Whether court can take in to consideration conduct of deft while deciding application for rejection of plaint?

 In my view, court cannot reject the plaint on the basis of the
allegations made by the defendants in the written statement. However,
court can certainly look into the averments in the affidavits filed by the
defendants themselves in the same proceedings taking a contradictory or
inconsistent stand than the stand taken in the application for rejection of
plaint under Order 7 Rule 11. In my view a party can not be allowed to take
two different stand, one while opposing the application for interim relief
filed by the plaintiff and another stand while making an application for
rejection of plaint under Order 7 Rule 11. Once court is satisfied that plaint
prima facie shows a cause of action, court is not required to make an
elaborate enquiry into the doubtful or complicated questions of law or facts.
Court cannot consider whether plaintiff would ultimately succeed in the
claims made by him or not while deciding application under Order 7 Rule
11 of Code of Civil Procedure, 1908. A perusal of the plaint in toto clearly

indicates that the cause of action set out in the plaint is not illusory but
requires to be decided at the time of trial.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY.
ORDINARY ORIGINAL CIVIL JURISDICTION
NOTICE OF MOTION NO.3897 OF 2006
IN
SUIT NO.2177 OF 2001
Export Credit Guarantee Corporation
of India Ltd,

V/s.
Mr T. Mathew


Citation;2014(4) ALLMR 135


CORAM : R.D.DHANUKA J.

JUDGMENT PRONOUNDED ON : MARCH 4,2014.
Read original judgment here; click here


By this notice of motion, defendant No.3 seeks rejection of plaint under
Order VII Rule 11 of Code of Civil Procedure 1908 on various grounds. Some of
the relevant facts which emerge from the plaint and the affidavits filed by the
parties are as under :
2. Defendant Nos.1 to 3 are the trustees of a private family trust known as
PTM Family Trust incorporated under the deed of settlement dated 5th September
1979 (hereinafter referred to as the said trust). In the year 1980, defendant Nos.
1 to 3 approached the plaintiff with a request to advance monies to the said trust

to purchase certain properties in a building viz. Dalamal House and offered that
upon purchase of the said properties, the said properties would be let out to the
plaintiff for a period of 20 years with other rights. Plaintiff advanced a sum of
Rs.93,93,420/in
the form of deposit to the said trust to enable it to buy certain
premises in the said building Dalamal House. On 15th May 1980, the plaintiff and
defendant Nos.1 to 3 entered into an agreement of lease by which the defendant
Nos.1 to 3 gave on lease to the plaintiff the premises Nos.21 and 22 and for a
period of 20 years at monthly rent of Rs.3.125 per sq. ft for the area of 9791.6 sq.
ft of the premises No.21 and 22 and area of 2500 sq. ft of premises No.31. It is
the case of the plaintiff that at the end of the lease period of 20 years, plaintiff
was given a right to purchase the reversionary right in all the said premises at a
prefixed
and agreed purchase price of Rs.100 per sq. ft and without any
consideration payable for the tax. Some of the relevant clauses of the said
agreement for the purpose of deciding this notice of motion are as under :
Clause : 1 : The Lessors shall grant to the Lessee and the Lessee
shall accept from the Lessors a lease of all those the said office
premises No.21 and 22 on the second floor and the said office
premises No.31 on the third floor of the said building known a
'Dalamal House' situate at Plot No.206, Block No.III, Backbay
Reclamation Scheme at Nariman Point in Bombay more particularly
described in the Schedule hereunder written for the definite term of
20 (Twenty) years commencing from the date of this Agreement at a
monthly rent for the said office premises of Rs.3.125 per square foot
of the built up area of 9791.6 square feet on the second floor and
2500 square feet on the 3rd floor subject to actual joint measurements
comprised in the said office premises (but, for the terrace on the
second floor of the said Dalamal House no rent shall be paid clear of
all deductions by equal monthly payments.
Clause(
B) Covenants by the lessors :
(i) To join in the formation of a Cooperative
Society or any
Company to be formed by the Purchasers (owners) of all the
premises in the said building – Dalamal House – and to satisfy the
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Lessee that such Society or Company has been duly and legally
formed and established and that the terms and conditions of the said
Agreement both dated 15th May, 1980 between the Builders and the
Lessors have been fully carried out and satisfied ;
(vi) To procure to an in favour of the Lessee and to produce a Bank
Guarantee from any Nationalised Bank to the satisfaction of the
Lessee ensuring the payments by the Lessors of all existing
Municipal and Government taxes and all common charges payable to
the Cooperative
Society or to the Company to be formed as aforesaid
during the said term of twenty years ;
(vii) To repay the said amount of the loan advanced by the Lessee
to the Lessor by adjusting the same against the monthly rent are
served in manner hereinbefore provided and not to sell, mortgage,
charge, hypothecate or otherwise encumber the said office premises
until repayment of the full amount of the said loan without the
previous consent in writing of the Lessee.
(C ) Provisos :
(i) … (ii) Right to the Lessee at the end of the said term of 20
(Twenty) years to renew the Lease for further period of 10(Ten) years
at the same rent and on the same terms and conditions and
thereafter to renew it for successive period of 10 (Ten) years at a
time at a rent to be mutually agreed upon but not exceeding 10% of
the rent charged for the previous term TOGETHER ALSO with a
right to purchase the reversion at any time after the said first term of
20 (Twenty) years the price upon such purchase being calculated at
the rate of Rs.100/per
square foot of the built up area. No
price being charged or paid for the terrace area of approximately
4700 sq.ft., on the 2nd floor of the said Dalamal House.
(vi) The Lessors shall immediately after the formation and
registration of the said Cooperative
Society or incorporation and
registration of a Company, as the case may be, execute to and in
favour of the Lessee a Lease of the said office premises containing the
Lessees' covenants, Lessors' covenants and provisos herein contained
in the forms previously to be approved by the Lessors shall also
jointly and severally execute to and in favour of the Lessee to execute
the said lease for and on behalf of and as the deed and act of the
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Lessors.
3. Defendant Nos.1 to 3 handed over possession of the said premises to
the plaintiff. Defendant Nos.1 to 3 also executed Power of Attorney dated 15th
May 1980 and gave various powers including the power to get the shares issued
by defendant No.4 Society in respect of the said premises transferred in the name
of the plaintiffs.
4. It is case of the plaintiff that in pursuance of the Power of Attorney,
plaintiff got a lease deed dated 8th July 1992 executed in their favour in respect of
the premises Nos.21 and 22 and the said terrace adjacent thereto. The said lease
deed was duly registered with the Sub Registrar of Assurances some time in the
year 2009 though lodged for registration immediately upon execution of the said
lease dated 8th July 1992.
5. It is case of the plaintiff that the said trust did not pay the quarterly
dues of defendant No.4 society in respect of the suit premises. Defendant No.4
filed a dispute before the cooperative
Court Mumbai. By an interim order dated
17th November 1994, the Cooperative
Court directed the plaintiff to pay certain
amounts during the pendency of the said proceedings. The appeal filed by the
plaintiff in the Cooperative
appellate Court came to be rejected by order dated 7th
November 1997. The plaintiff was directed to deposit certain amounts in the cooperative
Court as also to pay to the society amounts towards charges, taxes,
outgoings etc. in respect of the said premises. It is case of the plaintiff that
pursuant to said two orders, the plaintiff paid total amount of Rs.64,53,965.60 in
respect of the said premises either to the society directly or in the form of deposit
in the Cooperative
Court which was otherwise payable by the trust It is case of
the plaintiff that under the said agreement of 15th May 1980 after expiry of 20
years, plaintiff was entitled to exercise reversionary rights i.e. a right to purchase
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the reversion at any time after first term of 20 years at a specified rate.
According to the plaintiff, the said amount towards purchase price payable by the
plaintiff to the trust was of Rs.1001842/which
amount the plaintiff was entitled
to set off against the amount of Rs.7053965.60 which was alleged to have been
paid by the plaintiff on behalf of defendant Nos.1 to 3 pursuant to the orders
passed by the Cooperative
Court.
6. By their advocate's notice dated 16th May 2000 to the said Trust,
plaintiff exercised the alleged rights to purchase of the reversionary rights in
respect of the said premises and called upon the said trust to effect the transfer of
the suit premises to the plaintiff and also called upon the defendant No.3 to pay
a sum of Rs.5641658/to
the plaintiff which amount was after adjusting the
consideration amount payable by the plaintiff to the trust.
7. By notice dated 23rd March 2001, the said trust called upon the
plaintiff to quit and vacate the said premises on the ground that plaintiff had no
right, authority, power to continue to remain in possession of the said premises.
8. The plaintiff vide their advocate's letter dated 19th April 2001, denied
the allegations made by the said trust and contended that the plaintiff by
exercising the right to purchase the said premises vide a notice dated 16th May
2000 have become entitled to acquire the said premises as owners of the said
premises.
9. On 25th June 2001, the plaintiff filed this suit inter alia praying for a
declaration that defendant Nos.1 to 3 are bound and liable to specifically perform
the agreement dated 15th May 1990 and lease deed dated 8th July 1992 at the
agreed purchase price of Rs.10,01,842/and
for execution of necessary
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documents for effecting transfer thereof in favour of the plaintiff. Plaintiff also
has prayed for a money decree against Defendant Nos. 1 to 3 for an amount of
Rs.60,52,123.60 with further interest thereon. Defendant No.3 has filed a written
statement in this suit in the year 2005.
10. Mr.Kapadia, learned senior counsel and Mr.Purohit, learned counsel
appearing for defendant no.3 submitted that alleged lease deed dated 8th
July, 1992 is not validly executed and did not create any right in favour of
the plaintiff in the suit premises. The power of attorney relied upon by the
plaintiff is not registered. The alleged lease agreement dated 15th May,
1980 is not a registered document and thus such unregistered lease
agreement is not admissible in evidence. Under agreement to lease dated
15th May,1980, the lease was for a definitive period of 20 years which
expired on 14th May, 2000. There was no relationship of lessor and lessee
after expiry of 20 years. The said lease was admittedly not renewed. The
plaintiff thus could not seek to enforce the alleged revisionary rights in the
property. Reliance is placed on section 107 of the Transfer of Property Act,
1882 in support of the plea that the said agreement was an unregistered
agreement and was barred under the said provisions of the Transfer of
Property Act and was void. Suit based on such unregistered document is
not maintainable. The learned senior counsel submits that registration of
the document dated 8th July, 1992 in the year 2009 would not in any
manner alter and/or affect the demise granted under the said agreement.
11. It is submitted that upon expiry of 20 years, the plaintiff was a mere
tenant at sufferance and has not paid any rent nor the defendants have
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consented or accepted to the plaintiff to be a lessee holding over. It is
submitted that in the year February 1992, the plaintiff executed a lease deed
on behalf of the defendant nos. 1 to 3. It is submitted that even if the said
agreement dated 14th May, 1980 was a valid lease, it was determined on 14th
May, 2000 and purported exercise by the plaintiff on 16th May, 2000 of
supposedly acquiring revisionary rights could not subsist. Subsequent
registration of the agreement of February 1992 in the year 2009 would not
make the lease valid and subsisting since the same was already determined
in the year 2000. There was thus no cause of action in filing this suit and
the suit is therefore liable to be dismissed under order 7 Rule 11(a) of Code
of Civil Procedure, 1908. Learned senior counsel submits that under
proviso (C) (ii), the plaintiff was given a right to seek renewal of the lease
at the end of 20 years for further period of 10 years at the same rent and on
the same terms and conditions and thereafter to renew it for successive
period of 10 years at a time at a rent to be mutually agreed upon together
also with a right to purchase the reversion at any time after at the first term
of 20 years upon the purchase price calculated at the rate mentioned in that
clause. Since there was no renewal of the lease agreement after 20 years,
there was no question of exercising any alleged right to purchase the
reversion by the plaintiff. There is no cause of action in filing the suit.
12. The learned senior counsel placed reliance on the judgment of this
court in case of Bhaskar Gopal and Another vs. Padman Hira Chaudhari
and another AIR 1916 Bom.228 and in particular paragraph 2 thereof in
support of his submission that there had to be a subsisting lease and a right
of lessor – lessee relationship before the plaintiff could exercise right of
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reversion. Paragraphs 2 of the said judgment reads thus :2.
Section 54 of the Transfer of Property Act provides
that, in the case of tangible Immovable property of a
value less than Rs. 100, transfer by way of sale may be
made either by a registered instrument or by delivery of
the property. But the section draws a sharp distinction
between tangible Immovable property and a reversion or
other intangible thing. The defendants contend that the
thing sold to them was the tangible house, which indeed
purported to be the object of the sale. But it is clear that
the vendor could not sell any higher interest than she
possessed, and as at the date of the sale she had
transferred possession to the defendants who were in
possession as her tenants, I am of opinion that the only
interest which remained in the vendor was the reversion
within the meaning of that term as used in Section 54.
That, so far as I am aware, is the only interest in the
property which remains with a landlord after he has
leased the Immovable property to tenants and has made
over possession to them. The word is used in this sense in
Woodfall's Law of Landlord and Tenant and also in Lord
Halsbury's Laws of England, Vol. XVIII, paragraph 766
under the title "Landlord and Tenant." This use is in
conformity with the definition contained in Stroud's
Judicial Dictionary where a "reversion" is described as
"the undisposed of interest in land which reverts to the
grantor after the exhaustion of the particular estates, e.g.,
for years, for life, or in tail,which
he may have created."
13. My attention is invited to the letter dated 23rd March, 2001 from the
defendant nos. 1 to 3 to the plaintiff terminating the agreement and asking
for possession. Reliance is also placed on the letter dated 19th April, 2001
addressed by the plaintiff in which it is contended by the plaintiff that the
plaintiff had become the owner of the premises and therefore there was no
relationship of lessor and lessee or landlord or tenant under the lease
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agreement. The learned senior counsel placed reliance on the judgment of
the Supreme Court in case of State of U.P. And others vs. Lalji Tandon
(2004) 1 SCC 1 and in particular paragraphs 13 and 15 in support of the
submission that if covenant for renewal was to be exercised, a fresh deed of
lease ought to have been executed between the parties and in absence
thereof, the original lease which was for a fixed period ceased to exist.
Paragraphs 13 and 15 of the said judgment reads thus :13.
In India, a lease may be in perpetuity. Neither the
Transfer of Property Act nor the general law abhors a
lease in perpetuity. (Mulla on The Transfer of Property
Act, Ninth Edition, 1999, p.1011). Where a covenant for
renewal exists, its exercise is, of course, a unilateral act or
the lessee, and the consent of the lessor is unnecessary.
(Baker v. Merckel (1960) 1 All ER 668, also Mulla, ibid, p.
1204). Where the principal lease executed between the
parties containing a covenant for renewal, is renewed in
accordance with the said covenant, whether the renewed
lease shall also contain similar clause for renewal
depends on the facts and circumstances of each case
regard being had to the intention of the parties as
displayed in the original covenant for renewal and the
surrounding circumstances. There is a difference between
an extension of lease in accordance with the covenant in
that regard contained in the principal lease and renewal
of lease, again in accordance with the covenant for
renewal contained in the original lease. In the case of
extension it is not necessary to have a fresh deed of lease
executed; as the extension of lease for the term agreed
upon shall be a necessary consequence of the clause for
extension. However, option for renewal consistently with
the covenant for renewal has to be exercised consistently
with the terms thereof and, if exercised, a fresh deed of
lease shall have to be executed between the parties.
Failing the execution of a fresh deed of lease, another
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lease for a fixed term shall not come into existence
though the principal lease in spite of the expiry of the
term thereof may continue by holding over for year by
year or month by month, as the case may be.
15. A Division Bench decision of Andhra Pradesh High
Court in Syed Jaleel Zane v. P. Venkata Murlidhar and
Ors. , MANU/AP/0112/1981 : AIR1981AP328, wherein
Jeevan Reddy, J., as His Lordship then was, spoke for the
Division Bench makes almost an exhaustive discussion of
the relevant English and Indian Law available on the
point and we express our respectful agreement with the
exposition of law as made therein. We note with approval
the following proposition of law laid down therein:(
i) In India, the law does not prohibit a perpetual lease;
clear and unambiguous language would be required to
infer such a lease. If the language is ambiguous the Court
would opt for an interpretation negating the plea of the
perpetual lease;
(ii) To find an answer to the question whether a covenant
for renewal contained in the lease deed construed
properly and in its real context, entitles the tenant to
continue as long as he chooses by exercising the option of
renewal at the end of each successive period of 5 years
subject to the same terms and conditions depends on the
deed of lease being read as a whole and an effort made to
ascertain the intention of the parties while entering into
the contract. No single clause or term should be read in
isolation so as to defeat other clauses. The interpretation
must be reasonable, harmonious and be deduced from
the language of the document;
(iii) The Court always leans against a perpetual renewal
and hence where there is a clause for renewal subject to
the same terms and conditions, it would be construed as
giving a right to renewal for the same period as the
period of the original lease, but not a right to second or
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third renewal and so on unless, of course, the language is
clear and unambiguous.
14. Learned senior counsel placed reliance on the judgment of Supreme
Court in case of Shri Janki Devi Bhagat Trust, Agra vs. Ram Swarup Jain
AIR 1995 SC 2482 in support of the submission that any lease of
immoveable property from year to year or for any term exceeding one year
can be only made by registered instrument otherwise it would be void under
section 107 of the Transfer of Properties Act., paragraph 4 of the said
judgment reads thus :4.
Under Section 107 of the Transfer of Property Act a
lease of Immovable property from year to year or for any
term exceeding one year can be made only by a
registered instrument. Any lease of this kind would be
void unless it is created by a registered instrument. All
other leases of Immovable property may be made either
by a registered instrument or by an oral agreement
accompanied by delivery of possession. All the courts
below have held that there was a valid lease. The High
Court has also recorded that it was not the contention of
the respondent that his lease was from year to year. The
contention was that the lease was for a term exceeding
one year and was, therefore, compulsorily registerable
under the first part of Section 107 of the Transfer of
Property Act. This contention has been negatived by the
High Court as also by both the courts below. The High
Court has held that the lease was not for a term
exceeding one year, and so was not compulsorily
registerable under the first part of Section 107. It,
however held that since the lease was for a
manufacturing purpose, six month' notice to quit was
required under Section 106. In its absence, termination
was not valid.
15. Learned senior counsel placed reliance on the judgment of the
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Supreme Court in case of Delhi Motor Co. and others vs. V.A. Basrurkar
AIR 1968 SC 794 in support of the plea that an unregistered lease is void
and no specific performance can be claimed under a void document.
Paragraphs 4 and 5 of the said judgment reads thus :4.
The first point urged on behalf of the firm was that,
in this case, there was a completed sublease,
but it did
not require registration for two reasons. The first reason
advanced was that the lease was not evidenced by the
documents Exts. P. 1, P. 2 and P. 3 only, but was, in fact,
completed subsequently when, after the resolution of the
Board of Directors of the Company, the Company gave
possession of the leased property to the firm on or about
the 1st April, 1950. The second reason was that, in any
case, this lease was not a lease from year to year or for
any term exceeding on year or reserving a yearly rent, so
that s. 107 of the Transfer of Property Act was not
applicable and registration was not compulsory. These
submissions fail, because the lease, as relied upon by the
firm, has to be held to be a lease of immovable property
for a term exceeding one year, and such a lease is fully
governed by s. 107 of the Transfer of Property Act. The
firm itself came forward with the case that the rights that
were being claimed were under a lease and the lease was
in respect of immovable property consisting of the three
portions of the Scindia House which have been
mentioned above. It was, however, urged that this lease
was not for any fixed term at all and was for an indefinite
period, so that it could not be held to be a lease from year
to year either. It was further submitted that yearly rent
had not been reserved in respect of this lease. Even these
submissions were made on the basis that the terms of the
lease have to be ascertained from the three documents
Exts. P. 1, P. 2 and P. 3 which were relied upon by the firm
to claim the relief in the suit. It appears to us that, if
these documents are properly interpreted, an inference
necessarily follows that the lease, if any, brought into
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existence by these documents was certainly for a period
exceeding one year. Since reliance was placed on these
documents on behalf of the firm to urge that there was a
completed lease, learned counsel for the firm was asked
to point out the provision which fixed the rent payable in
respect of the leased property. The only provision, on
which he relied to show that rent had, in fact, been
agreed upon the fixed, was para 1 of Ext. P. 3 which
contains notes on agreement dated 22nd February, 1950.
That paragraph is as follows :"
Profit share of party No. 1 would be 10% of net profit
of New Delhi business only and will be settled at the
end of the 1st closing of the financial year which
would be 30th June, 1951."
Accepting this submission that this paragraph lays
down the rent payable, it is clear that, under it, the rent
payable for the first time would be 10% of the net profits
earned by the firm in its New Delhi business up to 30th
June, 1951. The period would naturally begin on the date
on which the lease commenced. That date, according to
the firm itself, was 1st April, 1950. From these facts it
follows that when the rent is to be paid for the first time,
it would be an amount of 10% of the net profits earned
by the firm in its New Delhi business between 1st April,
1950 and 30th June, 1951, and, naturally enough, the
rent will be in respect of the same period. This term,
therefore, clearly laid down that the very first payment of
rent was to be for a period of one year and three months,
so that, even though no further period for the
continuance of the lease after 30th June, 1951, was laid
down, the lease at least made rent payable for the first
period of fifteen months. The lease was, therefore, at
least for a period of fifteen months and, consequently, for
a period exceeding one year. Section 107 of the Transfer
of Property Act was, thus clearly applicable and such a
lease could not have been validly made, except under a
registered instrument. Admittedly, there was no
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registration of the documents which constituted the lease
and, consequently, the firm could not claim any rights on
the basis of this lease evidenced by unregistered
documents.
5. Learned counsel tried to urge that, since in these
documents no definite period for the lease was
mentioned, we should hold that s. 106 of the Transfer of
Property Act was applicable and the lease being in respect
of immovable property for purposes other than
agricultural or manufacturing must be deemed to be a
lease from month to month. We are unable to accept this
submission, because none of the documents, on which
reliance has been placed on behalf of the firm to prove
the lease, contains any clause indicating that the tenancy
was to be from month to month or the rent was payable
monthly. In fact, the indication from para 1 of Ext. P. 3
quoted above is that the rent was to be payable annually,
so that the contract itself seems to give an indication that
it was to be a lease from year to year and annual rent was
payable. These circumstances, however, are immaterial,
because we have already indicated earlier our finding
that this lease was at least for a minimum period of 15
months and, consequently, s. 107 of the Transfer of
Property Act becomes applicable, irrespective of the
question whether it was a lease from month to month or
from year to year. The High Court was, therefore, quite
correct in holding that on the basis of this lease the reliefs
claimed by the firm could not be granted to it.
16. Learned senior counsel submits that the lease agreement dated 15th
May, 1980 itself was an agreement of lease and was not an agreement for
lease. Learned counsel invited my attention to various paragraphs of the
plaint in support of this plea. Learned counsel placed reliance on the
judgment of the Supreme Court in case of Ram Saran Lall and others vs.
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MST Domini Kuer and others (1962 ) 2 SCR 474 in support of his
submission that section 47 of the Registration Act applies to the document
only after it is registered. Learned counsel placed reliance on th judgment
of the Supreme Court in case of Har Narain vs. Mam Chand (2010) 13
SCC 128 in support of the plea that section created by section 47 of the
Registration Act does not come into play before registration the actual
document takes place. Paragraphs 13, 16 and 23 of the said judgment reads
thus :13.
Section 54 of the Act, 1882, mandatorily requires
that the sale of any immovable property of the value of
hundred rupees and upward can be made only by a
registered instrument. Section 47 of the Act, 1908,
provides that registration of the document shall relate
back to the date of the execution of the document. Thus,
the aforesaid two provisions make it crystal clear that sale
deed in question requires registration. Even if registration
had been done subsequent to the filing of Suit, it related
back to the date of execution of the sale deed, which was
prior to institution of the Suit. A similar issue though in a
case of right of preemption
was considered by the
Constitution Bench of this Court in Ram Saran Lall and
Ors. v. Mst. Domini Kuer and Ors.
MANU/SC/0280/1961 : AIR 1961 SC 1747, by the
majority of 3:2, the Court came to the conclusion that as
the mere execution of the sale deed could not make the
same effective and registration thereof was necessary, it
was of no consequence unless the registration was made.
Thus, in spite of the fact that the Act, 1908, could relate
back to the date of execution in view of provisions of
Section 47 of the Act, 1908, the sale could not be given
effect to prior to registration. However, as the sale was
not complete until the registration of instrument of sale is
complete, it was not completed prior to the date of its
registration. The court held:
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“ 8. ….... Section 47 of the Registration Act does not,
however, say when sale would be deemed to be complete.
It only permits a document when registered, to operate
from a certain date which may be earlier than the date
when it was registered. The object of this section is to
decide which of two or more registered instruments in
respect of the same property is to have effect. The section
applies to a document only after it has been registered. It
has nothing to do with the completion of the registration
and therefore, nothing to do with the completion of a
sale when the instrument is one of sale. A sale which is
admittedly not completed until the registration of the
instrument of sale is completed, cannot be said to have
been completed earlier because by virtue of Section 47
the instrument by which it is effected, after it has been
registered, commences to operate from an earlier date.
Therefore, we do not think that the sale in this case can
be said, in view of Section 47 to have been completed on
January 31, 1946.
(Emphasis added).
16. However, all these cases are related to right to preemption
though the legal issue involved therein remained
the same. In view of the above, we are of the considered
opinion that in spite of the fact that the registration of the
sale deed would relate back to the date of execution, the
sale can not be termed as complete until its registration
and it becomes effective only once it stands registered.
Thus, the fiction created by Section 47 of the Act, 1908,
does not come into play before the actual registration of
the document takes place.
23. In view of the above, we reach the inescapable
conclusion that the sale executed by respondent No. 1 in
favour of respondent Nos. 2 to 6 on 2.8.1971 could not
be termed as a complete sale until the document got
registered on 3.9.1971. In view of the provisions of
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Section 47 of the Act, 1908 the effect of registration
would be that registration would relate back to the date
of execution but it does not mean that sale would be
complete in favour of respondent Nos. 2 to 6 prior to
3.9.1971 i.e. the date of registration of the sale deed. In
view of the above, as sale stood completed during the
pendency of the suit, doctrine of lis pendens is applicable
in the facts and circumstances of the case. The courts
below failed to appreciate that the fiction created by
Section 47 of the Act 1908, itself is a consequence of
registration of the sale deed. More so, as the appellant
had been in possession of the suit land being a mortgagee
since 1970 and this fact had also been mentioned by the
respondent No. 1 in the sale deed dated 2.8.1971 in
favour of respondent Nos. 2 to 6, the question of
respondent Nos. 2 to 6 being bonafide purchasers for
value and paid money in good faith without notice does
not arise, simply for the reason that the said respondents
were fully aware that the suit land was in possession of
the appellant. Thus, the respondents No. 2 to 6 cannot
take the benefit of the provisions of Section 19(b) of the
Act, 1963.
17. Learned senior counsel placed reliance on the judgment of the Delhi
High Court in case of M/s.Asea Brown Boveri Limited vs. Shri Chiranjiv
Lal Sharma 75 (1998) Delhi Law Times 773 in support of the plea that an
unregistered lease deed is inadmissible in evidence under section 49 of the
Registration Act except for the collateral purpose of proving the nature and
character of possession of the plaintiff. Paragraphs 10 of the said judgment
reads thus :10.
In my opinion, the unregistered lease deed dated 1st
December, 1979 is clearly inadmissible in evidence under
Section 49 of the Registration Act except for the collateral
purpose of proving the nature and character of possession of
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the plaintiff. As stated earlier that the option for further
extension of the lease is one of the terms of the lease
agreement, the proviso to Section 49 of the Registration Act is
not applicable to the present case inasmuch as the terms of
the lease are not "collateral purpose" within its meaning
(Satish Chand v. Govardhan Das, ). Consequently, I hold that
the renewal clause of the agreement dated 1.12.1979 being a
term of an inadmissible document could not form the basis of
the present suit for specific performance of contract.
18. It is submitted by the learned senior counsel appearing for defendant
no.3 that in so far as monetary claim made by the plaintiff is concerned, the
same is barred by law of limitation and the suit is thus liable to be dismissed
under Order 7 Rule (11)(d) of Code if Civil Procedure, 1908. It is submitted
that the monetary claim is based on the payments alleged to have been
made by the plaintiff based on the order passed by the Cooperative
Court
which was filed by the defendant no.4 against the plaintiff and the said trust
which payments were made prior to three years of filing this suit. Appeal
filed by the plaintiffs was already dismissed by the Cooperative
court on 7th
November, 1997 whereas suit is filed on 18th June, 2001.
19. In support of the plea that after termination of lease, plaintiff was a
tenant at sufferance and has no right and is like a tresspasser, reliance is
placed by the learned senior counsel on the judgment of the Supreme Court
in case of Kewal Chand Mimani vs. S.K.Sen and others AIR 2001 SC
2569. It is held by the Supreme Court that a tenancy at sufferance does
not create the relationship of landlord and tenant. Paragraphs 35 and 36 of
the said judgment reads thus ::::
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35. Coming back to the second of the twin issuance as
noticed above, namely, can the Mimanis be termed to be
a tenant holding over incidentally,
the act of holding
over in any event after the expiration of the term does
not necessarily create tenancy of any kind: if the lessee
remains in possession after the determination of the term
and for all practical purposes, he becomes a tenant at
sufferance. This Court in R.V. Bhupal Prasad Vs. State of
A.P. and others MANU/SC/0035/1996 : AIR1996SC140 :
AIR1996SC140 had the occasion to deal with this concept
of tenancy at sufferance in paragraph * of the report, this
court observed:"
8. Tenant at sufferance is one who comes into
possession of land by lawful title, but who holds it by
wrong after the termination of the term of expiry of
the lese by efflux of time. The tenant at sufferance is,
therefore, one who wrongfully continues in possession
after extinction of a lawful title. There is little
difference between him and a trespasser. In Mulla's
Transfer of Property Act (7th Edn.) at page 633 , the
position of tenancy at sufferance has been stated thus;
A tenancy at sufferance is merely a fiction to avoid
continuance in possession operating as a trespass. It
has been described as the least and lowest interest
which can subsist in reality. It therefore, cannot be
created by contract and arises only by implication of
law which a person who has been a possession under a
lawful title continues in possession under a lawful title
continues in possession after that title has been
determined, without the consent of the person
entitled. A tenancy at sufferance does not create the
relationship of landlord and tenant. At page 769 it is
stated regarding the right of a tenant holding over
thus; The act of the over after the expiration of the
term does not necessarily create a tenancy of any kind.
If the lessee remaining in possession after
determination of the term, the common law rule is
that he is a tenant of sufferance. The expression
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"holding over " is used in the sense of retaining
possession. a distinction should be drawn between a
tenant continuing in possession after the
determination of the lease, without the consent of the
landlord and a tenant doing so with the landlord's
consent. The former is called a tenant by sufferance in
the language of the English law and the latter class of
tenants is called a tenant holding over or a tenant at
will. The lessee holding over with the consent of the
lessor is in a better position than a mere tenant at will.
the tenancy on sufferance is concerted into a tenancy
at will by the assent of the landlord, but the
relationship of landlord and tenant is not established
until the rent was paid and accepted. The assent of the
landlord to the continuance of the tenancy after the
determination of the tenancy would create a new
tenancy. The possession of a tenant who has ceased to
be a tenant is protected by law. Although he may not
have a right to continue to possession after the
termination of the tenancy, his possession is judicial."
36. There is thus, however a subtle difference
resultantly a definite distinction between a tenant
holding over and a tenantatsufferance,
as noticed above
in Bhupal prasad's decision (supra): Holding over stands
equivalent to the retention of possession after
determination of lease, but with the consent of the
landlordwhereas,
on similar circumstance if the
possession is without the consent of the landlord then the
same stands out to be a tenantatsufferance.
Section 116
of the Transfer of Property Act does let a statutory
recognition to the concept of holding over: Is the
situation presently a kin to a tenancy by way of holding
over the property or the Mimanis be even termed as
tenantatsufferance
the
answer obviously, in the facts of
the matter under consideration, can not but be in the
negative Are
the Mimans in possession? The answer
again can not but be in the negative. There exists a
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differentiation between the lessee of a determined lease
in possession and a lessee disposed. Mimanis stands,
admittedly dispossessed from the lease premises, Can any
right be said to accrue in favour or the Mimanis the
answer cannot but be an emphatic `no' law courts will
have to act within the limits of law and the courts try to
take note of the moral fabric of the law.
20. Learned senior counsel for defendant no.3 placed reliance on the
judgment of Supreme court in case of State of Maharashtra and others vs.
Atur India Pvt.Ltd. (1994) 2 SCC 497 in support of his submission that an
agreement to lease may effect an actual demise in which case it is a lease
and on the other hand the agreement to lease may be a merely a executory
instrument binding the parties, the one to grant and the other to accept the
lease in the future. Paragraphs 27 and 28 of the said judgment reads thus :27.
We will now turn to Indian law: Mulla in 'The
Transfer of Property Act" (7th Edition) at page 674
dealing with agreement to lease states as under:
“An agreement to lease may effect an actual demise in
which case it is a lease. On the other hand the
agreement to lease may be a merely executory
instrument binding the parties, the one, to grant, and
the other, to accept a lease in the future. As to such an
executory agreement the law in England differs from
that in India. An agreement to lease not creating a
present demise is not a lease and requires neither
writing nor registration.
As to an executory agreement to lease, it was at one
time supposed that an intending lessee, who had taken
possession under an agreement to lease capable of
specific performance, was in the same position as if the
lease had been executed as registered. These cases
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have, however, been rendered absolute by the
decisions of the Privy Council that the equity in Walsh
V. Lonsdale does not apply in India.”
28. If it is merely an agreement to lease as to whether it
requires registration has come up for discussion of this
Court in Tiruvenibai and Anr. v. Smt. Lilabai, at page 111
it was held as under:
“ Before dealing with these points, we must first
consider what the expression "an agreement to lease"
means under Section 2(7) of the Indian Registration
Act. hereinafter referred to as the Act. Section 2(7)
provides that a lease includes a counterpart, Kabuliyat,
an undertaking to cultivate and occupy and an
agreement to lease. In Hemanta Kumari Debi v.
Midnapur Zamindari Co. Ltd. , the Privy Council has
held that "an agreement to lease, which a lease is by
the statute declared to include, must be a document
which effects an actual demise and operates as a
lease". In other words, an agreement between two
parties which entitles one of them merely to claim the
execution of a lease from the other without creating a
present and immediate demise in his favour is not
included under Section 2, Subsection
(7). In Hemanta
Kumari Debi's case (supra) a petition setting out the
terms of an agreement in compromise of a suit stated
as one of the terms that the plaintiff agreed that if she
succeeded in another suit which she had brought to
recover certain land, other than that to which the
compromised suit related, she would grant to the
defendants a lease of that land upon specified terms.
The petition was recited in full in the decree made in
the compromised suit under Section 375 of the CPC,
1882. A subsequent suit was brought for specific
performance of the said agreement and it was resisted
on the ground that the agreement in question was an
agreement to lease under Section 2(7) and since it was
not registered it was inadmissible in evidence. This
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plea was rejected by the Privy Council on the ground
that the document did not. effect an actual demise and
was outside the provisions of Section 2(7). In coming
to the conclusion that the agreement to lease under
the said section must be a document which effects an
actual demise the Privy Council has expressly
approved the observations made by Jenkins, C.J., in
the case of Panchanan Bose v. Chandra Charan Misra,
in regard to the construction of Section 17 of the Act.
The document with which the Privy Council was
concerned was construed by it as "an agreement that,
upon the happening of a contingent event at a dale
which was indeterminate and having regard to the
slow progress of Indian Litigation, might be far distant,
a lease would be granted"; and it was held that "until
the happening of that event, it was impossible to
determine whether there would be any lease or not".
This decision makes it clear that the meaning of the
expression "an agreement to lease" "which, in the
context where it occurs and in the statute in which it is
found, mast relate to some document that creates a
present and immediate interest in the land". Ever since
this decision was pronounced by the Privy Council the
expression "agreement to lease" has been consistently
construed by all the Indian High Courts as an
agreement which creates an immediate and a present
demise in the property covered by it.”
21. It is submitted that agreement of 1980 itself created right in presenti
and was compulsorily required to be registered. All the terms and
conditions of lease were recorded in the said agreement between the
parties. The document was hit by section 107 of Transfer of Properties Act.
22. Per contra Mr. Mehta learned senior counsel appearing for the
plaintiff submits that all the submissions made by the defendant no. 3 in
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support of the motion are on merits of the suit which can be considered at
the time of trial and not under Order 7 rule 11 of CP.C. It is submitted that
the plaintiff is seeking specific performance of the two agreements and for
claiming such reliefs, plaintiff has to show that such agreements were
entered into, plaintiff is entitled to specific performance thereof and that the
plaintiff is ready and willing to perform such agreement all through out
from the plaint. Learned senior counsel placed reliance on the judgment of
the supreme court in the case of Liverpool and London S.P. & I Association
Ltd Vs. M.V. Sea Success I and Another reported in (2004) 9 Supreme
Court Cases 512 in support of his submission that material facts are
required to be stated in the plaint and not the evidence. Reliance is placed
on paragraphs 4, 139 to 152 and 154 thereof which read thus.
“ 4. On an application for arrest of the 1st respondent vessel having been made, the
2nd respondent appeared and undertook to furnish security in respect of the appellant's
claim and further gave an undertaking that until the security is furnished the said
vessel will not leave the Port of Mumbai. However, thereafter S.S. Shipping
Corporation Inc., Liberia claiming to be the registered owner of the 1st respondent
furnished a bankguarantee
in relation to the appellant's claim in discharge of the
undertaking of security given by the second respondent. The 1st respondent thereafter
took out a Notice of Motion for rejection of the plaint purported to be under Order 7
Rule 11(a) of the Code of civil Procedure inter alia on the ground that the averments
contained therein do not disclose a cause of action as the claim of unpaid insurance
premium was not a "necessary" within the meaning of Section 5 of the Admiralty
Courts Act, 1861. A learned Single Judge of the High Court after hearing the Notice of
Motion by an order dated 12/
2/2001 referred the said question to a Division Bench
as it could not agree with a decision rendered by another learned Single Judge.
However, on the other two grounds it discharged the Notice of Motion holding that the
averments made in paragraphs 1 and 14 of the plaint inter alia to the effect that all
the three ships are beneficially owned by the 2nd respondent disclose a cause of action.
REJECTION OF PLAINT:
139. Whether a plaint discloses a cause of action or not is essentially a question of
fact. But whether it does or does not must be found out from reading the plaint itself.
For the said purpose the averments made in the plaint in their entirety must be held to
be correct. The test is as to whether if the averments made in the plaint are taken to be
correct in its entirety, a decree would be passed.
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CAUSE OF ACTION:
140. A cause of action is a bundle of facts which are required to be pleaded and proved
for the purpose of obtaining relief claimed in the suit. For the aforementioned purpose,
the material facts are required to be stated but not the evidence except in certain cases
where the pleading relies on any misrepresentation, fraud, breach of trust, wilful,
default, or undue influence.
141. Order 7 Rule 14 of the Code of civil Procedure provides as follows:
"14 PRODUCTION OF DOCUMENT ON WHICH PLAINTIFF SUES OR RELIES.
(1) Where a plaintiff sues upon a document or relies upon document in his possession
or power in support of his claim, he shall enter such documents in a list, and shall
produce it in Court when the plaint is presented by him and shall, at the same time
deliver the document and a copy thereof, to be filed with the plaint.
(2) Where any such document is not in the possession or power of the plaintiff, he
shall, where possible, state in whose possession or power it is.
(3) Where a document or a copy thereof is not filed with the plaint under this rule, it
shall not be allowed to be received in evidence on behalf of the plaintiff at the hearing
of the suit.
(4) Nothing in this rule shall apply to document produced for the crossexamination
of
the plaintiff's witnesses, or, handed over to a witness merely to refresh his memory."
142. In the instant case the 'Club' not only annexed certain documents with the plaint
but also filed a large number of documents therewith. Those, documents having regard
to Order 7 Rule 14 of the Code of civil Procedure are required to be taken into
consideration for the purpose of disposal of application under Order 7 Rule 11(a) of
the Code of civil Procedure. The 'Club' in its plaint pleaded:
"The Plaintiff is a Protection & Indemnity Association incorporated under the laws of
the United Kingdom and carries on business through its Managers, Liverpool &
London P&I Management Ltd. at Liverpool, UK. The Plaintiff is a mutual association
of shipowners
and offers insurance cover in respect of vessels entered with it for
diverse third party risks associated with the operation and trading of vessels. This
insurance is commonly known as Protection & Indemnity (P&I) cover in respect of
various risks associated with the vessels in their maritime adventure. The 1st
Defendant vessel m.v. "Sea Success I" is a sister ship of the vessels "Sea Ranger" and
"Sea Glory" which were entered for P&I risks with the Plaintiff Association. The said
two vessels were entered into the Plaintiff's Association for the policy year 19992000
by Defendant No. 2, Singapore Soviet Shipping Co. Pte. Ltd. who, as per the terms of
the insurance and Rules of the Plaintiff Association, were recognized and considered to
be the owners of the said two vessels and the assured under the policy of insurance.
The 1st Defendant vessel is owned and/ or controlled by Defendant No. 2 through its
wholly owned 100% subsidiary, Singapore Soviet Shipping Corporation Inc.,
Monrovia. The 1st Defendant vessel is presently at the port and harbour of Mumbai
within the territorial waters of India and within the Admiralty jurisdiction of this
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Hon'ble Court. The 2nd Defendant is the owner of the 1st Defendant and is also inter
alia the party liable in personam in respect of the Plaintiff's claim.
The Plaintiff submits as more particularly stated in paragraph 1 above, that the 1st
Defendant vessel is a sister ship of the two vessels "Sea Glory" and "Sea Ranger" in view
of the beneficial ownership, management of all three vessels having vested in
Defendant No. 2. The Plaintiff further submits that Defendant No. 2 is liable in
personam in respect of the unpaid insurance premium in respect of the two vessels "Sea
Glory" and "Sea Ranger". Consequently, the Plaintiff is entitled to arrest any other
vessel in the ownership of Defendant No. 2. The 1st Defendant vessel is owned by
Defendant No. 2 through it's 100% subsidiary S.S. Shipping Co. Inc. In the
circumstances, the Plaintiff submits that they are entitled to proceed against the
Defendant vessel in rem and are entitled to an order of arrest, detention and sale of
the vessel for recovery of their outstanding dues in respect of insurance premium as
more particularly stated above. The Plaintiff is, therefore, entitled to have the
Defendant vessel along with her hull, gear, engines, tackle, machinery, bunkers, plant,
apparel, furniture, equipments and all appurtenances thereto condemned and arrested
under a warrant of arrest of this Hon'ble Court for realization of the Plaintiff's dues.
The Plaintiff is further entitled to have the Defendant vessel sold under the orders and
directions of this Hon'ble Court and to have the sale proceeds thereof applied towards
the satisfaction of the Plaintiff's claim in the suit. The Plaintiff is entitled to an order
of arrest of the Defendant vessel as arrest is the only method of proceeding against the
said vessel in rem. The Plaintiff submits that if such an order of arrest is not granted,
irreparable harm and injury will be caused to the Plaintiff inasmuch as the Plaintiff's
suit will be rendered infructuous. There is no other alternative efficacious remedy
available to the Plaintiff.
143. The Club has pleaded that the vessel is a sister ship of 'Sea Ranger' and 'Sea
Glory' owned and possessed by the second defendant. The Club has also pleaded that
the defendant No. 2 is beneficial owner of the first defendant ship. Determination on
such assertions would amount to determination of question of fact. If the 'Vessel' denies
or disputes the same; an issue in that behalf will have to be framed and decided.
144. Beneficial ownership of a ship is not a question of fact alone. It is a mixed
question of fact and law. In William v. Wilcox it is held:
"It is an elementary rule in pleading that when a state of facts is relied, it is enough to
allege it simply, without setting out the subordinate facts which are the means of
proving it or the evidence sustaining the allegations."
145. The aforementioned dicta has been quoted with approval in Mohan Rawale v.
Damodar Tatyaba, and Ors. MANU/SC/0637/1994 : (1994)2SCC392 .
146. It may be true that Order 7 Rule 11(a) although authorises the court to reject a
plaint on failure on the part of the plaintiff to disclose a cause of action but the same
would not mean that the averments made therein or a document upon which reliance
has been placed although discloses a cause of action, the plaint would be rejected on
the ground that such averments are not sufficient to prove the facts stated therein for
the purpose of obtaining reliefs claimed in the suit. The approach adopted by the High
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Court, in this behalf, in our opinion, is not correct.
147. In D. Ramachandran v. R.V. Janakiraman and Ors. MANU/SC/0154/1999 :
[1999]1SCR983 , this Court held:
"It is well settled that in all cases of preliminary objection, the test is to see
whether any of the reliefs prayed for could be granted to the appellant if the
averments made in the petition are proved to be true. For the purpose of
considering a preliminary objection, the averments in the petition should be
assumed to be true and the court has to find out whether those averments
disclose a cause of action or a triable issue as such. The court cannot probe into
the facts on the basis of the controversy raised in the counter."
148. Furthermore a fact which is within the special knowledge of the defendant need
not be pleaded in the plaint. In Punit Rai v. Dinesh Chaudhary MANU/SC/0608/2003
: AIR2003SC4355 , it is stated:
"...These are the material facts relating to the plea raised by the appellant that
the respondent is not a Scheduled caste. We don't think if the respondent means
to say that the petitioner should have stated in the petition that the respondent
is not born of Deo Kumari Devi said to be married to Bhagwan Singh in village
Adai. If at all these facts would be in the special knowledge of respondent,
Bhagwan Singh and Deo Kumari Devi hence not required to be pleaded in the
election petition. It is not possible as Well. In this connection, a reference may be
made to a decision of this Court in Balwan Singh v. Lakshmi Nrain and Ors.
MANU/SC/0192/1960 : [1960]3SCR91 . This case also relates to election
matter and it was held that facts which are in the special knowledge of the other
party could not be pleaded by the election petitioner. It was found that
particulars of the arrangement of hiring or procuring a vehicle would never be
in the knowledge of the petitioner, such facts need not and cannot be pleaded in
the petition."
149. In D. Ramachandran v. R.V. Janakiraman and Ors. MANU/SC/0154/1999 :
[1999]1SCR983 , it has been held that the Court cannot dissect the pleading into
several parts and consider whether each one of them discloses a cause of action.
150. In the aforementioned backdrop, the question as to whether the Club had been
able to show that the Respondent No. 1 is a sister ship of "Sea Glory" and "Sea Ranger"
admittedly belonging to the first respondent is a matter which is required to be gone
into in the suit.
151. In ascertaining whether the plaint shows a cause of action, the court is not
required to make an elaborate enquiry into doubtful or complicated questions of law
or fact. By the statute the jurisdiction of the court is restricted to ascertaining whether
on the allegations a cause of action is shown. In Vijay Pratap Singh v. Dukh Haran
Nath Singh MANU/SC/0394/1962 : AIR1962SC941 this Court held:
"By the express terms of Rule 5 Clause (d), the court is concerned the ascertain
whether the allegations made in the petition show a cause of action. The court has not
to see whether the claim made by the petitioner is likely to succeed: it has merely to
satisfy itself that the allegations made in the petition, if accepted as true, would entitle
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the petitioner to the relief he claims. If accepting those allegations as true no case is
made out for granting relief no cause of action would be shown and the petition must
be rejected. But in ascertaining whether the petition shows a cause of action the court
does not enter upon a trial of the issues affecting the merits of the claim made by the
petitioner. It cannot take into consideration the defences which the defendant may
raise upon the merits; nor is the court competent to make an elaborate enquiry into
doubtful or complicated questions of law or fact. If the allegations in the petition,
prima facie, show a cause of action, the court cannot embark upon an enquiry
whether the allegations are true in fact, or whether the petitioner will succeed in the
claims made by him."
152. So long as the claim discloses some cause of action or raises some questions fit to
be decided by a Judge, the mere fact that the case is weak and not likely to succeed is
no ground for striking it out. The purported failure of the pleadings to disclose a cause
of action is distinct from the absence of full particulars. [See Mohan Rawale (supra)]
154. The approach of the High Court, in our considered opinion, is not correct. For
the purpose of rejecting a plaint it is not necessary to consider whether the averments
made in the plaint prove the factum that the defendant No. 1 "Sea SuccessI"
is a sister
ship of "Sea Glory" and "Sea Ranger" or the said two ships are beneficially owned by
the defendant No. 2. The reasons which have been assigned in support of the said
aforementioned finding that that the ship is a valuable commercial chattel and her
arrest undeservingly prejudices third parties as well as affect the interest of owner and
others is a question which must be gone into when passing a final order as regard
interim arrest of ship or otherwise. For the aforementioned purpose the Vessel herein
could file an application for vacation of stay. While considering such an application,
the Court was entitled to consider not only a prima facie case but also the elements of
balance of convenience and irreparable injury involved in the matter. In such a
situation and particularly when both the parties disclose their documents which are in
their possession, the Court would be in a position to ascertain even prima facie as to
whether the Club has been able to make out that "Sea Glory" and "Sea Ranger" are
sister vessels of the "Vessel".
23. Mr.Mehta learned senior counsel then submits that it is the case of the
plaintiff in the plaint that revisionary rights were given to the plaintiff by
the defendant nos. 1 to 3 in the suit property which are exercised by the
plaintiff. My attention is invited to paragraphs 4C to 4E of the plaint and
also to the copy of the lease deed dated 8th July, 1992, 14th May, 1980 and
the other documents in support of the submission that the lease deed dated
8th July, 1992 had been already registered on 10th July, 2009 though it was
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lodged on 8th July, 1992 itself. Mr. Mehta learned senior counsel also invited
my attention to paragraph 5, 6, 8 to 10, 10B 10C and 10E of the plaint in
support of his plea that all the averments required to be made in a suit for
specific performance are made in the plaint. It is submitted that this court
has to consider the averments in the plaint and not what is stated in the
written statement of the defendant.
24. Mr. Mehta learned senior counsel then submits that under
proviso to clause (C )(ii), the plaintiff was given right to seek renewal of
the lease at the end of 20 years or to exercise right of reversion. It is
submitted that it was not mandatory for the plaintiff to seek renewal of the
lease and then exercise right of reversion. It is submitted that right of
reversion could be exercised by the plaintiff anytime after the expiry of
twenty years. It is submitted that if the submissions of the defendants are
accepted, it would amount to rewriting the contract or to read additional
words in the agreement which is not permissible. Intention of the parties is
clear from the plain reading of the proviso to clause (C )(ii) of the
agreement. Learned senior counsel submits that whether there is reversion
or not can be decided only at the trial of the suit and not in this
proceedings. Learned senior counsel distinguished the judgment of this
Court in case of Bhaskar Gopal & Anr. Vs. Padman Hira Chowdhari &
Anr. reported in AIR 1916 Bom 228 on the ground that the facts of that
case are totally different. In so far as issue of registration raised by
defendant no. 3 is concerned, it is submitted by Mr. Mehta learned senior
counsel that the lease agreement dated 8th July, 1992 was already lodged
on 8th July, 1992 itself for the registration. If the said document is
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registered in 2009, plaintiff is not responsible for the same. It is submitted
that in any event, the registration of the document would relate back to the
date of its execution. Twenty years period of lease had not expired on 8th
July, 1992 admittedly. The fact that the agreement dated 8th July, 1992 is
registered is not in dispute and is not challenged by the defendants. My
attention is invited to page 94 of the plaint in support of the submission that
a draft lease was appended to the said agreement of 15th May, 1980 which
was to be executed in future by exercising power of attorney. My attention
is also invited to the power of attorney which was executed by defendant
nos. 1 to 3 in favour of plaintiff which included power to execute lease deed
in favour of the plaintiff. It is submitted that the plaintiff rightly exercised
such powers and executed a lease in favour of the plaintiff on 8th July,
1992.
25. Mr. Mehta learned senior counsel placed reliance on the judgment on
the Supreme Court in the case of Hardesh Ores (P) Ltd. Vs. Hede & Co.
reported in (2007) 5 Supreme Court Cases 614 in support of the
submission that whether a document is registered or not and effect thereof
can not be urged in an application under Order 7 rule 11 of C.P.C.
Paragraph 2, 3, 21, 23 and 25 of the said judgment read thus :
“ 2. These appeals have been filed by the appellants against the common judgment
and order of the High Court of Judicature at Bombay dated 20.10.2006 in First
Appeal Nos. 138 and 139 of 2006 whereby the High Court has affirmed the order of
the Trial Court dismissing the suits filed by the appellants under Order VII Rule 11 of
the Code of Civil Procedure holding that the suits are barred by limitation.
3. The representative facts giving rise to these appeals are taken from the pleadings in
suit filed by Hardesh Ores Pvt. Ltd. The appellants herein, namely, Hardesh Ores Pvt.
Ltd. in civil appeal arising out of SLP(C) No. 106/2007 (for short 'Hardesh') and
Sociedade de Fomento Industrial Pvt. Ltd. in civil appeal arising out of SLP(C) No.
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640/2007 (for short 'Fomento') respectively entered into two agreements with the
respondent Hede & Co. (for short 'Hede') on 23.10.1996. The agreement with
Hardesh was for extraction of ore from the mine in question whereas the agreement
with Fomento was for purchase of minerals extracted from the mine. Both the
agreements contained similar terms and conditions. As per Clause 2.1 of the
Agreement, the agreement though executed on 23.10.1996 was to come into force
from 1.1.1997 and was to remain in force for a period of 5 years from such date.
Clause 2.2 of the agreement provided that on the expiry of every 5 years the
agreement shall stand renewed for further periods of like duration at the sole option
of Hardesh on the same terms and conditions as contained in the original agreement.
Hardesh was entitled to exercise its option during the entire period of lease in respect
of the said mine and renewals thereafter, and until such time as remaining deposits of
ore in the said mine could be economically exploited. Clause 2.3 gave the right to
Hardesh to terminate the agreement by giving two calendar months prior notice in
writing to the respondentHede
of its intention to do so. Clause 2.5 of the agreement
provided inter alia that in case Hardesh was forced to abandon work in the said
mine/land on account of any lawful or legal claim made and/or objection raised by
any person including the holder of surface right or on account of any injunction being
passed by any Court of Law or on account of any fault of the respondent, the
agreement shall not stand terminated but the operation thereof shall stand suspended
for such time. In the event such a condition/situation continued to exist for a period
exceeding six calendar months, Hardesh shall be entitled to terminate the agreement
after giving 30 days notice in writing. Clause 9.2 of the agreement ensured that the
respondent shall not in any manner interfere or obstruct Hardesh from carrying on
the work of extraction, raising, loading or delivering the ore and its other functions
under and in accordance with the agreement.
21. Mr. Mukul Rohtagi, learned senior counsel appearing for the respondent in
civil appeal arising out of SLP(C) No. 106/2007 submitted that the High Court was
fully justified in coming to the conclusion that the clever drafting of the plaint
purporting to be a suit for injunction was merely to camouflage the real issue. He did
not dispute that the plaint must be read as a whole and one must look to the
substance rather than the form. He submitted that the appellant's case that there was
automatic renewal after the original term expired on mere exercise of option by the
appellant was not legally tenable. According to him the renewal of a mining lease
must be evidenced by the execution of a deed evidencing renewal, or a fresh mining
lease, and such a document must incorporate the negative covenants as were sought
to be enforced. According to him if the submission urged on behalf of the appellants is
to be accepted, by mere exercise of option and without execution of an actual
agreement, a renewed agreement comes into existence with the same negative
covenants which gave a right to the appellant to enforce the newly born negative
covenants. According to him where an option is to be exercised by the lessee, he must
insist upon the execution of an actual physical agreement evidencing renewal of the
original term. If the promisor refused to execute such a document, the appellants
should have sought the assistance of the Court and ought to have moved the Court
claiming a relief against the promisor for execution of a document evidencing renewal
of the lease. That should have been done within a period of 3 years from the date on
which the promisor rejected the claim of the appellant that the lease stood renewed
by mere exercise of option by it. If no suit is filed and no agreement executed by the
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parties, there can be no question of a fresh agreement coming into existence and
consequently no question of enforcement of a negative covenant in such a nonexistent
agreement. He further submitted that the 1996 agreement was a lease for a
period exceeding 11 months and, therefore, required compulsory registration in view
of the provisions of Sections 17 and 49 of the Registration Act. It, therefore, cannot
be read as evidence in the suit and consequently no rights under such an agreement
can be claimed. He further submitted that even renewal of such a lease required
registration. According to him the appellants were trying to side step something
which was imperative and which had necessarily to be asked for in the suit, which
had not been asked for. Therefore, applying the principle laid down in Srinivasa
Murthy's case (supra) the suit must fail because the appellants should have asked for
a declaration under Order II Rule 2 to the effect that the agreement stood renewed
and the respondent's denial was unlawful. Rather than doing that, the appellants
have sought only the end relief which could not be asked for without first asking for a
declaration that the lease deed stood renewed on mere exercise of option without the
execution of an indenture evidencing renewal of the lease. Only in such a renewed
lease a negative covenant could have been incorporated which could have been
enforced. Since such an agreement never came into existence and a suit for
declaration stood barred by time, the appellant cannot get over the limitation and
seek the remedy of injunction by way of enforcement of the negative covenants in an
agreement which never came into existence. In sum and substance he submitted that
without first getting a renewed lease deed executed in physical form or getting a
declaration from a Court of Law that lease stood renewed as contended by them, the
appellant cannot seek a relief by way of injunction by filing a suit for enforcement of
negative covenants. He further submitted that the appropriate Article which applied
in the facts of this case was Article 54. Since the respondent denied the fact that the
lease stood automatically renewed, the limitation commenced from that day and,
therefore, a suit for declaration and/or specific performance was barred after 3 years
from the date of refusal, i.e., 29.12.2001. Articles 58 and 113 did not apply to the
facts of this case.
23. Replying to the submissions urged on behalf of the respondents, Mr. Sorabjee,
appearing for the appellants submitted that the question as to whether the agreement
was really a mining lease or a mere agreement, and whether it required registration,
has to be gone into in the suit and this question cannot be urged in an application
under Order 7 Rule 11 CPC. At this stage whatever is stated in the plaint must be
accepted. The question of registration may arise when the document is produced and
objected to by the respondent. In any event, even if the document requires
registration, that cannot be a ground for rejecting the plaint on the ground that the
suit is barred by limitation. Moreover, since the respondents have given up the plea of
absence of cause of action, this matter cannot be investigated at this stage. He
reiterated his submission that under Clause 2.2 of the agreement read with Clause
18, by exercise of option claiming renewal, the agreement ipso facto stands renewed
and there is no need to get a fresh agreement executed.
25. The language of Order VII Rule 11 CPC is quite clear and unambiguous. The
plaint can be rejected on the ground of limitation only where the suit appears from
the statement in the plaint to be barred by any law. Mr. Nariman did not dispute that
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"law" within the meaning of Clause (d) of Order VII Rule 11 must include the law of
limitation as well. It is well settled that whether a plaint discloses a cause of action is
essentially a question of fact, but whether it does or does not must be found out from
reading the plaint itself. For the said purpose the averments made in the plaint in
their entirety must be held to be correct. The test is whether the averments made in
the plaint if taken to be correct in their entirety a decree would be passed. The
averments made in the plaint as a whole have to be seen to find out whether Clause
(d) of Rule 11 of Order VII is applicable. It is not permissible to cull out a sentence or
a passage and to read it out of the context in isolation. Although it is the substance
and not merely the form that has to be looked into, the pleading has to be construed
as it stands without addition or subtraction of words or change of its apparent
grammatical sense. As observed earlier, the language of Clause (d) is quite clear but if
any authority is required, one may usefully refer to the judgments of this Court in
Liverpool and London S.P. and I Association Ltd. v. M.V. Sea Success I and Anr.
MANU/SC/0951/2003 : (2004)9SCC512 and Popat and Kotecha Property v. State
Bank of India Staff Association MANU/SC/0516/2005 : (2005)7SCC510 .
26. It is submitted that whether document was compulsorily
required to be registered or not and effect thereof has to be considered at
the time of trial of the suit and not at the stage of hearing this application
under Order 7 rule 11 of C.P.C.
27. It is submitted by Mr Mehta learned senior counsel that no
portion of claim can be struck off. In so far as issue of limitation raised by
the defendants is concerned, it is submitted by the learned senior counsel
that the plaintiff had paid various amounts to the society as per orders
passed by Cooperative
Court. Plaintiff has pleaded adjustment of such
amounts against the purchase price for reversion of rights. Plaintiff has
claimed set off in respect of society dues against the consideration amount
and has given credit in respect thereof. Defendants did not reply to the
letter of demand issued by the plaintiff vide a letter dated 16th May 2000.
It is submitted that cause of action arose on 16th May 2000 when the
plaintiff had raised a demand and the amount was not paid by the
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defendants. In the alternate, it is submitted that the payments made 3
years prior to the filing of suit are clearly within time and thus no part of
claim can be rejected under Order 7 Rule 11 of the Code of Civil Procedure.
28. Mr Mehta learned senior counsel submits that even if 1980
document is not registered, lease is not non existent and such document
can be relied upon in evidence in a suit for specific performance. My
attention is invited to clause 4 of 1980 document in support of a submission
that a draft lease was annexed to the said document which was to be
executed in future.
29. In support of his plea that no part of the plaint cannot be
rejected, learned senior counsel placed reliance on the judgment of
Supreme Court in case of Sopan Sukhdeo Sable & Ors. vs. Assistant
Charity Commissioner (2004) 3 Supreme Court Cases 137 and in
particular paragraph 13 thereof which reads thus :
13. It is trite law that not any particular plea has to be considered, and the
whole plaint has to be read. As was observed by this Court in Roop Sathi v.
Nachhattar Singh Gill , only a part of the plaint cannot be rejected and if no
cause of action is disclosed, the plaint as a whole must be rejected.
30. It is submitted that the notice of motion filed by defendant No.3
in 2006 and being pressed at this stage in the suit of 2001 is liable to be
dismissed on the ground of gross delay. Suit is ready for hearing and final
hearing.
31. Mr Kapadia learned senior counsel appearing for defendant No.3 in
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rejoinder submits that 1992 document has been entered into by the plaintiff
only with a view to get it registered by exercising power of attorney on
behalf of both the parties. Learned senior counsel submits that 1980
document which was required to be registered and not having been
registered, such defect could not be cured by entering into another
agreement and by registration of such agreement. My attention is invited
to the power of attorney and it is submitted that though the power of
attorney refers to an annexure, no document is annexed to the power of
attorney and thus it is clear that 1980 document itself created rights in
favour of the plaintiff. Mr Kapadia learned senior counsel distinguished
the Judgment of Supreme Court in case of Hardesh Ores (P) Ltd. (supra)
on the ground that observation made by the Supreme Court in paragraph 23
is not a ratio but is passing observation. The suit was dismissed on the
ground of limitation. Learned senior counsel submits that under proviso of
clause (C )(ii) of the document of 1980 as well as 1992 contemplated
execution of a fresh document for renewal of lease at the end of 20 years.
There is no automatic renewal of lease. Execution of a document for such
renewal was must. Learned senior counsel submits that even in the
judgment of Hardesh Ores (P) Ltd. (supra), Supreme Court looked into the
clause of the contract and not only plaint. Reliance is placed on paragraph
14 to 16, 18, 25, 31, 36, 40 and 41 of the said judgment. Mr Kapadia
placed reliance on the Judgment of Supreme Court in the case of T.
Arivandandam Vs. T.V. Satyapal & Anr. Reported in AIR 1977 Supreme
Court 2421 and in particular paragraph 5 thereof in support of his
submission that the trial Court can examine the party even at the first
hearing so that bogus litigation can be shot down at the earlier stage.
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Paragraph 5 of the said judgment reads thus :
“ 5. We have not the slightest hesitation in condemning the petitioner for the gross
abuse of the process of the court repeatedly and unrepentantly resorted to. From the
statement of the facts found in the judgment of the High Court, it is perfectly plain
that the suit now pending before the First Munsif's Court Bangalore, is a flagrant
misuse of the mercies of the law in receiving plaints. The learned Munsif must
remember that if on a meaningful not
formal reading
of the plaint it is
manifestly vexatious, and meritless, in the sense of not disclosing a clear right to sue,
he should exercise his power under Order VII Rule 11, C.P.C. taking care to see that
the ground mentioned therein is fulfilled. And, if clear drafting has created the
illusion of a cause of action, nip it in the bud at the first hearing by examining the
party searchingly under Order X, C.P.C. An activist Judge is the answer to
irresponsible law suits. The trial Courts would insist imperatively on examining the
party at the first hearing so that bogus litigation cam be shot down at the earliest
stage. The Penal Code is also resourceful enough to meet such men, (Ch. XI) and
must be triggered against them. In this case, the learned Judge to his cost realised
what George Bernard Shaw remarked on the assassination of Mahatma Gandhi :
"It is dangerous to be too good."
32. It is submitted by the learned senior counsel that registration of
1992 document would relate back to 1992 and not 1980. It is submitted
that under 1980 document, lease premises were already transferred in
favour of the plaintiff. Since 1980 document was not registered, no part of
such document can be relied upon as no rights can be emanated from such
document.
33. Mr Kapadia learned senior counsel placed reliance on Section
91 and 92 of the Indian Evidence Act and submits that no oral evidence can
be submitted which would be inconsistent with the document. Intention of
the parties has to be gathered from the document itself. Only in case of
latent effect, other material has to be considered at the time of trial.
Construction of a document is always a question of law and no parole
evidence is permitted. On the issue of delay raised by the plaintiff, it is
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submitted that for making an application, under Order 7 Rule 11, no time is
provided and it can be made at any stage. It is submitted that the plaintiff
never took steps to get the suit heard at the earliest and thus no prejudice
would be caused to the plaintiff, if this application for rejection of plaint is
considered at this stage. In support of this plea, Mr Kapadia learned senior
counsel placed reliance on the judgment of Supreme Court in case of
Mayar H.K. Ltd. & Ors. vs. Owners & Parties, Vessel M. V. Fortune Express
& Ors. reported in (2006) 3 Supreme Court Cases 100 and in particular
paragraph 11 which reads thus :
“ 11. Under Order VII Rule 11 of the Code, the Court has jurisdiction to
reject the plaint where it does not disclose a cause of action, where the relief
claimed is undervalued and the valuation is not corrected within a time as
fixed by the Court, where insufficient court fee is paid and the additional court
fee is not supplied within the period given by the Court, and where the suit
appears from the statement in the plaint to be barred by any law. Rejection of
the plaint in exercise of the powers under Order VII Rule 11 of the Code would
be on consideration of the principles laid down by this Court. In T.
Arivandandam v. T.V. Satyapal and Anr . MANU/SC/0034/1977 :
[1978]1SCR742 , this Court has held that if on a meaningful, not formal,
reading of the plaint it is manifestly vexatious, and meritless, in the sense of
not disclosing a clear right to sue, the Court should exercise its power under
Order VII Rule 11 of the Code taking care to see that the ground mentioned
therein is fulfilled. In Roop Lal Sethi v. Nachhattar Singh Gill,
MANU/SC/0521/1982 : (1982) 3 SCC 487, this Court has held that where
the plaint discloses no cause of action, it is obligatory upon the court to reject
the plaint as a whole under Order VII Rule 11 of the Code, but the rule does
not justify the rejection of any particular portion of a plaint. Therefore, the
High Court could not act under Order VII Rule 11(a) of the Code for striking
down certain paragraphs nor the High Court could act under Order VI Rule
16 to strike out the paragraphs in absence of anything to show that the
averments in those paragraphs are either unnecessary, frivolous or vexatious,
or that they are such as may tend to prejudice, embarrass or delay the fair
trial of the case, or constitute an abuse of the process of the court. In ITC Ltd.
v. Debts Recovery Appellate Tribunal MANU/SC/0968/1998 : AIR1998SC634
, it was held that the basic question to be decided while dealing with an
application filed by the defendant under Order VII Rule 11 of the Code is to
find out whether the real cause of action has been set out in the plaint or
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something illusory has been projected in the plaint with a view to get out of
the said provision. In Saleem Bhai and Ors. v. State of Maharashtra and Ors.
MANU/SC/1185/2002 : [2002]SUPP5SCR491 , this Court has held that the
trial court can exercise its powers under Order VII Rule 11 of the Code at any
stage of the suit before registering the plaint or after issuing summons to the
defendant at any time before the conclusion of the trial and for the said
purpose the averments in the plaint are germane and the pleas taken by the
defendant in the written statement would be wholly irrelevant at that stage.
In Popat and Kotecha Property v. State Bank of India Staff Association
MANU/SC/0516/2005 : (2005)7SCC510 , this Court has culled out the legal
ambit of Rule 11 of Order VII of the Code in these words:
“There cannot be any compartmentalization, dissection, segregation
and inversions of the language of various paragraphs in the plaint. If
such a course is adopted it would run counter to the cardinal canon of
interpretation according to which a pleading has to be read as a
whole to ascertain its true import. It is not permissible to cull out a
sentence of a passage and to read it out of the context in isolation.
Although it is the substance and not merely the form that has to be
looked into, the pleading has to be construed as it stands without
addition or subtraction of words or change of its apparent
grammatical sense. The intention of the party concerned is to be
gathered primarily from the tenor and terms of his pleadings taken as
a whole. At the same time, it should be borne in mind that no
pedantic approach should be adopted to defeat justice on hairsplitting
technicalities.”
34. On the issue of limitation, learned senior counsel reiterated
that
each and every part of the monetary claim is barred by law of limitation.
Though various payments were alleged to have been made by the plaintiff
pursuant to the interim orders passed by Cooperative
Court, plaintiff did
not seek for any appropriate direction for refund of the amounts paid by the
plaintiffs to the society and gave consent to the society in withdrawing the
dispute filed by the society before the Cooperative
Court. There is thus no
cause of action against the defendant Nos.1 to 3 in respect of such monetary
claim and in any event the same is barred by law of limitation. It is lastly
submitted that all such payments were made by the plaintiff under 1980
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agreement and not under 1992 agreement. Since 1980 agreement is
admittedly not registered, no rights can be claimed under the said 1980
agreement and thus there is no cause of action for making any monetary
claim against the defendants. It is submitted that on this ground also the
suit is liable to be dismissed under Order 7 Rule 11 (a) of the Code of Civil
Procedure.
REASONS AND CONCLUSION
35. From the judgments relied upon by both sides on the issue of scope of
Order 7 Rule 11 of Code of Civil Procedure 1908, referred to aforesaid,
following principles of law can be culled out :(
a) Court should exercise its power under Order 7 Rule
11 if on a meaningful, not formal reading of the plaint, it
is manifestly vexatious and meritless
and does not
disclose a clear right to sue. It is obligatory upon the
court to reject the plaint as a whole in such circumstances
and cannot reject a portion of the plaint.
(b) Court cannot reject the plaint on the basis of the
allegations made by the defendants or cannot probe into
the facts on the basis of controversy raised in the written
statement or in an application for rejection of the plaint.
Court has to read the entire plaint as a whole to find out
whether it discloses a cause of action for the purpose of
exercising powers under Order 7 Rule 11.
(c)If plaint discloses some cause of action which requires
determination by the court, the mere fact that in the
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opinion of the court, the plaint may not succeed cannot
be a ground for rejection of the plaint. Intention of the
party has to be gathered primarily from the tenor and the
terms of his pleadings taken as a whole. No pedantic
approach should be adopted to defeat justice on heirsplitting
technicalities.
(d)Court cannot dismiss the plaint at the threshold
without going into the merit of the case on the ground
that on account of any provisions of the contract, plaintiff
was unlikely to succeed.
(e) Court cannot reject a plaint on the ground that the
averments are not sufficient to prove the facts stated
therein for the purpose of obtaining reliefs claimed in the
suit.
(f) For the purpose of deciding an application under
Order 7 Rule 11, the averments in the plaint should be
assumed to be true and court has to find out whether
those averments disclose a cause of action or a triable
issue as such.
(g) In ascertaining whether plaint shows a cause of
action, the court is not required to make an elaborate
enquiry into doubtful or complicated questions of law or
facts. The jurisdiction of the court is restricted to
ascertaining whether on the allegations a cause of action
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is shown. If the allegations in the plaint prima facie show
a cause of action, the court cannot embark upon an
enquiry whether the allegations are true in fact or
whether the plaintiff will succeed in the claims made by
him. So long as the claim discloses some cause of action
or raises some questions fit to be decided by a judge, the
mere fact that the case is weak and not likely to succeed
is no ground for striking it out.
(h) Court has to see whether a real cause of action has
been setout in the plaint or something purely illusory has
been stated with a view to get out of Order 7 Rule 11 of
the Code. There cannot be any compartmentalisation,
dissection, segregation and inversions of the language of
various paragraphs in the plaint. The intention of the
party concerned has to be gathered primarily from the
tenor and terms of his pleadings taken as a whole.
36. In this backdrop of the law summarized aforesaid, I shall now
consider whether plaint discloses any cause of action or not or whether suit
appears from the statement in the plaint to be barred by any law.
37. It is averred by the plaintiffs that by virtue of an agreement of lease
dated 15th May 1980, the defendant nos., 1 to 3 gave on lease the suit
premises at a monthly rent. Under the said agreement, the plaintiffs were
given a right to purchase the revisionary rights in the suit premises at the
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end of lease period of 20 years at a prefixed and agreed purchase price
mentioned therein. It is alleged that by virtue of power of attorney,
absolute powers and authorities were conferred on the plaintiffs in regard to
the lease premises including the right to get shares issued by defendant no.4
in respect of the said premises transferred in the name of the plaintiffs. The
lease rent for 20 years in respect of premises nos. 21 and 22 was to be
adjusted by the trust from out of the amount of deposit made by the
plaintiffs with the trust.
38. It is alleged that under the said lease agreement dated 15th May, 1980,
the trust and the trustees were responsible to pay the taxes, outgoings
maintenance and other charges levied by the society in respect of the suit
premises. The trust was regularly getting rent in respect of the suit
preemies by virtue of adjustment of rent from the deposit of Rs.93,93,420/made
by the plaintiffs with the trust as per the provisions of lease
agreement. Pursuant to the power of attorney, the plaintiffs got a lease
deed dated 8th July 1992 executed in their favour in respect of the suit
premises which lease deed was duly registered.
39. It is alleged that the said trust failed to pay the society charges. The
society purported to terminate the allotment of member in respect of
premises nos. 21 and 22 and filed a dispute against the defendant no.1 and
the plaintiffs for recovery of arrears of dues and possession of suit premises.
The cooperative
court passed interim Orders from time to time directing
the plaintiffs to pay the society outgoings and other charges.
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40. It is alleged that under the agreement dated 15th May, 1980 and the
lease deed dated 8th July 1992 the plaintiffs have right to purchase the
revisionary interest in the entire suit premises for a consideration to be
calculated at the rate of Rs.100/per
sq.ft. of the premises nos. 21 and 22.
It is averred that the plaintiffs are ready and willing to pay the said
consideration of Rs10,01,842/to
the defendant no.1 and have been ready
and willing to pay the purchase price to the trust and perform all their
obligations under the said two documents for purchasing the revisionary
rights in respect of the suit premises. It is averred that the said two
agreements are valid, subsisting and binding on the trust and the trustees.
41. It is averred that pursuant to the interim orders passed by the cooperative
court the plaintiffs have paid total amount of about
Rs.64,53,965.60 in respect of the suit premises to the society directly or in
the form of deposit in the Cooperative
Court which deposits were made to
protect their own interest in the said premises. It is alleged that the
plaintiffs have made those payments on behalf of the lessors, the benefit
whereof the lessors have enjoyed/accepted and are bound to make good
and compensate the plaintiffs in that behalf. It is alleged that the plaintiffs
have become entitled to and to have set off the purchase price of
Rs.10,01,842/payable
under the said agreement in respect of the premises
against the amount of Rs.70,53,965.60 for the period upto 30th May, 2000
paid by the plaintiffs to the society or deposited in court. It is alleged that
the plaintiffs being entitled, claimed a set off and have set off the purchase
price against the amount payable by the trust to the plaintiffs and called
upon the trust to effect the transfer of the suit premises to the plaintiffs by
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validly exercising their right to purchase the revisionary rights in respect of
the suit premises.
42. It is alleged that the defendants nos. 1 to 3 have failed and/or
neglected to comply with the requisitions contained in the notice dated 16th
May, 2000. It is averred that the defendants nos. 1 to 3 are liable to
perform their obligations under the said agreement by effectively
transferring the suit premises to the plaintiffs in terms of the said
agreement. It is alleged that under the lease agreement dated 15th May,
1980 the plaintiffs were given the right to purchase the revisionary rights in
respect of the suit premises after expiry of lease period of 20 years from 15th
May,1980. It is averred that the plaintiffs have got the lease deed dated 8th
July 1992 executed in their favour which is duly registered with the Sub
Registrar of Assurances.
43. It is averred that the plaintiffs had always complied with and ready
and willing to comply with all their obligations under the lease agreement
and the lease deed in respect of the suit premises.
44. In paragraph (16) of the plaint it is averred that no part of the claim
of the plaintiffs is barred by law of limitation. The cause of action for this
suit arose for the first time on 16th May 2000.
45. The plaintiffs have prayed in the plaint for a declaration that the
defendants nos. 1 to 3 are bound and liable to specially perform the
agreement contained in the lease agreement dated 15th May, 1980 and lease
deed dated 8th July, 1992 by a sale and transfer of the suit premises and to
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deliver and transfer the concerned share certificate issued by the society for
an agreed purchase price aggregating to Rs.10,01,842/and
to execute all
necessary documents for effecting transfer thereof in favour of the plaintiffs.
The plaintiffs have also prayed for an Order and decree against the trust in
the sum of Rs.60,52,123.60. Plaintiff has also sought an Order and decree
against the society to make the plaintiffs as members in respect of the suit
premises and to transfer and deliver the concerned share certificate in the
name of the plaintiffs. In the alternative, the plaintiffs have prayed for a
money decree against the defendant nos. 1 to 3 in the sum of
Rs.2,75,88,375.60 and also sum of Rs.20,00,00,000/with
interest thereon.
Defendants nos. 3 has already filed a written statement in this suit long
back.
46. Defendants no.3 has filed this Notice of Motion on 17th November,
2006 ineralia praying for rejection of plaint under Order 7 Rule 11 of Code
of Civil Procedure, 1908 on various grounds. Defendants no.3 has filed
additional affidavits in this notice of motion raising additional objections in
support of plea for dismissal of plaint. Plaintiff has filed affidavits
opposing the Notice of Motion.
47. On reading the averments in the plaint in toto it is clear that it is case
of the plaintiff that at the end of 20 years under the agreement dated 15th
May 1980 read with lease deed dated 8th July 1992, plaintiff has right to
purchase the revisionary interest in he entire suit property for a
consideration to be calculated at the described rate. It is also case of the
plaintiff that the plaintiff is ready and willing to pay the consideration of
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Rs.10,01,842/to
the defendant no.1 and have been ready and willing to
pay the said purchase price to the trust and perform all their obligations
under the said two documents for purchasing the revisionary rights in
respect of the suit premises. It is also averred that the said two agreements
are valid, subsisting and binding on the trust and the trustees. In paragraph
(16) read with (13) of the plaint it is averred that the cause of action from
this suit arose for the first time on 16th May 2000 when the trust failed
and/or neglected to comply with the demands contained in the notice dated
16th May, 2000 as also the letter dated 19th April, 2001.
48. Per contra, the submissions of the defendant no1. to 3 is that under
the agreement dated 15th May, 1980, itself was an agreement of lease and
not an agreement for lease and being unregistered document though
compulsorily required to be register under section 107 of the Transfer of
Property Act, no rights can be claimed under such unregistered document.
It is also case of defendants nos. 1 to 3 that since at the end of 20 years
period under agreement dated 15th May, 1980 or under 8th July, 1992 since
plaintiff did not apply for renewal of the lease agreement, there was no
question of exercising any alleged rights of purchase of revisionary rights in
the absence of any existing lease. For the purpose of deciding this objection
raised across the bar, and also partly raised in the affidavit in support of
Notice of Motion, it would be also appropriate to consider the plea raised by
the defendant nos. 1 to 3 in the affidavit in reply filed on 10th March, 2006
in Notice of Motion No. 1488 of 2001 by the defendant no.3.
49. It is averred in the said affidavit in reply by the defendant no.3 that no
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agreement of lease was executed between the parties as alleged. It is
alleged that pursuant to the negotiations between the parties, parties has
drawn up terms of agreement to lease on 15th May, 1980. It is alleged by
terming the said 'agreement to lease' as 'agreement of lease' the plaintiff is
trying to mislead the court. The said agreement was subject to further final
agreement. In paragraph (4) of the affidavit it is alleged that the plaintiff
was allowed to occupy the suit premises in good faith as the final agreement
of lease was to be drawn up. However, no final terms were agreed upon
and the said agreements dated 15th May 1980 remained inchoate. In the
affidavit it is case of the defendant no.3 that the terms suggested by the
plaintiff were one sided and onerous for the trust and accordingly the trust
by its letter dated 15th February 1982 had informed the plaintiff that due to
wrong calculation and misunderstanding, the trust was forced to sign the
agreement to lease on a mistaken notion. In para 7 of the said affidavit it is
alleged that in view of those developments, the parties did not execute any
agreements of lease thereby letting out the suit premises to the plaintiff. It
is alleged that the alleged lease deed is illegal and nonest in law. The said
agreement dated 8th July, 1992 did not create any right in favour of the
plaintiff. In paragraph 10 of the affidavit, it is alleged that the document to
which the plaintiff is referring as agreement of lease is in fact only
agreement to lease and no agreement to lease in respect of the premises was
in favour of the plaintiff and/or to any other person. It is alleged that no
agreement of lease and/or lease deed was ever executed by the parties.
50. On perusal of the affidavit in reply filed by defendant nos.1 to 3 in the
Notice of Motion in the same suit, it is clear that the submissions now
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advanced across the bar that the agreement dated 15th May 1980 itself was
an agreement to lease and not agreement of lease and was required to be
registered mandatorily under section 107 of Transfer of Property Act is
totally contrary to and inconsistent with the plea of the defendant nos.1 to 3
raised in the affidavit in reply to the notice of motion. In my view
defendants nos. 1 to 3 cannot be permitted to take a different stand in the
notice of motion taken out by defendant nos. 1 to 3 for dismissal of suit
under Order 7 Rule 11 than the stand already taken in the affidavit in rely
filed by the same defendants in the notice of motion filed by the plaintiff.
The defendants did not bring these facts to the notice of this court while
making submissions in support of their notice of motion.
51. In my view, court cannot reject the plaint on the basis of the
allegations made by the defendants in the written statement. However,
court can certainly look into the averments in the affidavits filed by the
defendants themselves in the same proceedings taking a contradictory or
inconsistent stand than the stand taken in the application for rejection of
plaint under Order 7 Rule 11. In my view a party can not be allowed to take
two different stand, one while opposing the application for interim relief
filed by the plaintiff and another stand while making an application for
rejection of plaint under Order 7 Rule 11. Once court is satisfied that plaint
prima facie shows a cause of action, court is not required to make an
elaborate enquiry into the doubtful or complicated questions of law or facts.
Court cannot consider whether plaintiff would ultimately succeed in the
claims made by him or not while deciding application under Order 7 Rule
11 of Code of Civil Procedure, 1908. A perusal of the plaint in toto clearly

indicates that the cause of action set out in the plaint is not illusory but
requires to be decided at the time of trial.
52. On the issue as to whether the documents relied upon by the plaintiff
were in the nature of agreement to lease or agreement of lease, defendants
placed reliance on the judgment of the Supreme Court in the case of State
of Maharashtra and others vs. Atur India Pvt.Ltd. (supra). In view of the
inconsistent stand taken by the defendants themselves in the affidavits in
reply filed in Notice of Motion and affidavit in support of the application
under Order 7 Rule 11, regarding the nature of documents and as the said
issue has to be decided at the time of trial, judgment relied upon by the
learned senior counsel is of no assistance to the defendant no.3 at this stage.
53. Mr. Kapadia, learned senior counsel and Mr. Simil Purohit also placed
reliance on the following judgments on the issue that the 1980 agreement
created an interest in the property being lease for more than one year and
required registration under section 107 of the Transfer of Property Act and
in the absence thereof no rights were created under the said document and
thus no reliance thereon can be placed. 2010 13 SCC 128, AIR 1995 SC
2482, 75 (1998) Delhi Law Times 773, AIR 1968 SC 794.
54. It is not in dispute that on 8th July, 1992, an agreement was entered
into by the plaintiff by exercising powers under power of attorney. The said
document is admittedly registered. Supreme Court in case of Harnarayan
(supra) has held that under section 47 of the Registration Act, 1908, a
registration of the document shall relate back to the date of execution of the
document. It is held that even if registration has been done subsequent to

the filing of the suit, it relates back to the date of execution of the deed
which required registration. I am thus not inclined to accept the submission
of the learned senior counsel appearing for defendant no. 3 that such
registration in the year 2009 which was after expiry of 20 years of lease
period would not relate back to the date of execution of the agreement. I
am respectfully bound by the judgment of the Supreme Court in Case of
Harnarayan (supra).
55. Since 1980 document itself is considered by the defendants as
agreement to lease and also an agreement for lease, whether such
document required registration or not therefore cannot be decided at this
stage while considering the application under Order 7 Rule 11 of Code of
Civil Procedure, 1908. The said issue can be considered by this court at the
trial. In my view issue of registration would depend upon the issue whether
the 1980 document is an agreement to lease or agreement for lease. The
proposition of law laid down by the Supreme Court and Delhi High Court in
the aforesaid judgments relied upon by the defendant no.3 is not in dispute
but cannot be applied at this stage.
56. A perusal of the plaint indicates that the suit is for specific
performance of the two documents. In paragraph 5, 6, 8 to 10, 10B, 10C,
10E of the plaint, it clearly indicates that the plaintiff has pleaded cause of
action required to be made in a suit for specific performance. Supreme
Court in case of Liverpool and London S.P. & I Association Ltd. (supra)
has held that a cause of action is a bundle of facts which are required to be
pleaded and for the purpose of obtaining relief claimed in the suit. The

material facts are required to be stated but not the evidence except in
certain cases where the pleadings relies on any misrepresentation, fraud,
breach of trust, willful default or undue influence. I am respectfully bound
by the judgment of Supreme Court referred to aforesaid which squarely
applies to the facts of this case.
57. In so far as issue of limitation raised by the defendant no.3 in respect
of monetary claim made in prayer (b) (II) or prayer (e)(I) is concerned,
reliance is placed by the learned senior counsel on the judgment of Supreme
Court in case of Hardesh Ores (P) Ltd.(Supra) and in case of Mayar H.K.
Ltd. (supra). This court in case of Western Coalfields Ltd. vs. Shri
Chandraprakash K.Khare 2010 (3) Bom.C.R. 344 after considering the
judgment of Supreme Court in case of Hardesh Ores (P) Ltd. (supra),
judgment of Supreme Court in case of N.V. Srinivasa Murthy v.
Mariyamma 2005 (5)SCC 548 and judgment of Supreme Court in case of
Popat and Kotecha Property vs. State Bank of India Staff Association
2005 (7) SCC 510 considered the issue whether a plaint can be rejected
under Order 7 rule 11(d) of Code of Civil Procedure on the ground of
limitation. Paragraphs 7 to 11 of the said judgment in case of Western
Coalfields Ltd. (supra) which are relevant for the purpose of deciding
whether plaint can be rejected on the ground of limitation under Order 7
Rule 11(d) read thus :7.
The Supreme Court had relied on its own decisions
in MANU/SC/0403/2005 : 2005 (5) SCC 548 (N.V.
Srinivasa Murthy v. Mariyamma) as well as
MANU/SC/0516/2005 : 2005 (7) SCC 510 (Popat
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and Kotecha Property v. State Bank of India Staff
Assn.). In fact, there was a conflict of opinion in
these decisions hence the matter was referred to the
larger Bench by the Supreme Court. The larger Bench
did not, however, express opinion as to which view
was correct, as it found that rendering of a decision
on that question would be merely academic.
Obviously, the conflict between the two decisions is
not at all resolved. This can be gathered from the
decision of the Supreme Court in (Balasaria
Construction (P) Ltd. v. Hanuman Seva Trust and
Ors.). Referring to the above two decisions, in
Shrinivasa Murthy and Popat and Kotecha Property,
the Supreme Court observed in as follows:
5. Noticing the conflict between the various High Courts
and the apparent conflict of opinion expressed by this
Court in N.V. Srinivasa Murthy v. Mariyamma and Popat
and Kotecha Property v. State Bank of India Staff Assn.
the Bench referred the following question of law for
consideration to a larger Bench:
Whether the words 'barred by law' under Order 7 Rule
11(d) would also include the ground that it is barred by the
law of limitation.
6. Before the three Judge Bench, counsel for both the
parties stated as follows:
...It is not the case of either side that as an absolute
proposition an application under Order 7 Rule 11 (d) can
never be based on the law of limitation. Both sides state
that the impugned judgment is based on the facts of this
particular case and the question whether or not an
application under Order 7 Rule 11(d) could be based on
law of limitation was not raised and has not been dealt
with. Both sides further state that the decision in this case
will depend upon the facts of this case.
7. In view of the statement made by the counsel for the
parties, the Bench held that the question referred to the

larger Bench was academic so far as this case is concerned
and accordingly declined to decide the question. The case
was sent back to the Bench for disposal on merits based
on the facts of the case.
8. After hearing counsel for the parties, going through the
plaint, application under Order 7 Rule 11(d) CPC and the
judgments of the trial court and the High Court, we are of
the opinion that the present suit could not be dismissed as
barred by limitation without proper pleadings, framing of
an issue of limitation and taking of evidence. Question of
limitation is a mixed question of law and fact. Ex facie in
the present case on the reading of the plaint it cannot be
held that the suit is barred by time. The findings recorded
by the High Court touching upon the merits of the dispute
are set aside but the conclusion arrived at by the High
Court is affirmed. We agree with the view taken by the
trial court that a plaint cannot be rejected under Order 7
Rule 11(d) of the Code of Civil Procedure.
This decision is also rendered by the two Hon'ble Judges and
they find that plaint cannot be rejected under Rule 11 since
question of limitation is a mixed question of fact and law. The
Supreme Court, however, in Hardesh Ore's (P) Ltd. case
observes that the plaint can be rejected when the suit appears
from the statement in plaint to be barred by limitation and
relies on Popat and Kotecha Property decision. Referring to
the same decision the Supreme Court in Balasara Construction
(P) Ltd. referred to above, says that the plaint can not be
rejected since limitation is a question of fact and law. I too find
that the plaint cannot be rejected on the ground that the suit is
barred by limitation and I give my own reasons in addition to
the reasons given by the Supreme Court in Balasara
Construction (P) Ltd. case.
8. The words used in Clause (d) of Rule 11 of C.P.C. are to the
effect that the plaint can be rejected when suit appears from
the statement in the plaint to be barred by law. The important
words in the said clause are "barred by law". The words barred
by law have to be interpreted in the sense the suit itself could

not be filed in the civil court i.e. where the civil court
inherently lacks jurisdiction and certain law prohibits it from
taking cognizance of the suit. Where, therefore, a mere plea of
limitation is raised; it could not be said that the suit is barred
by law. The law of limitation cannot prevent a party from
instituting a suit in civil court. But there are certain laws which
prevent the suit being instituted in the civil court, for that law,
makes a provision of alternate remedy and forum. If a person
wants to get an industrial dispute resolved, which is essentially
a civil dispute, such a person cannot approach civil court, since
Industrial Disputes Act makes remedy and forum available and
therefore, civil court in such cases will inherently lack
jurisdiction. The law of limitation, therefore, does not prohibit
a party from approaching the civil court and filing a suit even
though it may be barred by limitation.
9. While dealing with the question, we have to bear in mind
the difference between rejection of a plaint and the dismissal
of a suit. The plaint is rejected because it is found to be
defective for the reasons mentioned in Rule 11. Though not in
every case, generally the defective plaint is rejected by the
court at the threshold. The court refusing to take cognizance
can reject the plaint. Where plaint is rejected, a party has a
right to present a fresh plaint but where a suit is dismissed, no
party has a right to present a fresh suit on the same cause of
action. It is for this reason, we must look into Section 3 of the
Limitation Act. Section 3 of the Limitation Act reads as
follows -
3. Bar of limitation (1) Subject to the provisions
contained in Sections 4 - 24 (inclusive), every suit
instituted, appeal preferred, and application made after
the prescribed period shall be dismissed, although
limitation has not been set up as a defence.
(2) For the purposes of this Act,
(a) A suit is instituted,
(i) in an ordinary case, when the plaint is presented to the

proper officer;
(ii) in the case of a pauper, when his application for leave
to sue as a pauper is made; and
(iii) in the case of a claim against a company which is
being wound up by the Court, when the claimant first
sends in his claim to the official liquidator;
(b) any claim by way of a set off, or a counter claim, shall
be treated as a separate suit and shall be deemed to have
been instituted
(i) in the case of a set off, on the same date as the suit in
which the set off is pleaded;
(ii) in the case of a counterclaim, on the date on which the
counter claim is made in Court;
(c) an application by notice of motion in a High Court is
made when the application is presented to the proper
officer of that Court.
10. The section itself says that if suit is barred by limitation, it
has to be necessarily dismissed. If law of limitation, which is a
substantive law, speaks as to how a suit barred by limitation
should be dealt with, then the mandate in the substantive law
has to be followed. The Legislation in its wisdom has
mandated dismissal of the suit. It could have also said that in
such cases plaint be rejected. The fact that it makes use of the
word dismiss is by itself eloquent. Necessarily, therefore, if the
suit is apparently barred by limitation, the suit has to be
dismissed. This is necessary because the rejection of plaint
does not prohibit a party from filing a fresh suit as envisaged
by Rule 13 of Order 7 of C.P.C. Therefore, when once court
records a finding that suit is barred by limitation and dismisses
it, the lis comes to an end while where a plaint is rejected the
lis does not come to an end.
11. Where, therefore, a plea of limitation is raised, the court
cannot reject the plaint but may dismiss it on framing a

preliminary issue. The learned judge of the trial court has
rightly rejected the application under Order 7 Rule 11 of C.P.C.
There is, therefore, no substance in the revision and the same
is dismissed. No order as to costs.
58. A perusal of section 3 of Limitation Act clearly indicates that every suit
filed after prescribed period has to be dismissed subject however to
provisions contained in sections 4 to 24 of the Limitation Act, 1963, even if
limitation has not been set up as a defence. In so far as remedy under order
7 rule 11 of the CPC, 1908 is concerned, if the conditions setout therein are
satisfied, suit cannot be dismissed but only plaint can be rejected. Under
order 7 rule 13 of the CPC, even if plaint is rejected, fresh suit can be filed
whereas if suit is dismissed on the ground of limitation, no fresh suit can be
filed in respect of such time barred claim. In my view both the provisions
thus operate in different field. Plaint therefore cannot be rejected under
order 7 rule 11 of CPC on the ground of limitation. If according to the
defendant no.3, suit is barred by limitation, such issue can be raised by
defendant no.3 in the affidavit in reply or in the written statement and such
issue if raised can be tried by this court as a preliminary issue.
59. Even otherwise, a perusal of the plaint in toto indicates that it is case
of the plaintiff that various payments were made by the plaintiff to the
society or were required to be deposited in the cooperative
court pursuant
to the interim orders. It is also case of the plaintiff that plaintiff was
required to set off and have set off such payments against the consideration
payable to the defendant nos. 1 to 3 for exercising rights to purchase
revisionary rights in the suit property. It is also stated in the plaint that the

cause of action for filing the suit arose when the trust neglected to comply
with the demands contained in the notice dated 16th May, 2000 as also the
letter dated 19th April, 2001. it is also stated that no part of the plaint is
barred by law of limitation. In my view, the plea of limitation is a mix
question of facts and law and particularly considering the averments made
in the plaint, this court cannot come to any conclusion at this stage whether
the claim is liable to be rejected on the ground of limitation. In my view,
issue of limitation thus raised by the defendant no.3 in the notice of motion
can be considered as a preliminary issue under section 9A of Code of Civil
Procedure.
60. Supreme court in case of Sopan Sukhdeo Sable (supra) has taken a
view that court cannot reject only part of the plaint and if no cause of action
is disclosed, the plaint as a whole must be rejected. In my view, no case is
made out by the defendant no.3 that the plaint is liable to be rejected on
any of the grounds alleged in the affidavits filed in the notice of motion
under Order 7 Rule 11 or on the grounds urged across the bar.
61. The suit is filed in the year 2001. Defendant no.3 has already filed
written statement. Notice of Motion under order 7 rule 11 has been filed in
the year 2006. The Notice of Motion is pending for more than 7 years. In
my view the Notice of Motion is devoid of any merits and deserves to be
dismissed. I, therefore, pass the following order :(
a) Notice of Motion is dismissed.
(b) Hearing of suit is expedited.
(c) Both parties are directed to exchange draft issues

within two weeks from today. Office is directed to place
the suit on board for framing issues after two weeks after
parties filing the draft issues. No order as to costs.
[R.D. DHANUKA, J.]

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