Canara Bank v. P. Selathal and Ors. ETC.ETC.
M. R. SHAH, J.
1. Leave granted.
2. Feeling aggrieved and dissatisfied with the impugned common
judgment and order dated 09.11.2017 passed by the High Cour t of
Judicature at Madras in C.R.P.(PD) No. 2586/2013 and C.R.P.(PD )
No. 2587/2013, by which the High Court has dismissed the said revision
applications preferred by the appellant herein – Canara Ba nk and has
confirmed the orders passed by the learned trial Court dis missing the
applications preferred by the appellant herein to reject the respective
plaints in exercise of powers under Order 7 Rule 11 of the CPC, original
defendant no.5 – Canara Bank in O.S. No. 1269/2010, who is original
defendant no.6 in O.S. No.233/2011, has preferred the present appeals.
3. The facts leading to the present appeals in nutshell are as under:
That the appellant – bank sanctioned and granted a term loan of
Rs.49,50,000/- to M/s Coimbatore Hatcheries, a partnership firm in which
one Shri Ravichandran and G. Suresh Babu were the partners, in the
year 1995. That the said loan was secured by mortgage of immovable
property belonging to the said firm and the land situated at Survey Nos.
472 and 488 of Sanganur Village of one Shri M.C. Kallikutty – Guarantor.
That the land bearing Survey Nos. 472 and 488 of Sanganur Village of
one Shri M.C. Kallikutty – Guarantor is the subject matter of dispute.
At this stage, it is required to be noted that the said Shri M.C. Kallikutty
stood as a Guarantor. That the said Shri M.C. Kallikutty (here inafter
referred to as the ‘Guarantor’) signed Guarantee Deed dated 28.09.1995
and created equitable mortgage by deposit of Title Deeds of the disputed
lands in question.
3.1 That as the original borrower failed to repay the loan amount
due to the appellant-bank, the appellant-bank filed O.A. No. 489 of 2001
before the Debt Recovery Tribunal, Chennai in the month of October,
1997 against the principal borrower, its partners as well a s against the
CANARA BANK v. P. SELATHAL AND ORS. ETC.ETC.
Guarantor. That on 31.10.2001, DRT, Chennai passed an order in O.A.
No. 489/2001 to proceed ex-parte against the Guarantor. That O.A. No.
489/2001 was transferred to DRT, Coimbatore and was re-numbered as
T.A. No. 822/2002. That T.A. No. 822/2002 (previously O.A. No. 489/
2001) filed by the appellant-bank came to be decreed by the DRT for
Rs.57,35,770/- with 18% interest per annum in favour of the appellant-
bank and against the principal borrower as well as Guara ntor. That a
Recovery Certificate dated 16.09.2003 was issued in favou r of the
appellant-bank for a sum of Rs.57,35,770/- with 18% interest per annum.
3.2 That Recovery Officer, DRT, Coimbatore issued a Dema nd
Notice dated 11.11.2003 in R.P. No. 141/2003 to the principal borrower,
its partners and the Guarantor directing them to pa y the sum of
Rs.1,55,75,443/- as decreed in T.A. No. 822/2002. That the Guarantor
filed a writ petition before the High Court of Madras denying his guarantee
and creation of EMT and sought direction to the Crime Branch-CID to
register an FIR and investigate into the matter. That on directions of the
High Court of Madras, FIR No. 152/2010 came to be registered on
2.11.2005. The CB-CID, Coimbatore filed a final report under Section
173(2) of Cr.P.C. for the offences under Sections 120B read with 465,
466, 467, 468, 471, 420 and 419 of the IPC against the partners of the
principal borrower and also against one K.V. Roshan Babu, Agricultural
Extension Officer of the appellant – bank. It appears that thereafter the
criminal proceedings against the officer of the bank – Ros han Babu
came to be quashed by the High Court vide judgment and order dated
28.06.2011.
3.3 That in the year 2007 and in pursuance of the Reco very
Certificate in favour of the appellant-bank, the bank auctioned and sold
the properties of the partnership firm and recovered R s.38 lacs. That
thereafter after a period of five years from the date of the order passed
by the DRT dated 27.08.2003, the Guarantor filed I.A. No. 1821 of 2008
in the year 2008 for setting aside the ex-parte decree dated 27.08.2003
before the DRT, Coimbatore. That vide order dated 12.06.2009, DRT,
Coimbatore dismissed the said I.A filed by the Guarantor and refused to
condone the delay of 1337 days in challenging the ex-parte decree dated
27.08.2003 and for condonation of delay of 2392 days in filing the petition
to set aside the ex-parte order dated 31.10.2001.
3.4 That thereafter after a period of 15 years from the da te of
mortgage and after seven years from the date of the d ecree dated
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27.08.2003 passed by the DRT, the respondents herein filed O.S. N o.
1269/2010 and O.S. No. 233/2011 respectively in the Court of learned
Second Additional Subordinate Court, Coimbatore against the Guarantor,
principal borrower and its partners and the appellant-bank for a declaration
to declare the order dated 27.08.2003 passed by the DRT in T.A. N o.
822/2002 as non-est, ultra vires, null and void and not binding on the suit
property and also for a consequential permanent injunction restraining
the Recovery Officer from interfering with their peacef ul possession
and enjoyment of the suit property by taking any action as aga inst the
suit property by way of attachment, sale or otherwise. That in the aforesaid
two suits, the appellant-bank was joined as defendant no.5 in O.S. No.
1269/2010 and defendant no.6 in O.S. No. 233/2011 and was served
with the summons/notices of the suits. That the appellant-bank filed I.A.
No.431/2011 in O.S. No. 1269/2010 and I.A. No. 122/2012 in O.S. No.
233/2011 to reject the respective plaints in exercise of p owers under
Order 7 Rule 11(d) of the CPC. It was the case on behalf of the appellant-
bank that in view of the specific bar of jurisdiction under Sections 18 and
20(1) of the Recovery of Debts due to Banks and Financial Institutions
Act, 1993 (for short ‘RDDBFI Act’), the suits are not maintainable and
the civil court has no jurisdiction. It was the case on b ehalf of the
appellant-bank that as per Section 20(1) of the RDDBFI Act, the appeal
is provided to Debt Recovery Appellate Tribunal against th e order of
DRT and therefore the civil court has no jurisdiction to e ntertain the
suits challenging the decree passed by the DRT.
3.5 That the said applications were opposed by the original plaintiffs
submitting inter alia that they have purchased the suit property from the
original owner and that they are in possession and enjoyment of the suit
property. It was the case on behalf of the original plainti ffs that the
vendor did not create any equitable mortgage in favour of the bank and
the officials of the bank in collusion with the promoters of the principal
borrower created and fabricated equitable mortgage, as though the original
owner, their vendor created a mortgage. It was submitted tha t on a
complaint given by the Guarantor – Shri M.C. Kallikutty, t he original
owner of the suit property, an FIR was registered on 02.11.2005 and a
charge sheet dated 18.08.,2007 has been filed which is pending. It was
alleged that the bank and promoters of the principal borrower played
fraud and obtained decree in the DRT. It was submitted tha t the fraud
played by the bank and others can be proved only by the civil forum and
the same cannot be decided by the DRT. It was also submitted that the
CANARA BANK v. P. SELATHAL AND ORS. ETC.ETC.
[M. R. SHAH, J.]
plaintiffs are third parties and therefore they cannot approach the DRT
and the DRAT. Therefore, it was prayed to dismiss the said applications.
3.6 That the learned trial Court dismissed the said applic ations
and refused to reject the respective plaints in exercise of powers under
Order 7 Rule 11(d) of the CPC.
3.7 Feeling aggrieved and dissatisfied with the orders passed by
the learned trial Court dismissing the aforesaid applications and refusing
to reject the respective plaints under Order 7 Rule 11(d) of the CPC, the
appellant-bank preferred two separate revision applications before the
High Court. By the impugned common judgment and order, the High
Court has dismissed the said revision applications and has confirmed the
orders passed by the learned trial Court rejecting the a pplications to
reject the respective plaints in exercise of powers under Order 7 Rule
11 CPC by observing that the issue of either fraud or impersonation or
whether mortgage created by the Guarantor, vendor of the original
plaintiffs, in favour of the bank is legal or not is a matter to be adjudicated
in the civil suits and in criminal case.
3.8 Feeling aggrieved and dissatisfied with the impugned common
judgment and order passed by the High Court in refusing to reject the
respective plaints in exercise of powers under Order 7 Rule 11 CPC, the
appellant-bank – original defendant no. 5 in O.S. No. 1269/2010 and
original defendant no.6 in O.S. No. 233/2011 has preferred the present
appeals.
4. Shri Rajesh Kumar, learned Advocate appearing on behalf of
the appellant-bank has vehemently submitted that in t he facts and
circumstances of the case, the High Court has materially erred in rejecting
the respective applications and confirming the orders passed by the
learned trial Court rejecting the applications preferred by the appellant-
bank and refusing to reject the respective plaints in exercise of powers
under Order 7 Rule 11(d) of the CPC. It is vehemently submitted by the
learned Advocate that both, the High Court as well as the learned trial
Court have not properly appreciated and/or considered the relevant
provisions of RDDBFI Act, more particularly Sections 18, 19 and 20 of
the said Act.
4.1 It is further submitted by the learned Advocate appearing on
behalf of the appellant-bank that in substance the original plaintiffs are
challenging the decree passed by the DRT, Coimbatore dated 27.08.2003
953
passed in T.A. No. 822/2002. It is submitted that under the RDD BFI
Act against the decree passed by the DRT, the remedy of appeal is
available under Section 20 of the said Act before the DRAT. It is submitted
that therefore RDDBFI Act being a Special Act, the procedure provided
under the said Act has to be followed. It is submitted that therefore the
civil suit challenging the decree passed by the DRT shall not be
maintainable and therefore the case squarely falls within Order 7 Rule
11(d) of the CPC and therefore the learned trial Court as wel l as the
High Court ought to have rejected the respective plaints in exercise of
powers under Order 7 Rule 11(d) of the CPC. In support of the above
submission, learned Advocate appearing on behalf of the appe llant –
bank has heavily relied upon the decision of this Court in the case of
Punjab National Bank v. O.C. Krishnan and others, (2001) 6 S CC
569. It is submitted that even in the said decision, as held by this Court,
even the petitions under Articles 226 and 227 of the Constitution of India
are held to be not maintainable.
4.2 Learned Advocate appearing on behalf of the appellant-bank
has also heavily relied upon the decision of the Division B ench of the
Madras High Court in the case of M/s Cambridge Solutions Limited,
Bangalore v. Global Software Limited, Chennai, 2016-5-L.W. 45. It
is submitted that in the said case also the plaintiff file d a suit alleging
fraud while challenging the order passed by the Recovery Off icer and
despite the allegation of fraud the suit challenging the order passed by
the Recovery Officer is held to be not maintainable. It is submitted that
in the aforesaid decision, the Division Bench of the High Court has found
the allegation of fraud to be illusory. It is submitted that special leave
petition against the said decision has been dismissed by this Court.
4.3 It is further submitted by the learned Advocate appearing on
behalf of the appellant-bank that in the present case also the allegation
of fraud is not with respect to the Guarantee Deed exec uted by the
Guarantor – Shri M.C. Kallikutty, but with respect to Partnership Deed.
It is submitted that therefore the suits filed by the original plaintiffs are
frivolous and abuse of a process of law and therefore the p laints are
liable to be rejected on that ground also and in exercise of powers under
Order 7 Rule 11(d) of the CPC. In support of his above submis sion,
learned Advocate appearing on behalf of the appellant – bank has heavily
relied upon the decisions of this Court in the cases of T. Arivandandam
v. T.V . Satyapal (1977) 4 SCC 467; A.B.C. Laminart Pvt. Ltd. v. A. P .
CANARA BANK v. P. SELATHAL AND ORS. ETC.ETC.
[M. R. SHAH, J.]
Agencies (1989) 2 SCC 163; Sopan Sukhdeo Sable v. A ssistant
Charity Commissioner (2004) 3 SCC 137 and Madanuri Sri Ram a
Chandra Murthy v. Syed Jalal (2017) 13 SCC 174 .
4.4 Making the above submissions and relying upon the above
decisions, it is prayed to allow the present appeals.
5. The present appeals are vehemently opposed by Shri Robin R.
David, learned Advocate appearing on behalf of the original plaintiffs. It
is vehemently submitted that in the facts and circumstances of the case,
more particularly when there are specific allegations of fraud in the
respective suits which can be decided only by the civil court, both, the
learned trial Court as well as the High Court have rightly re fused to
reject the plaints in exercise of powers under Order 7 Rule 11(d) of the
CPC.
5.1 It is further submitted by the learned Advocate appearing on
behalf of the original plaintiffs that as such they are the bona fide
purchasers of the suit properties which were allege d to have been
mortgaged by their vendor – Shri M.C. Kallikutty. It is submitted that in
the criminal proceedings initiated by the said Shri Kallikutty, there are
specific allegations of fraud and in fact charge-sheets have been filed in
the criminal proceedings initiated by the said Shri M.C. Kallikutty. It is
submitted that in fact thereafter in the criminal proc eedings the trial
Court has convicted the partners of the partnership firm – G Suresh
Babu and Ravi Chandran for the offences under Sections 120B r ead
with 465, 466, 468, 471, 419 and 420 of the IPC. It is submitted that the
learned Magistrate has specifically observed and held that accused
entered into a criminal conspiracy and created a forged Partition Deed
of Shri M.C. Kallikutty by forging the signatures and thumb impressions
of witnesses and obtained the loan from the bank. It is submitted that the
learned trial Court as well as the High Court have rightly re fused to
reject the respective plaints under Order 7 Rule 11 (d) of the CPC.
5.2 Making the above submissions, it is prayed to dismis s the
present appeals.
6. In reply, learned Advocate appearing on behalf of the appellant-
bank has submitted that so far as the criminal proceedings are concerned,
the bank is not a party to the said criminal proceedings and therefore
any observations/finding of the Magistrate shall not bind the bank.
955
6.1 It is further submitted by the learned Advocate appearing on
behalf of the appellant – bank that even the criminal proceedings were
with respect to the partnership deed and not with respect to the guarantee
deed executed by Shri M.C. Kallikutty – Guarantor. It is submitted that
even the guarantee deed executed by Shri M.C. Kallikutty – Guarantor
was not even before the learned Magistrate. It is submitted that therefore
the plaintiffs cannot rely upon the said criminal proceedings and/or cannot
take the shelter under the word “fraud” used in the plaints. It is submitted
that therefore the allegations of fraud in the plaints are illusory and the
suits are vexatious and have been filed with mala fide inte ntion and
therefore this is a fit case to exercise powers under Order 7 Rule 11(d)
of the CPC.
7. We have heard the learned Advocates appearing on behalf of
the respective parties at length.
7.1 At the outset, it is required to be noted that there is already an
order passed by the DRT against the principal borrower and the Guarantor
and the recovery certificate issued by the Recovery Officer . That the
appellant-bank sanctioned the term loan in favour of the principal
borrower – partnership firm and its partners. The p artners of the
partnership firm – principal borrower executed a Memo randum of
Agreement for Agricultural Loans, thereby agreeing to abide by the terms
and conditions depicted therein. The Guarantor – Shri M.C. Kallikutty,
who was defendant no.4 in the application before the DRT, also signed
the said agreement as co-obligant, making himself jointly and severally
liable to pay the loan amount due to the bank in respect of the said term
loan. The term loan was further secured by the partners of the partnership
firm – principal borrower by mortgaging the lands of the firm and also
by the Guarantor – Shri M.C. Kallikutty by mortgaging the lands owned
by him. That the judgment and decree came to be passed by the DRT
as far back as on 27.08.2003 and even the recovery certifica te was
issued in favour of the bank on 16.09.2003. That after a period of 5
years the said Shri Kallikutty filed an interlocutory application before the
DRT to set aside the ex-parte decree dated 27.08.2003, which came to
be dismissed by the DRT on 12.06.2009. However, in the meantime, the
said Kallikutty initiated the criminal proceedings against the partners of
the partnership firm – principal borrower alleging forgery with respect
to the partnership deed. That thereafter after a period of 15 years from
the date of mortgage and after seven years from the date of de cree
CANARA BANK v. P. SELATHAL AND ORS. ETC.ETC.
[M. R. SHAH, J.]
passed by the DRT, the original plaintiffs filed the present suits basically
challenging the decree passed by the DRT dated 27.08.2003 alle ging
fraud. That in the said suits, it is the case on behalf of the original plaintiffs
that they have purchased the suit property, which have been mortgaged
while taking the term loan, from their vendor vide sale deeds dated
30.01.1996 and 10.03.1997 respectively and as the suit lands purchased
by them vide sale deeds dated 30.01.1996 and 10.03.1997 respectively
were put to mortgage by fraud by the principal borrower – partners of
the partnership firm and therefore the decree passed b y the DRT shall
not bind them. In the suits, the original plaintiffs have prayed inter alia
for the following reliefs:
“a) declaring that the alleged order dated 27.8.03 passed by the
Debt Recovery Tribunal, Coimbatore in T.A. No. 822/2002 is non-
est, ultra vires, null and void, and not binding on the suit property
and for a consequential permanent injunction restraining the 6 th
defendant from interfering with the plaintiff peaceful possession
and enjoyment of the suit property by taking any action as against
the suit property by way of attachment or sale or otherwise;
b) declaring the alleged mortgage said to have been crea ted by
the first defendant was the 5 th defendant in respect of the suit
property is non est, null and void and binding on the same and for
a consequent permanent injunction restraining the 5 th defendant
from interfering with the plaintiff’s possession and enjoyment of
the suit property by taking any action as against the suit property
by way of sale or otherwise.”
Thus, basically the plaintiffs are challenging the decree passed by
the DRT being purchasers. At this stage, it is required to be noted that in
fact the suit property was mortgaged in the month of September, 1995
and the original plaintiffs have claimed that they have purchased the suit
property on 30.01.1996 and 10.03.1997 respectively. It is also required
to be noted at this stage that at no point of time and ev en when the
Guarantor – Shri Kallikutty filed an interlocutory application before the
learned DRT in the year 2008 for quashing and setting aside the ex-
parte decree passed by the DRT, he did not disclose that he had already
sold the suit properties to the plaintiffs. It is also required to be noted at
this stage that even the sale deeds dated 30.01.1996 and 10.03.1997
respectively, as per the averments in the sale deeds, w ere executed by
Shri Kallikutty as power of attorney holder of the original owners and
957
even the sale consideration was paid in cash. As observed hereinabove
and as mentioned in the judgment and decree passed by the lea rned
DRT dated 27.08.2003, not only Kallikutty – Guarantor signed the
Memorandum of Agreement of Agricultural Loans dated 28.09.1995 by
which the partners of the firm agreed to make themselves jointly and
severally liable to pay the loan and became co-obligant , even the said
Kallikutty also mortgaged the lands owned by him. On considering the
averments in the plaints there are allegations of fraud with respect to
partnership deed and that too by the partners of the partner ship firm –
principal borrower. However, there is no reference at all in the plaints
with respect to properties mortgaged by Shri Kallikutty even after the
period of 15 years from the date of the mortgage and after 7 years from
the date of decree passed by the DRT, basically challenging the decree
passed by the DRT. As the suits were filed challenging the decree passed
by the DRT, the appellant-bank – one of the defendants filed applications
to reject the plaints in exercise of powers under Order 7 Rule 11(d) of
the CPC on the ground that considering the provisions of RDDBFI Act,
more particularly Sections 18, 19 and 20 of the Act, the suits ar e not
maintainable. Both the applications are dismissed by the lea rned trial
Court and which are further confirmed by the High Court. Therefore ,
the short question which is posed for consideration of this Court is, whether
the suits filed by the plaintiffs were liable to be rejected in exercise of
powers under Order 7 Rule 11(d) of the CPC or not?
7.2 While considering the aforesaid issue/question, few decisions
of this Court on exercise of powers under Order 7 Rule 11(d) of the
CPC are required to be referred to and considered.
7.3 In the case of T.Arivandandam(supra) ,while considering
the very same provision i.e. Order 7 Rule 11 of the CPC and the decree
of the trial Court in considering such application, this Court in para 5 has
observed and held as under:
“5. We have not the slightest hesitation in condemning the petitioner
for the gross abuse of the process of the court repeatedly and
unrepentantly resorted to. From the statement of the facts found
in the judgment of the High Court, it is perfectly plain that the suit
now pending before the First Munsif’s Court, Bangalore, is a
flagrant misuse of the mercies of the law in receiving plaints.
The learned Munsif must remember that if on a meaningful – not
formal – reading of the plaint it is manifestly vexatiou s, and
CANARA BANK v. P. SELATHAL AND ORS. ETC.ETC.
[M. R. SHAH, J.]
meritless, in the sense of not disclosing a clear right to s ue, he
should exercise his power under Order 7, Rule 11 CPC taking
care to see that the ground mentioned therein is fulfilled. And, if
clever drafting has created the illusion of a cause of action, nip it
in the bud at the first hearing by examining the party searchingly
under Order 10, CPC. An activist Judge is the answe r to
irresponsible law suits….”
7.4 In the case of Church of Christ Charitable Trust and
Educational Charitable Society v. Ponniamman Educational Trust
(2012) 8 SCC 706 , this Court in paras 13 has observed and held as
under:
“13. While scrutinizing the plaint averments, it is the bounden duty
of the trial Court to ascertain the materials for cause of action.
The cause of action is a bundle of facts which taken with the law
applicable to them gives the plaintiff the right to relief against the
defendant. Every fact which is necessary for the plaintiff to prove
to enable him to get a decree should be set out in clear terms. It is
worthwhile to find out the meaning of the words “cause of action”.
A cause of action must include some act done by the Defendant
since in the absence of such an act no cause of action can possible
accrue.”
7.5 In A.B.C. Laminart Pvt. Ltd. v. A.P. Agencies, Salem
(supra), this Court explained the meaning of ”cause of action” as
follows:
“12.A cause of action means every fact, which if trav ersed, it
would be necessary for the plaintiff to prove in order to support
his right to a judgment of the court. In other words, it is a bundle
of facts which taken with the law applicable to them give s the
plaintiff a right to relief against the defendant. It mus t include
some act done by the defendant since in the absence of suc h an
act no cause of action can possibly accrue. It is not limited to the
actual infringement of the right sued on but includes all the material
facts on which it is founded. It does not comprise e vidence
necessary to prove such facts, but every fact necessary for the
plaintiff to prove to enable him to obtain a decree. Ev erything
which is not proved would give the defendant a right to immediate
judgment must be part of the cause of action. But it has no relation
whatever to the defence which may be set up by the defendant
959
nor does it depend upon the character of the relief prayed for by
the plaintiff.”
7.6 In the case of Sopan Sukhdeo Sable (supra) in paras 11
and 12, this Court has observed as under:
“11. In I.T.C. Ltd. v. Debts Recovery Appellate Trib unal
[(1998)2SCC70] it was held that the basic question to be decided
while dealing with an application filed under Order 7 Rule 11 of
the Code is whether a real cause of action has been set out in the
plaint or something purely illusory has been stated with a view to
get out of Order 7 Rule 11 of the Code.
12. The trial Court must remember that if on a meaningful and not
formal reading of the plaint it is manifestly vexatious and meritless
in the sense of not disclosing a clear right to sue, it should exercise
the power under Order 7 Rule 11 of the Code taking care to see
that the ground mentioned therein is fulfilled. If clever dr afting
has created the illusion of a cause of action, it has to be nipped in
the bud at the first hearing by examining the party sear chingly
under Order 10 of the Code. (See T. Arivandandam (supra).”
7.7 In the case of Madanuri Sri Rama Chandra Murthy (su pra),
this Court has observed and held as under:
“7. The plaint can be rejected under Order 7 Rule 11 if conditions
enumerated in the said provision are fulfilled. It is needless to
observe that the power under Order 7 Rule 11 CPC can be
exercised by the Court at any stage of the suit. The relevant facts
which need to be looked into for deciding the application are the
averments of the plaint only. If on an entire and meaningful reading
of the plaint, it is found that the suit is manifestly vexatiou s and
meritless in the sense of not disclosing any right to sue, the court
should exercise power under Order 7 Rule 11 CPC. Since the
power conferred on the court to terminate civil action at the
threshold is drastic, the conditions enumerated under Order 7 Rule
11 CPC to the exercise of power of rejection of plaint have to be
strictly adhered to. The averments of the plaint have to be read as
a whole to find out whether the suit is barred by any law. I t is
needless to observe that the question as to whether the suit is
barred by any law, would always depend upon the facts and
circumstances of each case. The averments in the wr itten
CANARA BANK v. P. SELATHAL AND ORS. ETC.ETC.
[M. R. SHAH, J.]
statement as well as the contentions of the defendant are wholly
immaterial while considering the prayer of the defendant for
rejection of the plaint. Even when the allegations made in th e
plaint are taken to be correct as a whole on their face va lue, if
they show that the suit is barred by any law, or do not discl ose
cause of action, the application for rejection of plaint ca n be
entertained and the power under Order 7 Rule 11 CPC can be
exercised. If clever drafting of the plaint has created the illusion
of a cause of action, the court will nip it in the bud at the earliest
so that bogus litigation will end at the earlier stage.”
7.8 In the case of Ram Singh v. Gram Panchayat Mehal Kalan
(1986) 4 SCC 364 , this Court has observed and held that when the suit
is barred by any law, the plaintiff cannot be allowed to circumvent that
provision by means of clever drafting so as to avoid menti on of those
circumstances, by which the suit is barred by law of limitation.
8. Applying the law laid down by this Court in the aforesai d
decisions on exercise of powers under Order 7 Rule 11 of the CPC to
the facts of the case on hand and the averments in the plaints, we are of
the opinion that both the courts below have materially erred in not rejecting
the plaints in exercise of powers under Order 7 Rule 11 of the CPC. As
observed hereinabove, the main prayer in the suits is chal lenging the
decree passed by the DRT. The decree passed by the learned DRT and
even the order passed by the Recovery Officer are appealabl e under
Section 20 of the RDDBFI Act. In the case of O.C. Krishnan and
others (supra) , this Court has observed and held that in view of the
alternate remedy of preferring the appeal before the DRAT, the petition
under Article 227 challenging the order passed by the DRT shall not be
maintainable, without exhaustion of such remedy. In the case of O.C.
Krishnan and others (supra) , decree passed by the DRT was challenged
in a petition under Article 227 of the Constitution of India. T he High
Court allowed the petition. While allowing the appeal of the bank – Punjab
National Bank, this Court has observed that without exhaustion of the
remedies under the RDDBFI Act, the High Court ought not to ha ve
exercised its jurisdiction under Article 227. While holding so, in paragraph
6, this Court has observed and held as under:
“6. The Act has been enacted with a view to provide a speci al
procedure for recovery of debts due to the banks and the financial
institutions. There is a hierarchy of appeal provided in the Act ,
961
namely, filing of an appeal under Section 20 and this fast-tr ack
procedure cannot be allowed to be derailed either by tak ing
recourse to proceedings under Articles 226 and 227 of the
Constitution or by filing a civil suit, which is expressly b arred.
Even though a provision under an Act cannot expressly oust the
jurisdiction of the court under Articles 226 and 22 7 of the
Constitution, nevertheless, when there is an alternative remedy
available, judicial prudence demands that the Court refrains from
exercising its jurisdiction under the said constitutional provisions.
This was a case where the High Court should not have entertained
the petition under Article 227 of the Constitution and should have
directed the respondent to take recourse to the appeal mechanism
provided by the Act.”
9. Relying upon and following the decision of this Court in the
case of O.C. Krishnan and others (supra) , thereafter the Division
Bench of the Madras High Court in the case of M/s Cambridge Solutions
Limited (supra) , has rejected the plaint in which the order passed by
the DRT was challenged, in exercise of powers under Order 7 Rule 11
(d) of the CPC. It is required to be noted that in the said case also there
were allegations of fraud in the plaint and considering the averments in
the plaint, it was found that the allegations of fraud are illusory. It is
observed by the Division Bench in the said decision that specific instances
and acts of fraud with evidence have to be pleaded in the pl aint. It is
further observed that mere statements are not enough. I t is further
observed that it is not sufficient if just fraud is pleaded and there must be
material to show that the fraud is committed.
10. Having considered the pleadings and the averments in the
suits, more particularly the allegations of fraud, we find that the allegations
of fraud are with respect to the partnership deed and th ere are no
allegations at all with respect to mortgage created by th e Guarantor –
Shri Kallikutty and that too with respect to the deed of guarantee executed
by the Guarantor. Much reliance is placed upon the judgment and order
passed by the learned Magistrate holding the partners of the firm guilty.
However, it is required to be noted that even in the said judgment passed
by the learned Magistrate there is no reference to the deed of guarantee
and/or the mortgage created by the Guarantor. Even the bank i s not a
party to the said proceedings. It is reported that against the judgment
and order passed by the learned Magistrate, further appeal is p ending.
CANARA BANK v. P. SELATHAL AND ORS. ETC.ETC.
[M. R. SHAH, J.]
Be that as it may, considering the pleadings/averments in the suits and
the allegations of fraud, we are of the opinion that the allegations of
fraud are illusory and only with a view to get out of the judg ment and
decree passed by the DRT. We are of the opinion that ther efore the
suits are vexatious and are filed with a mala fide intention to get out of
the judgment and decree passed by the DRT. As observed hereinabove,
the plaintiffs are claiming right, title on the basis of the sale deeds dated
30.01.1996 and 10.03.1997 respectively executed by Shri Kallikutty as
power of attorney holder of the original owner. However, according to
the averments in the plaints, they have purchased the suit property from
their vendor which is factually incorrect. On a bare reading of th e sale
deeds, it appears that the sale deeds are executed by Shri Kal likutty as
power of attorney holder of the original vendor. As observed hereinabove,
even in the year 2008, when the said Kallikutty filed int erlocutory
application before the DRT to quash and set aside the ex-parte judgment
and decree passed by the DRT, he did not disclose that he has already
sold the property in favour of the original plaintiffs . As observed
hereinabove, even the sale consideration is alleged to have been paid in
cash. Before the execution of the sale deeds dated 30.01. 1996 and
10.03.1997, the lands were already put as a security by way of mortgage
with the appellant-bank by Shri Kallikutty. Thus, considering the overall
facts and circumstances of the case, the suits filed by the original plaintiffs
are vexatious, frivolous and nothing but an abuse of process of law and
court. Therefore, considering the law laid down by this Cour t in the
aforesaid decisions, more particularly in the case of T . Arivandandam
(supra) , the suits being vexatious and frivolous, the plaints are required
to be rejected in exercise of powers under Order 7 Rule 11 of the CPC.
As pointed out by Krishna Iyer, J. in T . Arivandandam (supra) , the
ritual of repeating a word or creation of an illusion in the p laint can
certainly be unravelled and exposed by the court while dealing with an
application under Order 7 Rule 11(a). As observed by this Court, such
proceedings are required to be nipped in the bud. Even otherwis e as
observed hereinabove, without exhausting the remedy of appeal provided
under the RDDBFI Act, the suits with the basic relief of challenging the
decree passed by the DRT were liable to be dismissed, as observed and
held by this Court in the case of O.C. Krishnan and others (supra) .
11. At this stage, it is also required to be noted that the suits have
been filed after a period of 15 years from the date of mortgage and after
a period of 7 years from the date of passing of the decree by the DRT.
963
In the plaints, it is averred that the plaintiffs came t o know about the
mortgage and the judgment and decree passed by the DRT only si x
months back. However, the said averments can be said to be too vague.
Nothing has been averred when and how the plaintiffs came to know
about the judgment and decree passed by the DRT and the mortgage of
the property. Only with a view to get out of the law of limitation and only
with a view to bring the suits within the period of limitation, such vague
averments are made. On such vague averments, plaintiffs cannot ge t
out of the law of limitation. There must be specific pl eadings and
averments in the plaints on limitation. Thus, on this ground also, the plaints
were liable to be rejected. As observed hereinabove, the plaints are
vexatious, frivolous, meritless and nothing but an abuse of proc ess of
law and court. Therefore, this is a fit case to exercise the powers under
Order 7 Rule 11 (d) of the CPC. Both the courts below have materially
erred in not rejecting the plaints in exercise of powers unde r Order 7
Rule 11(d) of the CPC. Both the courts below have materially erred in
not exercising the jurisdiction vested in them.
12. In view of the above and for the reasons stated above, b oth
these appeals succeed. The impugned common judgment and order
passed by the High Court in dismissing the revision applications and the
orders passed by the learned trial Court rejecting the applications preferred
by the appellant-bank to reject the respective plaints in exercise of powers
under Order 7 Rule 11(d) of the CPC are hereby quashed and set aside.
Consequently, the plaints filed by the original plaintiffs being O.S. No.
1269/2010 and O.S. No. 233/2011 pending in the Court of Additional
Subordinate Court, Coimbatore are rejected. The instant appeals are
allowed accordingly. No costs.
Ankit Gyan Appeals allowed.
CANARA BANK v. P. SELATHAL AND ORS. ETC.ETC.
[M. R. SHAH, J.]