Plain bar test under Order VII Rule 11(d): agreement for sale was not enough to reject the specific performance plaint.

A plaint in a specific performance suit was not liable to rejection under Order VII Rule 11(d) because no clear statutory bar appeared on the face of the plaint and its accompanying documents. Section 31(1) of the Foreign Exchange Regulation Act, 1973 was construed as requiring prior Reserve Bank permission before execution of a registered transfer by a foreign national, not merely before an agreement for sale. The Court also noted that Section 49(3) of the Foreign Exchange Management Act, 1999 prevented judicial notice of the alleged contravention long after repeal. The suit was therefore allowed to proceed on merits.

---

---

Issues: Whether the plaint in a suit for specific performance was liable to be rejected under Order VII Rule 11(d) of the Code of Civil Procedure, 1908 on the ground that the agreement for sale was barred by Section 31(1) of the Foreign Exchange Regulation Act, 1973 and that the alleged contravention could no longer be noticed in view of Section 49(3) of the Foreign Exchange Management Act, 1999.

Analysis: The application for rejection had to be tested on the plaint and the documents forming part of it. The materials showed that the transaction had proceeded only up to the stage of an agreement for sale and that no registered conveyance had been executed. Section 31(1) of the Foreign Exchange Regulation Act, 1973 was construed to require prior permission of the Reserve Bank of India before the foreign national alienated the property by execution of a registered transfer, not before entering into an agreement for sale. Section 47(2) of the Foreign Exchange Regulation Act, 1973 also indicated that prohibited acts under the contract would remain subject to permission rather than rendering the agreement void at inception. The Court further held that, in view of Section 49(3) of the Foreign Exchange Management Act, 1999, judicial notice of the alleged contravention could not be taken nearly two decades after the repeal regime had come into force. Since the plaint did not disclose a clear and unambiguous statutory bar, rejection under Order VII Rule 11(d) was not warranted.

Conclusion: The plea that the suit was barred by law was rejected, and the plaint was not liable to be rejected.

Final Conclusion: The application for dismissal of the suit failed because the alleged FERA infraction did not furnish a ground for rejection of the plaint at the stage of Order VII Rule 11(d), and the suit was left to proceed on merits.

Ratio Decidendi: For rejection of a plaint under Order VII Rule 11(d), the bar of law must be apparent from the plaint itself, and permission under Section 31(1) of the Foreign Exchange Regulation Act, 1973 is required before execution of the registered transfer, not merely before an agreement for sale.

---