Dismissed

M/s. Anu Pharma Private Limited and Another v. The State of Telangana and 4 Others

Telangana HC15 Dec 2021WP/18540/2020

Case brief

AI extract

What is this about?

Petitioners challenged the legality of a Lok Adalat award obtained via alleged fraud and inordinate delay of five years, seeking quashing of the award. The Court dismissed the writ petition, holding that fraud must be specifically proved with evidence of intent and that delay disentitles the petitioner from interventional relief. The interim stay was vacated.

What did the court decide?

Writ petition dismissed, interim orders vacated, and interlocutory application disposed of. No costs awarded.

M/s. Anu Pharma Private Limited and Another Vs The State of… — Arbitration | Telangana HC (2021)

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HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD

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(Special Original Jurisdiction)

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WEDNESDAY, THE FIFTEENTH DAY OF DECEMBER TWO THOUSAND AND TWENTY ONE

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PRESENT

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THE HON'BLE SRI JUSTICE UJJAL BHUYAN AND

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THE HON'BLE SMT JUSTICE P. MADHAVI DEVI

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WRIT PETITION NO: 18540 OF 2O2O

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Between:

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1 M/s. Anu Pharma Private Limited, Having regd. office at Ramachandra Puram Rep. by its Authorised Person Jetty Radhakrishna Reddy $/O. Sundara Ramireddy, Age 66^years, Occ. Business, r/o. Flat^{No.201,Sigma Central} Apartmeni, NeZr Pochamma Temple, Taranagar, Serilingampally,^Hyderabad- 50001e (TS).

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2 Chinnamail^{'satyanarayana} Reddy, S/o.^{Raji Reddy,Age 55 years,Occ'} Business, Fyo. H.No.4-4811318, Sii Sai Nagai Colony,^{Near BHEL BusDepot} road, Ramachandra Puram, Hyderabad-502032^(TS). ...pETtTtoNERS

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AND

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The State of Tetangana, Represented by^{its Principal Secretary'Home} Deoartment. TS Setretariat. Hvderabad-500022^(TS).

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Cohmissioner of Police, Cybeiabad^{Commissionerate, Gachibowli, Hyderabad-} 500032 (TS).

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2 Station Houle Officer, Ramachandra^{Puram Police Station, NearBHEL'} Hvderabad-500050^(TS ).

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The Secretary, Lok Adaiat Court,^{Sangareddy District Court Complex,} Sanoareddv, Sanqareddy^{District-502001(TS).}

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Prativada Naravaia Rao, S/o.^{P. GovindaRao, Age59 years, Occ. Business,} R/o. H.No,47, Second Left, SRR^{Ridge, Bachupally, QuthbullapurMandal,} Hyderabad, Telangana-500090^(TS).

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...RESpoNDENrs

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Petition under Article 226 ol the^{constitutionof lndia praying that in the} circumstances stated in the^{affidavitfiled therewith,the High court may be pleased} to issue writ or direction or orders^{more particularly writ of Mandamusdeclaring that} the impugned order dated^{12t9t2015 passedby the Honourable Lok-Adalatcourt,} sangareddy in Lok Adalat^{case number 378 of 2015 as illegal. arbitrary and void and} consequently set aside the^{impugned order dated 121912015 passed by the} Honourable Lok Adalat court,^{Sangareddyin Lok Adalat case number 378 of 2015} and also direct the^{official respondent nos.2 and 3 to conductfurtherand proper} investigation of a case^{in crime number 609 of 2014 of RamachandrapuramPS}

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IA NO : 1 OF 2020

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Petition under Section^{151CPC prayingthat in the circumstancesstated in} the affidavit filed in^{support of the petition,the High Court may be pleasedto} Suspendtheimpugnedorderdatedl2tglzolspassedbytheHonourableLokAdalat

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Court, Sangareddy^{in Lok Adalat case}

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number 378 of^{2015 pending disposalof the}

main writ Petition

lA NO: 1 OF 2021:

Between:

Prativada Narayana^{Rao,S/o. P. GovindaRao} ASq^{59 years'Occ Business' R/o'} 'n.r'r",ii, sttiio r-itt, 5n( niog". BiChrpaitv, Qithoutlapur Mandal' Hvderabad' Tela nga na-500090^(TS).

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....pETl,oNER/s,,^REspoNDENT

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AND

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[//s. Anu Pharma^{Private Limited, Havino regd. officeat Ramachandra Puram} R;;.^'nv itt-Arir]oriseo^{eelson'Jettv -Rad-hakrishna Reddy} ^S/O^Sundara nrilir..,iar. Aoe 66 vLirt, Occ. Business,^{r/o. Flat No 201,Sigma. Central} A;;ffi;;i,' r.ri? Focfiirma^{Temple, Taranagar, Serilinsampallv'Hvderabad-} 50001e (rs).

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Z. Clrlnnjmaif^{'Satyf-arayanaReddy. S/o, Raji Reddy, Age 55 years, Occ. Business.} - nio. n.rlo.+-+tilftla1-sii SJi 'r'lrga|. c6lonv, i'leai BHEL Bus Depot road' Ramachandra Puram,^{Hyderabad-502032(TS).}

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...pETt,oNERS

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The State of Telangana,^{Representedby ils} PlIrqPg]^{Secretary,Home}

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Deoartment. TS Setretariat, Hvderabad-500022^(TS)

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+. Co[rmissiorier oiPoli"e,^{Cybeiabad Commissionerate, Gachibowli, Hyderabad-} 500032^(TS).

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S. Siation Aouie Officer,^{Ramachandra Puram Police Station, Near BHEL,} Hvderabad-500050^(TS).

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O. t6e Secretary, Lok^{ROaiatCourt, SangareQgyDistrict Court Complex,} Sangareddy, Sangareddy^{District-50200'1 (TS).}

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(Respondents 3 to 6 are not necessary)

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..RE.'.NDENTS

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Petition under Section^{151 CPC prayingthat in the circumstancesstatedin} the affidavit filed in support^{of the petition,the High courtmay be pleasedto vacate} the interim order^{passed in lA No 1l2O2Oin wP No 18540/2020dated0611112020}

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lA NO: 2 OF 2021

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petitio.*,noer section 151 CPC praying that in the circumstances stated in the affidavit filed in support^{of the petition, the High court maybe pleasedto receive} the additional documents^{filed by Petitioner/RespondentNo 5 along with present} petition i.e., Document No 1, 2, 3, 4 and 5 in the^{interestof justice.}

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Counsel for the Petitioners: SRI^{N. MUKUND REDDY}

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Gounsel for Respondent Nos.¹ to 3: SRI^{T' SRIKANTH REDDY,} GP FOR HOME

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Counsel for Respondent No. 4: SRI J. ANIL KUMAR, SC FOR LEGAL SERVICES AUTHORITY

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Counsel for Respondent No. 5: SRI DISHIT BATTACHARJEE

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The Court made the following: ORDER

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HONOURABLE SRI JUSTICE UJJAT BHUYAN

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AND

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HONOURABLE SMTJUSTICE P. MADHAVI DEVI

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o 2

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Ofdef: (per Hon,ble Sri lunice Lljjal Bhuyan)

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By filing this petition under Articie 226 of the constitution of India, petitioners seek quashing of award dated 12.09.2015, passed by the Lok Adalat, Sangareddy, and further seek a direction to respondents No.2 and 3 to carryr out investigation in Crime No.6O9 of 2014, registered before the Ramachandrapuram police Station.

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On 25.a9.2014, one Sevaram Rajender Singh lodged a fint information before the Ramachandrapuram Police Station in the District of Medak, alleging that respondent No.5 and others, in collusion and conspiracy with officials of the Karnataka Ban[ Kukatpally branch, had forged and fabricated several cheques of petitioner No.l/Anu Pharmacy Private Limited^{(for short 'the} Compan/), of which, the informant^{was the tr{anaging Director.It} was alleged that all the cheques bore the^{signature of} CS.Reddy^{(petitionerNo.2), which wereforged by respondentNo.5.} The total amount covered by !t-r.^{forgedchequeswas} Rs.1,98,19,836.00. On^receipt of^{such first information,Crime} No.6O9 of ZOt+^{wasregisteredby respondentNo'3/StationHouse} Officer, Ramachandrapuram^{Police Station, underSections 4!9,420,} 406,468 and 471of^{the Indian Penal Code,1860 gPq. At the stage}

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of investigation, the Company^{wrotea letter to respondent No.3on} 74.02.2015, requesting to close the complaint. In the said letter, it was mentioned that there was a meeting of all the Directon of the Company including respondent No.5 whereafrer, an understanding was reached that the allegations made in the complaint were due to miscommunication between the Directon. Since miscommunications were removed, the above letter was addressed to respondent No.3. it was funher mentioned therein that the complainant- Sevaram Rajender Singh had expired on 1,6,12.2014 whereafter, ali the Directors of the Company sat together and decided to issue the above letter.

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It appean rhat in view of the above letter, the Assistant public Prosecuror filed a petition on behalf of the prosecurion before the Court of Additional Judiciai Magistrate of First Class, Sangareddy (for shon 'the coun below), r.rnder Section 21,6 G.p.C It was mentioned therein that Crime No.6O9 of 2al4 was registered by the police under Sections 41,9,420,4A6,46g and,471, of IpC, but rhe marrer s/as compromised out of the Coun. It was pointed our that the offences under sections 419,406 and 42oIpC were compoundable. Since both the parries were ready and willing to compromise the matter, prayer was made to delete the offences under Sections 46g and 47l IpC.

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A docLet order dated I2.A9.2OIS was passed by the leamed Additional Judicial l,{a.gistrate of First Class, Sangareddy. In the said order, it was mentioned that the accused 2.e., respondent No.5 was

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present' so also the defacto comprainant. The memo filed by rhe fusistant Public Prosecutor ro delete Sections 46g and 471 IpC and the authorization given by the C_ompany to the defacto complainant z'e'' Sri cS'Reddyto represent it, was alowed. Matter vras referred to Lok Adalat.

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Lok Adalat, Sangareddy, passed the award on 12.09.2015. It was mentioned that defacb-complainant/injured/victim had compromised with the accused. As per Section 320(g) of the Code of Giminal Procedure, 1923 (G.p.C), the accused (respondent No.5) was discharged against the charges under Sections 419,420 and 406 IPC The award was signed by both the accwed (respondent No.5) and the defacto complainant i.e., peifiioner No.2, who were identified byPolice Constable No.82.

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Vhile the matter rested thts, on l2.lO.2O2O, the C.ompany and Chinnamilli SatyanaraTana Reddy (CS.Reddy) filed the present \7rit Petition before this C-oun seeking the reliefs as indicated above. In paragraph 3 of the supponing affidavit, it is stated that the award was obtained by respondent No.5 fraudulently. Petitioner No.2 was nor authorized by the Company for any setrlement. He vras not the defacto complainant. In paragraph 7, it is stated that in the yar 2015, police, in the presence of respondent No.5, had taken the signatures of petitioner No.2 on some papers. Petitioner No.2 never appeared before the Lok Adalat. There was no compromise entered into between him and respondent No.5. In paragraph 9 of the supporting

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affidavit, it is stated that there is no mention about Sections 468 and 477 iPC in the award passed by the Lok Adalat. Finally, in paragraph 11, petitioners stated that on 21.a9.2020,, a represenration was submined to respondents No.2 and 3 to reopen the case since the Lok Adalat award was obtained by playing fraud.

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This C-oun by order dated a6.fl.2020 had issued notice and passed an interim order suspending the award dated I2.09,2A$, passed bythe Lok Adalat.

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Respondent No.5 has filed counter-affidavit as well as an interlocutory application for vacating the stay. In Interlocutory Application No.l of 2001, this Coun passed an order on 2g.04.2a21, directing that in rhe event respondent No.5 is required ro appear before the police authorities, then provisions of Section 41-A C"r.p.C, should be complied with. 9. Order dated 26.08.2021 records that Lok Adalat record has been received

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Leamed .counsel for the petitionen vehemently argued that present is a clear case of fraud being plaied by respondent No.5 whereafter, the award was obtained from the Lok Adalat. In suppon of his contention, he has referred to and relied upon the averments made in paragraphs 3,7, g and 11 of the supponing affidavit. In addition, he has also referred to vadous documenrs on record ro contend that even the resolutions of the Board of Directon of the C.ompany were forged. To suppon his contention that the award of

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the Lok Adaiat can be challenged under Anicles 226/227 o{ the constitution of India on the ground of fraud and misrepresentation, he has placed reliance on a decision of the Supreme Court in Bharvagi Construction v. Kothakapu Muthyam Reddy.l

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Leamed counsel further submits that since it is a case of fraud, entire proceedings of the Lok Adalat stand vitiated and question of limitation would not arise in such a case. In suppon of such contention, he has placed reliance on a decision of the Supreme Coun in Ram Chandra Singh v. Savitri Devi2 . Learned counsel for the petitioners also submits that Sections 468 and 471, IPC being noncompoundable offences, the Assistant Public Prosecutor could not have filed a memo for deletion of the same from Cr.No.609 of 201,4.

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1,2. Therefore, the impugned award should be quashed with consequential direction to the police authorities to carry out and complete the investigation in Crime No.609 ol 2A14 and take it to its iogical conclusion.

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Mr. T. Srikrnth Reddy, learned Govemment Pleader for Home appearing for respondents No.1, 2 and 3, has supported the award passed bythe Lok Adaiat.

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1,4. IVIr. J. Anil Kumar, leamed Standing^{Counsel for respondent} No.4/Lok Adalat, submits from the^{record that the defacto} complainant 2.r., petitioner^{No.2 was} Present^{on the date of Lok} Adalat on l2.Og.2At5.^{FIe has taken us to the award dated12.09.2015,}

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1 AIR 2017 sc 4428

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'^{(2003) 8 scc 319}

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passed by^{the Lok Adalatas weil as to the resolutionof the Boardof} Directors of^{the Companydated74'02'2015'and submits therefrom} that the signature^{of the defacto complainant i'e" petitioner No'2-} CS.Reddyis^{identicalin boththe documents'}

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Mr.Deepak^{Bhattachariee, leamed Senior Counsel appearing for} respondent^{No.5, at the outset, submitsthat the allegation in the FIR} wasonaccountofmiscommunicationbetweentheDirectorsofthe Company' After^{the unfonunatedeath of the L{anaging Director'the} other Directors^{sat rogerher and decidedto settlethe matter.fu a} gesture of goodwill,^{the son of the deceased ManagingDirector was} also made pan of^{the meeting of the Board of Directors and the} consequenrial^{resolution,whichwas adopted. The matter has been} amicably settled.^Five lears^{thereafter,this \X/nt Petition has been} filed. According^{to him, fiiing of this \flrit Petition is not bonafde and} is cleariy guided by^{ulterior morives.v&ile acknowledging that the} award of the Lok^{Adalat can be challengedin a proceeding under} Articles 226/227 of the consiit"tion^{of India on verylimitedgrounds'} such as fraud, he, however,^{submitsthat the challengehas to be made} without any undue delay. In the^{instantcase, there is a delay of five} lears^{in challenging the awardpassedbythe Lok Adalat.}

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Referring to a decision of the Supreme^{C.oun in TridipKutnar} / l Dindigal v. State of West Bengal3, ieamed^{SeniorC.ounsel submits} that inordinate delay in making the motion for^{a writ will be a good}

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ground for refusing to exercise the discretionary iurisdiction of the Filgh Coun under Anicle 226 of theConstitution of India.

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He, therefore, submits that the Writ petition shouid be dismissed with cost.

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Submissions made by learned counsel for the panies have received the due consideration of the coun. \we have arso carefury gone through the materials on record.

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1,9. Subject marter of the \7rit petition is challenge to the legality and validiry of the award passed by the Lok Adalat on D.a9.2015. The said challenge has been made on the ground that it vras obtained by playing fraud as the defacto complainant 2.e., peritioner No.2 was not present before the Lok Adalat when the award was passed.

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Before we advert to this aspect of the matter, we may briefly recapitulate the factual narrative as stated above.

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21.^\X/e have noticed that first information was lodged against respondent No.5 by the then I\fa.naging Director of the Company on 25.09.201.4, alleging forgery and cheating. On the basis of the said first information, Ramachandrapuram Police Station registered Crime No.609 of Z1t+ underSections 419,420,4A6,468 and47lIPC

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\While, at the stage of investigation, the Company filed an application before respondent No.3/Station House Officer of Ramachandrapuram Police Station on t4.02.2075, stating that they

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had settled the matter amicably and therefore, requested the Police authorities to close the case in Crime No.609 of 201,4. The Assistant

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Public Prosecutor^{filed a petition on 12'09'201'5 before the court} below under^{Section216 G'P'C,with the request that Sections 468} and 47t^{IPC shouldbe deletedfrom the fint informationsince the} parties had^{compromisedthe matter' It was pointed out that the} other Sections^{421., Sections4lg,42Oand 406 were compoundabie'} On such petition,^{the court below had passedorderdated 12'09'2a$'} Since this order is^{relevant, same is extracted in its entirery}

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"Accused Present. Defacto complainant^present' Leamed APP filed memo to delete^{468, 471 IPC and C-ompany} given authorizadon to the Defacto Complainant to^represent Sri CS.Reddy, allowed. Matter refer to Lok Adalath".

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A perusal of the aforesaid order would go to show that the coun below had recorded the presence of the accused as well as of the defacto complainant. The coun below also noted that the Assistant Public Prosecutor had filed rnemo for deletion of Sections 468 and 47t IPC as well as the authorization given by the Company to the defacto complainant. Both the memo as well as the authorization were allowed ty th. corrn below. Thereafter, the rnatter was referred to the Lok Adalat, which was being held on rhe same date i.e., on 12.09.2015. In the Lok Adalat, award was passed on 12.09.2015. In the original copy of the award, which is in Telugu language, we find the names of the accused (respondent No.5) and that of the defacto complainant (petitioner No .2). There were signarures over both and it is stated that both were identified byPolice C-onstable No.82.

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In the course of hearing, leamed Standing Counsel for the Legal Services Authoriry has drawn our anenrion to the similariry of the signature of the defacto complainanr appearing in the Lok Adalar award as weil as in the resolution of the Board of Directon of the Company darcd 14.02.2015, whereby it was decided to compromise the mauer. Though to the naked qe the signatures are identical, the same is not the onlydetermining factor.

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Section 216 G.P.C, empowers the C-oun to alter the charye. As per sub-section (1) thereof, any court may alter or add to any charge at any time before^judgment is pronounced. A petition was filed under the aforesaid provision by the fusistant Public Prosecutor for deletion of Sections 468 and 471 of IPC from the FIR By^the docket order dated 12.09.2015, the coun belov/ had^{allowed the} deletion of the aforesaid sections. As^{we haveseen,} the^remaining sections are compoundable. Accordingly, the^{matter was referred to} the Lok Adalat, where the matter was senled on compromise.

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The award of the Lok Adaiat is dated 12.09.2015.^Morethan five pan later, the present \frit Petition has been^{filedchallenging the} same aileging fraud. It is no doubt^{true,that the award passedby the} Lok Adalat can be assailedⁱⁿ a^{proceeding underAnicles 226/227 of} the Constitution of India on^{very limitedgrounds, suchas, fraud etc.} It is also true that fraud^{vitiates all proceedings.If thereis fraud,all} orders and^{judgmentsof the Coun would be rendered nullity' There} is no dispute to the^{proPosition of law laid down by the Supreme}

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Coun in Ram Chandra Singh⁽² supm)^{that fraud and justice never} dweli together. However, as the Supreme Coun has explainedⁱⁿ Hayas Rai Makhija v. Pushparani Jaina, mere allegation of fraud is not adequate. Commission of fraud must not only be pleaded specifically, but also be established by the person making the allegation by leading evidence. It is only after evidence is 1ed coupled with intent to deceive, that a conclusion of fraud could be arrived at. A mere bald allegation of fraud without proof and intent to deceive would not render a decree obtained by a pafiy as fraudulent. Fraud has a definite meaning in law. It mtst be proved and not merely alleged and inferred. To constitute fraud, there mut be an inrenr to deceive, evidence must be led and thereafter, fraud must be proved. No conclusion of fraud can be drawn on mere allegation and by way of inference.

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27 . Therefore, in a case of fraud, time is of the essence. S7hen the petitioners have alleged fraud ieading to closure of investigation, they ought to have raised this issue at the earliest point of dme. F{owever, we do not find any averment in the supponing affidavit explaining the inordinate delayof five years in filing the Writ Petition.

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28.^lff{hen we pur a queryto learned counsel for the petitioners as ro whether there is any explanation for the delay, his submission is that provisions of the Limitation Act, 1963, are not applicable to writ

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o (2017) 2 scc7g7

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proceedings. Additionally, he submits that when it is a case of fraud, question of limitation does not arise.

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Sfle are afraid we can accept such sweeping submissions made on behalf of the petitioners.

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Fir:t!, allegation of fraud must be not only be pleaded specificaliy, but must also be proved with clear intent to deceive. Secondl, party alleging fraud must approach the competent forum at the eariiest. Both from supponing affidavit as weil as from the materials placed on record including the resolution of the Board of Directors authorizing the petitioners to file the present^\Writ Petition, we find that only ona7.09.2020, decision was taken to file the \flrit Petition more than five years after the award was passed. Thereafter, representation was submitted before respondent No.2 on^L9.09.2020. Thus, there is clear delay and laches on the pan of^{the petitionersin} approaching the writ coun which,^{by itselfwould disentitlethem from} any discretionary relief .^{l-,x t!, by the docket orderdated t2.09.2015,} the coun below had^{ailovred the pral.erof the Assistant Public} Prosecutor for deletion of^{Sections 468 and 4TlIPCfrom G.No.609} of ZOt+. This order^{has not been challengedby the petitioners.After} this order^{was passed,the matterwas referredto the Lok Adalat.A11} the three sur.,riving^{secdons were comPoundableandas the parties had} arrived at a compromise,^{Lok Adalat passedthe consequentialaward.} Both the learned^{Government Pleaderfor FIome as well as learned} Standing C-ounsel^{for the Legal Services Authorityhave supponed the}

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award^{passed by the Lok Adalat includingthe factum of presenceof} the defacto^{complainant before the coun below as well as before the} Lok Adalat^{on 12.09.20t5. In fact, the court beiowhad recorded the} presence^{of the defacto complainant on 12'09 '2At5' Thereis aiwapa} presumption^{about the genuineness,coffectness and authenticity of a} coun proceeding.^{If the petitioners had any doubt aboutthe coutt} proceedings,^{it was alwap open to them to have approached the said} court for necessary^{rectification, but they failed to do so'} .

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31,. Thus,^{in the facts and circumstances of the case, we are of the} considered opinion^{that it wouldbe wholly unjust and inequitableto} interfere with the award^{passedby the Lok Adalat, that too, after a} period of five 1ears. There^{is.3 great deal of sanctiryattachedto a Lok} Adalat award, which should not be^{interfered with lightly'}

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At this stage, we may also mention^{that petitionerNo.2 had not} sworn the supponing affidavit to the vnit petition.^{The statements} made in paragraph Nos.2,3,7,,9 and 11 of the supponing^affidavit, regarding non-appearance of petitioner No.2 before the Lok^Adalat on 12.09.2015 is swom byJetty Radha Krishna Reddy, who could^not have vouched for the coffectness of the above statements. The fact that leamed couft below had recorded the presence of the defacto complainant (petitioner No.2) on 12.09.2015, on which date the Lok Adalat award was also passed, is a clear pointer to the fact that the defacto complainant (petitioner No.2) was present before the Lok Adalat on 12.09.201.5.

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In view of above, we are not inclined to entenain the \Vrit Petition. The ,frit petirion is, accordingly, dismissed. All interim orden passed earlier stand vacated. fulated interim appiication stands disposed of.

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