Civil Procedure Code 1908Order VII Rule 11 of CPC Object, Purpose and the Determining Test

SUPREME COURT OF INDIA

Dahiben v. Arvindbhai Kalyanji Bhanusali

Civil Appeal no. 9519 of 2019 | Date: 09.07.2020

FACTS

The Plaintiffs were in possession of an agricultural land (“Land”) which had restrictions under Section 73AA of Gujarat Land Revenue Code, 1979. Plaintiffs obtained permission from the Collector of Surat for the sale of the Land on the condition that the sale price for the Land will be as per the jantri issued by State Government.

The Plaintiffs sold the Land to Respondent No. 1 through a registered Sale Deed on July 02, 2009 for the consideration paid by the Respondent via 36 cheques. Respondent No. 1 afterwards sold the Land to Respondent Nos. 2 and 3 on April 01, 2013.

On December 15, 2014 which is more than five years after the execution of the Sale Deed, the Plaintiff instituted a suit against the Respondents. They pleaded that the Sale Deed should be cancelled and declared as illegal, void and ineffective on the ground being that full payment of the sale consideration had not been paid by the Respondent No. 1 and that the 30 cheques paid by the Respondent were “bogus” cheques and therefore claimed that the property be restored to the Plaintiffs.

Thereafter, the Respondent Nos. 2 and 3 filed an application for rejection of the Plaint under Order VII Rule 11 (a) and (d) of the CPC. Their main ground was that the Plaint filed by the Plaintiff was barred by limitation and moreover, no cause of action arose in the Plaint.

The Trial Court permitted the application and rejected the Plaint on the ground that the suit was time barred. The Plaintiff, thereafter, filed an appeal before the Gujarat High Court, which upheld the decision of the Trial Court.

Hence, the Appeal was filed by the Plaintiff before the Supreme Court against order of the High Court.

ISSUES BEFORE THE SUPREME COURT 

The following issue was considered by the Supreme Court:

1. Whether the Plaint discloses a real cause of action?

2. Whether the Suit is barred by limitation?

3. Whether the Suit is utterly vexatious, and an abuse of the process of the Court?

CONTENTION OF THE PARTIES

The Plaintiff contended that they were totally uneducated, and did not know how to read and write and they had only put their thumb impression on the Sale Deed. The Respondent paid 36 cheques for the sale consideration out of which 30 were bogus and therefore had paid only a small amount through the remaining 6 cheques and 99 percent of the consideration remained unpaid. Thus, plaintiffs prayed for declaring the Sale deed illegal and void.

The Plaintiffs also contended that the period of limitation commenced on November 21, 2014, when they obtained a copy of the index of the Sale Deed and found about the fraud perpetrated by the Respondent No. 1.

The Respondent No.2 and 3 contended that the suit was clearly time barred and that no cause of action had been disclosed in the plaint and therefore they had filed the application for Rejection of the Plaint under Order VII Rule 11 (a) and (d) of the CPC. The Plaintiff had declared the execution of the Sale Deed in front of the Sub-Registrar, Surat and the suit is devoid of any merit. It was incorrect that the part of sale consideration has not been paid.

Respondent Nos. 2 and 3 further submitted that they had purchased the suit property from Respondent No.1 after verifying the title, and inspecting the revenue records.

DECISION AND FINDINGS

Object and Purpose of Order 7 Rule 11

The Supreme Court held that the remedy under Order VII Rule 11 is an independent and special remedy, wherein the Court is empowered to summarily dismiss a suit at the threshold, without proceeding to record evidence, and conducting a trial, on the basis of the evidence adduced, if it is satisfied that the action should be terminated on any of the grounds contained in this provision.

The Court placed reliance on various judgments pertaining to the object of Order VII Rule 11 and opined that if no cause of action is disclosed in the Plaint or if the suit is barred by limitation, then Court cannot permit protraction of the proceedings. Herein, it will be pertinent to put a permanent halt to the sham litigation in order to not waste the time of the judiciary any further.

The Court categorically placed reliance on the adjudication in the case of Azhar Hussain vs. Rajiv Gandhi, 1986 Supp CC 315, and held that the primary objective of conferring such powers under Order VII Rule 11 is to ensure that a meaningless litigation that will be liable to be aborted in latter stage cannot be allowed to waste the time and mind of the judiciary and the Respondent.

Suit being barred by limitation

The Court observed that the sale was concluded upon the execution of the Sale Deed in 2009. Plaintiff had various opportunities to challenge the Sale Deed on grounds of non-receipt of full consideration.

To adjudicate upon the issue, the Court interpreted Articles 58 and 59 of the Limitation Act and relied on the case of Khatri Hotels Private Limited vs. Union of India, (2011) 9 SCC 126, and reiterated that the period of limitation will begin to run from the date when the first right to sue accrues.

Perceiving the conduct of the Plaintiffs, if they had a genuine injury, they could have moved for revocation of the permission granted by the Collector, and then they may have had other remedies in law for recovery of the balance consideration.

The Court observed that there was no explanation provided as to why the Plaintiff did not take any action for a period of 5 and a ½ years, without even issuing a legal notice. The Court opined that such delay shows that the suit is clearly barred under Article 59 of Limitations Act, 1963.

Accordingly, the Court held that –

“The omission of the date of execution of the Sale Deed on 02.07.2009 in the prayer clause, was done deliberately and knowingly, so as to mislead the Court on the issue of limitation. The Plaintiffs have failed to discharge the onus of proof that the suit was filed within the period of limitation. The plaint is therefore, liable to be rejected under Order VII Rule 11 (d) of CPC.”

Test for exercising power Under Order 7 Rule 11

The Court further enumerated that it is essential for Courts to first determine whether the Plaint discloses a cause of action before deciding upon the application seeking rejection of the Plaint. This should be done by analysing the submissions in the Plaint which is to be read along with the documents relied upon.

Further, the Court elucidated that in order to make such a determination, Courts need to disregard the pleas taken by the defendant in the written submission and also the application for rejection of plain on merit.

The Court reiterated the test laid down int eh case of Liverpool and London S.P. and I Association Ltd. vs. M.V. Sea Success, (2004) 9 SCC 512, wherein is was held that the issue of whether the plaint discloses a cause of action is purely a matter of fact. This has to be inferred from scrutinizing the Plaint and it should be found that that submissions made in the Plaint are true and correct in its entirety. Thus, it is essential to determine if the Plaint can stand in its entirety without any modification.

The Court held that “The power conferred on the Court to terminate a civil action is, however, a drastic one, and the conditions enumerated in Order VII Rule 11 are required to be strictly adhered to.”

The Court held that provision of Order VII Rule 11 is mandatory in nature. It states that the plaint “shall” be rejected if any of the grounds specified in clause (a) to (e) are made out. It held that “The Court must be vigilant against any camouflage or suppression, and determine whether the litigation is utterly vexatious, and an abuse of the process of the court.”

Hence, the Court concluded that the averments in the Plaint did not disclose a genuine cause of action and the Plaint is vexatious in nature and held that –

“The plea taken in the plaint that they learnt of the alleged fraud in 2014, on receipt of the index of the Sale Deed, is wholly misconceived, since the receipt of the index would not constitute the cause of action for filing the suit. On a reading of the plaint, it is clear that the cause of action arose on the non-payment of the bulk of the sale consideration, which event occurred in the year 2009. The plea taken by the Plaintiffs is to create an illusory cause of action, so as to overcome the period of limitation. The plea raised is rejected as being meritless and devoid of any truth.”

The Court also placed reliance on the case of Saleem Bhai v State of Maharashtra, (2003) 1 SCC 557, wherein it was held that the power under Order 7 Rule 11 can be exercised by the Court at any stage of the suit, either before registering the plaint, or after issuing summons to the defendant, or before the conclusion of trial.

Conclusively, the Court held that the on meaningful reading of the Plaint, if it is found that the Plaint is manifestly vexatious, without any merit and does not disclose the right to sue, then it would be enough for the Courts to be justified to exercise power under Order 7 Rule 11.

The Court held that the, even if the submissions in the Plaint submitted by the Plaintiff is construed to be true and the entire sale consideration was not paid, it cannot be a ground to cancel the Sale Deed.

AMLEGALS REMARKS 

Through this judgment, the Supreme Court reiterated that Plaintiffs must be cautious while drafting the plaint about its genuineness and disclosing the cause of action which is a crucial aspect of plaint and at the same time the respondents may practise the option of seeking rejection of a plaint, if the suit fails to disclose a valid cause of action; or is barred by any law; or if the reliefs prayed for therein are defective and un-remediable, in line with the provisions of Order 7 Rule 11.

The provision has to be followed strictly but with utmost caution as the Courts will not be delving into the merits of the case in detail, but instead would be determining the correctness of the suit merely from the analysis of submission in the Plaint. Thus, in case the Plaint is filed beyond time or the averments do not disclose a genuine cause of action, the Courts will not hesitate in putting an end to the litigation.

The rational behind the adjudication and the provision is that the time of the judiciary is extremely precious and thus, the Court are bound by the duty to reject Plaints that are vexatious in order to prevent wastage of precious judicial time. Nonetheless, the power ought to be exercised with certain amount of restraint to meet the ends of justice.

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