Section 38 BSA: Fraud or Collusion in Obtaining a Judgment

Section 38 BSA allows a party to challenge a relevant previous judgment by proving fraud, collusion or lack of court competence.

Introduction

Section 38 of the Bharatiya Sakshya Adhiniyam, 2023 (BSA) provides a safeguard against relying on a previous judgment, order or decree that was obtained through fraud or collusion, or delivered by a court that was not competent to deliver it.

The provision is particularly important where one party relies on an earlier judicial decision to support a claim, oppose a suit or establish a legal bar. The opposing party may challenge that decision on the specific grounds recognised by Section 38.

For example, suppose two persons collude to obtain a decree concerning public property by deliberately presenting a false dispute before a court. If that decree is later relied upon against a public authority, the authority may seek to establish that the earlier decree was obtained through collusion, subject to the applicable law.

Section 38 corresponds to Section 44 of the Indian Evidence Act, 1872.

Bare Act: Section 38 of the Bharatiya Sakshya Adhiniyam, 2023

38. Fraud or collusion in obtaining judgment, or incompetency of Court, may be proved.—

Any party to a suit or other proceeding may show that any judgment, order or decree which is relevant under section 34, 35 or 36, and which has been proved by the adverse party, was delivered by a Court not competent to deliver it, or was obtained by fraud or collusion.

Meaning and Explanation of Section 38 BSA

Section 38 permits a party to challenge a previous judgment on three recognised grounds:

1. Lack of competence of the court: The court that delivered the judgment was not legally competent to do so.
2. Fraud: The judgment was obtained through fraud.
3. Collusion: The judgment was obtained through collusion between parties or other persons involved in the proceeding.

The provision applies when the judgment, order or decree is relevant under Section 34, 35 or 36 BSA and has been proved by the opposing party.

Section 38 is not a general permission to reopen every unfavourable judgment. The party raising the challenge must establish a legally recognised ground and satisfy the requirements of the provision.

Essential Elements of Section 38 BSA

1. There must be a previous judgment, order or decree

The provision applies to an existing judicial decision that an opposing party has produced as evidence in a suit or other proceeding.

The decision may be relied upon because it potentially bars a later suit or trial, establishes a legal character or entitlement, or concerns a relevant matter of public nature.

2. The judgment must be relevant under Section 34, 35 or 36

Section 38 expressly refers to three preceding provisions:

• Section 34 BSA: Previous judgments relevant to bar a second suit or trial.
• Section 35 BSA: Certain judgments in probate, matrimonial, admiralty and insolvency jurisdiction.
• Section 36 BSA: Other judgments relating to matters of a public nature relevant to the inquiry.

The section does not expressly include Section 37 in this list. Therefore, its scope should not be extended indiscriminately to every judgment that may become relevant under another provision.

3. The opposing party must have proved the judgment

Section 38 applies where the relevant judgment, order or decree has been proved by the adverse party.

For instance, if A relies on an earlier decree to establish a legal bar against B, B may invoke Section 38 to establish that the decree was obtained through fraud or collusion or was delivered by a court lacking competence.

4. The challenge must concern a recognised ground

The provision identifies three grounds: incompetence of the court, fraud and collusion.

A party’s disagreement with the earlier court’s reasoning, or the mere fact that the judgment was unfavourable, does not by itself establish any of these grounds.

5. The ground must be established with appropriate evidence

The party challenging the judgment must establish the alleged fraud, collusion or lack of competence. Suspicion or a bare allegation is not sufficient.

The court must assess the evidence and apply the relevant procedural and substantive law before determining the effect of the earlier judgment.

Ground One: Incompetency of the Court

A judgment may be challenged under Section 38 if the court that delivered it was not legally competent to do so.

The issue may concern the court’s jurisdiction or legal authority to adjudicate the matter. The precise question depends on the nature of the proceeding and the applicable law.

Example

A dispute concerning a matter reserved by law for a particular court is decided by a different court that has no legal authority to adjudicate it.

Also Read: Section 34 BSA: Previous Judgments Relevant to Bar a Second Suit or Trial

If the earlier decision is relied upon in a subsequent proceeding and the requirements of Section 38 are satisfied, the opposing party may seek to establish the lack of competence.

Important distinction: An error committed by a court that had jurisdiction is not automatically the same as a lack of competence to decide the matter. The nature of the defect must be examined under the applicable law.

Ground Two: Fraud in Obtaining a Judgment

Fraud involves deception or dishonest conduct that affects the obtaining of a judicial decision. Section 38 permits a party to prove that a judgment was obtained by fraud.

Examples may include deliberately concealing material facts in circumstances that prevent a fair adjudication, fabricating material relied upon to obtain a decree, or deceiving the court through conduct that legally amounts to fraud.

Example

A deliberately conceals a material fact and uses fabricated documents to obtain a decree against B. A later relies on that decree in another proceeding.

If B establishes that the decree was obtained by fraud and the requirements of Section 38 are met, the earlier judgment may be challenged on that ground.

Fraud must be established through appropriate evidence. An incorrect decision or an unsuccessful defence does not, without more, prove that the judgment was obtained by fraud.

Ground Three: Collusion in Obtaining a Judgment

Collusion involves an arrangement or concerted action between persons who present an apparent dispute to the court while secretly cooperating to obtain a predetermined result.

Unlike a genuine adversarial proceeding, a collusive proceeding may create the appearance of a contest even though the participants are acting towards a common purpose.

Example

A and B secretly agree that B will not genuinely contest A’s claim to public land. B allows A to obtain a decree, intending that the decree will later be used against a public authority or another interested person.

If the evidence establishes that the decree was obtained through collusion, Section 38 may permit the affected party to challenge its effect.

Collusion must be distinguished from a genuine settlement or an admission made in good faith. The decisive issue is whether the judicial decision was obtained through collusive conduct recognised by law.

Important Judgment Relating to Section 38 BSA

The following judgments interpreted Section 44 of the former Indian Evidence Act, 1872. They remain relevant to understanding the corresponding provision of the BSA, but they are not direct interpretations of Section 38 BSA.

1. Gram Panchayat of Village Naulakha v. Ujagar Singh (2000)

Court: Supreme Court of India

Citation: 2000 Supp (3) SCR 457

The dispute concerned an earlier decree obtained against a Gram Panchayat. The Panchayat alleged that the decree had been obtained through collusion with the then Sarpanch.

The Supreme Court rejected the view that a party must invariably file a separate suit and obtain another decree declaring the earlier judgment collusive before raising the issue in subsequent proceedings.

The Court held that Section 44 of the former Evidence Act permitted a party to raise fraud or collusion as a challenge to an earlier judgment in a subsequent proceeding. It also explained that collusion involves a contrived or fictitious contest rather than a genuine dispute between opposing interests.

Legal principle: A party may, in appropriate circumstances, challenge the effect of an earlier judgment by establishing fraud or collusion under the corresponding statutory provision without first filing a separate suit solely for that purpose.

This is a leading Supreme Court authority on the operation of Section 44 of the former Evidence Act and is particularly relevant to Section 38 BSA.

2. Embassy Hotels (P) Ltd. v. Gajraj & Co. (2015)

Citation: (2015) 14 SCC 316

The decision is cited for the principle that a judgment of a competent court should not be disregarded by another court in collateral proceedings merely on the basis of suspicion of fraud or collusion.

Legal principle: Allegations of fraud or collusion must be established in accordance with law. A previous judicial decision cannot simply be ignored because one party questions its legitimacy.

Also Read: Section 37 BSA: When Other Judgments Are Relevant

This principle must be read alongside the statutory right under Section 38 to prove fraud, collusion or lack of competence when the provision applies.

3. Chandro Devi v. Union of India (2017)

Citation: (2017) 9 SCC 469

This decision is cited for the principle that a judgment alleged to have been obtained by fraud cannot be set aside merely on an unsupported allegation. There must be a definite conclusion that the relevant conduct amounted to fraud.

Legal principle: Fraud must be established through appropriate material. Not every erroneous decision or improper act automatically amounts to fraud.

The decision reinforces the need to distinguish a genuine challenge based on proved fraud from an attempt to reopen a judicial decision merely because a party disagrees with its outcome.

Is a Separate Suit Necessary to Challenge a Fraudulent or Collusive Judgment?

A separate suit is not invariably necessary.

In Gram Panchayat of Village Naulakha v. Ujagar Singh, the Supreme Court held that a party could raise a plea of collusion in a subsequent proceeding without first obtaining a separate decree declaring the earlier judgment collusive.

However, this does not mean that every judgment can be ignored by any party at any time. The availability of the challenge depends on the statutory provision, the nature of the proceeding, the party’s legal position and the applicable procedural requirements.

The distinction is between challenging the effect of an earlier judgment on a legally recognised ground and seeking to reopen a judgment simply because it is unfavourable.

Relationship Between Section 38 BSA and Res Judicata

Res judicata is the principle that a matter finally decided by a competent court cannot ordinarily be litigated again when the applicable legal requirements are satisfied. Section 11 of the Code of Civil Procedure, 1908, contains the principal statutory rule governing res judicata in civil suits.

Section 38 provides a safeguard where a previous judgment relied upon in a subsequent proceeding is alleged to have been delivered by a court lacking competence or obtained through fraud or collusion, provided the requirements of Section 38 are satisfied.

For example, if A relies on an earlier decree against B to argue that a later suit is barred by res judicata, B may seek to establish that the decree was obtained through collusion.

If the legally recognised challenge is established, the earlier decree may not have the effect claimed for it. The precise consequence depends on the applicable law and the findings of the court.

Difference Between Sections 37 and 38 BSA

Basis	Section 37 BSA	Section 38 BSA
Main subject	General relevance of other judgments	Fraud, collusion or incompetence concerning specified judgments
General rule	Judgments outside Sections 34–36 are generally irrelevant unless an exception applies	A party may challenge a judgment relevant under Sections 34–36 on specified grounds
Grounds	Existence of the judgment is a fact in issue, or another provision makes it relevant	Lack of competence, fraud or collusion
Purpose	Determines when other judgments may be considered	Allows a party to challenge the effect of a specified judgment
Corresponding former provision	Section 43, Indian Evidence Act	Section 44, Indian Evidence Act

Section 38 BSA and Section 44 of the Indian Evidence Act, 1872

Basis	Section 38 BSA	Section 44, Indian Evidence Act
Subject	Fraud or collusion in obtaining a judgment, or incompetency of court	Same subject
Relevant judgments	Judgments under Sections 34, 35 and 36 BSA	Judgments under Sections 40, 41 and 42 of the former Act
Grounds	Incompetence, fraud or collusion	Same grounds
Substantive effect	Carries forward the former rule	Former statutory provision
Current status	In force from 1 July 2024	Repealed, subject to applicable savings provisions

Section 38 BSA substantially carries forward Section 44 of the Indian Evidence Act, 1872, with corresponding changes to the section references.

Related Legal Provisions

• Section 34 BSA: Previous judgments relevant to bar a second suit or trial.
• Section 35 BSA: Relevancy of certain judgments in probate, matrimonial, admiralty and insolvency jurisdiction.
• Section 36 BSA: Relevancy and effect of other judgments relating to relevant matters of public nature.
• Section 37 BSA: General rule concerning judgments outside Sections 34, 35 and 36.
• Section 11, Code of Civil Procedure, 1908: Governs res judicata in civil suits.
• Section 17, Indian Contract Act, 1872: Defines fraud for the purposes of the law of contracts. Its contractual definition should not automatically be treated as the complete definition of fraud for every application of Section 38 BSA.

Important Points for Law Students and Judiciary Exams

• Section 38 BSA corresponds to Section 44 of the Indian Evidence Act, 1872.
• It permits a party to challenge a judgment, order or decree relevant under Sections 34, 35 or 36 BSA.
• The judgment must have been proved by the adverse party.
• The three recognised grounds are incompetence of the court, fraud and collusion.
• Mere suspicion or disagreement with a judgment is insufficient.
• In appropriate circumstances, a separate suit is not a prerequisite to raising fraud or collusion in a subsequent proceeding.
• Gram Panchayat of Village Naulakha v. Ujagar Singh is an important Supreme Court authority.
• Section 38 does not provide a general right to reopen every final judgment.
• The consequences of proving fraud, collusion or lack of competence depend on the applicable law and the circumstances of the case.

Frequently Asked Questions (FAQs)

1. What is Section 38 of the BSA?

Section 38 of the Bharatiya Sakshya Adhiniyam, 2023 allows a party to establish that a judgment, order or decree relevant under Section 34, 35 or 36 was delivered by a court that was not competent to deliver it or was obtained through fraud or collusion.

2. Which section of the Indian Evidence Act corresponds to Section 38 BSA?

Section 38 BSA corresponds to Section 44 of the Indian Evidence Act, 1872.

3. What are the grounds under Section 38 BSA?

The grounds are incompetence of the court, fraud in obtaining the judgment, and collusion in obtaining the judgment.

4. Can a judgment obtained by fraud be challenged in a later proceeding?

Yes. Where the requirements of Section 38 are satisfied, a party may seek to establish that the judgment was obtained by fraud. The challenge must be supported by appropriate evidence and comply with the applicable procedural law.

5. Is a separate suit always necessary to prove collusion?

No. In Gram Panchayat of Village Naulakha v. Ujagar Singh, the Supreme Court held that a separate suit is not invariably required before raising collusion in a subsequent proceeding. The applicable legal and procedural requirements must still be satisfied.

6. Does every error in a judgment amount to fraud?

No. An incorrect decision, an unfavourable finding or a legal error does not automatically amount to fraud. Fraud must be established in accordance with the applicable law.

7. Does Section 38 apply to every previous judgment?

No. The provision expressly concerns judgments, orders or decrees relevant under Sections 34, 35 or 36 BSA and proved by the adverse party.

Conclusion

Section 38 of the Bharatiya Sakshya Adhiniyam, 2023 safeguards the integrity of judicial proceedings by allowing a party to challenge specified previous judgments on the grounds of incompetence, fraud or collusion. It prevents a party from relying unquestioningly on a judicial decision that was obtained improperly or delivered without the necessary competence. At the same time, the provision requires the challenge to be established through appropriate evidence and does not permit judgments to be reopened merely because a party disagrees with their outcome.

For examinations, remember the central rule: a judgment relevant under Sections 34, 35 or 36 BSA may be challenged by proving that the court lacked competence or that the judgment was obtained through fraud or collusion.