banga. No case has been made out that the arbitration agreement was entered into after the death of Kamala. In fact the award of July, 2005 has been acted upon as the cheque was issued in August, 2005 and subsequent thereto Kamala died. The arbitration agreement has not been challenged in these proceedings though challenged before the City Civil Court.
7. In paragraph 11(e) of the application under Section 47 the arbitral proceedings has been challenged. Sect
