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Allahabad Bank v. Shank'S (Steel Fab Pvt. Ltd. & Ors.)

Calcutta High Court
Feb 15, 2008
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Structured Summary of the Provided Opinion

Factual and Procedural Background

The plaintiff, a Nationalized Bank, instituted a money recovery suit valued in excess of Rs. 10 lakh in the Court of Civil Judge, Senior Division, 9th Court, Alipore (Money Suit No. 20 of 2002). The opinion notes that under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (the Act), proceedings for such claims are entertainable only by the Debt Recovery Tribunal (DRT) and are thus beyond the jurisdiction of the ordinary Civil Court.

After the defendants entered appearance, they filed an application under Order VII Rule 11 of the Code of Civil Procedure (CPC) seeking rejection of the plaint on the ground that the suit was barred by the Act. The plaintiff filed an application under Order VII Rule 10 CPC, seeking return of the plaint (so that it could be presented to the appropriate forum). The Trial Court heard both applications together and by order dated 21st May, 2007 rejected the plaint under Order VII Rule 11 and dismissed the plaintiff's application under Order VII Rule 10. The plaintiff appealed by way of the present first miscellaneous appeal.

Legal Issues Presented

  1. Whether the learned Trial Judge erred in law in rejecting the plaint under Order VII Rule 11 CPC in the facts of this case.
  2. Whether, instead of rejecting the plaint, the Trial Court ought to have returned the plaint under Order VII Rule 10 CPC for presentation before the Debt Recovery Tribunal.

Arguments of the Parties

Appellant (Plaintiff / Mr. Basu)

  • Contended that the Trial Judge erred in rejecting the plaint when the Court had no jurisdiction; the proper course was to return the plaint for presentation before the Debt Recovery Tribunal.
  • Relied upon several Supreme Court and High Court decisions (listed in the opinion) to support the proposition that when a court lacks jurisdiction it should return the plaint rather than dismiss or otherwise dispose of the claim.

Respondents (Defendants / as reflected in the record)

  • Filed an application under Order VII Rule 11 CPC pleading that, on the face of the plaint, the suit is barred by the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and therefore the plaint should be rejected.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
R.S.D.V Finance Co. Pvt. Ltd. v. Shree Vallabh Glass Works Ltd., AIR 1993 SC 2094 Where a court lacks territorial jurisdiction, the proper course is to return the plaint (not dismiss) so it can be presented to the proper court. The Court distinguished this authority: R.S.D.V concerned dismissal by a court that had found lack of territorial jurisdiction; here the Trial Court rejected the plaint under Order VII Rule 11(d) because the plaint showed the suit was barred by statute. The Court held the cited authority inapplicable to the facts before it.
Sri Athmanathaswami Devasthanam v. K. Gopalaswami Ayyangar, AIR 1965 SC 338 Where a civil court has no jurisdiction over the subject matter, the court should not decide on merits and should return the plaint to be presented to the appropriate forum. The Court acknowledged the proposition but held it inapplicable where Order VII Rule 11(d) mandates rejection when a plaint on its face is barred by law. The Court emphasized Rule 11's mandatory scope and thus distinguished this precedent.
P. Mahomed v. Cheetra Nath Chowdhury, 27 C.L.J. 590 A Small Causes Court that has no jurisdiction must return the plaint for presentation to the proper court. The Court found this decision inappropriate here because specific statutory provisions applicable to Small Causes Courts (Section 23 of the Provincial Small Causes Act) differ from the present statutory scheme; and because the Trial Court did not decide merits but rejected the plaint under Order VII Rule 11.
Smt. Shail Kumari v. Abhislakh, 1998 All India High Court Cases (Allahabad) 398 If a court finds it has no jurisdiction, it should not record findings on merits and should return the plaint to the appropriate forum. The Court treated this authority as inapplicable because in the present case the plaint was rejected under Rule 11(d) on the face of the pleadings showing a statutory bar; there was no adjudication on merits that required correcting by return of plaint.
Smt. Ganga Coelho v. Smt. Neena Pinto, AIR 1997 Bombay 252 Where a court on contested hearing finds no jurisdiction, the proper remedy is to return the plaint for presentation before the appropriate forum. The Court distinguished this case on the ground that the present matter involved rejection under Order VII Rule 11(d) based on averments in the plaint (no contested hearing leading to a jurisdictional finding affecting merits), and therefore the authority did not assist the appellant.
Governing Council of Kayastha Pathshala Prayag v. Ram Chandra Srivastaya, AIR 1992 Allahabad 158 When a suit requiring presentation to a particular principal court is presented to a judge without jurisdiction (by reason of statutory conditions), the proper course may be to return the plaint under Order VII Rule 10. The Court observed the case did not strictly fall under Order VII Rule 11(d) because the relevant facts (leave of Advocate General taken or not) may not be apparent from the plaint. Thus the High Court's direction to return the plaint was appropriate there, but that reasoning did not apply to the present facts.
Amar Chand v. Union of India, AIR 1973 SC 313 Referenced in relation to the principle that if a plaint is returned under Order VII Rule 10, the suit may be deemed to have been presented on the original date for certain purposes (e.g., limitation) — in connection with Section 14 Limitation Act. The Court cited this authority when discussing limitation consequences; it observed that even if the Court returned a plaint under Rule 10 in appropriate cases, presentation to a Tribunal (like the DRT) is not by plaint and return would not automatically confer the same benefits in the present context.
Harshad Chiman Lal Modi v. D.L.F. Universal Ltd., AIR 2006 SC 646 Also cited concerning consequences of return/presentation dates and limitation (Section 14 Limitation Act). The Court cited this authority to explain the legal doctrine about deemed presentation and limitation, but held that returning a plaint under Order VII Rule 10 cannot operate to present a proceeding before a non-Code forum such as the Debt Recovery Tribunal.

Court's Reasoning and Analysis

The Court's analysis proceeded by examining the respective provisions of Order VII Rules 10 and 11 CPC and the nature of the forum before which the Bank sought relief:

  1. Distinction between Rule 10 and Rule 11:
    • Order VII Rule 10 empowers a court to return a plaint at any stage for presentation before the appropriate Court when it concludes it lacks jurisdiction to entertain the suit (typically for lack of territorial or pecuniary jurisdiction within the Code).
    • Order VII Rule 11 prescribes specific situations where a court shall reject a plaint. Clause (d) of Rule 11 mandates rejection where the suit appears from the statements in the plaint to be barred by any law.
  2. Nature and scope of Rule 11(d):
    • When invoking Rule 11(d), the Court's scrutiny is limited to the averments in the plaint; the Court must presume those averments to be true and cannot take into account the defendant's defence or external evidence at that stage.
    • If from the plaint itself it appears that the suit is barred by law, Rule 11(d) requires the plaint to be rejected; the provision is mandatory and leaves no discretion.
  3. Application to the facts:
    • The plaint expressly alleged a claim exceeding Rs. 10 lakh, which, on the pleadings, placed the matter within the exclusive domain of the Debt Recovery Tribunal under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. Therefore, the plaint showed on its face that the civil court could not entertain the suit.
    • Because the bar to the civil court's jurisdiction was apparent from the pleadings, the Trial Court correctly invoked Order VII Rule 11(d) and rejected the plaint. Rejection, distinct from dismissal, leaves open the right to institute fresh proceedings after removal of the defect.
  4. Why Order VII Rule 10 was inapplicable:
    • Order VII Rule 10 relates primarily to lack of territorial or pecuniary jurisdiction within courts governed by the Code; it anticipates return for presentation before another court governed by the Code.
    • The Debt Recovery Tribunal is a statutory tribunal whose proceedings are initiated by an application under Section 19 of the Act and not by presentation of a plaint within the meaning of the Code; the Tribunal is not one of the courts specified in Section 3 of the Code. Consequently, returning a plaint under Rule 10 could not achieve presentation before the DRT.
    • The Court pointed to the language of Rules 10A and 10B to show that Rule 10's scope is limited regarding the kinds of transfers and directions envisaged under the Code.
  5. Treatment of precedents relied on by the appellant:
    • The Court reviewed the authorities cited by the appellant (Supreme Court and High Court decisions) and found them distinguishable because many dealt with lack of territorial jurisdiction or situations where facts relevant to jurisdiction were not apparent on the face of the plaint, or involved dismissal rather than mandatory rejection under Rule 11(d).
    • Accordingly, the Court concluded those precedents did not assist the appellant in the circumstances of a plaint that, on its face, disclosed a statutory bar under the Act and therefore required rejection under Rule 11(d).
  6. Limitation and consequence considerations:
    • The Court acknowledged that if the plaintiff initiates fresh proceedings before the DRT, limitation may become an issue and the plaintiff may need the benefit of Section 14 of the Limitation Act. The Court observed that even if a plaint is returned under Order VII Rule 10 in appropriate cases, a return does not automatically confer entitlement to Section 14 benefits in the present context because proceedings before the DRT commence by a different mode (Section 19 application).
  7. Final procedural considerations:
    • Since the Trial Court's order did not prejudicially affect the plaintiff in any manner covered by Section 99 CPC, and because the Trial Court had correctly applied Rule 11(d), the appellate court found no reason to interfere.

Holding and Implications

Core Holding: The appeal was dismissed. The appellate court upheld the Trial Court's order rejecting the plaint under Order VII Rule 11 CPC and dismissing the plaintiff's application under Order VII Rule 10.

Implications and Consequences:

  • The Trial Court's rejection of the plaint (under Order VII Rule 11(d)) stands. Because rejection is not the same as dismissal on merits, the plaintiff remains able to initiate fresh proceedings before the appropriate forum (the Debt Recovery Tribunal) if it so chooses.
  • The Court observed that initiating new proceedings before the Debt Recovery Tribunal may raise limitation issues; the plaintiff may seek benefit under Section 14 of the Limitation Act, but the Court noted that a return of plaint under Order VII Rule 10 would not automatically entitle the plaintiff to such benefit in the present statutory context because proceedings before the DRT are commenced by an application under Section 19 and not by a plaint under the Code.
  • The connected application for stay (CAN 7742 of 2007) was rendered infructuous by dismissal of the appeal and was disposed of accordingly.
  • No broader change in legal principle was made by this judgment; the decision applies the existing distinction between Order VII Rules 10 and 11 and the statutory scheme that places certain bank debt recovery matters within the exclusive jurisdiction of the Debt Recovery Tribunal.

Orders and Administrative Directions Noted in the Opinion

  • The appeal was dismissed under Order XLI Rule 11 of the Code of Civil Procedure.
  • The connected stay application (CAN 7742 of 2007) was disposed of as infructuous.
  • The Court directed that a xerox certified copy of the order, if applied for, be supplied to the parties within a week on compliance with requisite formalities.

Appeal dismissed.

Show all summary ...

JUDGMENT

1. This first miscellaneous appeal is at the instance of a plaintiff in a suit for recovery of money and is directed against order dated 21st May, 2007 passed by the Civil Judge, Senior Division, 9th Court, Alipore, in Money Suit No. 20 of 2002, thereby rejecting the plaint and at the same time, dismissing an application under Order VII Rule 10 of the Code of Civil Procedure filed by the plaintiff for return of the plaint.

2. The plaintiff, a Nationalized Bank, filed a suit for recovery of money valued above Rs. 10 lac in the Court of Civil Judge, Senior Division, 9th Court, Alipore, notwithstanding the fact that in view of the provisions contained in the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, (hereinafter referred to as the Act), such suit is barred and the proceedings are entertainable only by the Debt Recovery Tribunal.

3. The defendants, after entering appearance in the suit, filed an application under Order VII Rule 11 of the Code of Civil Procedure thereby praying for rejection of the plaint on the ground that even on the basis of averments made in the plaint itself, the suit was barred by the provisions contained in the said Act.

4. The plaintiff, at that stage, came forward with an application under Order VII Rule 10 of the Code of Civil Procedure thereby praying for a direction for return of the plaint instead of rejection of the same.

5. Both the applications were taken up together for hearing and by the order impugned herein, the learned Trial Judge has allowed the application under Order VII Rule 11 of the Code by rejecting the plaint and at the same time, has dismissed the other application under Order VII Rule 10 of the Code of Civil Procedure filed by the plaintiff for return of the plaint.

6. Being dissatisfied, the plaintiff has come up with the present first miscellaneous appeal.

7. Mr. Basu, the learned advocate appearing on behalf of the plaintiff/appellant, has strenuously contended before us that the learned Trial Judge erred in law in rejecting the plaint when, on the face of it, it had no jurisdiction to entertain the suit in view of the bar created under the Act. Mr. Basu, therefore, submits that the learned Trial Judge, instead of rejection of the plaint, ought to have passed direction for return of plaint for presentation before the Debt Recovery Tribunal.

8. Therefore, the sole question that arises for determination in this appeal is whether the learned Trial Judge erred in law in rejecting the plaint in the facts of the present case.

9. After hearing Mr. Basu appearing on behalf of the appellant and after going through the provisions contained in Order VII Rule 10 and Order VII Rule 11 of the Code of Civil Procedure, we find that Rule 10 authorises the Court to return the plaint at any stage of the suit for presentation before the appropriate Court once it comes to the conclusion that it has no jurisdiction to entertain such suit. Rule 11, on the other hand, prescribes the situations in which the Court shall reject a plaint. At this stage, we cannot lose sight of the fact that rejection of a plaint does not amount to dismissal of the suit. If a suit is dismissed, a fresh suit will be barred by the principles of res judicata; whereas in the case of rejection of a plaint, a fresh suit is maintainable and the previous order of rejection of plaint will not be an impediment in filing the second suit after removal of defect which was the cause of rejection of the plaint.

10. Order VII Rule 11(d) authorizes a Court to reject a plaint, where the suit appears from the statements made in the plaint to be barred by any law. In order to invoke Order VII Rule 11(d) of the Code, the Court must restrict its scrutiny only to the averments made in the plaint and at that stage, it cannot take into consideration the defence of the defendant nor can it seek assistance of any evidence from the parties. If it appears from the averments made in the plaint itself that the Court cannot entertain the suit because of any bar created by law, the Court is left with no other alternative but to reject the plaint by taking recourse to Rule 11(d). In other words, at the time of invoking the jurisdiction under Order VII Rule 11(d) of the Code, the Court shall presume all statements made in the plaint to be true and even if on that basis, it appears that the suit is barred by any law for the time being in force, the plaint shall be rejected. The provision is mandatory and no discretion is left with the Court.

11. In the case before us, the plaintiff, a Nationalized Bank, has alleged in the plaint that the claim of the Bank was more than Rs. 10 lakh and in view of such claim, the Civil Court has no jurisdiction to entertain the suit, the appropriate remedy being available before the Debt Recovery Tribunal created under the Act, Court therefore, rightly concluded that this was a case of rejection of plaint. The moment, the plaint has been rejected instead of dismissal of the suit, it necessarily follows that the Court has not gone into the merit of the case and, therefore, there is no adjudication on the merit of the claim of the plaintiff.

12. In our view, the Court was quite Justified in not returning the plaint in the facts of the present case, because Order VII Rule 10 speaks of a situation where either the territorial or the pecuniary jurisdiction of that particular Court is lacking and that such suit is required to be filed in a different Court to which the Code of Civil Procedure applies having jurisdiction to entertain the dispute. This is not a case of lack of either territorial or pecuniary jurisdiction of the Trial Court, but is one where the Statute has created a total bar of jurisdiction of the Civil Court. The fact that a Court can invoke the provision of Order VII Rule 10 only to a case of lack of territorial or pecuniary jurisdiction will plainly appear from the language of the provisions contained in Order VII Rules 10A and 10B where there is no scope of passing a direction for appearance of the defendant before a Tribunal or other Special Authority on representation of the plaint. Moreover, a plaint can be presented only before a Court governed by the Code for initiation of a suit. A proceeding before Debt Recovery Tribunal is initiated by presentation of an application under Section 19 of the Act and is never commenced by presentation of a plaint within the meaning of the Code nor does such Tribunal come within the specifications of any of the Courts mentioned in Section 3 of the Code.

13. We fail to appreciate how the appellant is aggrieved by the order impugned herein because notwithstanding the rejection of the plaint, the plaintiff is entitled to maintain fresh proceedings before the Debt Recovery Tribunal. We appreciate that if now a new proceeding is initiated before the Debt Recovery Tribunal, the claim may be, on the face of it, barred by limitation unless the benefit of Section 14 of the Limitation Act is conferred upon the plaintiff. But even if the Court exercises jurisdiction under Order VII Rule 10 of the Code of Civil Procedure and returns the plaint, the plaintiff cannot automatically get the benefit of Section 14 of the Limitation Act as even in the case of return of plaint for want of jurisdiction under the provisions contained in Order VII Rule 10 of the Code, the suit should be deemed to have been validly presented on the date of representation before the appropriate forum. (See: Amar Chand v. Union of India reported in AIR 1973 SC 313 and Harshad Chiman Lal Modi v. D.L.F Universal Ltd. reported in AIR 2006 SC 646).

14. Mr. Basu, in this connection, vehemently contended before us that once it is found that the Court has no jurisdiction over the subject matter, the Court is left with no other alternative but to return the plaint and in support of such contention, Mr. Basu has relied upon the following decisions of the Supreme Court as also different High Courts:

(a) R.S.D.V Finance Co. Pvt. Ltd. v. Shree Vallabh Glass Works Ltd. reported in AIR 1993 SC 2094;

(b) Sri Athmanathaswami Devasthanam v. K. Gopalaswami Ayyangar reported in AIR 1965 SC 338;

(c) P. Mahomed v. Cheetra Nath Chowdhury reported in 27 C.L.J 590;

(d) Smt. Shail Kumari v. Abhislakh reported in 1998 All India High Court Cases (Allahabad) 398 : 1998 AIHC 398

(e) Smt. Ganga Coelho v. Smt. Neena Pinto reported in AIR 1997 Bombay 252;

(f) Governing Council of Kayastha Pathshala Prayag v. Ram Chandra Srivastaya reported in AIR 1992 Allahabad 158.

15. In the case of R.S.D.V Finance Co. Pvt. Ltd. (supra), the trial Judge decreed the suit. On appeal before the High Court, the Division Bench of the High Court concluded that the Court had no jurisdiction and, accordingly, allowed the appeal and dismissed the suit. Being dissatisfied, the plaintiff came up before the Supreme Court on special leave. While affirming the finding of the Division Bench of the High Court in appeal before the Supreme Court, the said Court was of the view that the Division Bench was wrong in passing of the order of dismissal of the suit when it had arrived at the conclusion that the Court had no jurisdiction to try the suit. According to the Supreme Court, the only course open in such circumstances was to return the plaint for presentation to the proper Court and not to dismiss the suit.

16. We fail to appreciate how the said decision can be of any help to the appellant, when, in this case, the Court has not dismissed the suit, but has merely rejected the plaint and such act is mandatory under Order VII Rule 11 of the Code. In the said case, the Supreme Court rightly held that for want of territorial jurisdiction, if a Court refuses to exercise jurisdiction, it should not dismiss the suit but should return the plaint. The case before us is not one of want of territorial jurisdiction. We, thus, find that the said decision does not help the appellant in any way.

17. In the case of Athmanathaswami Devasthanam (supra), before the Supreme Court, one of the points agitated was that when the Civil Court has no jurisdiction over the subject matter of the suit, the High Court could not have dealt with the cross objection filed by the appellant with respect to adjustment of certain amount paid by one of the parties. The Supreme Court upheld such contention and held that when the Court had no jurisdiction over the subject matter of the suit, it could not decide any question on merit and after simply deciding the question of jurisdiction, it should have returned the plaint. We, for a moment, do not dispute the said proposition of law. But as prescribed under Order VII Rule 11 of the Code, if, on the basis of averments made in the plaint, it appears that the suit is barred by any law, the Court is bound to reject the plaint instead of return of the plaint. Therefore, the said decision cannot have any application to a case of rejection of plaint on compliance of the provisions of Order VII Rule 11 of the Code. We should bear in mind that the provisions of Order VII Rule 10 is subject to the provisions of Order VII Rule 11 otherwise, the provision of Rule 11(d) becomes redundant if it is also covered by Rule 10.

18. In the case of P. Mahomed (supra), a Division Bench of this Court held that if it appears to a Small Causes Court that it has no jurisdiction to entertain the suit, it was bound to return the plaint for presentation to the Court where it ought to have filed. We also fail to appreciate how that decision can have any application to the facts of the case where the Court had not dismissed the suit on merit, nor had it arrived at any finding on merit on the claim of the appellant. Moreover, in view of the clear provision contained in Section 23 of the Provincial Small Causes Act, the Court is bound to return the plaint for presentation to the Court competent to decide title. The said decision is, therefore, inappropriate in the facts of the present case.

19. In the case of Smt. Shail Kumari (supra), the Court came to the conclusion that it had no jurisdiction over the subject matter of the suit; but, in spite of that, recorded a finding as regards right of possession. In such circumstances, the Court was of the view that the Court ought to have simply returned the plaint for presentation before appropriate forum. In the case before us, we have already pointed out that the case having fallen within the purview of Order VII Rule 11(d) of the Code of Civil Procedure, the Court merely rejected the plaint on the ground that the provision contained in the Act bars the jurisdiction of a Civil Court. We, thus, find that the said decision is equally inapplicable to the facts of the present case.

20. Similarly, in the case of Smt. Ganga Coelho (supra), the Court, on contested hearing, came to the conclusion that it had no jurisdiction to entertain the suit and in such a case, the Bombay High Court was of the view that only course open to the Court was to return the plaint for presentation before appropriate forum. We have already pointed out that this is not a case where at the stage of hearing, the Court had arrived at the finding that it had no jurisdiction; but is one, where on the basis of averments made in the plaint, the suit is barred by law for the time being in force and, as such, the Court rightly invoked the mandatory provision of Order VII Rule 11 and rejected the plaint. Therefore, the said decision is of no assistance to the appellant.

21. In the case of Governing Council of Kayastha Pathshala Prayag (supra), a suit in the nature of Section 92 of the Code of Civil Procedure was presented not before the principal Court of civil jurisdiction, but before a Civil Judge who had no jurisdiction to entertain such suit without taking leave of the Advocate General. In such a case, the defendants having raised the plea that the Civil Judge had no jurisdiction to entertain such a suit without taking leave of the Advocate General, the same was liable to be rejected. The learned Trial Judge accepted such plea. On appeal, the Division Bench of the Allahabad High Court held that the District Court being the appropriate Court, the Civil Judge had no jurisdiction to entertain the suit and, as such, it was a case of return of plaint under Order VII Rule 10 of the Code. In our view, the said case did not strictly come within the purview of Order VII Rule 11(d) of the Code of Civil Procedure because whether the leave of Advocate General was taken or not may not be available from the averments made in the plaint and at the same time, the District Court being the appropriate forum for such type of suit, the High Court rightly passed direction for return of plaint instead of rejection of the plaint.

22. Therefore, the decisions cited by Mr. Basu are of no avail to his client.

23. Apart from the aforesaid fact, since by the order impugned in this case, the plaintiff is not prejudicially affected in anyway, in view of the provisions contained in Section 99 of the Code of Civil Procedure, we do not find any reason to interfere with the order passed by the Trial Court.

24. We, thus, find that this appeal should be dismissed under Order XLI Rule 11 of the Code and we dismiss this appeal accordingly.

25. In view of dismissal of the appeal itself, the connected application for stay being CAN 7742 of 2007 has become infructuous and the same is disposed of accordingly.

26. Let a xerox certified copy of this order, if applied for, be supplied to the parties within a week from the date of making of such application on compliance with requisite formalities.

Appeal dismissed.