Thursday, 26 November 2015

Precaution to be taken by trial court while deciding application for rejection of plaint?

 Rejection of the plaint under Order VII rule 11 of
the CPC is a drastic power conferred in the court to
terminate a civil action at the threshold. The conditions
precedent to the exercise of power under Order VII rule 11,
therefore, are stringent and have been consistently held to
be so by the Court. It is the averments in the plaint that has
to be read as a whole to find out whether it discloses a cause
of action or whether the suit is barred under any law. At the
stage of exercise of power under Order VII rule 11, the stand
of the defendants in the written statement or in the
application for rejection of the plaint is wholly immaterial. It
is only if the averments in the plaint ex facie do not disclose
a cause of action or on a reading thereof the suit appears to
be barred under any law the plaint can be rejected. In all
other situations, the claims will have to be adjudicated in the
course of the trial.

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.5254 OF 2006
P.V. GURU RAJ REDDY REP. BY
GPA LAXMI NARAYAN REDDY & ANR. ...APPELLANTS
VERSUS
P. NEERADHA REDDY & ORS. ETC. ...RESPONDENTS
Citation;(2015) 8 SCC331

1. This appeal seeks to challenge two separate
though largely similar orders both dated 26th June, 2003
passed by the High Court of Andhra Pradesh at Hyderabad in
Civil Revision Petition Nos.1398 and 1399 of 2003. By the
aforesaid orders, the High Court, in reversal of the order of
the learned trial judge, has allowed the applications filed by
the defendants under Order VII rule 11 of the Code of CivilPage 2
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Procedure, 1908 (hereinafter referred to as “the CPC”).
Aggrieved, the plaintiffs are before us in this appeal.
2. Original Suit Nos. 71 and 72 of 2002 were filed by
the plaintiffs (appellants herein) for declaration of title and
possession. The case of the plaintiffs in both the suits were
more or less similar. According to the plaintiffs as they were
living abroad they had reposed trust and faith in defendants
Nos.1 and 2 who are their close relatives (sister and brotherin-law
of plaintiff No.1) to purchase immovable property in
Hyderabad in the name of the plaintiff No.2. According to the
plaintiffs, they had made funds available to the defendants
Nos. 1 and 2 for the said purpose and had entirely relied on
them.
3. The specific case of the plaintiffs in Original Suit
No.71 of 2002 is to the effect that the property belonging to
one Professor N.S. Iyengar was identified for purchase and
an agreement was drawn up with the said person. According
to the plaintiffs, they were informed by the defendants thatPage 3
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Professor Iyengar has resiled from the agreement which
required filing a suit for specific performance. According to
the plaintiffs when they visited Hyderabad in
November/December 1999, they could notice some
construction activity in the plot belonging to Professor
Iyengar. It is at that point of time that they had made
enquiries and could come to know that though the suit for
specific performance filed by the defendants was decreed,
the sale deed was executed in the name of the defendant
No.4 who is the brother-in-law of the defendant No.1. It is
thereafter that the suit being Original Suit No.71 of 2002 was
filed.
4. Insofar as Original Suit No.72 of 2002 is concerned,
the plaintiffs' case is that the property belonging to one
Professor B. Ramchander Rao was identified for purchase.
Though the defendant Nos.1 and 2 informed the plaintiffs
that the needful was done, it transpired that the said
property was purchased on 31.8.1979 jointly in the name of
plaintiff No.2 and the defendant No.3, who is the son ofPage 4
4
defendant No.1. According to the plaintiffs immediately after
they came to know of the said facts, they had issued a legal
notice on 20.12.1999 and on receipt of the reply to the said
notice which contained an unequivocal denial of the
plaintiffs' claim, the suit being Original Suit No.72 of 2002
was filed. Both the suits were filed in July, 2002.
5. Rejection of the plaint under Order VII rule 11 of
the CPC is a drastic power conferred in the court to
terminate a civil action at the threshold. The conditions
precedent to the exercise of power under Order VII rule 11,
therefore, are stringent and have been consistently held to
be so by the Court. It is the averments in the plaint that has
to be read as a whole to find out whether it discloses a cause
of action or whether the suit is barred under any law. At the
stage of exercise of power under Order VII rule 11, the stand
of the defendants in the written statement or in the
application for rejection of the plaint is wholly immaterial. It
is only if the averments in the plaint ex facie do not disclose
a cause of action or on a reading thereof the suit appears toPage 5
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be barred under any law the plaint can be rejected. In all
other situations, the claims will have to be adjudicated in the
course of the trial.
6. In the present case, reading the plaint as a whole
and proceeding on the basis that the averments made
therein are correct, which is what the Court is required to do,
it cannot be said that the said pleadings ex facie discloses
that the suit is barred by limitation or is barred under any
other provision of law. The claim of the plaintiffs with regard
to the knowledge of the essential facts giving rise to the
cause of action as pleaded will have to be accepted as
correct. At the stage of consideration of the application
under Order VII rule 11 the stand of the defendants in the
written statement would be altogether irrelevant.
7. In Original Suit No.71 of 2002, the plaintiffs had averred
that it is only in November/December 1999 when they came to India
that they could come to know that the property of Professor Iyengar
was sold to somebody else. Thereafter, they had issued a legal noticePage 6
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on 3.12.1999. The plaintiffs have further averred that it is only from
the reply of the said notice that they could come to know of the true
facts and the conduct of the defendants in conspiring to cheat the
plaintiffs. Thereafter, according to the plaintiffs after obtaining the
copy of the decree of specific performance passed in O.S. No.24/1985
and the judgment of the Appeal Court in A.S. 215/87 as well as the
judgment of the High Court dated 13.1.1995, the suit in question was
filed, inter alia, for:
 “a) For a declaration that the Plaintiff has
title over the schedule property and for
possession of the suit schedule property
from the defendants.
 b) For cancellation of the judgment and
decree passed in O.S. 24/85 on the file of
the Court of the Principal Subordinate
Judge, Ranga Reddy District at
Saroornagar regarding the schedule
property.
c) For permanent injunction restraining the
defendants, their men and others on their
behalf from further alienating the
schedule property in favour of any other
person.
 d) For costs.”
8. Similarly in Original Suit No.72 of 2002, according to thePage 7
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plaintiffs, they could come to know of the sale deed dated 31.8.1979
executed in favour of the plaintiff No.2 and the defendant No.3 only in
the year 1999 immediately whereafter they had issued the legal notice
dated 20.12.1999. According to the plaintiffs it is only subsequently
that they came to know of sale of half of the scheduled property in
favour of the defendant No.5. Accordingly they had filed the Original
Suit No.72 of 2002 claiming the following reliefs:
“a) For a declaration that the schedule
property is the property of the 2nd
plaintiff and for possession of the
suit schedule property from the
defendants to the 2nd plaintiff.
b) For cancellation of the sale deed,
dt. 31.8.1979 jointly executed in
the name of the 2nd plaintiff and
the 3rd defendant, so far as the 3rd
defendant is concerned.
c) For cancellation of the sale deed,
dated 10.02.1999, executed in the
name of the 5th defendant.
d) For permanent injunction
restraining the defendants, their
men and others on their behalf
from further alienating the
schedule property in favour of
other persons.
e) For costs.”Page 8
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9. Both the suits were filed in July 2002 which is well
within three years of the date of knowledge, as claimed by
the plaintiffs, of the fact that the property had not been
transferred in the name of plaintiff No.2 by the defendants
Nos. 1 and 2. The aforesaid averments made in the plaint
will have to be accepted as correct for the purposes of
consideration of the application under Order VII rule 11 filed
by the defendants Nos. 1 and 2. If that be so, the averments
in the plaint would not disclose that either of the suits is
barred by limitation so as to justify rejection of the plaint
under Order VII rule 11 of the CPC.
10. There is yet another issue framed by the High
Court as Question No.3 which is in the following terms:
“3. Whether the claims made in
the suit, as appearing in the
statement in the plaint, are hit
by the provisions of the
Benami Transactions
(Prohibition) Act, 1983?”Page 9
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11. While in Civil Revision Petition No.1398 of 2003 the
said issue was decided in favour of the plaintiffs, in Civil
Revision Petition No.1399 of 2003 the same was decided
against the plaintiffs. The finding of the High Court in this
regard proceeds on the basis that the plaintiffs had admitted
in the plaint that the property purchased in the name of the
defendant No.3 belonged to the plaintiffs. Therefore the
provisions of Benami Transactions (Prohibition) Act, 1988
would apply. We fail to see how the aforesaid view of the
High Court can be sustained. The suits in question were not
filed for recovery of any property held in benami by the
defendants. Rather, the suit was for declaration of plaintiffs'
title and for recovery of possession from the defendants, as
already noted.
12. For the aforesaid reasons, the order of the High
Court dated 26th June, 2003 has to be reversed. We,
accordingly, do so and allow this appeal and direct the
learned trial Court to hear and decide both the suits i.e.Page 10
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Original Suit No.71 of 2002 and Original Suit No.72 of 2002
on merits at an early date.
13. The appeal is disposed of in the above terms.
……..……......................J.
 (RANJAN GOGOI)
.……..…….....................J.
 (PRAFULLA C. PANT)
NEW DELHI
FEBRUARY 13, 2015.
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