Rejection of plaint can be examined after issues are framed; bare non-supply allegations do not defeat letters of credit autonomy.

An application for rejection of plaint under Order 7 Rule 11(a) may be examined even after issues are framed and the suit is listed for evidence, because the court must test the plaint on its own averments and can terminate a suit that discloses no sustainable cause of action. In disputes under irrevocable letters of credit, the bank's payment obligation remains independent of the underlying transaction, subject only to narrow fraud exceptions. A bare plea that goods were not supplied does not establish fraud, and absent specific allegations of forged or fraudulent documents, the plaint does not disclose a legally cognizable cause of action against the seller. The plaint was therefore rejected as against the appellant.

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Issues: (i) Whether an application for rejection of plaint under Order 7 Rule 11(a) of the Code of Civil Procedure, 1908 could be entertained after issues had been framed and the suit was posted for evidence; (ii) Whether the plaint disclosed a cause of action against the appellant for recovery of amounts paid under irrevocable letters of credit on allegations of fraud or misrepresentation.

Issue (i): Whether an application for rejection of plaint under Order 7 Rule 11(a) of the Code of Civil Procedure, 1908 could be entertained after issues had been framed and the suit was posted for evidence.

Analysis: The power under Order 7 Rule 11 is intended to terminate a suit that does not disclose a sustainable cause of action at the threshold. The framing of issues does not prevent the Court from examining whether the plaint itself is defective in law. The plaint must be tested on its own averments, and a meaningless or abortive proceeding need not be carried forward to trial merely because issues have already been framed.

Conclusion: The objection could be examined notwithstanding the framing of issues, and the appellant's application was maintainable.

Issue (ii): Whether the plaint disclosed a cause of action against the appellant for recovery of amounts paid under irrevocable letters of credit on allegations of fraud or misrepresentation.

Analysis: The legal position governing letters of credit is that the bank's obligation is independent of the underlying sale transaction, subject only to narrow exceptions such as fraud in the presentation of documents. A mere allegation that goods were not supplied or not moved does not by itself amount to fraud in this branch of law. The plaint contained no allegation of forged or fraudulent documents presented by the appellant, and the use of expressions such as fraud or misrepresentation could not convert a non-supply dispute into a legally sustainable cause of action against the seller under the letter of credit arrangement.

Conclusion: The plaint did not disclose any cause of action against the appellant, and rejection of the plaint as against the appellant was warranted.

Final Conclusion: The appeal succeeded and the plaint was rejected in relation to the appellant, as the pleadings failed to disclose a legally cognizable claim under the letter of credit transaction.

Ratio Decidendi: For rejection of a plaint, the Court must look only to the plaint averments, and a bare allegation of non-supply of goods does not constitute fraud for purposes of avoiding the independent obligation regime governing letters of credit unless fraudulent or forged documents are specifically pleaded.

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