2008 (7) TMI 851 - SC - Companies Law

Whether fraud has been played upon the Court as well as upon the appellant and all orders passed by the High Court deserve to be quashed and set aside? Held that - As the appellant has not come forward with all the facts. He has chosen to state facts in the manner suited to him by giving an impression to the Writ Court that an instrumentality of State (SAIL) has not followed doctrine of natural justice and fundamental principles of fair procedure. This is not proper. Hence on that ground alone the appellant cannot claim equitable relief. But we have also considered the merits of the case and even on merits we are convinced that no case has been made out by him to interfere with the action of SAIL or the order passed by the High Court. Appeal dismissed.

Issues Involved:
1. Allegations of fraud and misrepresentation.
2. Compliance with principles of natural justice.
3. Suppression of material facts by the appellant.
4. Validity of the High Court's order based on alleged settlement.
5. Jurisdiction and discretionary power of the Writ Court.

Issue-wise Detailed Analysis:

1. Allegations of Fraud and Misrepresentation:
The appellant contended that fraud was committed by the respondents upon him and the Court, warranting the quashing of all orders passed by the High Court. The appellant argued that his representative, Ramesh, Chairman and Managing Director of Rithwik Projects, had colluded with respondent No. 2, and any settlement or compromise reached was unauthorized. The Supreme Court referenced the principle that "fraud avoids all judicial acts" and cited cases such as S.P. Chengalvaraya Naidu (Dead) by Lrs. V. Jagannath (Dead) by Lrs. & Ors. and A.V. Papayya Sastry & Ors. V. Govt. of A.P. & Ors., affirming that judgments obtained by fraud are nullities. However, the Court found no evidence of fraud by SAIL or respondent No. 2, as the appellant had not informed SAIL about the revocation of the Power of Attorney given to Ramesh.

2. Compliance with Principles of Natural Justice:
The appellant argued that SAIL violated principles of natural justice by not properly notifying him about the reconsideration of the tender. The Court found that SAIL had issued notices to all parties, including the appellant, who had authorized Ramesh to represent him. The Court concluded that there was no breach of natural justice as the appellant had been duly notified and had chosen his representative.

3. Suppression of Material Facts by the Appellant:
The Court emphasized the necessity for petitioners to disclose all material facts when invoking the extraordinary jurisdiction of the Court. The appellant was found to have suppressed facts, particularly regarding his authorization of Ramesh to act on his behalf. The Court cited several precedents, including State of Haryana v. Karnal Distillery and Vijay Kumar v. State of Haryana, underscoring that suppression of material facts can lead to the dismissal of a petition. The appellant's failure to disclose the revocation of the Power of Attorney and his authorization of Ramesh was deemed a significant suppression.

4. Validity of the High Court's Order Based on Alleged Settlement:
The High Court had disposed of miscellaneous applications based on a purported settlement between the parties. The appellant claimed he never agreed to any settlement. The Supreme Court found that the appellant's representative, Ramesh, had participated in negotiations and that there was no evidence to suggest the settlement was fraudulent. The Court held that the High Court's order was valid and that the appellant had no grounds to challenge it based on allegations of unauthorized representation.

5. Jurisdiction and Discretionary Power of the Writ Court:
The Supreme Court reiterated that the jurisdiction under Article 32 and Article 226 is extraordinary, equitable, and discretionary, meant for substantial justice. The Court referenced R. v. Kensington Income Tax Commissioners and All India State Bank Officers Federation v. Union of India, highlighting that petitioners must approach the Court with clean hands. The appellant's conduct, characterized by suppression and misrepresentation, disentitled him from any relief. The Court stressed that the appellant's failure to disclose all relevant facts and his attempt to mislead the Court warranted the dismissal of his appeal.

Conclusion:
The Supreme Court dismissed the appeal with costs, finding no merit in the appellant's claims. The Court held that the appellant had not been deceived or cheated by SAIL or respondent No. 2, and that the High Court's order based on the settlement was valid. The appellant's suppression of material facts and misrepresentation further justified the dismissal of his appeal.

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