2021 (8) TMI 1368 - SC - Indian Laws

Court affirms rejection not based on res judicata. Appellant granted liberty to challenge maintainability. Preliminary issue to be decided.

The Supreme Court affirmed the decisions of the Trial Court and the High Court, ruling that the plaint was not liable to be rejected under Order 7 Rule ... Validity of sale deed - challenge on the ground that KSFC had no authority to put the suit property for sale - rejection of the application Under Order 7 Rule 11 of the Code of Civil Procedure - HELD THAT:- It would be necessary to refer to the decisions that particularly deal with the question whether res judicata can be the basis or ground for rejection of the plaint. In KAMALA AND ORS. VERSUS K.T. ESHWARA SA AND ORS. [2008 (4) TMI 800 - SUPREME COURT], the Trial Judge had allowed an application for rejection of the plaint in a suit for partition and this was affirmed by the High Court. Justice S B Sinha speaking for the two judge bench examined the ambit of Order 7 Rule 11(d) of the Code of Civil Procedure - While holding that 'recourse to Order 7 Rule 11' by the Appellant was not appropriate, this Court observed that the Trial Court may, after framing the issues, take up the issues which pertain to the maintainability of the suit and decided them in the first instance. The Court held that this course of action would help the Appellant avoid lengthy proceedings. In a more recent decision of this Court in SHAKTI BHOG FOOD INDUSTRIES LTD. VERSUS THE CENTRAL BANK OF INDIA & ANR [2020 (6) TMI 823 - SUPREME COURT], a three Judge bench of this Court, speaking though Justice AM Khanwilkar, was dealing with the rejection of a plaint Under Order 7 Rule 11 by the Trial Court, on the ground that it was barred by limitation. The Court referred to the earlier decisions including in SALEEM BHAI AND ORS. VERSUS STATE OF MAHARASHTRA AND ORS. [2002 (12) TMI 640 - SUPREME COURT], and observed that It is clear that in order to consider Order 7 Rule 11, the court has to look into the averments in the plaint and the same can be exercised by the trial court at any stage of the suit. It is also clear that the averments in the written statement are immaterial and it is the duty of the Court to scrutinize the averments/pleas in the plaint. In other words, what needs to be looked into in deciding such an application are the averments in the plaint. At that stage, the pleas taken by the Defendant in the written statement are wholly irrelevant and the matter is to be decided only on the plaint averment. On a reading of the plaint, it is evident that the first Respondent has not made an attempt to conceal the fact that a suit regarding the property was pending before the civil court at the time. It is also relevant to note that at the time of institution of the suit (OS No. 138/2008) by the first Respondent, no decree had been passed by the civil court in OS No. 103/2007. Thus, the issues raised in OS No. 103/2007, at the time, had not been adjudicated upon. Therefore, the plaint, on the face of it, does not disclose any fact that may lead us to the conclusion that it deserves to be rejected on the ground that it is barred by principles of res judicata. The High Court and the Trial Court were correct in their approach in holding, that to decide on the arguments raised by the Appellant, the court would have to go beyond the averments in the plaint, and peruse the pleadings, and judgment and decree in OS No. 103/2007. An application Under Order 7 Rule 11 must be decided within the four corners of the plaint. The Trial court and High Court were correct in rejecting the application Under Order 7 Rule 11(d). The plaint was not liable to be rejected Under Order 7 Rule 11(d) and affirm the findings of the Trial Court and the High Court. We clarify however, that we have expressed no opinion on whether the subsequent suit is barred by the principles of res judicata - Appeal dismissed. Issues Involved:1. Authority of KSFC to auction the suit property.2. Validity of the sale deed executed by KSFC.3. Non-payment of court fee.4. Non-disclosure of cause of action.5. Suit being barred by res judicata.Issue-wise Detailed Analysis:1. Authority of KSFC to auction the suit property:The first Respondent contended that KSFC had no authority to auction the suit property. This was one of the defenses raised in the written statement filed by the first Respondent in the suit for possession filed by the third Respondent. The Trial Court in its judgment dated 26 February 2009 concluded that the contention regarding KSFC's authority could not be determined within the suit and must be challenged independently. The first Respondent had knowledge of the auction but took no action to challenge it until the arguments were being heard by the Trial Court.2. Validity of the sale deed executed by KSFC:The first Respondent challenged the sale deed dated 8 August 2006 executed by KSFC in favor of the third Respondent, claiming that KSFC had no authority to sell the property. The Trial Court, while decreeing the suit for possession in favor of the third Respondent, stated that the validity of the sale deed could not be determined in the present suit as KSFC was not made a party to the suit. The High Court upheld this decision, noting that the application for clubbing the two suits (OS No. 103/2007 and OS No. 138/2008) should have been allowed. The issue of the sale deed's validity was to be considered in the subsequent suit filed by the first Respondent.3. Non-payment of court fee:The Appellant contended that the suit should be rejected due to non-payment of the court fee. The Trial Judge dismissed this ground, stating that under Order 7 Rule 11(c) of the CPC, a plaint can only be rejected for insufficient stamping if the court requires the Plaintiff to supply the requisite stamp paper within a fixed time and the Plaintiff fails to do so. In this case, no such order was passed by the court.4. Non-disclosure of cause of action:The Appellant argued that the suit did not disclose a cause of action. The Trial Judge found that the cause of action was specifically pleaded by the first Respondent in paragraph 5 of the plaint, thus dismissing this ground for rejection.5. Suit being barred by res judicata:The Appellant contended that the suit was barred by res judicata as the issues regarding the validity of the sale deed and title were raised and decided in the previous suit (OS No. 103/2007). The Trial Judge and the High Court both held that the issue of res judicata could not be decided merely by looking into the averments in the plaint under Order 7 Rule 11(d) of the CPC. The High Court cited the decision in Soumitra Kumar Sen v. Shyamal Kumar Sen, emphasizing that a determination of res judicata requires consideration of the pleadings, issues, and judgment in the previous suit, which is beyond the scope of Order 7 Rule 11(d).Conclusion:The Supreme Court affirmed the decisions of the Trial Court and the High Court, holding that the plaint was not liable to be rejected under Order 7 Rule 11(d) on the ground of res judicata. The Court clarified that it had expressed no opinion on whether the subsequent suit was barred by res judicata and granted liberty to the Appellant to raise the issue of maintainability before the Additional Civil Judge, Belgaum. The Additional Civil Judge was directed to consider framing a preliminary issue under Order XIV and decide it within three months, with the final adjudication of the suit to be completed by 31 March 2022. The appeal was dismissed, and there were no orders as to costs.