The Decrees Obtained through Fraudulent Compromises or Collusion can be Challenged by affected Third Parties --- Lahore High Court Remands Case for Fresh Decision

Islamabad 11-03-2025: The Lahore High Court, in a significant judgment, clarified important legal principles relating to fraud, collusion, and the application of Section 12(2) of the Code of Civil Procedure, 1908 (CPC). Mr. Justice Sultan Tanvir Ahmad issued this decision in a Civil Revision Petition filed by petitioner [applicant of 12(2)].

The Revision Petition arose from an application under Section 12(2) CPC challenging a consent decree, alleging fraud and collusion. The petitioner argued that plaintiff, after obtaining a decree in his favor, sold the disputed property to him but subsequently colluded with the respondents to withdraw the suit fraudulently, thereby prejudicing his rights.

The Lower Court had summarily dismissed petitioner’s 12(2) application, citing the doctrine of lis pendens and absence of fraud against the Court itself. However, the Lahore High Court observed that the doctrine of lis pendens does not protect decrees obtained through fraudulent compromises or collusion, and Section 12(2) CPC indeed applies even when third parties, adversely affected by such decrees, seek judicial redress.

Mr. Justice Sultan Tanvir Ahmad emphasized that summary dismissal of applications under Section 12(2) CPC should only occur when allegations clearly lack substance. The Lahore High Court stressed the necessity of framing proper issues and recording evidence to address allegations involving mixed questions of law and fact.

Consequently, the Court set aside the earlier dismissal by the Additional District Judge, Sheikhupura, and remanded the case for a fresh decision with directions for proper proceedings, including evidence recording and issue framing.

Powered by Froala Editor