TaxTMI 
TaxTMI 
2021 (8) TMI 1368
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....rnataka State Finance Corporation ("KSFC") and mortgaged the suit property as security for repayment of the loan. Since the loan was not repaid, KSFC auctioned the property. The third Respondent, who is the predecessor-in-interest of the Appellant, furnished the highest bid of Rs. 15,00,000. A sale deed of the suit property was executed in favour of the third Respondent on 8 August 2006. Despite the execution of the sale deed, the first Respondent and his brother failed to handover the possession of the suit property and as a consequence a suit for possession was filed by the third Respondent on 13 March 2007. On 20 December 2007, the first Respondent, who was impleaded as the second Defendant to the suit filed his written statement raising inter alia the following defences: (i) KSFC had no authority to put the suit property on sale; (ii) The second Defendant (first Respondent herein) had not taken any loan from KSFC nor had any transaction with it. He had not executed any documents offering the suit property as security; and (iii) The second Defendant had no concern with the borrower. Issues were framed in the suit, among them being the followin....
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....hat there is no cause of action for the suit 6. Whether Plaintiff is entitled for decree 7. What decree or order 6. By a judgment dated 26 February 2009, the Trial Judge decreed the first suit (OS No. 103/2007) that was instituted by the third Respondent and directed the Defendants (first Respondent and his brother) in the suit to hand over vacant and peaceful possession of the suit property to the third Respondent-Plaintiff. The Trial Court concluded that: (i) The contention of the first Respondent-Defendant that KFSC did not have the right to auction the suit property cannot be determined in the suit and must be challenged independently. The first Respondent took no action to challenge the auction or the sale deed executed between KFSC and the Plaintiff-third Respondent till arguments were being heard by the Trial Court, though evidence suggests that he had knowledge of the auction. The first Respondent acknowledged the receipt of the letter from KFSC. Moreover, KSFC was impleaded as the fourth Defendant in O.S. No. 369/2004- the suit that was filed by his brother's daughters and it was averred in the plaint that the auction notice by KSFC was nu....
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....had borrowed the money. However, KSFC filed a memo in Miscellaneous Petition No. 114/2003 stating that the first Respondent (second Defendant therein) was not a guarantor; and (ii) The application filed for clubbing O.S. No. 138/2008 and O.S. No. 103/2007 ought to have been allowed by the Trial Court. Since the right of the first Respondent cannot be considered in the present proceedings arising out of O.S. No. 103/2007, the third Respondent is entitled to the possession of the suit property as he is a bona fide auction purchaser. 9. Pursuant to the judgment of the High Court, the Appellant who has purchased the suit property from the third Respondent, filed an application [IA No. VII dated 25 March 2019 in OS No. 138/2008] for rejection of plaint Under Order 7 Rule 11 of the Code of Civil Procedure on the grounds of (i) non-payment of court fee; (ii) non-disclosure of cause of action; and (iii) the suit being barred by res judicata. It was contended that the suit instituted by the first Respondent was barred by res judicata as the grounds relating to the validity of the sale deed and the issue of title were raised in the previous suit O.S. No. 103/2007. The Appellant u....
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.... framed and the judgment in the previous suit, to compare it with the present suit. This exercise, the High Court held, could not be undertaken merely by looking into the plaint averments as held in Soumitra Kumar Sen (supra). Pursuant to the dismissal of the revision petition by the High Court, the Appellant has approached this Court challenging the order of the High Court. 12. The rejection of the application Under Order 7 Rule 11 of the Code of Civil Procedure is the bone of the contention in this appeal. O.S. No. 138 of 2008, instituted by the first Respondent, is a suit for declaration, partition, possession, and for a consequential relief of injunction. Besides the first Respondent, who is the Plaintiff in the said suit, KSFC (the second Respondent) is the first Defendant. The third Respondent is the second Defendant, the Appellant is the fourth Defendant. The third Defendant to the suit is Dr Arvind Vithal Kamat, the brother of the first Respondent. The following reliefs have been sought in the suit: a] Declaring that the Sale-Deed dated: 08-08-2006 executed by Defendant No. 1 in favor of the Defendant No. 2 with respect to the suit property is null and void to t....
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....cific defence in regard to the validity of the sale conducted by the KSFC in favour of the third Respondent. The submission is that the original sale deed executed by KSFC is of 8 August 2006. The decree in the first suit was of 26 February 2009 and though twelve years have passed since the date of the decree, the Appellant as a successor-in-interest of the auction purchaser is not being allowed to enjoy the suit property. 15. Order 7 Rule 11 of the Code of Civil Procedure reads as follows: 11. Rejection of plaint.-- The plaint shall be rejected in the following cases: (a) where it does not disclose a cause of action; (b) where the relief claimed is undervalued, and the Plaintiff, on being required by the Court to correct the valuation within a time to be fixed by the Court, fails to do so; (c) where the relief claimed is properly valued, but the plaint is returned upon paper insufficiently stamped, and the Plaintiff, on being required by the Court to supply the requisite stamp-paper within a time to be fixed by the Court, fails to do so; (d) where the suit appears from the statement in the plaint to be barred by any law; [(e....
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.... the exercise taken up by this Court while adjudicating on res judicata, before referring to res judicata as a ground for rejection of the plaint Under Order 7 Rule 11. Justice R C Lahoti (as the learned Chief Justice then was), speaking for a two Judge bench in V. Rajeshwari v. T.C. Saravanabava (2004)1 SCC 551 discussed the plea of res judicata and the particulars that would be required to prove the plea. The court held that it is necessary to refer to the copies of the pleadings, issues and the judgment of the 'former suit' while adjudicating on the plea of res judicata: 11. The Rule of res judicata does not strike at the root of the jurisdiction of the court trying the subsequent suit. It is a Rule of estoppel by judgment based on the public policy that there should be a finality to litigation and no one should be vexed twice for the same cause. 13. Not only the plea has to be taken, it has to be substantiated by producing the copies of the pleadings, issues and judgment in the previous case. Maybe, in a given case only copy of judgment in previous suit is filed in proof of plea of res judicata and the judgment contains exhaustive or in requisite detai....
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....drawn from the averments made in the plaint. Different clauses in Order 7 Rule 11, in our opinion, should not be mixed up. Whereas in a given case, an application for rejection of the plaint may be filed on more than one ground specified in various Sub-clauses thereof, a clear finding to that effect must be arrived at. What would be relevant for invoking Clause (d) of Order 7 Rule 11 of the Code are the averments made in the plaint. For that purpose, there cannot be any addition or subtraction. Absence of jurisdiction on the part of a court can be invoked at different stages and under different provisions of the Code. Order 7 Rule 11 of the Code is one, Order 14 Rule 2 is another. 22. For the purpose of invoking Order 7 Rule 11(d) of the Code, no amount of evidence can be looked into. The issues on merit of the matter which may arise between the parties would not be within the realm of the court at that stage. All issues shall not be the subject-matter of an order under the said provision. (emphasis supplied) The Court further held: 23. The principles of res judicata, when attracted, would bar another suit in view of Section 12 of the Code. The questio....
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....eed to be looked into for deciding an application thereunder are the averments in the plaint. The trial court can exercise the power Under Order 7 Rule 11 Code of Civil Procedure at any stage of the suit--before registering the plaint or after issuing summons to the Defendant at any time before the conclusion of the trial. For the purposes of deciding an application under Clauses (a) and (d) of Rule 11 of Order 7 Code of Civil Procedure, the averments in the plaint are germane; the pleas taken by the Defendant in the written statement would be wholly irrelevant at that stage, therefore, a direction to file the written statement without deciding the application Under Order 7 Rule 11 Code of Civil Procedure cannot but be procedural irregularity touching the exercise of jurisdiction by the trial court. 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 looke....
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.... Rule 11 Code of Civil Procedure. Referring to Kamala (supra), the Court further observed that 12.... The Appellant has mentioned about the earlier two cases which were filed by Respondent 1 and wherein he failed. These are judicial records. The Appellant can easily demonstrate the correctness of his averments by filing certified copies of the pleadings in the earlier two suits as well as copies of the judgments passed by the courts in those proceedings. In fact, copies of the orders passed in judgment and decree dated 31-3-1997 passed by the Civil Judge (Junior Division), copy of the judgment dated 31-3-1998 passed by the Civil Judge (Senior Division) upholding the decree passed by the Civil Judge (Junior Division) as well as copy of the judgment and decree dated 31-7-2014 passed by Civil Judge, Junior Division in Suit No. 268 of 2008 are placed on record by the Appellant. While deciding the first suit, the trial court gave a categorical finding that as per MoU signed between the parties, Respondent 1 had accepted a sum of Rs. 2,00,000 and, therefore, the said suit was barred by principles of estoppel, waiver and acquiescence. In a case like this, though recourse....
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....ents in the plaint will have to be referred to; (ii) The defense made by the Defendant in the suit must not be considered while deciding the merits of the application; (iii) To determine whether a suit is barred by res judicata, it is necessary that (i) the 'previous suit' is decided, (ii) the issues in the subsequent suit were directly and substantially in issue in the former suit; (iii) the former suit was between the same parties or parties through whom they claim, litigating under the same title; and (iv) that these issues were adjudicated and finally decided by a court competent to try the subsequent suit; and (iv) Since an adjudication of the plea of res judicata requires consideration of the pleadings, issues and decision in the 'previous suit', such a plea will be beyond the scope of Order 7 Rule 11(d), where only the statements in the plaint will have to be perused. 21. In the present case, a meaningful reading of the plaint makes it abundantly clear that when the first Respondent instituted the subsequent suit, he had been impleaded as the second Defendant to the earlier suit (OS No. 103/2007) that was instituted on 13 March 2....