Holding

The decree obtained by fraud is a nullity, the Municipality is not a necessary party under Order XXI Rule 92, and the respondents must pay the tax amount while the appeal is dismissed.

Summary

The vendor (RV) sold a municipal property to Sakunthala without notifying the Coimbatore Municipality, which continued to claim property tax arrears. The Municipality sued RV, obtained a decree, and the property was later auctioned; RV's wife bought it and subsequently sold it to a third party, who sold it to the appellants. The appellants challenged the decree on the ground that the Municipality, as a statutory charge holder, was a necessary party under Order XXI Rule 92 and that the decree was obtained by fraud. The Supreme Court held that the Municipality was not a necessary party, that a decree obtained by fraud is a nullity, and that the appellants could not claim any benefit from the fraudulent proceedings. Accordingly, the respondents were ordered to pay the outstanding tax amount as redemption, and the appeal was dismissed. The Court exercised its equity jurisdiction under Article 142 to ensure justice for the victim of fraud.

Issues considered

Whether the Municipality is a necessary party under Order XXI Rule 92(4) in a suit challenging an auction sale.
Whether a decree obtained by fraud is a nullity and its consequences on subsequent proceedings.
The effect of non-impleadment of a necessary party on the validity of the decree.
Liability for payment of property tax under the Tamil Nadu District Municipalities Act when the sale is not notified.
Whether purchasers pendente lite are bound by a decree obtained through fraud.
Whether the respondents should be directed to pay the tax amount as redemption.

Legislation cited

Code of Civil Procedure, 1908s. Order XXI Rule 66, s. Order XXI Rule 92(4), s. Order XXI Rule 92(5), s. Order XXXIV Rule 1, s. Order XXXIV Rule 15
Constitution of Indias. Article 136, s. Article 142
Transfer of Property Act, 1882s. 100, s. 52, s. 55(1)(g)

Subjects

property taxstatutory chargefraudnecessary partyimpleadmentOrder XXI Rule 92decree nullityequity jurisdictionArticle 142Transfer of Property ActTamil Nadu District Municipalities Actauction salesuppression of evidence

Judgment

A . T. VIJENDRADAS AND ANR.
v.
M. SUBRAMANIAN AND ORS.

OCTOBER 9, 2007
B
[S.B. SINHA AND H.S. BEDI, JJ.]

Coqe ofCivil Procedure, 1908~.34 & 021,r.92,-fendor:Jiable ...
to pay property tax arrears .to ¥1!;nicipa/ity-fioldproperty to
C Respondent without intimating Municipality-Name o.fRespondent not
recorded in mutation register-Municipality filed suit for recovery of
taxes-Vendor did not intimate factum o.fsale to Court-Municipality
obtained decree-Propaty put in auction which was purchased by wife
of vendor-Suit for declaration and possession filed by vendee-
D respondent alleging commission of.fraud by vendor-Meanwhile wife
of vendor sold property to third party who ultimately sold it to
Appellants-Suit filed by vendee decreed-Challenge to decree by
Appellants on ground that vendee did not implead Municipality inspite
of it being a necessary party-Tenability of-Held: Not tenable-
E Municipality was not a necessary party under Order 21, r.92-
Appellants purchased property pendente lite inspite ofnotice ofsale
made by vendor in favour of Respondent-They are also guilty of
suppressio veri-Respondent was victim of.fraud-Directions issued
by Supreme Court in exercise of its equity jurisdiction under Art. 142
F ofthe Constitution-Appellants otherwise entitled to file suit against
wife of vendor-Constitution of India, 1950-Article 142-Equity.
Tamil Nadu District Municipalities Act, 1920--Ss.85 and 88-
Liability to pay property tax-Held: Is on vendor upto date ofsale-
Liability of vendee arises only from date of sale-However if no
G mutation has taken place in name of vendee, liability of vendor shall
continue-Transfer ofProperty Act, 1882--S. 55(J)(g).
Decree-Decree obtained by practicing fraud on Court-Held:
Is nullity-Once it is held that by reason ofcommission of.fraud, decree
H . 880
~{
' T. VIJENDRADAS v. M. SUBRAMANIAN 881

is void then it is inequitable to·confer benefit on party who is beneficiary A
--f
thereunder.
'RV' owned property situated within the Coimbatore Municipal
Corporation (the Municipality). He sold the property to 'S', the
mother of Respondent Nos.1 and 2, but did not intimate the factum
of sale to the Municipality. 'RV' was liable to pay certain property B
tax arrears in terms of the Tamil Na du District Municipalities Act,
1920. \Vith a view to enforce statutory charge as laid down in the
1920 Act, the Municipality filed suit against 'RV'. 'RV' did not inform
the Court that he had already sold the property in favour of 'S'. The
suit was decreed. In execution proceedings, the property was put in C
auction. The wife of 'RV' purchased the property. 'S' filed suit for
declaration and possession alleging commission of fraud by 'RV'.
Meanwhile wife of 'RV' sold the property to a third party who
ultimately sold it to Appellants. The suit filed by 'S' was decreed.
The First and Second appeal thereagainst were dismissed. D
In appeal to this Court, it was contended by the Appellants that
in view of the mandatory provisions contained in sub-rule (4) of Rule
92 of Order XXI CPC, Municipality was a necessary party in the
suit filed by 'S' and in its absence the judgment passed by the Courts E
below are nullities.
Disposing the appeals, the Court
>\ HELD:l.1. Section SS(l)(g) of the Transfer of Property Act,
1882 envisages payment of taxes in respect of the property by the F
vendor up to the date of sale. The liability of the vendee to pay the
property tax arises only from the date of sale. However, Sections
85 and 88 of the Tamil Na du District Municipalities Act provide that
in the event, the factum of sale is not communicated, the liability of
the vendor shall continue. Consequently a statutory charge is created G
--r- on the property. A person having an interest in the property,
therefore, might have a right ofredemption. A suit for realisation of
the dues in respect of a property in respect whereof a statutory
charge is created, a suit could also be filed by the Municipality, apart
from taking recourse to the procedure provided for realisation of the H
.\~
882 SUPREME COURT REPORTS [2007] 10 S.C.R. \

A said dues as land revenue. [Para 12] [892-G-H; 893-A-B]
1.2. The decree obtained by the Municipality had been passed
under Order XXXIV CPC. A decree passed in terms of Order
XXXIV, Rule 1 CPC is somewhat different from a decree passed in
an ordinary money suit. lfin terms of the provisions of the statute,
B plaintiffs-respondents are found liable to pay the property tax, at
an appropriate stage, they can redeem the charge.
[Paras 13 and 24] [900-E-F; 893-B-C)
2. The contention that in effect and substance the plaint
C contained allegation of fraud on Municipality cannot be accepted.
The pleadings must be read in their entirety for the purpose of proper
construction thereof. What had been alleged in the plaint is the
commission of fraud by 'RV'. His conduct throughout the proceedings
has been taken into consideration by the courts below; viz., despite
D transferring the property he did not intimate thereabout to the
Municipality. Even when the suit was filed, he did not make any
attempt to raise a plea which was expected of any reasonable and
prudent man that he ceased to be liable to pay the property tax as
he had already transferred the property. The purported intimation
E given to the plaintiffs was also found to be an act of fraud on his part
inasmuch as the purported notice to the plaintiff had deliberately
been llent at a wrong address. The contents of the notice had also
not been brought on record. Despite having sufficient means he
voluntarily suffered an ex parte decree. He never objected to ,,,-1
F reduction of upset price. He despite the fact did not contest the suit,
participated in the auction sale and purchased the property in the
name of his wife. Not only that the auction purchaser sold the
property to a third party, who again despite the knowledge of
pendency of the suit transferred the property in favour of the
G appellants. [Para 14] [893-F-H; 894-A-B]
S.P. Chengalvaraya Naidu (Dead) by Lrs. v. Jagannath (Dead)
by L.Rs. and Ors., [1994] 1SCC1; Ram Chandra Singh v. Savitri Devi,
[2003] 8 SCC 319; Tulsi and Ors. v. Chandrika Prasad and Ors.,
[2006] 8 SCC 322 and A. V Papayya Sas try and Ors. v. Govt. ofA. P.
H and Ors., [2007] 4 sec 221, relied on.
.•
-),. T. VIJENDRADAS v. M. SUBRAMANIAN 883

3.1. The purpose of impleadment of a necessary party is to see A
as to whether without it an order can be made effectively. If an
effective order can be made, the suit will not be defeated. A decree
passed in terms of Order XXI, Rule 92(4) does not take into
consideration the effect of a statutory charge on a property, vis-a-
vis the statutory right of any persons having interest in the property B
to redeem or sell the same at any point of time. When a fraud is
practised on a court, the same is rendered a nullity. In a case of nullity,
even the principles of natural justice are not required to be complied
with. [Para 21] [899-C-D]

3.2. Once it is held that by reason of commission of fraud, a C
decree is rendered to be void rendering all subsequent proceedings
taken pursuant thereto also nullity, it would be wholly inequitable to
confer a benefit on a party, who is a beneficiary thereunder.
[Para 22] [899-E-F] D
Udit Narain Singh Malpaharia v. Additional Member, Board of
Revenue, Bihar, [1963] Supp. 1 SCR 676 and Profulla Chrone Requitte
and Ors. v. Satya Chorone Requitte, [1979] 3 SCC 409, distinguished.
Kendriya Vidyalaya Sangathan and Ors. v.Ajay Kumar Das and
Ors., [2002] 4 SCC 503 and A. Umarani v. Registrar, Cooperative E
Societies and Ors., [2004) 7 SCC 112, relied on.
Chandra Singh v. State ofRajasthan & Anr., [2003) 6 SCC 545
and Oriental Insurance Co. Ltd v. Brij Mohan & Ors., (2007) 7 SCALE
753, referred to. F

4.1. Appellants as also their predecessor purchased the property
pendente lite. They would be deemed to have notice of the sale made
by 'RV' in favour of the plaintiff-respondents. Section 3 of the
Transfer of Property Act provides that a person is said to have notice
of the fact when he actually knows that fact, where any transaction G
relating to immovable property is required by law to be and has been
effected by a registered instrument. They have purchased the
property with notice, apart from the fact that the transfer made in
their favour was hit by Section 52 of the Transfer of Property Act.
H
884 SUPREME COURT REPORTS [2007] 10 S.C.R. ~

A The decree obtained by the Municipality had been passed under ·
Order XXXIV CPC. Respondents had a subsisting right of
redemption. Order .X:XXIV, Rule 15 CPC provides that all the
provisions contained therein shall, as far as may be, apply to a
mortgage by deposit of title-deeds within the meaning of Section 58,
B and to a charge within the meaning of Section 100 of the Transfer of
Property Act. The charge created under Section 85 of the 1920 Act
would be one covered by Section 100 of the Transfer of Property
Act. [Para 24] [900-D-G]

C 4.2. Appellants and their predecessors are also guilty of
suppressio veri. Ordinarily a statute shall prevail over the common
law principle. However, in a case of thi~ nature, in the event of any
conflicting interest, this Court in exercise of its equity jurisdiction
under Article 142 of the Constitution oflndia is to weigh the effect
D of a fraud and the consequence ofnon-impleadmentofa necessary
party. The scale of justice weighs in favour of the person who is a
victim of fraud and, thus, relief in his favour cannot be refused, only
because he might have been wrongly advised. The purport and object
for which Order XXI, Rule 92(5) was enacted furthermore would be
better subserved if it is directed that the respondents shall pay the
E amount which the Court paid to the Municipality out of the amount
of auction. [Para 27] [903-D-E]
4.3. One of the objects sought to be achieved in amending Order
XXI, Rule 92 was to do complete justice to the parties so as to enable
F the auction purchaser to get back the amount from the decree-holder
and revive the execution proceedings so that the decree-holder may
proceed against the judgment-debtor for realisation of the decretal
amount. The plaintiffs-respondents had not claimed any relief
against the Municipality. The Municipality's right to realise the
G amount of property tax together with interest, if any, is not in dispute.
Although the liability of 'RV' in terms of the 1920 Act to pay the
property tax continued, the plaintiffs-respondents were also liable
to pay the amount of property tax afterthe date of sale. In a case of
this nature, therefore, the plaintiffs-respondents can be directed to
H pay the amount of property tax by way of redemption of mortgage
-l
T. VIJENDRADAS v. M. SUBRAMANIAN [SINHA, J.] 885

in favour of the Municipalicy. [Para 28) (903-F-H; 904-A] A
4.4. If any amount is available with the court out of the amount
received from the auction sale, the same may be paid to the
appellants. Appellants would also be otherwise entitled to file an
appropriate suit as against the wife of 'RV' and others. Therefore, B
subject to the terms aforementioned, the appellants should not be
granted any relief. The plaintiffs-respondents are therefore directed
Y to deposit the amount paid to the Municipality out of the auction
amount by the order of the executing court within six months from
date and on such payment, the appeal shall stand dismissed.
[Paras 29, 30 and 31) (904-B, C, D) C

Lachhman Dass v. Jagat Ram and Ors., (2007) 3 SCALE 349,
relied on.

Mangru Mahto and Ors. v. Shri Thakur Taraknathji Tarakeshwar
Math & Ors., [1967) 3SCR125, referred to. D
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4727 of
2007.
From the Judgment and final Order dated 05.04.2006 of the High
Court of Judicature at Madras in Second Appeal No. 911 of 1999. E
K.V. Viswanathan, K.V. Venkataramani, B. Raghunath and R.
.\ Nedumaran for the Appellants.
K. Parasaran, V. Mahana, Hari Priya and Anirudh Sharma for the
Respondents. F
The Judgment of the Court was delivered by
S.B. SINHA, J. 1. Leave granted.

1" 2. A short but interesting question in regard to interpretation of Order G
XXI, Rule 92(4) of the Code of Civil Procedure, 1908 (for short, 'CPC;)
is involved in this appeal.
Facts:
3. R. Venugopal (since deceased), original defendant No.3, was the H
/-~--
886 SUPREME COURT REPORTS [2007] 10 S.C.R. "

A owner of the suit property consisting of 8 cents and 116 sq. ft. of land Y-
situated within the Coimbatore Municipal Corporation (for short, 'the
Municipality;). He transferred his right, title and interest therein by reason
of a registered deed of sale in favour of one Sakunthala, the original plaintiff
no. 1 in the suit and mother of Respondent Nos. 1 and 2 herein. It is,
B however, not in dispute that the factum of sale was not intimated to the
authorities of the Municipality either by the vendor or by the vendee
thereof. The vendee' s name was not mutated in the records of the
Municipality. Indisputably, property tax in respect of premises in question "'-1:
had not been paid for the period from 01.04.1970 to 31.03.1973. The
c property tax for two quarters, thus, was to be paid by Venugopal whereas
the rest was to be paid by the vendee. The matter relating to payment of
property tax is governed by the Tamil Nadu District Municipalities Act
(Tamil Nadu Act V of 1920) (for the sake of brevity, hereinafter called
and referred to as 'the 1920 Act').
D 4. With a view to enforce a statutory charge as laid down in the ~
1920 Act, the Municipality filed a suit, which was marked as O.S. No. r

986 of 1973. Sakunthala was not a party therein. Venugopal although
entered his appearance in the suit but at the subsequent stages, did not
appear. Yet again he did not inform the court about the fact that he had
E sold the property in favour of Sakunthala. He allegedly sent an information
to Sakunthala in regard thereto, but admittedly, the latter was sent at a
wrong address.
-..(
The said suit was decreed in 1978. The Municipality filed an /
F application for execution of the said decree, which was marked as E.P.
No. 2620 of 1978. The property in question was put up on auction sale,
the upset price wherefor was fixed at Rs.20,000/- by an order dated
l 9.03.1979. However, as allegedly no buyer was available, an application
for reduction of upset price was filed being E.A. No. 284of1979 for
G bringing it down from Rs.20,000/- to Rs. 5,000/-. It was, however, --y
directed to be reduced to Rs. 10,000/-, but therefor no notice was issued
to the judgment debtor, as is required in terms of Order XXI, Rule 66
CPC. Yet again without any other order being passed for further reduction
of the upset price, the suit property was sold on auction for a sum of
Rs.8,010/- in favour of one Manickam, original defendant no. 1, on
H
T. VIJENDRADAS v. M. SUBRAMANIAN [SINHA, J.] 887

___,, A
06.08.1979.
5. It will be appropriate to place on record that although at one point
of time there existed a dispute as to whether the said Manickam was the
wife of Venugopal or not, it stands accepted that a relationship of husband
and wife had been existing by and between them. The said auction sale B
was not only confirmed by an order dated 11.10.1979, but a sale
certificate was also issued on or about 04.12.1979. An application for
r' withdrawal of the said auction amount was filed by the Municipality, which
had been allowed and a cheque was directed to be issued in its favour.
)"'he said order was complied with on 20.02.1981. c
6. Manickam allegedly sold the said property in favour of one Mis
Ramans for a sum of Rs.41, 0661- by a registered deed of sale dated
22.08.1981. Having learnt that the property in question had been sold in
auction, Sakunthala filed a suit for declaration and possession, against her
D
)
vendor, his mother and wife on or about 27.08.1981. The plaintiff then
-1 allegedly had no knowledge in regard to the sale of the said property in
favour of one Mis Ramans. In her written statement, defendant no. 1
denied that she was the wife of the judgment-debtor and disclosed that
she had sold the property during the pendency of the said suit. Mis
Ramans despite knowledge of the pendency of the suit sold the said E
property in favour of the appellants herein. Mis Ramans and the appellants
herein thereafter on an application made in that behalf were imp leaded
as defendants in the said suit. Indisputably, in their written statement, the
~\ appellants raised a plea that the Municipality was a necessary party. The
said suit was decreed by a judgment and decree dated 19 .12.1996. An F
appeal thereagainst preferred by the appellants has been dismissed by a
judgment and order dated 12.01.1999. A Second Appeal preferred by
the appellants has also been dismissed.

.
Submissions : G
7. The principal contentions raised in this appeal by Mr. K.V.
Viswanathan, learned counsel for the appellants are :
6) In view of the mandatory provisions contained in sub-rule (4)
of Rule 92 of Order XXI CPC, the decree-holder was a H
888 SUPREME COURT REPORTS [2007] 10 S.C.R. -~
A necessary party and in its absence the judgment and decree
passed by the courts below are nullities.
r
(ii) In terms of Order I, Rule 9 CPC, noh-impleadment of a
necessary party would render a suit not maintainable.

B (lii) Sakunthala having questioned the title of Venugopal as on the
date ofholding of the auction, in terms of the aforementioned
provision, she was bound to implead the Municipality as a
party defendant in the suit.
(iv) The.'finding of coinmission of fraud as alleged by the plaintiff
c either on the part of the Municipality' of oh the· part of the
appellants and his predecessors, would not render the auction
sale void.
(v) Had the Municipality been impleaded as a party, it could have
shown that no fraud had been committed on the court in the
D matter of holding of the auction.
~
t-
(vi) The plaintiff having not examined herself, and only an auditor
having been examined on her behalf, an adverse inference
should have been drawn in that regard by the courts below.
E 8. Mr. K. Parasaran, learned Senior Counsel appearing on behalf
of the respondents, on the other hand, would submit :
(l) A specific plea of fraud having been raised on the part of the
auction purchaser, who was wife of the judgment-debtor and :~
/
the defendant in the suit, and a finding of fact in that behalf
F
having been arrived at by the trial court as also by the appellate
court, the Municipality cannot be said to be a necessary party.
(ri) The plaintiffs-respondents had rightly been held to have not
raised any contention in regard to commission of fraud on the
G part of the Municipality, as has been held by the learned Trial
Judge as also the Appellate Court, it was not a necessary l
party to the suit.
(rii) The suit as framed did not attract the provisions of Order XXI,
Rule 92 CPC, as a decree passed in favour of the judgment-
H
r

--1 I T. VIJENDRADAS v. M. SUBRAMANIAN [SINHA,J.] 889

debtor Venugopal was a mortgage decree, as contemplated A
under Order XXXIV, Rule I CPC vis-a-vis the Transfer of
Property Act,
(iv) Order XXI, Rule 92, in any event, must be given a contextual
meaning.
B
(v) The principle of caveat emptor will be applicable in this case.
(vi) Appellants being purchasers pendent lite are bound by the
decree passed by the learned Trial Judge.
(vii) The position of the judgment-debtor 'Venugopal' being that
of a trustee, as envisaged under Section 88 of the Indian Trusts
c
Act, 1882 it was obligatory on his part to protect the interest
of Sakunthala
Statutory Provisions :
) 9. Sections 85 and 88 of the 1920 Act, which are relevant for the D
~ purpose of adjudication of this case, read as under:
"85. Property tax a first charge on property. - The property
tax on buildings and lands shall, subject to the prior payment of
land revenue, if any, due to the Government thereon, be a first E
charge upon the said_ buildings or lands and upon the movable
property, if any, found within or upon the same and belonging to
the person liable to such tax."
,)-\
"88. Obligation of transferor and transferee to give notice
oftransfer. - (1) Whenever the title of any person primarily liable F
to the payment of property tax on any premises to or over such
premises is transferred, the person whose title is transferred, and
the person to whom the same shall be transferred shall within three
months after the execution of the instrument of transfer or after its
-r: registration if it be registered or after the transfer is effected, if no G
instrument be executed, give notice of such transfer to the Executive
authority.
(2) In the event of death of any person primarily liable as
aforesaid the person to whom the title of the deceased shall be H
890 SUPREME COURT REPORTS (2007] 10 S.C.R.

A transferred, as heir or otherwise shall give written notice of such
transfer to the executive authority within one year from the death
of the deceased.
(3) The notice to be given under this section shall be in such
B form as the executive authority may direct and the transferee or
the person to whom the title passes, as the case may be, shall, if
so required, be bound to produce before the executive authority
any documents evidencing the transfer or succession.
(4) Every person who makes a transfer as aforesaid without
c giving such notice to the execufr\'e authority shall in addition to any
other liability which he incurs through such neglect, continue liable
for the payment of property tax assessed on the premises
transferred until he gives notice or until the transfer shall have been
recorded in the municipal registers but nothing in this section shall
D be held to affect -
(a) the liability of the transferee for the payment of the said
tax, or -~

(b) the prior claim of the municipal council under section 85."
E
Fraud:
10. Relationship bttween Venugopal and Manickam is not dispute.
A contention has, however, been raised by the respondents themselves
that Sakunthala was a national of Malaysian origin. Venugopal and ~~
F Manickam, as noticed hereinbefore, denied and disputed their relationship
of husband and wife. Despite such a stand taken at least before the High
Court, the same was given up. Keeping that aspect in view we may notice
·the findings of the learned Trial Judge:
" ... The sale deed Ex.A. I has been suppressed and an ex-parte
G decree has been obtained in that suit. It is a fraudulent act of -=--r--
Venugopal ... The suit property has been brought in auction in E.P.
No. 2620of1978 suppressing the already existing sale in favour
of the plaintiff Sakuntala. This Court therefore, considers that such.
an act is unjust and fraudulent."
H
--; T. VIJENDRADAS v. M. SUBRAMANIAN (SINHA, J.] 891

The First Appellate Court also found as under : A
" .. .It is also clear that the 3rd respondent did not inform the
plaintiffs/appellants that for the arrears of property tax in respect
of the property sold to them, a decree has been obtained and that
the 3rd respondent did not appear in court and inform the Court
that he had sold the property to the plaintiffs and hence the plaintiffs B
also should be impleaded as parties to the suit. D.W.l, the 5th
respondent examined on the side of the respondents, has stated in
r' his evidence that on 2.8.1978 Venugopal appeared in Court in the
case filed by the Corporation, that Venugopal had means to pay
the arrears of tax of Rs. 406/- and that even after the decree in c
the said suit, Venugopal did not pay the arrears of property tax of
Rs. 406/-. It is therefore, clear that the 3rd respondent has acted
fraudulently by not paying the arrears of tax even after the sale in
favour of the plaintiffs, though he had means to pay and the plaintiffs
) were also not informed about the same ... Even when the property D
-i· was brought for auction, the 3rd respondent did not contest
it.Though the property tax arrears is a small amount of Rs. 406/-
, he has not chosen to pay the same."
It was further found : E
"The 3rd respondent in his written statement has stated that
the Ist respondent is not his wife, that the Ist respondent in the
written statement has stated that the 3rd respondent is not her
)-'\
husband and that she is not married ... The fraudulent conduct is
very clear from their statement in their written statement that the F
1st respondent is not the wife of the 3rd respondent. There is no
doubt that Corporation has filed a suit for recovery of a small
amount of Rs. 406.76 towards arrears of property tax and obtained
a decree, which was followed by execution proceedings, which
was also not contested, that wantonly allowing all the proceedings G
to go on, the 3rd respondent, through his wife, fraudulently took
tl1e property in auction for Rs.8,010/- ... "

The Court held :
" ... The 3rd respondent in his written statement has stated that H
892 SUPREME COURT REPORTS [2007] 10 S.C.R.

A though it is not necessary for him to inform anything about the
proceedings to anybody regarding the.auction sale, he informed
the plaintiff by registered post and that under those circumstances
there is no chance to say that he acted fraudulently. It was stated
by the learned counsel for the appellants that on the side of the
B respondents, in support of the above, Ex. B.1 has been filed. A
perusal of Ex. B.1 shows that the registered post has been returned
stating that there is no such addressee. In the above registered post,
\'{
the address found is M. Sakunthala, wife of Muthyya Chettiar,
Thisoolpadam, Thirupathur Pos~ Ramanathapuram District. But it
c is clear from the plaint documents that the place of plaintiff
Sakunthala is "Siruoodalpatti village, Tirupathur Taluk, Sivaganga
District. There is no doubt that the 3rd respondent want only sent
the registered post giving a false address, got it returned and filing
it into Court is clearly a continuation of his fraudulent action."
D 11. Although not very relevant, but we may notice that the vendor
had never paid the arrears of property tax to the Municipality. He had
other properties and the quantum of tax for which the suit was filed was
only Rs.406.76. A further finding of fact had been arrived at that despite
knowledge, no notice was sent to Sakunthala at her known address i.e.
E Sirukoodalpatti Village which was the address disclosed in the sale deed,
but sent to another address. In the suit only the registered cover had been
filed but tht contents thereof had not been disclosed. It was obligatory
on the part of the appellant to bring the office copy of the said notice on
the record.
F
On the basis of the aforementioned findings, the courts below had
arrived at a conclusion that Venugopal had not been acting bona fide and
an attempt had been made to create evidence to cover up his fraud.
Statutory application :
G
12. Section 55(1)(g) of the Transfer of Property Act, 1882 envisages
payment of taxes in respect of the property by the veridor up to the date
of sale. The liability of the vendee to pay the property tax arises only from
the date of sale. However, Sections 85 and 88 of the 1920 Act provide
H that in the e>1ent, the factum of sale is not communicated, the liability of
-f- T.VIJENDRADASv.M.SUBRAMANIAN[SINHA,J.] 893

the vendor shall continue. Consequently a statutory charge is created on A
·-'( the property. A person having an interest in the property, therefore, might
have a right of redemption. A suit for realisation of the dues in respect of
a property in respect whereof a statutory charge is created, a suit could
also be filed by the Municipality, apart from taking recourse to the
procedure provided for realisation of the said dues as land revenue. B
13. A decree passed in terms of Order XXXIV, Rule I CPC is
somewhat different from a decree passed in an ordinary money suit. If in
terms of the provisions of the statute, plaintiffs-respondents are found to
r' be liable to pay the property tax, at an appropriate stage, they can redeem
the charge. The plaintiffs-respondents did not claim any relief against the c
Municipality. Its right, title and interest over the property having regard
to the statutory charge thereover has not been denied or disputed. It is
also not a case where fraud was alleged to have been committed by the
Municipality either in conspiracy with the judgment-debtor Venugopal or
otherwise. What was contended was that having regard to the fact that D
'> upset price was brought down without following the procedure as
-i contained in Order XXI, Rule 66 CPC, an irregularity or fraud was
practised in the context of the conduct of the auction sale. Irregularity
committed in conducting the auction sale and commission of fraud either
on court or on a party to the suit stand completely on different footings. E
14. Mr. Viswanathan' s contention that in effect and substance the
plaint contained allegation of fraud on Municipality, in our opinion, cannot
be accepted. As is well-known, the pleadings must be read in their entirety
for the purpose of proper construction thereof. What had been alleged in
F
the plaint is the commission of fraud by Venugopal. His conduct throughout
the proceedings has been taken into consideration by the courts below;
viz., despite transferring the property he did not intimate thereabout to
the Municipality. Even when the suit was filed, he did not make any
attempt to raise a plea which was expected of any reasonable and prudent
man that he ceased to be liable to pay the property tax as he had already G
f transferred the property. The purported intimation given to the plaintiffs
was also found to be an act of fraud on his part inasmuch as the purported
notice to the plaintiff had deliberately been sent at a wrong address. The
contents of the notice had also not been brought on record. Despite having
H
894 SUPREME COURT REPORTS [2007] 10 S.C.R. ~-
A sufficient means he voluntarily suffered an ex parte decree. He never
objected to reduction of upset price. He despite the fact did not contest -.,~
the suit, participated in the auction sale and purchased the property in
the name of his wife. Not only that the auction purchaser sold the property
to a third party, who again despite the knowledge of pendency of the
B suit transferred the property in favour of the appellants.

The effect of commission of such fraud either on court on or a party
is no longer res integra. [See S.P. Chengalvaraya Naidu (Dead) by Lrs.
v. Jagannath (Dead) by L.Rs. and Ors., [1994] 1 SCC 1, Ram \"(
Chandra Singh v. Savitri Devi, [2003] 8 SCC 319 and Tulsi and Ors.
c V. Chandrika Prasad and Ors., [2006] 8 sec 322].

15. In A. V Papayya Sastry and Ors. v. Govt. ofA.P. and Ors.,
[2007] 4 sec 221, it was held :
''21. Now, it is well settled principle oflaw that if any judgment
D or order is obtained by fraud, it cannot be said to be a judgment
or order in law. Before three centuries, Chief Justice Edward Coke
proclaimed :
"Fraud avoids all judicial acts, ecclesiastical or temporal."
E 22. It is thus settled proposition of law that a judgment, decree
or order obtained by playing fraud on the Court, Tribunal or
Authority is a nullity and non est in the eye of law. Such a judgment,
decree or order --by the first Court or by the final Court-- has to
be treated as nullity by every Court, superior or inferior. It can be
F challenged in any Court, at any time, in appeal, revision, writ or
even in collateral proceedings."
Non-impleadment of the Municipality in a suit :
16. Keeping in view the principles of law, we may notice the effect
G of non-impleadment of the Municipality, as envisaged under Order XXI,
Rule 92(4) & Rule 92(5) CPC, which reads as under:
"92. Sale when to become absolute or be set aside -
(4) Where a third party challenges the judgment-debtor's title
H
1 T. VIJENDRADAS v. M. SUBRAMANIAN [SINHA, J.] 895

by filing a suit against the auction-purchaser, the decree-holder and A
-y the judgment-debtor shall be necessary parties to the suit.
(5) If the suit referred to in sub-rule (4) is decreed, the Court
shall direct the decree-holder to refund the money to the auction-
purchaser, and where such an order is passed the execution
B
proceeding in which the sale had been held shall, unless the Court
otherwise directs, be revived at the stage at which the sale was
ordered."
'l
17. The purported allegations of the fraud on the Municipality in the
plaint reads as under : c
"IX The property originally proclaimed for sale at Rs. 20,000/-.
The upset price was allowed to be reduced on application without
notice being issued to other side. The entire execution is not only
fraud but also irregular, illegal and void."
D

-
~ ...... ... ...
XI The property originally proclaimed for sale at Rs. 20,000. Due
to irregularities in the procedure and want of proper publication
and publicity the sale did not take place and there were series of
application to reduce and upset price and the property ultimately E
sold on the upset price fixed at Rs. 8000/-... "
The findings of the Trial Court on the said issue are as under:
,>-" " ... Ex A-9 is the copy of the interim application filed in the
execution petition no. 2620 of 1978 by the corporation. That F
application has been filed to reduce the upset pri~e from Rs.
20,000/- to 5,0001-. Further it has been stated in that petition that
reduction of upset price is prayed for on account of the fact that
the house constructed in the suit property is in a dilapidated
f condition. For the purpose of reduction of price, false details have G
been fumished .... With the intention of suppressing the real facts
from the eyes of the court, it has been stated that there is a building
in the suit property in a dilapidated condition ... Further in that
application it is stated that 12 years have lapsed after the judgment
H
896 SUPREME COURT REPORTS [2007] 10 S.C.R.

A in OS No. 986/73. But the judgment has been delivered in 1973.
Execution petition has been filed in 1978, 5 years after the
judgment. While so, it is clear that the said application contains
allegations against the truth ... "
B 18. It may be true that an observation had been made that the
Municipality did so at the instance of Venugopal, but there was no warrant
for the following finding :.
" ... No notice has been given to the respondents in the petition filed
for reduction of upset price. Because of these defects in brining
c the property for auction in the execution petition, it is clear that
that there are legal flaws ...."
It was also found :
"It was argued on the side of the defendants that since
D Coimbatore Corporation has not been made a party to this suit,
this suit has to be dismissed. This suit has been filed for the relief
of declaration that the suit property absolutely belongs to the plaintiff
on the basis of Ex. A.I. For deciding the right with regard to the
suit property, Corporation is not a necessary party. The powers
E to decide as to which property belongs to whom has not been
granted to the Corporation. Only a power to collect property ta'<
is vested with the Corporation. The Court therefore holds that in
the suit filed to decide as to whether the suit property belongs to
the plaintiff or the defendants, the Corporation is an unnecessary
F party. It is not necessary to implead Corporation as a party to
decide the disputes arising between the individuals. Further in the
suit and in the execution proceedings by the Coq)oration, Plaintiff
Sakunthala is not a party. While so, this Court holds that it is not
necessary to add Corporation as a party to the suit. The
G Corporation has also not sent any notice at any time stating that
the suit property did not belong to the plaintiffs. Hence this Court
holds that so far as this case is concerned, the Corporation need
not be impleaded as a party. Hence this issue is answered against
the defendants." ·
H
T. VIJENDRADAS v. M. SUBRAMANIAN [SINHA, J.] 897

--'( Such findings had been affirmed by the Appellate Court, stating : A
"A perusal of the above shows that the Corporation need not
be impleaded as a party nor any case to be filed to set aside the
auction proceedings and this will not affect the plaintiff's case in
anyway.
B
From the above, it is clear that the 3rd respondent has executed
Ex. A 1 sale deed in favour of the first plaintiff for valid
t' consideration, which has not been denied by the 3rd respondent,
that the 1st respondent became entitled to the property so
purchased later under the court auction sale, which has been held c
to be invalid under law, this court hold that the first plaintiffis entitled
to a declaration that the suit property purchased under Ex.A. I
belongs to the first plaintiff and after her plaintiffs 2 and 3 are
entitled to the suit property ... "

,~
19. We have noticed hereinbefore that a suit filed in terms of Order D
-I XXXIV, Rule 1 CPC stands on a different footing. Non-joinder of a
property party in terms of Order I, Rule 9 would not render a suit not
maintainable. We are, however, not oblivious of the purport and object
in amendment of Order XXI, Rule 92 CPC. The Law Commission in its
54th Report recommended : E

"2 l.48D. Whatever be the correct view on the existing
language, it appears to us that something should be done to improve
'~'\ the position. No doubt, to permit the auction-purchaser to sue for
refund from the decree-holder, is to add to the troubles of the F
decree-holder, and thus to delay execution. But that seems to be
the only possible alternative. As between the decree-holder and
the auction-purchaser, if some one has to suffer, the former should
suffer.
It may not be feasible for the court to inquire into the title of G
f the judgment-debtor (at the time of the proclamation), in an
elaborate manner; but that does not answer the basic question,
namely, when a sale held by a Court and culminating in a certificate
issued by the court is held to be a nullity for want of title, by reason
of a defect discovered after expiry of the period for making H
,-~
898 SUPREME COURT REPORTS [2007] 10 S.C.R. '

A objections under rule 91 etc., is it.justice to dispose of the
purchaser's grievance by saying that the purchaser purchased the
property at.his peril? The decree-holder should re-imburse him for
the loss suffered by him, because it is the decree-holder at whose
instance the sale was held. The abstract principle that there is no
B warranty at court sales fails to yield a just result in this case.
The auction-purchaser should have a right to sue the decree-
holder. Where a third party challenges the judgment-debtor's title
by filing a suit against the auction-purchaser the decree-holder and
judgment-debtor should be necessary parties, and in that suit the
c court shall direct the decree-holder to refund the money to the
auction-purchaser.
If such a decree is passed, the original execution proceedings
shall be revived at the stage where the sale was ordered, unless
D the court otherwise directs. This provision is necessary to avoid
complications as to limitation."
Recommendation
"21.49. We, therefore, recommend that the following sub-rules
E should be added to Order 21, rule 92 :-
"(5) Where a third party challenges the judgment-debtor's title by
filing a suit against the auction-purchaser, the decree-holder
and the judgment-debtor shall be necessary parties to the suit;

F (6) If the suit referred to in sub-rule 5 is decreed, the court shall,
direct the decree-holder to refund the money to the auction-
purchaser, and, where such an order is passed, the execution
proceedings in which the sale had been held shall, unless the
court otherwise directs, be revived at the stage at which the
sale was ordered."
G
20. The Statement of Objects and Reasons also lead to the same
inference, wherein it was, inter alia, stated :
"Rule 92 is being amended to provide that where a third party
challenges the judgment-debtor's title by filing a suit against the
H
T. VIJENDRADAS v. M. SUBRAMANIAN [SINHA, J.] 899

--f auction-purchaser, the decree holder and the judgment-debtor A
should be necessary parties to that suit and if the suit is decreed,
the Court shall direct the decree-holder to refund the money to
the auction-purchaser. With a view to avoiding complications with
regard to limitation, the mle further provides that where a decree
is passed in favour of such third party, the original execution B
proceeding will become revived at the stage where the sale was
ordered unless the Court otherwise directs."
f
21. It is tme the purpose of impleadment of a necessary party is to
see as to whether without it no order can be made effectively. If an
effective order can be made, the suit will not be defeated. A decree which
c
is passed in terms of Order XXI, Rule 92(4) does not take into
consideration the effect of a statutory charge on a property, vis-a-vis the
statutory right of any persons having interest in the property to redeem
or sell the same at any point of time. When a fraud is practised on a CC?urt,
the same is rendered a nullity. In a case of nullity, even the principles of D
....,>
natural justice are not required to be complied with. [Kendriya Vidyalaya
Sangathan and Ors. V. Ajay Kumar Das and Ors., [2002] 4 sec 503
& A. Umarani v. Registrar, Cooperative societies and Ors., [2004] 7
sec 112- para 65].
E
22. Once it is held that by reason of commission of a fraud, a decree
is rendered to be void rendering all subsequent proceedings taken
pursuant thereto also nullity, in our opinion, it would be wholly inequitable
,>-'\ to confer a benefit on a party, who is a beneficiary thereunder. The
decisions rendered in Udit Narain Singh Malpaharia v. Additional F
Member, Board of Revenue, Bihar, [1963] Supp. I SCR 676 and
Profulla Chrone Requitte and Ors. v. Satya Chorone Requitte [1979]
3 SCC 409 whereupon reliance has been placed by Mr. Viswanathan,
may not have any application in a case of this nature in view of the fact
that the principal question which, in our opinion, would be more pertinent
f G
is as to whether even in a situation of this nature, the discretionary
jurisdiction under Article 136 of the Constitution of India should be
invoked particularly when the party raising the said question has been
impleaded as a party.
23. We would assume that the courts below proceeded on a wrong H
900 SUPREME COURT REPORTS [2007] 10 S.C.R.

A premise that Order XXI, Rule 92(4) is not attracted, but the question as )-- _
regards fraud committed by the judgment-debtor has been gone into a
great details. We are satisfied that the findings arrived at by the learned
Trial Judge and affirmed by the First Appellate Court also by the High
Court are equitable. It is in a situation of this nature, we are of the opinion
B that this Court in exercise of its jurisdiction under Article 142 of the
Constitution of India can pass an appropriate order with a view to do
complete justice to the parties. [Chandra Singh v. State of Rajasthan
& Anr., [2003] 6 SCC 545 and Oriental Insurance Co. Ltd. v. Brij
Mohan & Ors., (2007) 7 SCALE 753 - para 14].
c Are the Appellants bound by the decree ?

24. In this case the appellants as also the aforementioned Mis
Ramans purchased the property pendente lite. They would be deemed
to have notice of the sale made by Venugopal in favour of the plaintiff-
D respondents. Section 3 of the Transfer of Property Act provides that a
person is said to have notice of the fact when he actually knows that fact,
where any transaction relating to immovable property is required by law
to be and has been effected by a registered instrument. [See Lachhman
Dass v. Jagat Ram & Others - 2007 (3) SCALE 349]. They have
E purchased the p"roperty with notice, apart from the fact that the transfer
made in their favour was hit by Section 52 of the Transfer of Property
Act. The decree obtained by the Municipality had been passed under
Order XXXIV CPC. Respondents had a subsisting right of redemption.
Order XXXIV, Rule 15 CPC provides that all the provisions contained
F therein shall, as far as may be, apply to a mortgage by deposit of title-
deeds within the meaning of Section 58, and to a charge within the meaning
of Section 100 of the Transfer of Property Act. The charge created under
Section 85 of the 1920 Act would be one covered by Section I 00 of
the Transfer of Property Act. Section 100 of the Transfer of Property
Act reads as under :
G
"S. 100 Charges - Where immoveable property of one person is
by act of parties or operation of law made security for the payment
of money to another, and the transaction does not amount to a
mortgage, the latter person is said to have a charge on the property;
H and all the provisions hereinbefore contained which apply to a
I

--./
' T. VIJENDRADAS v. M. SUBRAMANIAN [SINHA, J.] 901

simple mortgage shall, so far as may be, apply to such charge. A
Nothing in this section applies to the charge of a trustee on the
trust-property for expenses properly incmTed in the execution of
his trust, and, save as otherwise expressly provided by any law
for the time being in force, no charge shall be enforced against any B
property in the hands of a person to whom such property has been
transferred for consideration and without notice of the charge."
25. In Mangru Mahto & Ors. v. Shri Thakur Taraknathji
Tarakeshwar Math & Ors., [1967] 3 SCR 125, this Court held:
c
"A lease granted by the mortgagor, out of the ordinary course
of management, though not binding on the mortgagee, is binding
as between the mortgagor and the lessee. Such a lessee acquires
an interest in the right of redemption and is entitled to redeem. If
such a lease is created before the institution of a suit relating to D
the mortgage, the lessee must be joined as a party to the suit under
Order 34 Rule 1 CPC; otherwise he will not be bound by the
decree passed in the suit and will continue to retain his right of
redemption. But in view of Section 52 of the Transfer of Property
Act, if the mortgagor grants such a lease during the pendency of a
suit for sale by the mortgagee, the lessee is bound by the result of E
the litigation. If the property is sold in execution of the decree
passed in the suit, the lessee cannot resist a claim for possession
by the auction-purchaser. The lessee could apply for being joined
as a party to the suit and ask for an opportunity to redeem the
property. But ifhe allows the property to be sold in execution of F
the mortgage decree and they have now lost the present case, the
lessees allowed the suit lands to be sold in execution of the
mortgage decree and they have now lost the right of redemption.
They cannot resist the claim of the auction purchaser of recovery
of possession of the lands." G

26. Materials have been brought on record to show that a preliminary
decree and a final decree in terms of Order XXXIV have been passed.
The learned Trial Judge also found so. It is also appropriate to notice the
following findings of the learned Trial Judge in regard to issuance of the H
902 SUPREME COURT REPORTS [2007] 10 S.C.R.
/~
A two encumbrances certificates :
" ... Ex. A.17 is the encumbrance certificate. Thim E. A yyasami filed
an application and obtained that encumbrance certificate. That
encumbrance certificate has been issued on 28.6.1983 from the
office of the Sub Registrar. In that the sale deed dated 12.11.70
B in favour of the plaintiff is shown. Similarly in that encumbrance
certificate, the sale deed dated 4.12. 79 in respect of the suit
pro?erty and another sale deed dated 22.8.81 in favour of
Manickam find a place. Ex. A. 18 is the questionnaire regarding
family card. In that it is mentioned that Manickam is the wife of
c Venugopal. But in the written statement filed by the defendant it is
stated that Manickam is not the wife ofVenugopal. Ex. A. 16 is
the voters list issued to the family of Venugopal. In that document
also it is stated that Manickam is the wife of Venugopal. Ex. A.
20 is the copy of the complaint filed in the criminal Court in STC
D No. 2119/94. That complaint has been filed by advocate Thiru
N. Sundaravadivelu and advocate Thiru S. Krishnamurthy. This
document has been fled to show that the defendants Venugopal
and Manickam together engaged those two lawyers and were
conducting the case.
E
32. Ex. B. 4 is the encumbrance certificate obtained on the
application by Thiru James. That certificate has been issued on
24.7.80 by the Sub Registrar's Office. In that the sale in favour
of Sakunthala do not find a place. But in Ex. A. 17 the
encumbrance certificate obtained on 28.6.1983, the sale deed in
F
favour of the plaintiff Sakunthala has been mentioned. In an
encumbrance certificate issued three years before Ex. B4
encumbrance certificate was issued, the sale deed in favour of the
plaintiff Sakunthala finds a place. In an encumbrance certificate
obtained thereafter that sale does not find a place. Hence it is clear
G that because of the arrangements made by the defendant -y
Venugopal, the sale in favour of the plaintiff Sakunthala does not
find a place there. Sin1ilarly Ex. B. 5 is the encumbrance certificate
obtained by Thiru M.P. Ramakrishnan on his application issued
by the office of the Sub Registrar on 26.4.84 containing no
H
T. VIJENDRADAS v. M. SUBRAMANIAN [SINHA, J.] 903

-r encumbrance. Hence it is clear that the matters contained in that A
encumbrance certificate are false. Ex. B. 6 is the encumbrance
certificate obtained by Mr. M.P. Ramakrishnan on 12.4.84. In that,
the sale dated 22.8.1981 in favour of Manickam finds a place.
Therefore is clear that the encumbrance certificates marked on the
side of the defendants contained details contrary to truth. This B
court therefore hold that those encumbrance certificates have been
issued only in connivance with Venugopal. This Court hold that
by selling the property to 5th defendant to get more profit, the
sale in favour of Sakunthala in the encumbrance certificate was
suppressed." c
Conclusion :

27. Appellants and their predecessors, therefore, are also guilty of
suppressio veri. Ordinarily a statute shall prevail over the common law
principle. However, in a case of this nature, in the event of any conflicting D
>
~ interest, this Court in exercise of its equity jurisdiction under Article 142
of the Constitution of India is to weigh the effect of a fraud and the
consequence of non-impleadment of a necessary party. We would hold
that the scale ofjustice weighs in favour of the person who is a victim of
fraud and, thus, we should not refuse any relief in his favour, only because E
he might have been wrongly advised. The purport and object for which
Order XXI, Rule 92(5) was enacted furthermore would be better
subserved if it is directed that the respondents shall pay the amount which
.,.."\ the Court paid to the Municipality out of the amount of auction.
28. We have noticed hereinbefore that one of the objects sought to F
be achieved in amending Order XXI, Rule 92 was to do complete justice
to the parties so as to enable the auction purchaser to get back the amount
from the decree-holder and revive the execution proceedings so that the
decree-holder may proceed against the judgment-debtor for realisation
-f of the decretal amount. In this case, the plaintiffs-respondents had not G
claimed any relief against the Municipality. The Municipality's right to
realise the amount of property tax together with interest, if any, is not in
dispute. Although the liability ofVenugopal in terms of the 1920 Act to
pay the property tax continued, it has been accepted at the Bar that the
H
~\~
\

904 SUPREME COURT REPORTS [2007] 10 s.c.R.

A plaintiffs-respondents wac; also liable to pay the amount of property tax 1- ·
after the date of sale. In a case of this nature, therefore, the plaintiffs-
respondents can be directed to pay the amount of property tax by way
of redemption of mortgage in favour of the Municipality.
B 29. If any amount is available with the court out of the amount
received from the auction sale, the san1e may be paid to the appellants.
Appellants would also be otherwise entitled to file an appropriate suit as
against Manickam and others.
30. We, therefore, are of the opinion that subject to the terms
C aforementioned, the appellants should not be granted any relief.
31. For the views we have taken, it is not necessary for us to go
into the other contentions raised by the learned counsel for the parties.
We, therefore, direct the plaintiffs-respondents to deposit the amount paid
D to the Municipality out of the auction amount by the order of the executing
court within six months from date and on such payment, the appeal shall
stand dismissed. However, in the facts and circumstances of the case,
there shall be no order as to costs.
B.B.B. Appeal disposed of.
E

.fl.··· c(
/'