Sayyed Ayaz Ali vs Prakash G. Goyal on 20 July, 2021


Try out our Premium Member services: Virtual Legal Assistant, Query Alert Service and an ad-free experience. Free for one month and pay only if you like it.

Supreme Court of India

Sayyed Ayaz Ali vs Prakash G. Goyal on 20 July, 2021

Author: Hon’Ble Dr. Chandrachud

Bench: Hon’Ble Dr. Chandrachud, M.R. Shah

                                                                                                 Reportable



                                         IN THE SUPREME COURT OF INDIA
                                          CIVIL APPELLATE JURISDICTION


                                         Civil Appeal Nos 2401-2402 of 2021
                                         @ SLP (C) Nos. 29975-29976 of 2018



          Sayyed Ayaz Ali                                                             .... Appellant


                                                          Versus



          Prakash G Goyal & Ors.                                                   .... Respondents




                                                     JUDGMENT

Dr Dhananjaya Y Chandrachud, J

1 These appeals arise from a judgment of a Single Judge at the Nagpur Bench

of the High Court of Judicature at Bombay.

2 The appellant is the plaintiff in a suit instituted before the Civil Judge, Senior
Signature Not Verified

Digitally signed by
Chetan Kumar
Date: 2021.07.20
19:09:04 IST

Division at Nagpur. The first respondent filed an application at Exhibit-50 for the
Reason:

rejection of the plaint on the ground that it was barred under clauses (b) and (d) of
1
Order 7 Rule 11 of the Code of Civil Procedure 1908 (“CPC”). The Fifth Joint Civil

Judge, Junior Division, Nagpur allowed the application. However, while doing so, the

appellant was “directed to seek proper relief and pay court fee thereon within 15

days, otherwise appropriate order will be passed”. This order of the Trial Judge,

insofar as it permitted the appellant to carry out an amendment for seeking

appropriate reliefs was assailed before the High Court in a Civil Revision Application

No 124 of 2017 by Defendants 1A to D and Defendant No 2 (Respondent Nos 1 to 5

to these proceedings). The appellant instituted a Writ Petition1 under Article 227 of

the Constitution for challenging the order of the Trial Judge allowing the application

under Order 7 Rule 11 of the CPC. The High Court decided both the civil revision

application and the writ petition by a common judgment. The Single Judge held that

since the plaint was rejected under Order 7 Rule 11(d) there was no occasion to

direct that an amendment be made to the plaint. The civil revision was allowed on

this basis. The writ petition filed by the appellant was held to be an “after thought

and belated” and no relief was granted to the appellant in the writ proceedings. That

is how the proceedings have reached this Court. The appellant is essentially

aggrieved by the decision of the Trial Court and the High Court to allow the

application under Order 7 Rule 11(d) of the CPC.

3 Since the controversies in the present case arise out of the application under

Order 7 Rule 11, it would be necessary to set out in brief the contents of the plaint.

Parties would be referred to on the basis of their respective positions in the suit. The

1
(WP No 4508 of 2018)

2
plaintiff claims that he came into contact with the third defendant who is a financial

broker. The third defendant is alleged to have arranged a loan of Rs 7 lacs with

interest at 5 per cent month subject on the plaintiff executing an agreement and

blank documents as security for the loan. Against the loan of Rs 7 lacs, the plaintiff

is alleged to have executed an agreement dated 3 April 2012 in favour of the

nominees of the third defendant and executed documents which were blank.

Thereafter, it is alleged that the plaintiff needed an additional finance of Rs 22 lacs

and the third defendant took the plaintiff to the first defendant. The first defendant is

alleged to have agreed to give a loan of Rs 22 lacs on the condition that the plaintiff

executed a sale deed in respect of land of Mauza: Kanholi towards security for

repayment of the loan. The amount was paid over on 11 May 2012 and was to carry

interest of 5 per cent per month and in consideration, the plaintiff is alleged to have

executed documents including a sale deed dated 11 May 2012. In the meantime, the

fourth defendant is alleged to have expressed the desire to sell plot Nos 23-A, 29,

34, 35-A, 24, 25, 26, 27 and 28 admeasuring 25.009 sq. ft. out of land bearing

Khasra No 82/3 Mauza: Gorewada. P.R. No 9, Tah: and District Nagpur. This

property has been referred to as the suit property. The fourth defendant is alleged

to have shown an agreement dated 22 March 2011 in his favour. The plaintiff is

alleged to have been shown certain documents between Shoab Asad, Murtuja Khan

and Shashikant Grihanirman Sahakari Sanstha. After negotiation, it is stated that the

plaintiff agreed to purchase the suit property at Rs 1950 per sq. ft., out of which the

plaintiff agreed to pay Rs 1400 per sq. ft. to Shashikant Grihanirman Sahakari

Sanstha and Rs 550 per sq. ft. to the fourth defendant. Since the plaintiff did not
3
have funds for the purchase of the property, it is alleged that he met the first

defendant through the third defendant and sought a loan for the amount. The third

defendant is alleged to have agreed to a loan of Rs 1.5 crores subject to the

deduction of the earlier loans of Rs 7 lacs and Rs 22 lacs together with interest.

According to the plaintiff, it was however a condition that the sale deed of Plot No

23A and 24 would be executed directly in the name of the first defendant and

second defendant towards security for the repayment of the loan and the sale deed

for Plot Nos 25 to 29, 34 and 34A would be executed in the joint names of the first

and second defendants and the plaintiff. The plaintiff is alleged to have entered into

an agreement for the purchase of the suit property on 15 June 2012. The amount

alleged to have been paid for the loan was obtained by the plaintiff from the first

defendant. The sale deed for plot Nos 23A and 24 was executed and registered on

27 June 2012 in the names of the first and second defendants, while the sale deed

for the remaining plots was executed in the joint names of the first and second

defendants and the plaintiff. The plaintiff claims to have been placed in exclusive

possession of the entire suit property and it is his case that the names of the first

and second defendants were incorporated in the sale deed only for security for the

repayment of the loan.

4 The plaintiff claims to have commenced development on the land and to have

purchased an adjoining plot bearing no 9A on 28 September 2012. According to the

plaintiff, on 26 September 2012, the first and third defendants came to the suit

property and demanded the repayment of the interest on the loan of Rs 1.5 crores.

4
The plaintiff is alleged to have made certain payments on 8 September 2012 and to

have furnished postdated cheques towards the interest for the months of November

and December 2012. The plaintiff alleged that he completed the work of leveling the

plots. On 24 November 2012, the third, fourth and fifth defendants are alleged to

have entered the suit property along with thirty unknown persons and to have

demanded the payment of Rs. 1.50 crores within two days. The police, it is alleged,

did not take any action on the complaint registered by the plaintiff.

5 The first and second defendants are alleged to have conspired with

Defendants 3 to 5 to commit criminal acts against the plaintiff with the help of the

local police. Crime No 475 of 2012 was registered on 28 November 2012 under

Sections 143, 147, 447 and 427 of the Indian Penal Code. According to the plaintiff,

during the pendency of the suit, a compromise was arrived with the first and second

defendants. It has been alleged that though certain amounts were paid to the first

and second defendants pursuant to the compromise, they have refused to execute

a sale deed in return and have recovered an amount of Rs. 50 lacs from the plaintiff

under the garb of a compromise.

The reliefs which have been sought in the suit are as follows:

“1. declare that the acts of the defendants no.3 to 5 to enter
into the suit property on 24-11-2012 and to beat/assault and
to interfere with the peaceful possession of the plaintiff is
criminal, illegal, arbitrary and without any authority.

2. Pass decree for permanent perpetual injunction against
defendants, their agents servants and the person acting on
their behalf, thereby restraining them from interfering with the
peaceful possession of the plaintiff over the suit property and

5
from dispossessing the plaintiff from the suit property in any
manner of whatsoever nature permanently in the interest of
justice.”

6 After the institution of the suit on 26 November 2012, an application was filed

on behalf of the second defendant for the rejection of the plaint under clauses b and

d of Rule 11 of Order 7 of the CPC. The rejection was sought on the ground that the

plaintiff has admitted the execution of sale deeds in favour of the first and second

defendants. Despite this, no declaration of invalidity has been sought in regard to

the sale deeds. The submission was that the plaintiff did not seek the cancellation of

the sale deeds on the ground that they were executed only as a security for the loan

transaction. Further, no declaration was sought by the plaintiff to the effect that the

sale deeds did not confer any right, title or interest on the defendants. As a result of

this, the suit would be barred by Section 34 of the Specific Relief Act 1963.

7 The application under Order 7 Rule 11 was rejected by the Trial Judge on 1

August 2017. The Trial Judge observed that the plaintiff has claimed a declaration

simpliciter that the act of the defendants in entering upon the suit property on 24

November 2012 is illegal, besides which a permanent injunction has been sought to

protect the possession of the plaintiff. The Trial Judge held that the plaintiff having

failed to seek a declaration that the sale deeds were executed only as a security for

the loan transaction, the suit is not maintainable in view of the provisions of the

Section 34 of the Specific Relief Act. The Trial Judge held:

“14 …as discussed above, the plaintiff neither sought relief of
cancellation of alleged sale deeds nor for declaration that the

6
alleged sale deeds were executed for security purpose and
not its real sense. Therefore, I am of the view that present
application deserves to be allowed. However, as discussed
above, the plaintiff is ready to pay the requisite court fee
thereon. Therefore, I give my finding point No. l affirmative
and so far as, point No.2 is concerned, I pass following order.

ORDER
1] Application is allowed.

2] The plaintiff is directed to seek proper relief and pay court
fee thereon within 15 days, otherwise, appropriate order will
be passed.”

8 Aggrieved by the order of the Trial Judge, granting liberty to the plaintiff –

appellant to amend the plaint despite allowing the application under Order 7 Rule

11, Defendant Nos 1-a to 1-d and Defendant No 2 (Respondent Nos 2-5 and

Respondent No 1 before this Court) filed a civil revision application before the High

Court. On 11 September 2017 and 23 July 2018, the appellant instituted a writ

petition challenging the order of the Trial Judge allowing the application (Exhibit 50)

of Defendant No 2 under Order 7 Rule 11. The High Court by its judgment and order

dated 14 September 2018 held that:

(i) On a reading of the plaint, it is clear that the sale deeds were executed in

the names of the first and second defendants with regard to plot Nos 23A

and 24;

(ii) Sale deeds were executed in respect of the plot Nos 25 to 29, 34 and 34A

in the joint names of the plaintiffs together with the first and second

defendants;

(iii) According to the plaintiff, these sale deeds in the name of the first and

second defendants were a security for the repayment of the loan;

7

(iv) It was necessary for the plaintiff to seek a declaration that the sale deeds

were executed merely as a security for the repayment of the loan and a

failure to seek such a declaration would come within the purview of the

proviso to Section 34 of the Specific Relief Act 1963;

(v) The Trial Court having allowed the application under Order 7 Rule 11(d) of

the CPC committed an error in granting time to the plaintiff to amend the

plaint to seek proper relief and pay court fees. Where the rejection of the

plaint takes place under Order 7 Rule 11(d), there would be no question of

granting time to the plaintiff to rectify the defects in the plaint. Where the

suit appears from the statements in the plaint to be barred by any law, the

defects are not curable; and

(vi) The challenge by the plaintiff to the order rejecting the plaint under Order 7

Rule 11(d) is without substance. The order on Exhibit-50 was passed on 1

August 2017. On the basis of the order, the plaintiff sought an amendment

of the plaint under Order 6 Rule 17 on 14 August 2017 by seeking a

declaration in respect of the sale deeds. The order under Exhibit- 50 was

challenged in a civil revision application on 12 September 2017 and the

plaintiff was served by substituted service in April 2018 and it was only on

24 July 2018 that the plaintiff sought to challenge the order under Exhibit-

50. Consequently, the challenge is belated and is an afterthought.

9 Mr Vinay Navare, learned Senior Counsel appearing on behalf of the

appellant-plaintiff submitted that the High Court has erroneously upheld the finding

8
of the Trial Judge that the application under Order 7 Rule 11 of the CPC had to be

allowed. Under Order 7 Rule 11(d), a plaint shall be rejected “where the suit appears

from the statements in the plaint to be barred by any law”. The appellant has sought

a declaration against the third, fourth and fifth defendants in regard to their act of

entering upon the property on 24 November 2012 and interfering with the peaceful

possession of the plaintiff. An injunction has been sought against all the defendants

restraining them from interfering with the peaceful possession of the plaintiff over

the suit property. Section 342 of the Specific Relief Act indicates that

(i) A person entitled to any legal character or to any right as to any property

may institute a suit against any person denying or interested to deny his

title to such character or right;

(ii) The court may in its discretion make a declaration that the plaintiff is so

entitled and the plaintiff need not in such a suit ask for further relief; and

(iii) Under the proviso, no court shall make any such declaration where the

plaintiff being able to seek further relief than a mere declaration of title

omits to do so.

It has been urged that the proviso to Section 34 applies to a situation where a

plaintiff has sought a mere declaration of title but omits to seek further or

2
“34. Discretion of court as to declaration of status or right-Any person entitled to any legal character, or to any right
as to any property, may institute a suit against any person denying, or interested to deny, his title to such character or
right, and the court may in its discretion make therein a declaration that he is so entitled, and the plaintiff need not in
such suit ask for any further relief: Provided that no court shall make any such declaration where the plaintiff, being
able to seek further relief than a mere declaration of title, omits to do so.
Explanation.-A trustee of property is a “person interested to deny” a title adverse to the title of someone who is not
inexistence, and for whom, if in existence, he would be a trustee.”

9
consequential relief. The submission is that in the present case, the suit has been

instituted to protect the possession of the plaintiff simpliciter without claiming a

declaration of title. Seeking a declaration of title is, according to the submission, not

mandatory: what the proviso to Section 34 provides is that seeking a mere

declaration of title without seeking further relief is impermissible. On these grounds,

it is urged that the suit could not be held to be barred by Section 34 of the Specific

Relief Act. Learned counsel urged that whether the suit would be maintainable in the

absence of the plaintiff – appellant seeking a declaration of title is a distinct question,

but it cannot be held to be barred by any law within the meaning of Order 7 Rule

11(d).

The appellant instituted a writ petition before the High Court on 23 July 2018, to

challenge the order of the Trial Court allowing the application (Exhibit -50) for

rejecting the plaint under Order 7 Rule 11. For clarity, it is necessary to extract the

reliefs which were claimed before the High Court in the writ petition:

“1. …quash and set aside the order passed below Exh: 50
(ANNEXURE-F) on 01/08/2017 in RCS No.4990/2012
(Sayyad -Vs.-Om Mittal and others) by the 5th Joint Civil
Judge, Junior Division, Nagpur…

2. Reject the application at Exh: 50 filed RCS No.4990/2012
(Sayyad -Vs.-Om Mittal and others) pending on the file of 5th
Joint Civil Judge, Junior Division, in the interest of justice.”

10 The High Court has, in the course of its judgment, rejected the writ petition on

the ground that it was “by way of an afterthought and belated”. This was on the

premise that after the order of the Trial Judge dated 1 August 2017, the appellant
10
filed an application under Order 6 Rule 17 on 14 August 2017 in terms of the liberty

granted by the Trial Judge for amending the plaint to seek a declaration in regard to

the sale deeds in question. The first and second defendants to the suit challenged

the grant of the liberty by the Trial Judge by filing a revision application on 12

September 2017 and it was only on 24 July 2018 that the appellant – plaintiff sought

to challenge the order rejecting the plaint under Order 7 Rule 11(d).

11 Mr Pankaj Kothari, learned Counsel appearing on behalf of the respondents –

defendants raised a preliminary objection to the maintainability of the writ petition on

the ground that against the rejection of the plaint, the remedy of the appellant was to

file a regular first appeal since an order of rejection operates as a decree. It has

been urged that the appellant, after having complied with the order of the Trial Court,

deliberately filed a writ petition, instead of an appeal, to avoid the issue of limitation

in filing an appeal. Mr Navare, learned Senior Counsel contested the submission by

urging that since a civil revision application had been filed by the first and second

defendants before the High Court, the appellant- plaintiff was justified in seeking

recourse to the writ jurisdiction of the High Court. Moreover, he submitted that the

availability of a remedy of a first appeal under Section 96 of the CPC would not ipso

facto bar a recourse to the writ jurisdiction.

12 Section 2(2) of the CPC defines the expression ‘decree’ in the following

terms:

“(2) “decree” means the formal expression of an adjudication
which, so far as regards the Court expressing it, conclusively
determines the rights of the parties with regard to all or any of

11
the matters in controversy in the suit and may be either
preliminary or final. It shall be deemed to include the rejection
of a plaint and the determination of any question within
section 144, but shall not include—

(a) any adjudication from which an appeal lies as an appeal
from an order, or

(b) any order of dismissal for default.

             Explanation.—A decree         is preliminary when further
             proceedings have to be        taken before the suit can be
             completely disposed of. It    is final when such adjudication
             completely disposes of the    suit. It may be partly preliminary
             and partly final;”



Order 7 Rule 13 provides that the rejection of the plaint “on any of the grounds

hereinbefore mentioned shall not of its own force preclude the plaintiff from

presenting a fresh plaint in respect of the same cause of action”.

The definition of “decree” in Section 2(2) “shall be deemed to include the rejection of

a plaint”. Hence, the order of the Trial Court rejecting the plaint is subject to a first

appeal under Section 96 of the CPC. The writ petition filed by the appellant was

liable to be rejected on that ground. We therefore affirm the judgment of the High

Court rejecting the writ petition, though for the above reason leave it open to the

appellant to pursue the remedy available in law.

13 The High Court while exercising its revisional jurisdiction accepted the plea of

the first and second defendants that the Trial Judge, having allowed the application

Order 7 Rule 11(d), was not justified in granting to the appellant-plaintiff liberty to

amend the plaint by seeking appropriate reliefs and paying the court fee. In this

context, it is necessary to advert to Order 7 Rule 11 which provides as follows:

12
“11. Rejection of plaint.— The plaint shall be rejected in the
following cases:—

(a) where it does not disclose a cause of action;

(b) where the relief claimed is undervalued, and the plaintiff,
on being required by the Court to correct the valuation within
a time to be fixed by the Court, fails to do so;

(c) where the relief claimed is properly valued, but the plaint is
returned upon paper insufficiently stamped, and the plaintiff,
on being required by the Court to supply the requisite stamp-
paper within a time to be fixed by the Court, fails to do so;

(d) where the suit appears from the statement in the plaint to
be barred by any law;

(e) where it is not filed in duplicate;

(f) where the plaintiff fails to comply with the provisions of rule
9

[Provided that the time fixed by the Court for the correction of
the valuation or supplying of the requisite stamp-paper shall
not be extended unless the Court, for reasons to be recorded,
is satisfied that the plaintiff was prevented by any cause of an
exceptional nature from correcting the valuation or supplying
the requisite stamp-paper, as the case may be, within the
time fixed by the Court and that refusal to extend such time
would cause grave injustice to the plaintiff.]”

The proviso quoted above deals with a situation where time has been fixed by the

Court for the correction of the valuation or for supplying of the requisite stamp paper.

Under the proviso, the time so fixed shall not be extended unless the court, for

reasons to be recorded, is satisfied that the plaintiff was prevented by a cause of an

exceptional nature from complying within the time fixed by the court and that a

refusal to extend time would cause grave injustice to the plaintiff. The proviso

evidently covers the cases falling within the ambit of clauses (b) and (c) and has no

application to a rejection of a plaint under Order 7 Rule 11(d). In the circumstances,

13
the High Court was justified in coming to the conclusion that the further direction

that was issued by the Trial Judge was not in consonance with law.

14 For the above reasons, we affirm the judgment of the Single Judge of the

High Court:

(i) allowing the revision application filed by the first and second defendants;

and

(ii) dismissing the writ petition filed by the appellant-plaintiff.

Since the dismissal of the writ petition has been upheld on the ground that the order

rejecting the plaint operates as a decree within the meaning of Section 2(2) of the

CPC, the appellant is at liberty to take recourse to the remedy against the rejection

of the plaint as prescribed by the CPC.

15 The appeals shall stand disposed of in the above terms.

16          Pending application(s), if any, stand disposed of


.


……….………………………………………………..J.
[Dr Dhananjaya Y Chandrachud]

…..….………………………………………………..J.
[M R Shah]
New Delhi;

July 20, 2021
14



Source link