Pleading inconsistency and misjoinder justified rejection of a company dispute plaint under Order 7 Rule 11 CPC.

A plaint may be rejected under Order 7 Rule 11 CPC where the reliefs pleaded are inconsistent with the underlying agreement and the company law position. Here, the suit mixed claims based on a shareholding and management agreement with prayers for administration of the company's assets and cancellation of board decisions, although the agreement was not incorporated into the articles and the company was not a party to it. The court held that a shareholder has no proprietary interest in company assets before dissolution, that the pleading did not amount to a proper derivative action, and that it disclosed misjoinder of distinct causes of action. The plaint was therefore rejected and the application allowed.

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Issues: Whether the plaint was liable to be rejected under Order 7 Rule 11 of the Code of Civil Procedure, 1908 on the grounds that the reliefs sought were inconsistent with the pleaded agreement and company law principles, the company was not bound by the agreement in the absence of corresponding articles, and the plaint disclosed misjoinder of causes of action.

Analysis: The reliefs in the suit were founded on an agreement concerning shareholding and management, but the plaint also sought administration of the assets of the company and cancellation of board decisions. The pleadings showed that the agreement had not been incorporated into the articles of association, and the company was not a party to the agreement. A shareholder has no proprietary interest in the assets of the company until dissolution, and the pleaded relief of administration of assets could not be maintained on that basis. The court further found that the plaintiffs had not confined themselves to a proper derivative action and that the plaint disclosed a misjoinder of distinct causes of action. On that footing, the plaint could not proceed in its present form.

Conclusion: The plaint was rejected under Order 7 Rule 11 of the Code of Civil Procedure, 1908 and the application was allowed.

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