2022 (9) TMI 1687 - SC - Indian Laws

Suits for cancellation of sale deeds held time-barred; plaints rejected under Order VII Rule 11(d) CPC

SC allowed the appeals filed by the original defendant, holding that the suits seeking cancellation of registered sale deeds were ex facie barred by ... Seeking cancellation of registered Sale Deeds, which were executed by the original plaintiffs - Dismissal of civil revision petitions - Rejection of applications filed under Order VII Rule 11 of Code of Civil Procedure - HELD THAT:- On exercise of powers under Order VII Rule 11 CPC to the facts of the case on hand and the averments in the plaints, it is opined that both the Courts below have materially erred in not rejecting the plaints in exercise of powers under Order VII Rule 11(d) CPC. The respective suits have been filed after a period of 10 years from the date of execution of the registered sale deeds. It is to be noted that one suit was filed by the minor, which was filed in the year 2006, in which some of the plaintiffs herein were also party to the said suit and in the said suit, there was a specific reference to the Sale Deed dated 19.09.2005 and the said suit came to be dismissed in the year 2014 and immediately thereafter the present suits have been filed. Thus, from the averments in the plaint and the bundle of facts stated in the plaint, we are of the opinion that by clever drafting, the plaintiffs have tried to bring the suits within the period of limitation, which otherwise are barred by limitation. Therefore, considering the decisions of this Court in the case of T. Arivandandam [1977 (10) TMI 116 - SUPREME COURT] and other decision of Raghwendra Sharan Singh [2019 (3) TMI 1710 - SUPREME COURT], and as the respective suits are barred by the law of limitation, the respective plaints are required to be rejected in exercise of powers under Order VII Rule 11 CPC. The impugned common judgment and order passed by the High Court rejecting the revision applications and the orders passed by the learned Trial Court rejecting the respective applications under Order VII Rule 11 CPC and refusing to reject the plaints in exercise of powers under Order VII Rule 11 CPC are hereby quashed and set aside. The respective applications filed by the appellant herein – original defendant to reject the respective plaints on the ground that the same are barred by the law of limitation are hereby allowed. Appeal allowed. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether the suits seeking cancellation of registered sale deeds executed in 2005, filed in 2015/2016, were barred by limitation and therefore liable to rejection under Order VII Rule 11(d) of the Code of Civil Procedure. 1.2 Whether the pleadings of 'fraud' and 'date of knowledge' in the plaints were sufficient to attract Section 17 of the Limitation Act and avoid rejection under Order VII Rule 11(d) CPC, or amounted to mere 'clever drafting' without disclosing a real cause of action within limitation. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Rejection of plaints under Order VII Rule 11(d) CPC on the ground of limitation Legal framework (as discussed) 2.1 The Court considered Order VII Rule 11(d) CPC, which permits rejection of a plaint where the suit appears from the statements in the plaint to be barred by any law, including the law of limitation. 2.2 The Court referred to precedent laying down that, while deciding an application under Order VII Rule 11 CPC, only the averments in the plaint are to be considered; the plaint must be read meaningfully as a whole to see if a real cause of action is disclosed or if the suit is barred by law; and that 'clever drafting' creating an illusion of cause of action must be 'nipped in the bud'. Interpretation and reasoning 2.3 The sale deeds sought to be cancelled were registered documents executed in 2005, with consideration paid through demand drafts credited to the plaintiffs' bank accounts. The suits were filed after about ten years, in 2015/2016. 2.4 The Court examined the 'cause of action' paragraph in the plaints and noted that: (a) The plaints themselves state that the cause of action for the suits arose on 19.09.2005, the date of execution of the sale deed in favour of the defendant. (b) Multiple other 'cause of action' dates pleaded (from 1983 onwards, including land acquisition notifications, writ proceedings, appeals, review, SLPs, etc.) were all events either much prior to, or prior to, the execution of the registered sale deeds. 2.5 The Court also noted that: (a) A prior suit had been filed in 2006 by a minor, in which some of the present plaintiffs were parties. (b) That earlier suit specifically referred to the sale deed dated 19.09.2005 and was dismissed in 2014. (c) The present suits were filed immediately after that dismissal. 2.6 From the bundle of facts pleaded, the Court inferred that the plaintiffs were aware of the sale deeds much earlier and that the timing and content of the present plaints indicated an attempt to overcome limitation rather than a genuine later discovery of rights. 2.7 The Court applied the principles, as reiterated in previous decisions, that: (a) If, on a meaningful (not merely formal) reading of the plaint, it is manifestly vexatious and meritless, and shows that the suit is barred by law, the court must exercise power under Order VII Rule 11 CPC. (b) A suit barred by limitation cannot be saved by artful or 'clever drafting' that avoids or obscures material facts. Conclusions 2.8 On the plaint averments themselves, the suits were instituted more than ten years after execution of registered sale deeds, with the cause of action initially stated as arising on the date of execution; they were therefore barred by limitation. 2.9 Both the Trial Court and the High Court erred in treating limitation, in the present facts, as necessarily a mixed question of law and fact and in refusing to reject the plaints under Order VII Rule 11(d) CPC. 2.10 The plaints were liable to be, and were directed to be, rejected as barred by limitation under Order VII Rule 11(d) CPC, and the orders of the Trial Court and the High Court were set aside. Issue 2: Sufficiency of fraud and 'date of knowledge' pleadings to invoke Section 17 of the Limitation Act Legal framework (as discussed) 2.11 The plaintiffs relied on Section 17 of the Limitation Act, contending that the sale deeds were obtained by fraudulent misrepresentation and that limitation commenced when the fraud was discovered in 2015. 2.12 The Court noted the settled law that: (a) To attract Section 17, specific facts constituting fraud and specific facts as to discovery of fraud must be pleaded. (b) Mere use of the words 'fraud' or 'fraudulent' in the plaint without particularisation of how and when the fraud was committed and discovered is insufficient. (c) Clever drafting that merely labels a transaction as fraudulent cannot be used to circumvent limitation. Interpretation and reasoning 2.13 The plaint allegations were that: (a) The defendant procured sale deeds by misrepresenting them as documents relating to a Joint Development Project/Joint Venture Agreement. (b) The plaintiffs did not know the contents of the documents when they signed them. (c) The 'alleged fraudulent sale came to the knowledge of the plaintiffs only when the plaintiffs visited the suit properties', after which they engaged their own advocates and filed suits. 2.14 The Court found these averments inadequate and vague for the following reasons: (a) The plaints did not specify the exact date or even approximate time when the plaintiffs allegedly discovered the fraud. (b) The mode and circumstances of discovery were not explained; it was merely stated that knowledge arose when the plaintiffs visited the suit properties, without explaining how such a visit could reveal the contents of the sale deeds or the fraudulent nature of the transaction. (c) There were no detailed pleadings as to how the alleged fraud was conceived, carried out, or concealed, nor as to what acts constituted fraudulent misrepresentation of the document's character. 2.15 The Court held that the allegations of fraud and date of knowledge were 'too vague' and unsupported by necessary material averments, and therefore did not meet the standard of specific pleading required to invoke Section 17 of the Limitation Act. 2.16 The Court emphasised that mere assertion in the plaint that fraud was played, without specific factual particulars, cannot extend limitation, and that plaintiffs cannot be permitted to bring otherwise time-barred suits within limitation by simply using the word 'fraud'. 2.17 The Court applied prior authority that, if clever drafting creates only an illusion of cause of action or of a basis for saving limitation, the court must 'nip it in the bud' by rejecting the plaint under Order VII Rule 11 CPC. Conclusions 2.18 The pleadings on fraud and date of knowledge did not disclose sufficient material facts to validly invoke Section 17 of the Limitation Act. 2.19 The vague and general allegations of fraud and late discovery could not save the suits from being barred by limitation. 2.20 The attempt to rely on Section 17 through such pleading amounted to 'clever drafting' and could not prevent rejection of the plaints under Order VII Rule 11(d) CPC. 2.21 Consequently, the Court held that the plaints disclosed suits barred by limitation, not salvaged by any valid plea of fraud under Section 17, and ordered rejection of the plaints.