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Hemantha Kumar vs. R. Mahadevaiah

Civil Appeal · 2022 INSC 694Decided 11 Jul 2022
Civil Appeal No. 4108 of 2022
M.R. Shah · B.V. Nagarathna

Background

The appellant (a buyer) had sued for specific performance of an agreement to sell property against two defendants. All parties jointly applied to the trial court for a consent decree recording their compromise, but instead of passing the decree itself, the trial court referred the matter to the Lok Adalat, which was presided over by the same judge and which then passed the consent decree. Years later, the defendants challenged that consent decree in the Karnataka High Court, alleging it had been obtained by fraud, and the High Court set it aside, observing that the plaintiff's counsel appeared to have "misled" the trial court. The plaintiff appealed to the Supreme Court.

Decision Breakdown

The Supreme Court held that merely referring a matter to a Lok Adalat instead of passing the consent decree directly is not, by itself, a ground to doubt the genuineness of the resulting decree, especially where the same judge presided over both. It found no material basis for the High Court's "prima facie" finding that the plaintiff's counsel had misled the court, particularly since the defendants' own advocates had signed the same compromise application and never objected to it, and the defendants did not dispute having received the balance sale consideration. The Court held the High Court had committed a serious error, both on facts and in law, in setting aside the consent decree without any real evidence of fraud. It quashed the High Court's order and restored the consent decree.

Lesson Learnt

A consent decree passed through a Lok Adalat carries the same legal weight as one passed directly by a court, and it cannot be set aside on vague suspicion of fraud: a party alleging fraud must show clear evidence, not just point to the procedural path (like a Lok Adalat reference) the case took.

Official source (sci.gov.in)View Judgment (PDF)

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