Second proviso to Section 115 allows revisional court to uphold Order VII Rule 11 dismissal of plaint blocking N.I. Act remedies

SC allowed the appeal, holding the revisional court had jurisdiction under the second proviso to Section 115 (Orissa amendment) to entertain and allow the defendant's Order VII Rule 11 application and thus reject the plaint. The High Court erred in setting aside that order and remanding the matter. The Court found the plaint sought declaratory reliefs that, in substance, would frustrate the defendant's remedies under the N.I. Act and were therefore barred, justifying rejection of the plaint. Matter decided in favour of the appellant; High Court order set aside.

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Issues Involved:
1. Jurisdiction of the revisional court under Section 115 of the CPC (Orissa Amendment).
2. Applicability of Order VII Rule 11 of CPC for rejection of the plaint.
3. Whether the suit is barred under the Specific Relief Act (SR Act).
4. Whether the plaint discloses a cause of action.
5. The effect of the plaintiff seeking declaratory reliefs without consequential reliefs.
6. The legality of the plaintiff's attempt to frustrate defendant no.1's remedies under the Negotiable Instruments Act (NI Act).

Issue-wise Detailed Analysis:

1. Jurisdiction of the Revisional Court under Section 115 of the CPC (Orissa Amendment):
The High Court set aside the order of the revisional court, asserting that the revisional court exceeded its jurisdiction by rejecting the plaint. However, the Supreme Court held that the revisional court acted within its jurisdiction as per the second proviso to Section 115 of the CPC (Orissa Amendment), which allows the revisional court to reverse an order if it would finally dispose of the suit or prevent a failure of justice. The revisional court's rejection of the plaint was deemed appropriate and within its jurisdiction.

2. Applicability of Order VII Rule 11 of CPC for Rejection of the Plaint:
The revisional court allowed the application under Order VII Rule 11 of CPC, which led to the rejection of the plaint. The Supreme Court affirmed this action, stating that the court must reject a plaint if it does not disclose a cause of action or is barred by law. The High Court's remand for reconsideration was incorrect, as the revisional court had the authority to reject the plaint under the Orissa amendment to Section 115 of the CPC.

3. Whether the Suit is Barred under the Specific Relief Act (SR Act):
The defendant argued that the suit was barred under the SR Act because the plaintiff sought only declaratory reliefs without consequential reliefs. The Supreme Court noted that the proviso to Section 34 of the SR Act requires a plaintiff to seek further relief if able, and this issue should be considered at the final adjudication of the suit. However, the Supreme Court found that the declaratory reliefs sought were, in substance, attempts to prevent the defendants from pursuing legal remedies under the NI Act, which is barred by law.

4. Whether the Plaint Discloses a Cause of Action:
The Supreme Court found that the plaint did disclose a cause of action based on the MoU between the parties and the subsequent actions. The plaintiff's grievances regarding the cheque and the alleged breach of the MoU by defendant no.1 provided a basis for the suit. However, the reliefs sought were legally untenable as they aimed to prevent legal proceedings under the NI Act.

5. The Effect of the Plaintiff Seeking Declaratory Reliefs without Consequential Reliefs:
The Supreme Court held that the omission to seek consequential reliefs would be relevant only if the court grants the declaratory reliefs. Since the declaratory reliefs sought were barred by law, the issue of consequential reliefs became moot. The court emphasized that the plaintiff's suit was an attempt to prevent the defendants from exercising their legal rights, which is not permissible.

6. The Legality of the Plaintiff's Attempt to Frustrate Defendant No.1's Remedies under the NI Act:
The Supreme Court highlighted that the plaintiff's suit was essentially an attempt to prevent defendant no.1 from initiating proceedings under Section 138 of the NI Act for the dishonoured cheque. Such an attempt is barred by Sections 41(b) and (d) of the SR Act, which prohibit injunctions to restrain legal proceedings. The court held that the plaintiff cannot seek reliefs that would frustrate the defendants' legal remedies.

Conclusion:
The Supreme Court set aside the High Court's order and restored the revisional court's decision to reject the plaint. The court clarified that the rejection of the plaint does not prevent the plaintiff from filing a new suit seeking appropriate reliefs in accordance with the law. The appeal was allowed, and each party was directed to bear its own costs.

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