I have already held that while exercising jurisdiction under the provision of Order VII Rule 11(d) of the Civil Procedure Code, Court cannot travel beyond the statements in the plaint and has to decide the question pertaining to rejection of the plaint only within the four corners of the plaint. It cannot step out of the plaint and can certainly not enter into the merits of the case. However, it is seen from the order dated 26.11.1982 passed below Exhibit-1 by the learned 2nd Joint Civil Judge, Junior Division, Nagpur that he has decided the question of the suit being barred by law or otherwise on merits of the case. Learned Civil Judge has observed that the plaintiff herself is an educated English knowing lady who is the widow of Bahmanshaw Byramji and being possessed of sufficient means to have best and independent legal advice in the situation, could not have been defrauded in the proceedings under Section 17 and the decree that followed the proceedings. These observations clearly indicate that the learned Civil Judge did not restrict himself to only what was stated in the plaint, but went beyond that and considered something that was not the part of the plaint. Accordingly, he held that the decree passed in Regular Civil Suit No. 230 of 1975 could not be said to be the result of fraud played on plaintiff and, therefore, it operated as a res judicata. This was in excess of the power available under Order VII Rule 11(d) of the Code of Civil Procedure, 1908 and thus not permissible under the law.
IN THE HIGH COURT OF BOMBAY (NAGPUR BENCH)
Second Appeal No. 207 of 1994
Decided On: 08.01.2014
Sushilabai Vs. Kamlarukh and Ors.
Hon'ble Judges/Coram:
S.B. Shukre, J.
Citation: 2014(2) ALLMR 629
1. This appeal is preferred against the judgment and decree passed by the 5th Additional District Judge, Nagpur in Regular Civil Appeal No. 56 of 1983 on 11.11.1993 thereby confirming the order passed below Exhibit-1 in Regular Civil Suit No. 63 of 1982 on 26.11.1982 by 2nd Joint Civil Judge, Junior Division, Nagpur. The original plaintiff/appellant, Sushilabai Byramji (now deceased) had filed a suit being Regular Civil Suit No. 63 of 1982 against the respondents. The suit was for rendition of accounts, execution of the trusts, setting aside of the decree passed in Special Civil Suit No. 230 of 1975 and injunction restraining the respondents-original defendants from alienating or encumbering the properties of the trust in the suit in any manner. Although such relief's as rendition of accounts, execution of the trusts and grant of injunction were claimed, the suit was mainly for seeking the relief of declaration that the decree passed in Special Civil Suit No. 230 of 1975 was null and void and setting aside of the same, as the suit was based upon fraud and misrepresentation.
2. In this suit, the original appellant was the plaintiff and the respondent No. 1 (now deceased) and the respondent No. 2 were the defendants. For the sake of convenience, the parties to the appeal are being hereinafter referred to as the plaintiff and the defendants in the order in which they were arrayed in the suit.
3. The facts leading to filing of the Regular Civil Suit No. 63 of 1982 could be stated thus. The plaintiff was the widow of late Bahmanshaw Byramji, who died at Nagpur on 24.6.1972. At the time of his death, Bahmanshaw Byramji had interests in four trusts as beneficiary. These trusts were i) Sirin Lodge Trust, ii) Bahman Hall Trust, iii) Bombay Property Trust and iv) Byramji Trust. Said Bahmanshaw Byramji had full and absolute beneficial interest in all the trusts, except for the Bombay Property Trust, wherein he had half interest with the other half belonging to original defendant No. 1. It may be stated at this juncture that defendant No. 1 and her husband D.P.R. Cassad were, together with Bahmanshaw Byramji the trustees of these trust and after death of Bahmanshaw, defendant No. 2 was appointed as trustee. The interests of Bahmanshaw were transferable, both intervivos and by way of a Will. Under the Will executed by Bahmanshaw on 10.6.1972, his interests in the aforesaid trust properties were bequeathed to the plaintiff and after his death on 24.6.1972, the plaintiff became entitled to all these interests in her own right and the trustees of these trusts were bound to hold them in trust for the plaintiff. It was also averred that the plaintiff was entitled to her share in the trust properties as the widow of Bahmanshaw in accordance with the provisions of the Indian Succession Act, 1925 in any case. In respect of her interests in these properties, the plaintiff had entered into an agreement with the defendants, which was termed as the settlement agreement on 2.7.1973. It was contended that this so called settlement agreement was obtained by the defendants and one D.P.R. Cassad-husband of the defendant No. 1, fraudulently. It was further contended that in order to absolve the trustees of their statutory obligations and to cover up their fraudulent acts in duping the plaintiff into the said settlement, the defendants planned a fake arbitration. It was further contended that a fake arbitration agreement dated 7.10.1974, purporting to be an agreement between the plaintiff and the defendant No. 1, for referring the fake dispute between them to an arbitrator was prepared and Mr. B.R. Zaiwala, Advocate, Mumbai was appointed as arbitrator. It was contended that the proceedings held by the arbitrator were fraudulent and the Award dated 26.7.1975 prepared by the arbitrator was also fraudulent. The Award was then presented before the 2nd Civil Judge, Junior Division in Special Civil Suit No. 230 of 1975 for converting the same into a decree of Civil Court and the learned Civil Judge passed a decree in terms of Award on 6.4.1976. The plaintiff submitted that this decree of the Court confirming the Award dated 26.7.1975 was also obtained by fraud and misrepresentation. Therefore, she filed the suit for setting aside the same and for other relief's.
4. The defendants filed an application (Exhibit-15) stating therein that the suit was not maintainable on the ground that it was barred by res judicata and limitation. It was prayed that the plaint be rejected. The defendants had not filed any written statement in the suit. After hearing both sides, the trial Court concluded that the suit was barred by law by operation of principle of res judicata, and law of limitation and also not maintainable in view of Section 32 of the Arbitration Act. Therefore, the trial Court rejected the plaint under Order 7 Rule 11(d) of the Code of Civil Procedure.
5. The plaintiff preferred an appeal against the order of rejection of the plaint bearing Regular Civil Appeal No. 56 of 1983. After hearing both sides, the first appellate Court also found that the plaint was liable to be rejected under Order 7 Rule 11(d) of the Civil Procedure Code and, therefore, dismissed the appeal with costs.
6. Not satisfied with these orders of rejection of plaint, the plaintiff has preferred the present appeal.
7. This appeal was admitted by this Court on 9th February, 1998 on a substantial question of law. The substantial question of law that arises for my consideration in this appeal is:
Whether the courts below are justified in holding that the suit challenging the decree based on Award of arbitration is prohibited under the provisions of Section 32 of the Arbitration Act, read with Section 47 of the said Act and Order XXIII, Rule 3A of the C.P.C.?
8. I have heard Shri Uday Dastane, learned counsel for the plaintiff and Mr. P.V. Kulkarni, learned counsel for the respondent No. 2. With their assistance, I have carefully gone through the memo of appeal, the impugned judgments and orders and the paper book of the appeal.
9. Learned counsel for the plaintiff has submitted that it was specifically averred in the plaint that the decree in Special Civil Suit No. 230 of 1975 was obtained by fraud and undue influence by the defendants and said D.P.R. Cassad and in breach of their duties as trustees and, therefore, both the Courts below have committed a serious error of fact and law in rejecting the plaint under Order 7 Rule 11(d) of C.P.C. He submits that in this suit, it was also contended by the plaintiff that even the Award, which was confirmed by a decree passed in Special Civil Suit No. 230 of 1975 was vitiated by deception, cheating and fraud played upon the plaintiff. He further submits that when a suit is filed for setting aside of a decree confirming an Award based upon the fraud and mis-representation, such suit is maintainable in view of the law laid down by the Hon'ble Apex Court in the case of Ramesh Kumar and another vs. Furu Ram and another, reported in MANU/SC/0952/2011 : (2011) 8 SCC 613.
10. Learned counsel for the defendants has submitted that the judgments and orders of both the Courts below are absolutely in accordance with law and from the averments made in the plaint itself, it was apparent that the suit was barred by law, in view of the provisions of Section 32 of the Arbitration Act, 1940 (hereinafter referred to as "the Arbitration Act"). He further submits that in the case of Ramesh Kumar and another (supra) there were allegations that even the decree confirming the Award of the arbitrator was obtained by fraud and mis-representation, whereas in the instant matter, the allegations of fraud have been made in respect of the Award and not the decree passed in the suit. Therefore, the law laid down in the said case would have no application to the facts of the instant matter, so submits the learned counsel.
11. Before the rival arguments are considered, it would be appropriate to make a reference to the provision of Rule 11(d) of Order VII of the Civil Procedure Code, 1908, which reads thus:
Plaint shall be rejected in the following cases:
a)...
b)...
c)...
d) Where the suit appears from the statement in the plaint to be barred by any law;
12. From the above provision of law, it is clear that the question as to whether or not the suit is barred by any law, has to be considered and answered only on the basis of pleadings or the statements made in the plaint and that it is not permissible for the Court exercising jurisdiction under this provision to enter into the merits of the case.
13. In the case of Ramesh Kumar (supra), it has been laid down that a suit challenging validity of order and decree passed under Section 17 of the Arbitration Act, on allegations of them having been obtained by fraud and mis-representation is not barred under Sections 32 and 33 of the Arbitration Act and such suit is maintainable before the Civil Court.
14. It is the contention of the learned counsel for the defendants that in the instant suit, the allegations of fraud practiced upon the plaintiff by the defendants date back to the period preceding the proceedings under Section 17 of the Arbitration Act and that there is no statement in the plaint that the plaintiff was defrauded in Civil Court and the decree obtained in the proceedings under Section 17 was by playing fraud upon her. Therefore, he submits that the law laid down in the said case of Ramesh Kumar, wherein in addition to the allegations of playing of fraud in obtaining a decree under Section 17, there were also allegations that the agreement dated 12.3.1992 and the Award dated 13.3.1992 and the proceedings initiated under Sections 14 and 17 of the Arbitration Act were all fraudulent, would not be applicable to the facts of the present case.
15. No doubt, in the said case of Ramesh Kumar, appellant had not only alleged that the agreement dated 12.3.1992 and Award dated 13.3.1992 were obtained by fraud, but had also contended that the proceedings initiated under Sections 14 and 17 of the Arbitration Act and the decree drawn thereunder were all fraudulent. So, it would have to be seen as to what were the contentions made by the plaintiff in the instant suit in order to examine applicability of said case of Ramesh Kumar to the facts of the instant case.
16. It is seen from the bare reading of the plaint that plaintiff had not only contended that the arbitration agreement dated 7.10.1974, and the Award passed by the Arbitrator on 26.7.1975 were fake, bogus and fraudulent, but had also submitted that the decree obtained in Special Civil Suit No. 230 of 1975 initiated under Section 17 of the Arbitration Act was obtained by fraud and under undue influence of Cassad and defendant No. 2. The allegations of fraudulently obtaining of a decree have been specifically mentioned in paragraph 25, sub-paragraph 5 of the plaint and are re-produced as under:-
That the so called arbitration proceedings and the so called Award and the Decree based on such Award are nullity and non-est in law. In any event and without prejudice to the said contentions, the same is liable to be set aside on the ground that the said decree was obtained by fraud and undue influence of the Cassad and defendant No. 2 and in breach of their duties as trustees. The said decree does not confer any rights in favour of defendant No. 1 contrary to the trusts and the properties held by her now under the decree continue to be trust properties held by her as a trustee.
17. Therefore, I am of the view that this is a case to which the law laid down by the Hon'ble Apex Court in the case of Ramesh Kumar (supra) is squarely applicable. The first appellate Court has committed a serious error of fact when it observed that there were no allegations that the decree under Section 17 was obtained by fraud and that the allegations were only in respect of fraud practiced upon the plaintiff before getting the Award. If the present suit has been brought on the basis that the decree obtained under Section 17 of the Arbitration Act was fraudulent and in order to substantiate this contention, if it has been further alleged that even the arbitration agreement dated 7.10.1974 and the Award dated 26.7.1975 were fraudulent, the suit as filed in the present case, following the law laid down by the Hon'ble Apex Court in the case of Ramesh Kumar (supra), would be maintainable and would not be barred under Sections 32 and 33 read with Section 47 of the Arbitration Act. Thus, I find substance in the argument of learned counsel for the plaintiff and no merit in the argument of learned counsel for the defendants canvassed in this regard.
18. In the instant appeal, question of bar to suit under Order XXIII, Rule 3(a) of the Civil Procedure Code, 1908 is also involved. Under this provision a suit cannot lie to challenge the decree on the ground that the compromise on which the decree is based was not lawful. In the instant case, the allegation made in the plaint is not that the compromise on which the decree is based was not lawful. The allegation is that the decree was obtained by practicing fraud upon the plaintiff. Therefore, the bar under Rule 3(a) of Order XXIII would not be applicable to the instant suit.
19. I have already held that while exercising jurisdiction under the provision of Order VII Rule 11(d) of the Civil Procedure Code, Court cannot travel beyond the statements in the plaint and has to decide the question pertaining to rejection of the plaint only within the four corners of the plaint. It cannot step out of the plaint and can certainly not enter into the merits of the case. However, it is seen from the order dated 26.11.1982 passed below Exhibit-1 by the learned 2nd Joint Civil Judge, Junior Division, Nagpur that he has decided the question of the suit being barred by law or otherwise on merits of the case. Learned Civil Judge has observed that the plaintiff herself is an educated English knowing lady who is the widow of Bahmanshaw Byramji and being possessed of sufficient means to have best and independent legal advice in the situation, could not have been defrauded in the proceedings under Section 17 and the decree that followed the proceedings. These observations clearly indicate that the learned Civil Judge did not restrict himself to only what was stated in the plaint, but went beyond that and considered something that was not the part of the plaint. Accordingly, he held that the decree passed in Regular Civil Suit No. 230 of 1975 could not be said to be the result of fraud played on plaintiff and, therefore, it operated as a res judicata. This was in excess of the power available under Order VII Rule 11(d) of the Code of Civil Procedure, 1908 and thus not permissible under the law. It is further seen that he also held that the suit was barred by law of limitation. For holding that the suit was barred by law of limitation, the learned Civil Judge again exceeded his jurisdiction by entering into the merits of the case, losing site of the fact that in the facts and circumstances of the present suit, the question of limitation was a mixed question of law and facts. Such an order of the trial Court, has been confirmed by the learned 5th Additional District Judge, Nagpur without considering what really were the statements made in the plaint and whether power to reject the plaint under Order VII Rule 11(d) of the Civil Procedure Code could be exercised by going beyond the statements in the suit. At the cost of repetition, I must say it here that the statements in the suit clearly showed that the plaintiff had also alleged that she was deceived and defrauded in obtaining of a decree in the proceedings under Section 17 of the Arbitration Act, in addition to alleging that the arbitration agreement and the Award were also fraudulent. Therefore, the law laid down by the Hon'ble Apex Court in the case of Ramesh Kumar (supra) would have to be applied to the facts of the instant case and the order of the trial Court as well as the judgment and decree of the first appellate Court impugned here would be required to be quashed and set aside.
20. In the circumstances, the substantial question of law is answered in terms that the suit challenging the decree based on Award of arbitration is not prohibited under the provisions of Section 32 of the Arbitration Act read with Section 47 of the said Act and Order XXIII Rule 3(a) of the Civil Procedure Code, 1908, if the suit is filed on allegation of the decree having been obtained by fraud and mis-representation. The appeal, therefore, deserves to be allowed.
21. The appeal is allowed with costs. The order of the trial Court dated 26.11.1982 passed below Exhibit-1 in Regular Civil Suit No. 63 of 1982 and the judgment and decree dated 11.11.1993 passed in Regular Civil Appeal No. 56 of 1993, which are impugned herein, are hereby quashed and set aside.
22. Civil Suit stands restored to the original file of the concerned Court and it shall be tried in accordance with law from the stage at which it was pending when the order dated 26th November, 1982 was passed.
23. Disposal of the suit shall be expedited and as far as possible it be disposed of within six months from the date of receipt of record and proceedings by the trial Court in accordance with law. Parties shall appear before the trial court on 27th January, 2014.
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