SHRIPADGOUDA VENKANGOUDA APARANJI Vs. GOVINDGOUDA NARAYANGOUDA APARANJI

JUDGEMENT

(1.) THIS appeal arises from an action instituted by the plaintiff-appellant in the Court of the First Class Subordinate Judge at Dharwar to set aside, on the ground of fraud and false representation, a decree upon an award passed in Suit No.53 of 1931 between the parties on April 1, 1932. That decree was passed by the same Court in which it is now challenged. The former suit was instituted by the defendant to recover Rs. 12,000 with interest upon a promissory-note executed in his favour on April 22, 1930. The plaintiff, who was the defendant in that suit, had filed a written statement in which he contended inter alia that he was liable to pay only Rs. 2,000, a debt due from the family and contracted by his eldest brother Pralhad in his lifetime while he was the manager of the family, that the balance of the claim was fraudulent, and that the promissory-note was obtained by fraud, misrepresentation and undue influence. After that defence was filed and before the hearing commenced, both the parties asked the Court to refer the matter in dispute to arbitration, and accordingly it was so referred to one Narsingrao, a friend of the parties and also a distant relative of the plaintiff, for the determination of the dispute, Upon that reference the arbitrator made his award, and after hearing the parties the decree now impeached was passed by the Court. The arbitrator refused interest to the defendant and granted instalments to the debtor-plaintiff. The plaintiff's allegations of fraud and false representation, which form the basis of the suit for setting aside the decree, are fully set out in the plaint and the plaintiff's statement.

(2.) AFTER stating that the claim was false and fraudulent inasmuch as there was no consideration for the promissory-note and that the defendant had represented to the plaintiff that by passing a promissory-note to him (defendant) the plaintiff's other creditors could be coerced into accepting a lesser amount in satisfaction of their debt, for they would by suing the plaintiff be subjecting their claim to a decree which could be paid off rateably out of his assets, the plaint proceeds to say as follows: The defendant further represented to him (plaintiff) that the mere taking of promissory-notes was not sufficient to threaten other creditors and that if a decree were obtained (on the promissory-notes) it would be effective and that the other creditors could be asked to adjust their debts by giving remissions and that (in this way) his property could be shielded and that no loss to the plaintiff would be caused. By such representation and without giving the plaintiff any opportunity to secure independent advice in the matter, and by fraudulent misrepresentation and undue influence the defendant got the plaintiff to consent to the arbitration and got from him the necessary documents and got one Narsingrao Nadagouda, a relation and a friend of his, to act as arbitrator in the case. The arbitrator also without making any inquiry passed an award in accordance with the wishes of the defendant.

(3.) IF, therefore, upon the pleadings, the fraud alleged was a fraud by the parties to the suit on the Court in obtaining an order of reference and the order making the award the decree of the Court, the question is whether such a collusive conduct in a judicial proceeding can be made the basis of an action to nullify a judgment of that Court, That aspect of the case does not seem to have been clearly appreciated in the Court below, which proceeded to consider the evidence led by the plaintiff as to the nature of the claim on the promissory-note and the agreement between the parties to refer the dispute to arbitration. The lower Court came to the conclusion that the promis- sory-note itself was for consideration, that the promissory-note and the decree were not obtained by fraud, and that the defendant was justified in recovering the amount of the decree. The question, whether the defendant agreed not to execute the decree, was also considered and decided against the plaintiff. Accordingly the plaintiff's suit was dismissed.