2012 (7) TMI 1029 - SC - Indian Laws

Supreme Court emphasizes clear cause of action in plaint rejection appeal.

The Supreme Court upheld the learned single Judge's decision to reject the plaint against the first defendant, emphasizing the need for a clear cause of ... Agreement for Sale - failed to comply with the commitments made in agreement for sale - specific performance - rejection of the plaint - power of attorney - HELD THAT:- It is clear that from the date the power of attorney is executed by the principal in favour of the agent and by virtue of the terms the agent derives a right to use his name and all acts, deeds and things done by him are subject to the limitations contained in the said deed. It is further clear that the power of attorney holder executed a deed of conveyance in exercise of the power granted under it and conveys title on behalf of the grantor. In the case, though the plaint avers that the 2nd defendant is the agreement holder of the 1st defendant, the said agreement is not produced. It was also pointed out that the date of agreement is also not given in the plaint. We have already mentioned Form Nos. 47 and 48 of Appendix A and failure to mention date violates the statutory requirement and if the date is one which attracts the bar of limitation, the plaint has to conform to Order VII Rule 6 and specifically plead the ground upon which exemption from limitation is claimed. It was rightly pointed out on the side of the appellant that in order to get over the bar of limitation all the required details have been omitted. In the case on hand, the application for rejection of the plaint of the appellant-1st defendant seeks no relief against the respondent herein-2nd defendant. It is settled legal position that a party against whom no relief is claimed in the application is not a necessary party at all. In view of the shortfall in the plaint averments, statutory provisions, namely, Order VII Rule 11, Rule 14(1) and Rule 14(2), Form Nos. 47 and 48 in Appendix A of the Code which are statutory in nature, we hold that the learned single Judge of the High Court has correctly concluded that in the absence of any cause of action shown as against the 1st defendant, the suit cannot be proceeded either for specific performance or for the recovery of money advanced which according to the plaintiff was given to the 2nd defendant in the suit and rightly rejected the plaint as against the 1st defendant. Unfortunately, the Division bench failed to consider all those relevant aspects and erroneously reversed the decision of the learned single Judge. We are unable to agree with the reasoning of the Division Bench of the High Court. Hence, The judgment and order dated 16.08.2011 passed by the Division Bench of the High Court in OSA No. 100 of 2006 is set aside and the order dated 25.01.2006 passed by the learned single Judge in Application No. 3560 of 2005 is restored. The civil appeal is allowed with costs. Issues Involved:1. Justification for rejection of the plaint by the learned single Judge of the High Court.2. Validity of the Division Bench's reversal of the single Judge's decision.3. Compliance with Order VII Rule 11 of the Code of Civil Procedure.4. Examination of cause of action in the plaint.5. Admissibility and relevance of the power of attorney.6. Discretionary nature of specific performance under Section 20 of the Specific Relief Act.7. Non-joinder of necessary parties in the application for rejection of the plaint.Detailed Analysis:1. Justification for Rejection of the Plaint by the Learned Single Judge of the High Court:The learned single Judge of the High Court rejected the plaint against the first defendant (appellant) on the grounds that it did not disclose a cause of action against him. The Court emphasized that under Order VII Rule 11 of the Code, the plaint must be rejected if it does not show a cause of action, is undervalued, insufficiently stamped, barred by any law, or fails to comply with procedural requirements. The single Judge found that the plaint did not meet these criteria, specifically noting the absence of necessary documents and clear terms of the agreement.2. Validity of the Division Bench's Reversal of the Single Judge's Decision:The Division Bench of the High Court reversed the single Judge's decision, allowing the appeal against the rejection of the plaint. However, the Supreme Court found that the Division Bench failed to consider relevant aspects such as the absence of a clear cause of action and non-compliance with statutory provisions. The Supreme Court reinstated the single Judge's decision, emphasizing that the Division Bench's reasoning was erroneous.3. Compliance with Order VII Rule 11 of the Code of Civil Procedure:Order VII Rule 11 mandates the rejection of a plaint if it does not disclose a cause of action, among other criteria. The Supreme Court reiterated that the trial Court must scrutinize the plaint's averments to determine if a cause of action exists. The Court cited previous judgments, including Saleem Bhai & Ors. vs. State of Maharashtra and Others, to underline that the power under Order VII Rule 11 can be exercised at any stage of the suit and that the averments in the plaint are crucial for this determination.4. Examination of Cause of Action in the Plaint:The Supreme Court highlighted that the cause of action is a bundle of facts that gives the plaintiff the right to relief against the defendant. The Court found that the plaint did not adequately set out the necessary facts to establish a cause of action against the first defendant. The absence of the agreement and the power of attorney, which were crucial to the plaintiff's claim, further weakened the case.5. Admissibility and Relevance of the Power of Attorney:The power of attorney in question did not authorize the second defendant to execute a sale agreement or deed on behalf of the first defendant. The Supreme Court emphasized that a power of attorney must be strictly construed and must expressly authorize the agent to perform such acts. The Court found that the power of attorney in this case did not meet these requirements, making the plaintiff's claim untenable.6. Discretionary Nature of Specific Performance under Section 20 of the Specific Relief Act:The Supreme Court reiterated that the jurisdiction to grant specific performance is discretionary. The Court cited previous judgments to underline that specific performance is not an automatic remedy and must be granted based on the merits of the case. The lack of a clear cause of action and necessary documents in the plaint justified the rejection of the claim for specific performance.7. Non-joinder of Necessary Parties in the Application for Rejection of the Plaint:The respondent argued that the application for rejection of the plaint should be dismissed due to the non-joinder of the second defendant. However, the Supreme Court held that the second defendant was not a necessary party to the application for rejection of the plaint. The Court noted that the application sought no relief against the second defendant and that the plaintiff alone was a necessary party to the application for rejection of the plaint.Conclusion:The Supreme Court set aside the judgment of the Division Bench and restored the order of the learned single Judge, rejecting the plaint against the first defendant. The Court emphasized the importance of complying with statutory provisions and the necessity of a clear cause of action in the plaint. The appeal was allowed with costs.