A.V. Papayya Sastry & Ors v. Government of A.P. & Ors (2007) - CLAT PDF Download

Introduction

In this case, the court emphasized that courts of law exist to administer justice between parties, and any party approaching the court must do so with clean hands.

Facts

• The appellant owned 18 acres and 39 cents of land in Village Kancharapalem, District Visakhapatnam. The Visakhapatnam Port Trust (Port Trust) sought to acquire the land for public use, specifically for constructing quarters for its employees. The Chairman of the Port Trust sent a requisition to the District Collector for the acquisition of the land. 
• The Estate Manager of the Port Trust took advance possession of the land through private negotiations. Subsequently, the Port Trust requested the state authority to initiate proceedings for land acquisition under the Land Acquisition Act, 1894. The land acquisition was approved by both the Port Trust and the Government of India.
• On 17th February 1976, the Ceiling Act came into force in the state of Andhra Pradesh, covering the Visakhapatnam Urban Agglomeration. The appellants contended that since the land was already in the possession of the Port Trust before the Act came into effect, the provisions of the Ceiling Act should not apply. The Special Officer and Competent Authority, Urban Land Ceiling declared the landowners as 'non-surplus land holders'.
• In response to a query by the Land Acquisition Officer, the Chief Engineer of Port Trust clarified that actual physical possession of the land had not been taken, as the tenant did not vacate the land. The landowners filed a writ petition before the High Court, requesting it to direct the state authorities to complete proceedings under the Land Acquisition Act and pass an award. The High Court instructed the authorities to finalize the proceedings and pass the award within three months.
• Subsequently, a recall application was filed by the state authorities, claiming that fraud had been committed by the landowners, who had suppressed material facts. They argued that the landowners had not actually handed over possession of the land to the Port Trust. The High Court allowed the recall petition, set aside the earlier judgment, and concluded that fraud had occurred. The appellants then challenged the High Court's decision in the Supreme Court.

Issues Involved

• The main issue was whether a judgment or order obtained through fraudulent means or suppression of material facts is binding or not.

Observations

• The Supreme Court reiterated that a judgment, decree, or order obtained through fraud on the court is a nullity and has no legal standing. The Court emphasized that the principle of finality in litigation should not be used as a tool for oppression by dishonest litigants. The Indian judiciary has inherent powers under Section 151 of the Code of Civil Procedure, 1908 (CPC) to recall judgments or orders if they are obtained by fraud. A litigant is obligated to produce all relevant documents in a case, and withholding a vital document to gain an unfair advantage constitutes fraud.
• The Court noted that if fraud is evident and criminal proceedings are initiated, and the High Court recalls an order to pass an appropriate decision, it cannot be considered a miscarriage of justice that warrants interference by the Supreme Court under Article 136 of the Constitution of India, 1950. The Supreme Court declined to intervene in this case.
• The Supreme Court quoted Chief Justice Edward Coke: "Fraud avoids all judicial acts, ecclesiastical or temporal." This means that a judgment or order based on fraud, regardless of whether it is from the first court or the final court, must be treated as a nullity by all courts, whether superior or inferior. Such judgments can be challenged at any time, in any court, through appeal, revision, writ, or even in collateral proceedings.

Conclusion

Fraud is considered an extrinsic collateral act that invalidates all judicial acts, whether they are in rem (against a thing) or in personam (against a person).