It is a trite law that plaint could be returned
at any stage of the suit to be presented to the
Court in which the suit should have been
instituted, if the Court finds that the Court did
not have the territorial or pecuniary
jurisdiction to try the suit. There are no
conditions or circumstances specified in Rule 10
for return of the plaint, as specified for
rejection of the plaint under Rule 11 of Order
VII. Though not specifically stated, Rule 11
casts duty on the Court to reject the plaint, if
the case falls under any of the clauses mentioned
therein. If both the provisions are perused
closely, it transpires that both are independent
provisions available to the defendant in the
suit. Where the plaint does not disclose a cause
of action, it is liable to be rejected under
Clause (a) of Rule 11 and could not be returned
under Rule 10. Similarly, where the relief
claimed is not valued properly or if properly
valued, but the plaint is written upon paper
insufficiently stamped, and the plaintiff on
being required by the Court to correct the
valuation or to submit the requisite stamp paper
as the case may be within the time fixed by the
Court fails to do so, the plaint is liable to be
rejected under Clause (b) or Clause (c), as the
case may be, of Rule 11 and could not be returned
under Rule 10. Similarly, where the suit appears
from the statement made in the plaint to be
barred under any law, then also the plaint is
liable to be rejected Clause (d) of under Rule 11
and could not be returned under Rule 10. Thus, a
duty is cast on the Court to reject the plaint
when the same is hit by any of the infirmities
provided in the clauses of Rule 11 even without
the intervention of the defendant. Whereas the
plaint could be returned under Rule 10 only when
the Court comes to the conclusion at any stage
of the suit that the plaint was not presented to
the Court having jurisdiction to try the suit,
and under the circumstances, it has to be
returned to be presented to the Court in which
the suit should have been instituted. Thus, on
the plain reading of the said provisions as
contained in Rule 10 and 11 of Order VII, it
clearly emerges that they are mutually exclusive
to each other, and the reliefs could not be
prayed for alternatively, either under Rule 10 or
under Rule 11 as sought to be prayed for in the
instant case by the applicant – defendant before
the trial Court. The Court, therefore, is the
opinion that such a composite application under
Rule 10 and Rule 11 of Order VII as such would
not be maintainable. {PARA 6}
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
CIVIL REVISION APPLICATION NO. 10 of 2015
H D F C BANK LIMITED.
V
ASHAPURA MINECHEM LIMITED..
CORAM: MS.JUSTICE BELA M. TRIVEDI
Date : 13/10/2017
1. The applicant Bank (original defendant) by way of
the present Civil Revision Application filed
under Section 115 of CPC has challenged the order
dated 15.12.2014 passed by the Principal Sr.
Civil Judge, Jamkhambhaliya (hereinafter referred
to as "the trial Court”) below Exh.9 in Special
Civil Suit No.72 of 2012, whereby the trial Court
has rejected the said application filed by the
applicant under Order VII Rule 10 and 11 read
with Section 151 of CPC, seeking return and/or
rejection of the plaint. With the consent of the
learned Advocates for the parties, the Civil
Revision Application was heard finally at the
admission stage.
2. The factual matrix in nutshell giving rise to the
present Civil Revision Application may be stated
as under:-
2(i) The respondent (original plaintiff) has
filed the suit being Special Civil Suit No.72 of
2012 against the applicant – defendant seeking
various reliefs of declaration and permanent
injunction as stated in paragraph 46 of the
plaint, which read as under:-
“(a) For a declaration that the Master
Agreement dated 15th October 2007 and
all the four Transactions thereunder
bearing reference nos.69026HM to
69145HM, 73359HM to 73360HM, 73773HM to
73774HM and 74217HM to 74218HM are
illegal, void ab initio and
unenforceable;
(b) For a permanent order of injunction of
this Hon’ble Court restraining the
Defendant, from acting under and/or in
furtherance of the Master agreement
dated 15th October 2007 and Transactions
thereunder bearing reference nos.69026HM
to 69145HM, 73359HM to 73360HM, 73773HM
to 73774HM and 74217HM to 74218HM in any
manner whatsoever;
(c) For a declaration that the Term Loan
Agreement dated 13th August 2009 is
illegal, null, void and unenforceable;
(d) For a permanent order of injunction of
this Hon’ble Court restraining the
Defendant, from acting under and/or in
furtherance of the Term Loan Agreement
dated 13th August 2009 in any manner
whatsoever;
(e) For recovery of Rs.54,68,57,468/ paid
to the Defendant pursuant to the Master
Agreement dated 15th October 2007 and
the said Transactions and an interest at
the rate of 18% per annum thereon;
(f) Pending the hearing and final disposal
of the present suit, for a temporary
order and injunction of this Hon’ble
Court staying all proceedings initiated
by the Defendant before the Debts
Recovery Tribunalll, Mumbai in Original
Application No.29 of 2011, Original
Application No.30 of 2011 and Original
Application No.31 of 2011;
(g) Pending the hearing and final disposal
of the present suit, for a temporary
order and injunction of this Hon’ble
Court restraining the Defendant, its
Managing Directors, Directors, officers,
agents and servants from continuing with
and/or initiating any fresh proceedings
against the Plaintiff in the Debts
Recovery Tribunal or any other
Court/Tribunal/Forum for any alleged
claims under Master Agreement dated 15th
October 2007, the said Transactions
thereunder and/or the Term Loan
Agreement dated 13th August 2009;
(h) Pending the hearing and final disposal
of the present suit for a temporary
order and injunction of this Hon’ble
Court restraining the Defendant, its
Managing Directors, Directors, officers,
agents and servants from acting under
and/or in pursuance of and/or in
furtherance thereto, or making any
demands out of or in connection with
said Master Agreement dated 15th October
2007 and/or the said Transactions
thereunder;
(i) Pending the hearing and final disposal
of the present suit for a temporary
order and injunction of this Hon’ble
Court restraining the Defendant, its
Managing Directors, Directors, officers,
agents and servants from acting under
and/or in pursuance of and/or in
furtherance thereto or making any
demands out of or in connection with the
Term Loan Agreement dated 13th August
2009 including adjustments and/or
appropriating any sums and/or receiving
and/or realizing any sums for recovery
of the amounts allegedly due
thereunder.”
2(ii) It has been alleged in the plaint
inter alia that the plaintiff is an exporter
of bauxite and bentonite, having its offices
at various places in India, including at
Mumbai and Khambhaliya. The defendant is a
banking company incorporated under the Indian
Laws, with whom the plaintiff had banking
relationship since 2007. Since the plaintiff
was an exporter of minerals, it was
constantly exposed to the risk arising out of
the fluctuation in the exchange rate of
foreign currency. Hence, considering the
recommendation of the defendant Bank and
considering the fact that export of bauxite
would increase in future, the plaintiff in
order to protect itself against the risk of
depreciation of the dollar, which would
impact the business profit, agreed to enter
into a Master Agreement to hedge the foreign
currency risks arising out of the business of
export of bauxite. The Master agreement
called “International Swaps and Derivatives
Association Master Agreement” was entered
into between the parties on 15th October,
2007 and the same was intended to be a
foreign exchange derivative transactions in
the nature of foreign currency rupee option
between the parties, wherein the plaintiff
was to sell USD and buy INR from the
defendant at a predetermined price. At the
end of every month, if the dollar rate was
below the predetermined rate, the difference
between the predetermined rate and the
prevalent rate was payable by the defendant
to the plaintiff, whereas if the prevailing
dollar rate was more than the predetermined
rate, then the plaintiff was liable to pay
double the difference to the defendant.
Under the said Master agreement, the
plaintiff and the defendant had entered into
four transactions in the nature of foreign
currency rupee options bearing Reference
Nos.69026HM to 69145HM, 73359HM to 73360HM,
73773HM to 73774HM and 74217HM to 74218HM.
The said four transactions put together
involved a notional of 150 million dollars or
the equivalent of around Rs.592 Cr., at the
prevailing spot rates.
2(iii) It has been further averred in the
plaint that apart from the inherent features,
which make the transactions illegal and
opposed to public policy, the overall
exposure under such transactions of the
plaintiff patently exceeded the permissible
maximum limit based on the past performance
and/or the receivables pending from its
contracts. The defendant was aware of other
similar contracts that the plaintiff had
entered into with other Banks on account of
the said risks in the mining and export
business of the plaintiff, and yet the
defendant did not conduct the activity of due
diligence. The plaintiff did not realize
that the defendant had in gross breach of
their fiduciary duty, on the basis of
misrepresentations, fraudulently induced the
plaintiff to enter into the said
transactions, which resulted in losses to the
plaintiff and gross profits to the defendant.
As per the Reserve Bank of India (“RBI” for
short) and Foreign Exchange Management Act
(“FEMA” for short) guidelines/circulars the
onus was upon the defendant Bank to ensure
that the plaintiff had understood the risks
associated with the transactions and to
ensure that the transactions were consistent
with the plaintiff’s business, financial
operations, skills and risks, however, no
such exercise was carried out by the
defendant. The plaintiff was never appraised
of the fact that the Master agreement and the
said transactions were in fact a wager within
the meaning of Section 30 of the Indian
Contract Act. The defendant being a Bank of
good repute and supposedly excellent
services was in a position to exercise undue
influence over and dominate the will of the
plaintiff company, which had no expertise or
skill or adequate knowledge in the field of
foreign exchange management. The said Master
agreement and the said transactions,
therefore, were voidable at the instance of
the plaintiff under Sections 17 and 18 of the
Indian Contract Act and void ab initio under
Section 23 of the Indian Contract Act.
2(iv) It has been further averred that in
or around June 2009 the defendant claimed and
demanded a sum of Rs.22 Cr., approximately,
which the plaintiff was made liable to pay
under the said transactions. As the
plaintiff was not in a position to pay the
said amount, the defendant further misled the
plaintiff by suggesting that they would grant
a Term loan to the plaintiff of an equivalent
amount. The plaintiff having no other choice
borrowed money from the market to make
payment against the said alleged debt and
made payment of Rs.22 Cr., to the defendant,
and in return the defendant released a sum of
Rs.25 Cr., under the guise of Term loan for
the purpose of partial reimbursement of
capital expenditure incurred for setting up
Kaolin Project at Village Melakulam, Taluka
Trivandrum, District Trivandrum, Kerala. In
this regard, Term loan agreement dated
13.8.2009 was executed between the parties.
2(v) It is further case of the plaintiff that
in early 2010, the plaintiff realizing the
illegality of the Master agreement and the
transactions thereunder, stopped making
further payments under the said contracts,
and therefore, various demands raised of into
crores of rupees came to be made by the
defendant from the plaintiff as per the
letters dated 21.10.2010, 9.12.2010,
14.1.2011 and 29.6.2012. The defendant by
its letter dated 19.4.2011 demanded
Rs.26,62,33,451.20 being alleged dues arising
out of the Term loan along with the interest
thereon. The cheques that were issued by the
plaintiff to the defendant by way of
collateral security for the Term loan came to
be dishonoured by the banks for which the
defendant had filed various criminal
complaints against the plaintiff under
Section 138 of the Negotiable Instrument Act
(hereinafter referred to as "NI Act”).
According to the plaintiff an article was
published in the daily newspaper the Times of
India in April 2011 stating that the RBI had
fined 19 banks for violating its guidelines
on derivatives. The defendant Bank was
amongst the said banks, which was also
penalized by the RBI.
2(vi) It has been further stated in the
plaint that the plaintiff was willing to
return the amount of Rs.55,52,500/- gained by
the plaintiff under the said transactions, to
the defendant. However, the plaintiff had
paid the amount of Rs.54,68,57,468/- under
the said transactions, which the plaintiff
was seeking to recover by way of the present
suit.
2(vii) As regards the jurisdiction of the
trial Court, it has been stated in the plaint
that the cause of action had partly arisen in
Khambhaliya inasmuch as the authorized
signatory of the plaintiff had signed and
executed the Master agreement in Khambhaliya
and the factory of the plaintiff was also
situated in Khamabhaliya, and therefore, the
major export business of bauxite by the
plaintiff was conducted from Khambhaliya.
2(viii) It has been further stated that the
defendant by way of original application
Nos.29, 30, and 31 of 2011 had filed
proceedings against the plaintiff before the
Debts Recovery Tribunal (hereinafter referred
to as "the DRT”) and had also filed Misc.
Applications in the said original
applications seeking interim reliefs for
restraining the plaintiff from alienating or
creating third party rights in Kaolin land
property of the plaintiff. Since the
plaintiff had no intention of parting away
with any of the suit properties, the
Presiding Officer of the DRT had disposed of
the said Misc. Applications upon the
statement made by the plaintiff in that
regard.
2(ix) It is further stated that since the
plaintiff had suffered enormous losses, it
had to make a reference to the Board of
Industrial and Financial Reconstruction
(hereinafter referred to as "the BIFR”) vide
the application dated 31.5.2011, which was
registered as Case No.34 of 2011 by the BIFR.
In the said case of the plaintiff, the BIFR
on 2.11.2011 passed the order inter alia
stating that “the HDFC Bank was allowed to
approach the competent Court for
crystallization of their dues and that they
shall approach the Board whenever their dues
are crystallized. Till then, they will not
enforce the recovery of their dues from the
company, as agreed by them in the hearing.”
According to the plaintiff, despite the said
order passed by the BIFR, the defendant filed
interim applications in the original
applications in the DRT on or around
1.12.2011 seeking the stay on the further
hearing of the original applications to be
vacated, and the Presiding Officer of the DRT
allowed the said interim applications vide
the order dated 17.1.2012 directing that the
further hearing of the original applications
would proceed in accordance with law and that
the recovery certificate, if issued, would
not be enforced without the permission of the
BIFR. Being aggrieved by the said order, the
plaintiff filed writ petitions before the
Bombay High Court, which came to be dismissed
by the order dated 26.11.2012. The plaintiff
thereafter filed the present suit before the
trial Court on 24.12.2012 seeking the reliefs
as stated herein above.
2(x) The present applicant – original
defendant submitted the application at Exh.9
under Order VII Rule 10 and 11 read with
Section 151 of CPC seeking to return and/or
reject the plaint filed in the suit mainly on
the ground that the trial Court did not have
the jurisdiction to entertain the suit, in
view of the ISDA Master agreement and the
Term loan agreement, as also Section 20 of
CPC. The plaint was also sought to be
rejected on the ground that it was barred by
law of limitation, was barred by provisions
contained in the Recovery of Debts Due to
Banks and Financial Institutions Act, 1993,
barred by the provisions contained in Section
41(b) and 41(h) of the Specific Relief Act,
1963, barred by Section 13 of the Security
and Reconstruction of Financial Assets and
Enforcement of Security and Interest Act etc.
The plaint was also sought to be rejected on
the ground that it did not disclose any cause
of action, and that the suit was a mala fide
attempt on the part of the plaintiff to avoid
and delay the payment of the amounts that had
fallen due to the defendant and was a gross
abuse of Court. The said application has
been rejected by the trial Court, against
which the present Civil Revision Application
has been filed.
3. The learned Sr. Advocate Mr.Mihir Thakore for the
applicant Bank assailing the impugned order
passed by the trial Court, and relying upon the
grounds agitated in the application filed by the
applicant – original defendant seeking
return/rejection of the plaint submitted that the
trial Court had failed to appreciate that the
trial Court did not have the territorial
jurisdiction to entertain the suit in view of the
provisions of the Term loan agreement dated
13.8.2009 read with Section 20 of CPC, and
therefore, the plaint was liable to be returned
for being presented to the competent Court having
jurisdiction. Referring to the documents annexed
to the plaint, he implored that Master agreement
and the Term loan agreement having been executed
and signed at Mumbai and all other legal
proceedings having also been initiated and
pending on the same subject matter, before the
Courts/Tribunals at Mumbai, the trial Court at
Khambhaliya did not have the jurisdiction to
entertain the suit. In the alternative, he
submitted that the plaint was liable to be
rejected mainly under Clause (a) of Rule 11,
Order VII as it did not disclose any cause of
action, and was filed with mala fide intention,
misusing the process of law to avoid and/or delay
the payment of the amounts that had fallen due to
the defendant Bank. Mr.Thakore pressing into
service the provisions contained in Sections 17
and 18 of the Recovery of Debts Due to Banks and
Financial Institutions Act, 1993 (hereinafter
referred to as "the RDDBFI Act”) submitted that
the Debts Recovery Tribunal would have the
exclusive jurisdiction in the matter of recovery
of debts and in the instant case the defendant –
Bank has already initiated the recovery
proceedings before the DRT-II, Mumbai and the
issues raised in the plaint are directly and
substantially the issues before the DRT in the
recovery proceedings initiated by the defendant.
Reliance is placed on the decision of the Supreme
Court in case of I.T.C. Limited Vs. Debts
Recovery Appellate Tribunal & Ors., reported in
AIR 1998 SC 634 to submit that in absence of
valid cause of action shown in the plaint, the
suit was liable to be rejected under Order VII
Rule 11 of CPC. He has also relied upon the
decision of Delhi High Court in case of Radnik
Exports Vs. Standard Chartered Bank, reported in
(2014) DLT 436. Pressing into service the
provisions contained in the Specific Relief Act,
more particularly Section 41(b) and Section 41(h)
thereof, Mr.Thakore has submitted that the
prayers contained in the suit could not be
granted as per the said provisions. Mr.Thakore
also submitted that the suit containing the
prayer seeking injunction against the defendant
Bank from enforcing the securities available with
the defendant Bank was also barred under Section
34 of the Securitisation and Reconstruction of
Financial Assets and Enforcement of Security
Interest Act, 2002 (hereinafter referred to as
'SARFAESI Act'). According to Mr.Thakore, the
suit is even otherwise vexatious and filed with
ulterior motive abusing the process of law, and
therefore also, was liable to be rejected in view
of the observations made by the Supreme Court in
case of T. Arvindam Vs. T. V. Satyapal,
reported in (1977) 4 SCC 467.
4. Per contra, the learned Sr. Advocate Mr.Mihir
Joshi for the respondent - plaintiff raising
preliminary objection with regard to the very
maintainability of the revision application
submitted that the order rejecting the
application of the defendant seeking return of
the plaint under Order VII Rule 10 could not be
said to be an order finally disposing of the suit
and the revision application would not be
maintainable in view of the proviso to Section
115 of CPC. In this regard he has relied upon
the decision of this Court in case of Vimal Coop.
Housing Society Ltd. Vs. Rajendrakumar
Shankerbhai Bhagiya, reported in 2003(2) GLH 58.
Mr.Joshi has also relied upon the decision of
this Court in case of Patel Enterprise & Anr. Vs.
Gujarat Tea Depot Company & Anr., decided on
17.7.2017 to submit that the composite
application under Rule 10 and 11 of Order VII
filed by the applicant before the trial Court was
also not maintainable. As regards the rejection
of the plaint under Order VII Rule 11, Mr.Joshi
has relied upon the latest decision of the
Supreme Court in case of Kuldeep Singh Pathania
Vs. Bikram Singh Jaryal, reported in (2017) 5
SCC 345, to submit that the plaint can not be
rejected if the plaint discloses the cause of
action and that the cause of action has to be
gathered on the basis of the averments made in
the plaint. Merely because the Court is of the
opinion that the plaintiff may not succeed in the
suit can not be a ground for rejection of the
plaint. Mr.Joshi has also relied upon the
decision of the Supreme Court in case of Sopan
Sukhdeo Sable and Ors. Vs. Assistant Charity
Commissioner and Ors., reported in (2004) 3 SCC
137 and in case of Mayar (H.K.) Ltd. and Ors. Vs.
Owners and Parties, Vessel M. V. Fortune Express
& Ors., reported AIR 2006 SC 1828 and submitted
that 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 was applicable. According
to him, the trial Court having rightly passed the
order rejecting the application of the defendant
Bank, and this Court having limited jurisdiction
under Section 115 of CPC may not interfere with
the same in view of the decision of the Supreme
Court in case of Hindustan Petroleum Corporation
Limited Vs. Dilbahar Singh, reported in 2014 (9)
SCC 78.
5. In response to the preliminary objection raised
by the learned Sr. Advocate Mr.Mihir Joshi as
regards the maintainability of the composite
application under Rule 10 and 11 of Order VII of
CPC filed by the applicant – defendant before the
trial Court, the learned Sr. Advocate Mr.Mihir
Thakore has submitted that the applicants had
made alternative prayers for return of the plaint
under Rule 10 and rejection of the plaint under
Rule 11 for the grounds stated therein,
nonetheless if the Court is of the opinion that
such a composite application with alternative
prayers was not maintainable, he would not press
for the return of the plaint under Rule 10 and
the present revision application be treated as
having been filed against the order rejecting the
application filed by the applicant under Rule 11
of Order VII of CPC.
6. It is a trite law that plaint could be returned
at any stage of the suit to be presented to the
Court in which the suit should have been
instituted, if the Court finds that the Court did
not have the territorial or pecuniary
jurisdiction to try the suit. There are no
conditions or circumstances specified in Rule 10
for return of the plaint, as specified for
rejection of the plaint under Rule 11 of Order
VII. Though not specifically stated, Rule 11
casts duty on the Court to reject the plaint, if
the case falls under any of the clauses mentioned
therein. If both the provisions are perused
closely, it transpires that both are independent
provisions available to the defendant in the
suit. Where the plaint does not disclose a cause
of action, it is liable to be rejected under
Clause (a) of Rule 11 and could not be returned
under Rule 10. Similarly, where the relief
claimed is not valued properly or if properly
valued, but the plaint is written upon paper
insufficiently stamped, and the plaintiff on
being required by the Court to correct the
valuation or to submit the requisite stamp paper
as the case may be within the time fixed by the
Court fails to do so, the plaint is liable to be
rejected under Clause (b) or Clause (c), as the
case may be, of Rule 11 and could not be returned
under Rule 10. Similarly, where the suit appears
from the statement made in the plaint to be
barred under any law, then also the plaint is
liable to be rejected Clause (d) of under Rule 11
and could not be returned under Rule 10. Thus, a
duty is cast on the Court to reject the plaint
when the same is hit by any of the infirmities
provided in the clauses of Rule 11 even without
the intervention of the defendant. Whereas the
plaint could be returned under Rule 10 only when
the Court comes to the conclusion at any stage
of the suit that the plaint was not presented to
the Court having jurisdiction to try the suit,
and under the circumstances, it has to be
returned to be presented to the Court in which
the suit should have been instituted. Thus, on
the plain reading of the said provisions as
contained in Rule 10 and 11 of Order VII, it
clearly emerges that they are mutually exclusive
to each other, and the reliefs could not be
prayed for alternatively, either under Rule 10 or
under Rule 11 as sought to be prayed for in the
instant case by the applicant – defendant before
the trial Court. The Court, therefore, is the
opinion that such a composite application under
Rule 10 and Rule 11 of Order VII as such would
not be maintainable. In any case, considering
the submission of Mr.Thakore, the present
revision application is treated as having been
filed against the order passed by the trial Court
rejecting the application for rejection of the
plaint under Rule 11 of Order VII of CPC.
7. It is needless to say that the law as regards the
rejection of plaint under Order VII Rule 11 on
the ground of non-disclosure of cause of action
under Clause (a) and on the ground of the suit
being barred by law as contemplated in Clause (d)
is well settled. The Supreme Court in case of
Sopan Sukhdeo Sable and Ors. Vs. Assistant
Charity Commissioner and Ors. (supra) while
laying down the spectrum of Order VII Rule 11 in
the legal ambit has reiterated the earlier
position laid down in various judgements which
may be reproduced as under:-
“ 10. In Saleem Bhai and Ors. v. State of
Maharashtra and Ors., it was held with
reference to Order VII Rule 11 of the Code
that the relevant facts which need to be
looked into for deciding an application
thereunder are the averments in the plaint.
The trial Court can exercise the power 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. For the purposes of deciding
an application under clauses (a) and (d) of
Order VII Rule 11 of the Code, the averments
in the plaint are the germane; the pleas
taken by the defendant in the written
statement would be wholly irrelevant at that
stage.
11. In I.T.C. Ltd. v. Debts Recovery
Appellate Tribunal and Ors., it was held
that the basic question to be decided while
dealing with an application filed under
Order VII Rule 11 of the Code is whether a
real cause of action has been set out in the
plaint or something purely illusory has been
stated with a view to get out of Order VII
Rule 11 of the Code.
12. The trial Court must remember that if on
a meaningful and not formal reading of the
plaint it is manifestly vexatious and
meritless in the sense of not disclosing a
clear right to sue, it should exercise the
power under Order VII Rule 11 of the Code
taking care to see that the ground mentioned
therein is fulfilled. If clever drafting has
created the illusion of a cause of action,
it has to be nipped in the bud at the first
hearing by examining the party searchingly
under Order X of the Code.
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 Lal Sathi v. Nachhattar
Singh Gill (1982 (3) SCC 487), 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.
14. In Raptakos Brett & Co.Ltd. v. Ganesh
Property (1998 (7) SCC 184) it was observed
that the averments in the plaint as a whole
have to be seen to find out whether clause
(d) of Rule 11 of Order VII was applicable.
15. 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 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 or 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.”
8. In Mayar (H.K.) Ltd. and Ors. Vs. Owners and
Parties, Vessel M. V. Fortune Express & Ors.
(supra) dealt with the similar issue and held in
paragraph 11 as under:-
“11. From the aforesaid, it is apparent that
the plaint cannot be rejected on the basis
of the allegations made by the defendant in
his written statement or in an application
for rejection of the plaint. The Court has
to read the entire plaint as a whole to find
out whether it discloses a cause of action
and if it does, then the plaint cannot be
rejected by the Court exercising the powers
under Order VII Rule 11 of the Code.
Essentially, whether the plaint discloses a
cause of action, is a question of fact which
has to be gathered on the basis of the
averments made in the plaint in its entirety
taking those averments to be correct. A
cause of action is a bundle of facts which
are required to be proved for obtaining
relief and for the said purpose, the
material facts are required to be stated but
not the evidence except in certain cases
where the pleadings relied on are in regard
to misrepresentation, fraud, willful
default, undue influence or of the same
nature. So long as the plaint discloses some
cause of action which requires determination
by the court, mere fact that in the opinion
of the Judge the plaintiff may not succeed
cannot be a ground for rejection of the
plaint. In the present case, the averments
made in the plaint, as has been noticed by
us, do disclose the cause of action and,
therefore, the High Court has rightly said
that the powers under Order VII Rule 11 of
the Code cannot be exercised for rejection
of the suit filed by the plaintiffappellants.”
9. Yet in another case of Popat and Kotecha Property
Vs. State Bank of India Staff Association,
reported in 2005 (7) SCC 510, the Supreme Court
keeping in view the principles set out in Sopan
Sukhdeo Sable and Ors. Vs. Assistant Charity
Commissioner and Ors. (supra), observed in
paragraphs 23 as under:-
“23. Rule 11 of Order VII lays down an
independent remedy made available to the
defendant to challenge the maintainability
of the suit itself, irrespective of his
right to contest the same on merits. The
law ostensibly does not contemplate any
stage when the objection can be raised, and
also does not say in express terms about the
filing of the written statement. Instead,
the word “shall” is used clearly implying
thereby that it casts a duty on the Court to
perform its obligation in rejecting the
plaint when the same is hit by any of the
infirmities provided in the four Clauses of
Rule 11, even without intervention of the
defendant. ...”
10.In the light of the afore-stated legal position,
let us examine the averments made in the plaint
so as to find out whether the plaint discloses
the cause of action, and whether the suit is
barred under any law as contemplated in Clause
(a) and Clause (d) respectively of Rule 11 of
Order VII. At this juncture, it would be also
apposite to mention that Order VI Rule 2 requires
that every pleadings shall contain, and contain
only a statement in concise form and of material
facts on which the party pleading relies for his
claim or defence as the case may be, but not the
evidence by which they are to be proved. Thus,
though the pleadings must contain a statement in
concise form of material facts, it need not
contain the evidence by which they are to be
proved. At this juncture, it would be also
relevant to mention that Order VII Rule 1 states
as to what particulars should be contained in the
plaint, and as per Clause (e) of the said Rule,
the plaint must contain the facts constituting
the cause of action, and when it arose. As per
Clause (f) thereof, the plaint also must contain
the facts showing that the Court has
jurisdiction. The distinction between “material
facts” and “particulars” has been succinctly
described by the Supreme Court in case of Sopan
Sukhdeo Sable and Ors. Vs. Assistant Charity
Commissioner and Ors. (supra). Paragraph 20
thereof reads as under:-
“20. There is distinction between ’material
facts’ and ’particulars’. The words ’material
facts’ show that the facts necessary to formulate
a complete cause of action must be stated.
Omission of a single material fact leads to an
incomplete cause of action and the statement or
plaint becomes bad. The distinction which has
been made between ’material facts’ and
’particulars’ was brought by Scott, L.J. in Bruce
v. Odhams Press Ltd. (1936) 1 KB 697 in the
following passage :
The cardinal provision in Rule 4 is that the
statement of claim must state the material
facts. The word "material" means necessary
for the purpose of formulating a complete
cause of action; and if any one "material"
statement is omitted, the statement of claim
is bad; it is "demurrable" in the old
phraseology, and in the new is liable to be
"struck out" under R.S.C. Order XXV, Rule 4
(see Philipps v. Philipps ((1878) 4 QBD
127)); or "a further and better statement of
claim" may be ordered under Rule 7.
The function of "particulars" under Rule 6
is quite different. They are not to be used
in order to fill material gaps in a
demurrable statement of claim gaps which
ought to have been filled by appropriate
statements of the various material facts
which together constitute the plaintiff’s
cause of action. The use of particulars is
intended to meet a further and quite
separate requirement of pleading, imposed in
fairness and justice to the defendant. Their
function is to fill in the picture of the
plaintiff’s cause of action with information
sufficiently detailed to put the defendant
on his guard as to the case he had to meet
and to enable him to prepare for trial.
The dictum of Scott, L.J. in Bruce case (supra)
has been quoted with approval by this Court in
Samant N. Balkrishna v. George Fernandez (1969
(3) SCC 238), and the distinction between
"material facts" and "particulars" was brought
out in the following terms:
The word ’material’ shows that the facts
necessary to formulate a complete cause of
action must be stated. Omission of a single
material fact leads to an incomplete cause
of action and the statement of claim becomes
bad. The function of particulars is to
present as full a picture of the cause of
action with such further information in
detail as to make the opposite party
understand the case he will have to meet.
Rule 11 of Order VII lays down an independent
remedy made available to the defendant to
challenge the maintainability of the suit itself,
irrespective of his right to contest the same on
merits. The law ostensibly does not contemplate
at any stage when the objections can be raised,
and also does not say in express terms about the
filing of a written statement. Instead, the word
’shall’ is used clearly implying thereby that it
casts a duty on the Court to perform its
obligations in rejecting the plaint when the same
is hit by any of the infirmities provided in the
four clauses of Rule 11, even without
intervention of the defendant. In any event,
rejection of the plaint under Rule 11 does not
preclude the plaintiffs from presenting a fresh
plaint in terms of Rule 13.”
11.From the afore-stated provisions contained in
Order VI Rule 2 and Order VII Rule 1 it clearly
emerges that the pleadings i.e. the plaint in the
instant case, must state the material facts
constituting the cause of action and as to when
it arose, and omission of a single material fact
leads to an incomplete cause of action, and the
plaint becomes bad. Such infirmity may attract
Clause (d) of Rule 11 of Order VII. The word
“shall” used in Order VII Rule 11 also cast duty
on the Court to reject the plaint when it is hit
by any of the clauses mentioned in Rule 11.
12.As stated herein above, the suit has been filed
by the respondent – plaintiff seeking various
reliefs inter alia for declaration that the
Master agreement dated 15th October 2007 and the
transactions made therein were illegal and void
ab initio as well as for declaration that the
Term loan agreement dated 13.8.2009 was also
illegal and void ab initio, and for permanent
injunction restraining the defendant from acting
under and/or in furtherance of the said Master
agreement and the Term loan agreement in any
manner whatsoever, as also for recovery of
Rs.54,68,57,468/- paid by the plaintiff to the
defendant pursuant to the said Master agreement.
The respondent – plaintiff has also sought
temporary injunction for staying the proceedings
initiated by the applicant – defendant before the
DRT-II, Mumbai and for restraining the defendant
from initiating fresh proceedings against the
plaintiff in the DRT or in any other Court
pursuant to the said Master agreement and the
Term loan agreement.
13.Now, if the substance of the pleading of the
plaintiff is looked into without any addition or
subtraction, it clearly transpires that the suit
is filed by the plaintiff not only with mala fide
intention to misuse and abuse the process of law,
as will be discussed herein under, the plaint
also does not disclose the material facts
constituting cause of action and the material
facts as to when it arose, as contemplated in
Rule 1(e) of Order VII. As held by the Supreme
Court in case of Sopan Sukhdeo Sable and Ors. Vs.
Assistant Charity Commissioner and Ors. (supra),
the facts necessary to formulate a complete cause
of action must be stated in the plaint and
omission of a single material fact would lead to
an incomplete cause of action. When Rule 1 of
Order VII requires the particulars as mentioned
therein to be stated in the plaint, more
particularly the facts constituting cause of
action and as to when it arose, the omission to
mention such particulars in the plaint would make
the plaint defective leading to the conclusion
that it did not disclose the cause of action.
14.When the specific query was raised by the Court
to point out from the averments made in the
plaint as to how and when the cause of action was
stated to have arisen, the learned Sr. Advocate
Mr.Joshi was not in a position to point out the
same. From the bare reading of the plaint also
it appears that though the paragraphs in the
plaint have been separately numbered with titles
like “the parties, preliminary back ground, the
facts, grounds for ad-interim reliefs,
limitation, jurisdiction, valuation, no other
suit, prayers,” etc., there is no paragraph
specifically stating as to which facts
constituted cause of action and as to when such
cause of action, in fact, had arisen for filing
the suit. The respondent – plaintiff has averred
inter alia with regard to the execution of the
Master agreement in the year 2007 and execution
of the Term loan agreement in the year 2009,
however, has remained conveniently silent as to
when such agreements became illegal or void,
requiring the plaintiff to file the suit. The
respondent plaintiff has also remained completely
silent as to how and when the cause of action for
seeking the reliefs claimed in the suit had
arisen. Such omission to state material facts as
regards cause of action is a material omission,
making the plaint bad.
15.The respondent plaintiff has alleged inter alia
that the plaintiff did not realize that the
defendant had, in gross breach of its fiduciary
duty on the basis of misrepresentations,
fraudulently induced the plaintiff to enter into
the transactions under the Master agreement,
which resulted in losses to the plaintiff and
profits to the defendants. It is pertinent to
note that, as stated in the plaint itself, the
plaintiff was an exporter inter alia of bauxite
and bentonite and was constantly exposed to the
risks arising out of the fluctuation in the
exchange rate of foreign currency, and therefore,
had entered into the Master agreement with the
defendant bank. Hence, it did not lie in the
mouth of the plaintiff company to state that the
respondent - plaintiff was fraudulently induced
by the defendant Bank to enter into such
agreement or transactions under such agreement in
question. The plaintiff has also stated in the
plaint that the plaintiff had gained
Rs.55,52,500/- out of the transactions entered
into with the defendant Bank. Of course it is
also stated that the plaintiff was willing to
return the said amount gained by it. However, as
stated herein above, the recovery of the amount
of Rs.54,68,57,468/-, has been claimed, without
mentioning as to when and how the said amount was
paid by the plaintiff to the defendant and as to
when they became payable by the defendant. It
can not be gain-said that for the purpose of
ascertaining as to when the period of limitation
had started running for seeking the reliefs
claimed in the suit, such facts would be material
facts to show cause of action. For seeking
declarations as regards the Master agreement and
the transactions made thereunder the date of
knowledge about the same having been found to be
fraudulent would be a material fact required to
be stated in the plaint, which is also absolutely
absent in the instant case. Mere allegation of
fraud made in the plaint without stating the
particulars of fraud and misrepresentation would
not constitute cause of action. As per the
settled legal position stated herein above, a
cause of action is a bundle of facts which are
required to be proved for obtaining the reliefs
and for the said purpose, the material facts with
regard to misrepresentation, fraud, undue
influence are required to be stated in the plaint
itself.
16. On the contrary, it appears that the suit
was filed by the respondent in the Court of
Khambhaliya seeking various reliefs only with a
view to frustrate the proceedings initiated by
the defendant Bank in the DRT-II, Mumbai and that
too, after having failed to obtain the desired
reliefs from the Bombay High Court against the
orders passed by the DRT-II, Mumbai. As
transpiring from the paragraph Nos.29 to 34 of
the plaint, it clearly emerges that the defendant
Bank had filed the original Application Nos.29,
30 and 31 of 2011 before the DRT-II, Mumbai for
the recovery of its dues and had also filed
interim applications in the said original
applications, which were allowed by the said
Tribunal directing that the further hearing of
the original Applications would proceed in
accordance with law and the recovery certificate,
if issued, would not be enforced without the
permission of the BIFR, as the plaintiff had
filed the proceedings before the BIFR under SICA.
The BIFR in the said case of the plaintiff had
passed the order inter alia permitting the
applicant Bank to approach the competent Court
for crystallization of their dues and to approach
the Board whenever their dues were crystallized.
The orders passed by the said DRT were challenged
by the plaintiff by filing the writ petition in
the Bombay High Court, which were dismissed by
the order dated 26.11.2012 and thereafter the
suit was filed before the Court at Khambhaliya on
24.12.2012 seeking various reliefs, including the
injunction for staying of the proceedings
initiated by the defendant Bank before the DRTII,
Mumbai in O.A. Nos.29 of 2011, 30 of 2011 and
31 of 2011. At this juncture, it may be noted
that the Tribunal constituted under the DRT Act
has the jurisdiction, powers and authority to
entertain and decide the applications of the
Banks and Financial Institutions for recovery of
debts due to such banks and financial
institutions as contemplated under Section 17 of
the DRT Act, and that the jurisdiction of all
Courts and authorities, except the Supreme Court
and the High Court, exercising the jurisdiction
under Article 226 and 227 of the Constitution of
India, is barred in relation to the matters
specified in Section 17, as per Section 18 of the
said Act. In view of the said provisions
contained in Sections 17 and 18 of the DRT Act,
the suit before the Civil Court in relation to
the matters required to be decided by the DRT is
barred.
17. Though it has been sought to be submitted by
the learned Sr. Advocate Mr.Joshi relying upon
the decision of the Supreme Court in case of
Nahar Industrial Enterprises Limited Vs. Hong
Kong and Shanghai Banking Corporation, reported
in (2009) 8 SCC 646 that the jurisdiction of the
Civil Court could not be said to be completely
barred under Sections 17 and 18 of the DRT Act,
and the reliefs claimed in the suit by the
respondent plaintiff could not be granted by the
DRT, the said submission has no force. The
relevant observations made by the Supreme Court
may be reproduced as under:-
“117. The Act, although, was enacted for
a specific purpose but having regard to the
exclusion of jurisdiction expressly provided
for in Sections 17 and 18 of the Act, it is
difficult to hold that a civil court’s
jurisdiction is completely ousted.
Indisputably the banks and the financial
institutions for the purpose of enforcement
of their claim for a sum below Rs.10 lakhs
would have to file civil suits before the
civil courts. It is only for the claims of
the banks and the financial institutions
above the aforementioned sum that they have
to approach the Debt Recovery Tribunal. It
is also without any cavil that the banks and
the financial institutions, keeping in view
the provisions of Sections 17 and 18 of the
Act, are necessarily required to file their
claim petitions before the Tribunal. The
converse is not true. Debtors can file
their claims of set off or counterclaims
only when a claim application is filed and
not otherwise. Even in a given situation the
banks and/or the financial institutions can
ask the Tribunal to pass an appropriate
order for getting the claims of setoff or
the counter claims, determined by a civil
court. The Tribunal is not a high powered
tribunal. It is a one man Tribunal. Unlike
some Special Acts, as for example Andhra
Pradesh Land Grabbing (Prohibition) Act,
1982 it does not contain a deeming provision
that the Tribunal would be deemed to be a
civil court.
118. The liabilities and rights of the
parties have not been created under the Act.
Only a new forum has been created. The banks
and the financial institutions cannot
approach the Tribunal unless the debt has
become due. In such a contingency,
indisputably a civil suit would lie. There
is a possibility that the debtor may file
preemptive suits and obtain orders of
injunction, but the same alone, in our
opinion, by itself cannot be held to be a
ground to completely oust the jurisdiction
of the civil court in the teeth of Section 9
of the Code. Recourse to the other
provisions of the Code will have to be
resorted to for redressal of his individual
grievances.”
18. In the instant case, the applicant Bank
having already initiated the proceedings under
Section 17 of the DRT Act, for crystallizing
their dues as permitted by the BIFR, the suit
filed by the respondent – plaintiff seeking
reliefs in respect of the same subject matter
would be completely barred under Section 18 of
the said Act. It can not be gainsaid that under
Section 17 the Tribunal has powers and
jurisdiction to entertain and decide applications
from the banks and financial institutions for
recovery of debts, and under Section 18 no other
Court or authority has jurisdiction or powers in
relation to the matters specified in Section 17.
The learned Sr. Advocate Mr.Joshi would have been
justified in relying upon the observations made
by the Supreme Court in case of Nahar Industrial
Enterprises Limited Vs. Hong Kong and Shanghai
Banking Corporation (supra), if the bank had not
filed applications under Section 17 for recovery
of debts due to the bank, and if the respondent
had filed peremptory suit for obtaining orders of
injunction against the applicant Bank. However,
when the applicant Bank has filed the proceedings
before the DRT, the respondent was expected to
claim set off or counter-claim in respect of the
transactions in question, which were also the
subject matter of the proceedings before the DRT.
The respondent could not have asked for the
prayers in the suit seeking stay of the
proceedings pending before the DRT, Mumbai, which
was not the Tribunal subordinate to the trial
Court. As rightly submitted by the learned Sr.
Advocate Mr.Thakore such a relief of injunction
for restraining any person from instituting or
prosecuting any proceedings in a Court not
subordinate to that from which the injunction is
sought, would also be barred under Clause (b) of
Section 41 of the Specific Relief Act. The
respondent – plaintiff instead of filing counterclaim
or making claim of set off in the
proceedings initiated by the applicant Bank
before the DRT, Mumbai, has filed the suit for
recovery of the amount in respect of the same
subject matter, on which applicant Bank has filed
the proceedings before the DRT, Mumbai, which
would also be not tenable in view of Clause (h)
of Section 41 of the Specific Relief Act. Such a
vexatious and dishonest litigation deserves to be
dismissed right at the threshold.
19. As held by Supreme Court in case of T.
Arvindam Vs. T. V. Satyapal, reported in (1977)
4 SCC 467, followed in N. V. Srinivasa Murthy
Vs. Mariyamma, reported in (2005) 5 SCC 548, and
various other cases, if clever drafting has
created an illusion of a cause of action, the
Court must nip it in the bud at the first
hearing.
20. In view of the above, the Court is of the
opinion that the plaint, not disclosing the cause
of action and even otherwise barred under the
provisions contained in Section 18 of the DRT
Act, deserves to be rejected under Clause (a) and
(d) of Rule 11 of Order VII. The Court is also
of the opinion that the suit filed by the
respondent is absolutely vexatious and dishonest
litigation, filed with a view to misuse and abuse
the process of law to avoid payments to the
applicant Bank. The trial Court having failed to
discharge the statutory duty cast upon it under
Order VII Rule 11, and having failed to exercise
the jurisdiction vested in it, the impugned order
passed by it deserves to be set aside and is
hereby set aside. The plaint of the suit being
Special Civil Suit No.72 of 2012 is rejected
under Clause (a) and (d) of Rule 11 of Order VII
of CPC.
21. The Civil Revision Application stands allowed
accordingly.
(BELA M. TRIVEDI, J.)
FURTHER ORDER:
The learned Advocate Mr.S. N. Thakkar for the
respondent has requested to stay the operation of
this order passed by the Court, however, the same is
rejected. When the plaint is rejected, there is
nothing to be stayed in the matter.
(BELA M. TRIVEDI, J.)
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