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2025 Supreme(Online)(Del) 46467

IN THE HIGH COURT OF DELHI AT NEW DELHI
Jyoti Singh, J
Narender Kumar Agarwal – Appellant
Versus
Pradeep Gupta – Respondent
CS(OS) 2495/2001

Advocates:
For the Appellants/Petitioners: Arvind Kumar Gupta, Abhiesumat Gupta, Ishan Parashar, Arun Bhattacharya
For the Respondents: Darpan Wadhwa, Amer Vaid, Divita Vyas, B.S. Mathur, Rajat Mathur, Pranjal Tripathi, Areen Gulati

A consent decree can be recalled by the court that passed it if the decree was obtained through fraud, coercion, or misrepresentation, as fraud vitiates all judicial acts and the court has an inherent duty to ensure the integrity and honesty of its proceedings.

Headnote:(A) Civil Procedure Code, 1908 - Order 23, Rule 3 - Consent decree - Recall application - Fraud - When a compromise decree is obtained by fraud, the court which passed the decree has the inherent jurisdiction to recall the same upon being satisfied that the agreement was not lawful and was vitiated by deception. (Para 14, 38, 40)

(B) Professional Ethics and Trust - Role of legal counsel - Advocates are officers of the court and are bound by a duty to maintain the integrity of judicial proceedings. Where it is established that counsel engaged in creating fraudulent documents and siphoning settlement funds without client authorization, such actions render the decree a nullity. (Para 10, 39)

(C) Evidence - Expert opinions and Circumstantial Evidence - In cases where signatures are contested, the court must consider not only forensic reports but also the surrounding circumstances, such as the creation of fictitious financial accounts and the fabrication of notary stamps, to determine if a fraud was perpetrated on the court. (Para 27, 34, 35)

Facts of the case:
A suit for partition and declaration was instituted. During pendency, an application for recording a compromise was filed, leading to a decree. Subsequently, an application for recall was moved alleging that the parties never entered into the settlement, that signatures on the settlement documents and power of attorney were forged, and that legal representatives, in collusion with others, siphoned settlement amounts into fictitious bank accounts.

Findings of Court:
The court observed that investigations revealed a well-orchestrated conspiracy involving the creation of fake bank accounts and the use of forged notary certifications. The financial instruments issued pursuant to the compromise were misappropriated, confirming that the consent decree was obtained through deception and fraud. The court emphasized its duty to protect the majesty and honor of judicial process.

Issues: Whether a consent decree can be recalled by the court that passed it when it is alleged that the decree was obtained through fraud, forgery, and lack of valid consent by the litigants.

Ratio Decidendi: Fraud vitiates every solemn act, and a court is obligated to ensure its proceedings remain untainted by deception. Where material evidence establishes that an agreement was not voluntary or lawful due to fraudulent orchestration, the court possesses the inherent power to set aside the resultant decree to prevent a miscarriage of justice.

Result: Application allowed; judgment and decree recalled; suit restored to its original status.

Table of Content
1. establishing the factual matrix and cause of action in the partition suit. (Para 1 , 2 , 3 , 4)
2. defendant contentions and the filing of a compromise decree under order xxiii rule 3 cpc. (Para 5 , 6 , 7)
3. procedural history, initiation of police investigation, and restoration of the application. (Para 8 , 9 , 10)
4. arguments regarding the vitiation of consent decree due to fraudulent acts. (Para 11 , 12 , 13 , 14)
5. arguments regarding the validity of a compromise decree and evidentiary burden of proof. (Para 15 , 16 , 17 , 18 , 19 , 20 , 21)
6. court's re-examination of the terms of settlement and evidence gathered. (Para 22 , 23 , 24 , 25 , 26)
7. evidence of organized fraud and forgery committed by legal representatives. (Para 27 , 28 , 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37)
8. the principle that fraud vitiates all judicial proceedings and allows recalling a consent decree. (Para 38 , 39)
9. final order granting the recall of the decree and restoration of the suit. (Para 40 , 41 , 42)

JUDGEMENT

JYOTI SINGH, J.

I.A. 507/2007

1. This application is filed on behalf of Applicant/Plaintiff No.5 Sh. Sushil Gupta for recall of judgment and decree dated 19.09.2006 passed on an application under Order XXIII Rule 3 CPC being I.A. No.10515/2006, purportedly jointly filed by Plaintiffs and Defendant No.1.

2. To the extent necessary, the facts are that Plaintiffs No. 1 to 5 and Defendants No. 3 and 4 are sons of late Sh. Radhey Lal Gupta. Defendants No. 5 to 7 are daughters and Defendants No. 1 and 2 are sons of Defendant No. 3. Plaintiffs No. 1 to 5 filed suit for partition, rendition of accounts and declaration qua two properties viz., (i) 188, Katra Beriyan, Fatehpuri, Delhi (‘Fatehpuri property’); and (ii) AG-63, Sanjay Gandhi Transport Nagar (‘Transport Nagar property’) through Sh. Sharad K. Agrawal and Sh. Atul Gupta, Advocates. Sh. Atul Gupta is the son of Sh. Mahesh Kumar Gupta, Plaintiff No. 4. Applicant herein, Sushil Gupta instituted the plaint and signed and verified the pleadings on his behalf and as authorized representative of Plaintiffs No. 1 to 4.

3. Summons were issued in the suit on 06.12.2001 and Court directed Defendants No. 1 to 4 not to create third party rights in the suit properties. As per the plaint, estate of Radhey Lal included Fatehpuri property measuring around 200 sq. yards in the name and style of HUF M/s Anant Ram Radhey Lal Transport Company, operating a transport company. Radhey Lal executed a registered Will whereby Fatehpuri property, which was let out to the Partnership Firm, was to devolve on the 8 sons to the exclusion of the daughters and if any son desired to surrender his tenancy, he could do so only in favour of the other brothers.

4. It was pleaded in the plaint that Radhey Lal expired on 20.06.1974. On 03.12.2001, Plaintiffs entered into a family settlement, as per which 50% of the total 71% share of the parties came to the Applicant and out of the remaining 21%, share to the extent of 20% was distributed equally among Plaintiffs No. 1 to 4 and the remaining 1% was kept towards expenses incurred for executing the family settlement. As per the Plaintiffs, Transport Nagar property measuring 200 sq. yards was purchased by the sons of Radhey Lal from their own resources. Apprehending that Defendants would create third party rights in the two properties, present suit was filed.

5. Defendant No. 1 filed a written statement contesting the suit and claiming that no HUF was in existence at any stage as none was created either by Radhey Lal or his father Anant Ram. The plaint did not disclose the essential ingredients of existence of an HUF and is devoid of any cause of action in favour of the Plaintiffs, since no particulars were given as to who created the HUF or the date of its creation and/or who were the coparceners as also which were the properties acquired by HUF. The suit was wholly frivolous and filed at the behest of Atul Gupta, Advocate who is the son of Plaintiff No.

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2025 Supreme(Online)(Del) 46467

IN THE HIGH COURT OF DELHI AT NEW DELHIJyoti Singh, JNarender Kumar Agarwal – AppellantVersusPradeep Gupta – RespondentCS(OS) 2495/2001

A consent decree can be recalled by the court that passed it if the decree was obtained through fraud, coercion, or misrepresentation, as fraud vitiates all judicial acts and the court has an inherent duty to ensure the integrity and honesty of its proceedings.

Cases Referred (3)

IN THE HIGH COURT OF DELHI AT NEW DELHI
Jyoti Singh, J
Narender Kumar Agarwal – Appellant
Versus
Pradeep Gupta – Respondent
CS(OS) 2495/2001