Order VII Rule 11 CPC - No Evidence Or Merits Of Controversy Can Be Examined While Deciding Rejection Of Plaint : Supreme Court

Recently, the Supreme Court (on November 30) held that no amount of evidence or merits of the controversy could be examined at the stage of deciding rejection of a plaint application under Order VII Rule 11 of the Code of Civil Procedure, 1908 (C.P.C.). It may be noted that this order provides the grounds on which the Court shall reject a plaint.

The Bench of Justices Vikram Nath and Rajesh Bindal supported the above observation by referring to the catena of judgments regarding the application of Order VII Rule 11 of CPC.

The cited cases also included the case of Kamala and others v. K. T. Eshwara Sa and others., (2008) 12 SCC 661. In this case, the Court opined that only the averments in the plaint would be relevant for invoking clause (d) of Order VII Rule 11 C.P.C. For this purpose, there cannot be any addition or subtraction. No amount of evidence can be looked into. The issue on merits of the matter would not be within the realm of the Court at that stage. Therefore, at that stage, the Court would not consider any evidence or enter a disputed question of fact of law.

Pertinently, clause (d) of Order VII Rule 11 C.P.C. provides for the rejection of a plaint when "the suit appears from the statement in the plaint to be barred by any law."

Apart from this, the decision in Dahiben v. Arvindbhai Kalyanji Bhanusali (Gajra), dead, through legal representatives and others, (2020) , was also referred. Therein, the Court, among other findings, also observed:

“The remedy under Order 7 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 Bench of Justices Vikram Nath and Rajesh Bindal was hearing an appeal against the impugned order passed by the Allahabad High Court in its review jurisdiction. The challenged order allowed the rejection application filed by Ashok Vidyarthi (respondent no.1) before the Trial Court. This resulted in a dismissal of suit filed by Eldeco Housing And Industries Limited (appellant). 

The instant case revolved around a Memorandum of Understanding, which was entered into between the appellant and respondent No. 1 on 31.08.1998 for the sale of the disputed property. Pertinently, in the said MOU, it was mentioned that there is ongoing litigation between the family members of respondent No. 1 concerning the property. Thus, the sale deed will get registered once the litigation ends and the vendor's rights are decided.

In 2009, the appellant learned that respondent No. 1 was trying to sell the property to third parties. This resulted in a suit for injunction against the respondent. Consequently, the same was dismissed as counsel for the appellant failed to appear. Thereafter, the litigation with respect to the property was resolved by the Top Court in 2015. However, it came to the appellant's notice that respondent No. 1 was again trying to dispose of the property. Thus, the appellant filed a suit for specific performance seeking enforcement of the MoU. However, respondent no 1. filed an application under Order VII Rule 11(d) (Rejection of plaint) C.P.C. The same was based on the ground that the relief of specific performance was available to the appellant when the suit for injunction was filed by it. Thus, in terms of Order II Rule 2 of the C.P.C., a fresh suit was not available.

It may be noted that Order 2 Rule 2 mandates that a plaintiff must include their entire claim related to a specific cause of action in one lawsuit. If the plaintiff intentionally or unintentionally omits a part of the claim, they cannot file a separate suit for it without the court's permission.

Analysis and Findings of the Court

After referring to the precedents, including the ones mentioned above, the Court took note of the fact that on 16.12.2015, ongoing litigation was put to rest by the Supreme Court. As a result, the rights of the vendor were finally crystallized. Pursuant to this, a Suit for specific performance was filed in 2017, arguing that the appellant came to know about the disposal of the litigation right before filing the suit.

However, in a suit filed for injunction, the cause of action arose when the appellant came to know that the respondent intended to sell the property to others.

Based on this, the Court observed that when the suit for injunction was filed on 22.01.2009, the cause of action to file suit for specific performance had not arisen.

“Suit for specific performance was filed on 03.08.2017 stating that the appellant-plaintiff came to know about the disposal of the litigation amongst the family members just before filing the suit. Earlier suit for injunction was filed on 22.01.2009 pleading that the appellant-vendee came to know that the vendor was trying to create third party rights in the property while agreeing to sell the same to same to some other parties. At that stage cause of act to file suit for specific performance had not arisen.”

At last, the Court also addressed another argument advanced by the respondent. The respondent filed the rejection application claiming that following the aforementioned MoU, an agreement was executed on 02.09.1998. In the same, it was clearly mentioned that if the ongoing litigation of is not decided after one year, the appellant will have the right to get his earnest money back. In this regard, the appellant had also issued a notice on 22.03.2001 seeking a refund of the same. In view of the same, it was pleaded that the suit for specific performance, filed after the dismissal of the suit for injunction, was barred under Orde II Rule 2 CPC and deserved to be rejected.

However, the Court refused to accept this argument, observing that "no amount of evidence or merits of the controversy can be examined at the stage of the decision of the application under Order VII Rule 11 C.P.C." Thus, the Court, while setting aside the impugned order, directed the Trial Court to proceed with the Suit.

Case Title: ELDECO HOUSING AND INDUSTRIES LIMITED v. ASHOK VIDYARTHI AND OTHERS., SPECIAL LEAVE PETITION (C) NO. 19465 OF 2021

Citation : 2023 LiveLaw (SC) 1033

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