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Case Number

First Appeal No. 4676 of 2008

Advocates

Mr AC Gandhi for Appellant(s) : 1-2.
Mr Prasad N Bhatt for Defendant(s) : 1,
Nanavati Associates for Defendant(s) : 2,

Judges

Jayant Patel
Bankim. N. Mehta, JJ.

Acts

provisions of order xiv, rule 2 of the code of civil procedure. order xiv, rule 2(1)
Order VII Rule 11(d) of the Code of Civil Procedure.
provisions of order viii, rule 6a( 1) of the code
provisions of order xiv, rule 2(2) of the code
provisions of order 7, rule 11 (a) of the code
provisions of order 7. rule 1 l(a)
provisions of order vii, rule 11
provisions of order 7, rule 11(a)
provisions of order 7, rule 11
provisions of sub-rule (2),
Order 7, Rule 11, CPC."17.
Order 7, Rule 11, CPC,
rule 11 of the code
rule 11, clause (d)
7, rule 1 l(a)
7, rule 11 (a)
rule 6 a(1)
7, rule 11

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Smart Summary

Judicial Opinion Summary — Jayant Patel, J.

Factual and Procedural Background

This appeal arises from a judgment and order dated 03.04.2006 in which the trial Court dismissed the suit after hearing applications Exhs.19 and 23 under Order VII, Rule 11 of the Code of Civil Procedure (CPC).

The plaintiff instituted Special Civil Suit No. 23/04 in the Court of the Civil Judge (SD), Ahmedabad Rural, seeking:

declaration that sale deeds for land at Survey Nos. 436/1 and 436/2, village Gota, Taluka Dascroi, Ahmedabad are bogus and unauthorized and should be quashed and set aside;
cancellation of certain documents (referred to in paras 3 and 4 of the plaint) executed in favour of defendants 1 and 2;
a decree directing defendant No. 2 to hand over possession of the property to the plaintiff; and
an injunction restraining defendant No. 2 from transferring or alienating the property.

The plaintiff filed an interim injunction application (Exh.5). No ex parte injunction was granted; notice was issued on 04.02.2002. Both defendants appeared. The defendants filed applications (Exh.19 and Exh.23) under Order VII, Rule 11 seeking dismissal of the suit. They contended, among other things, that the plaintiff had executed a Power of Attorney (POA) in favour of defendant No.1, the sale deeds were executed under that POA, and the sale consideration had been credited to the plaintiff's account — facts the defendants said had been suppressed by the plaintiff.

The trial Judge heard the interim injunction application and the applications under Order VII, Rule 11, and found (inter alia) that the execution of the POA had been suppressed by the plaintiff, that a purported communication for cancellation of the POA was dated after execution of the sale deed, and that the sale consideration had been transferred into the plaintiff's account. The trial Judge refused interim relief and dismissed the suit under Order VII, Rule 11 by order dated 03.04.2006. The present appeal followed.

Legal Issues Presented

Whether the plaint discloses a cause of action such that the suit should be rejected under Order VII, Rule 11 of the Code of Civil Procedure.
Whether a defendant's counter-claim under Order VIII, Rule 6-A(1) can be allowed after the defendant has delivered his defence, in particular when the counter-claim is raised long after the written statement (here, after about four years) and whether such a counter-claim is barred by limitation.

Arguments of the Parties

Appellant (Plaintiff) — Primary Contentions

The plaint alleges misuse of a Power of Attorney by defendant No.1 and collusion between defendant No.1 and defendant No.2 to effect fraudulent transfers; the plaintiff sought reliefs on that basis.
Counsel for the appellant (Mr. Gandhi) argued that the sale had occurred at a "throwaway price" and that this indicated collusion and fraud; however, he was unable to point to specific averments in the plaint supporting that contention.
The appellant argued that the plaint could be amended and that evidence could be led to show mode and manner of fraud even if particulars were not presently in the plaint.
The appellant argued that a plaint should not be rejected under Order VII, Rule 11 save where the suit is barred by a statutory provision (this argument was made but the Court considered it in the context of the broader statutory scheme of Order VII, Rule 11).
With regard to the defendant No.2's belated counter-claim, the appellant/petitioner contended it was time-barred and contradicted earlier pleadings.

Respondents (Defendants) — Primary Contentions

Both defendants relied on the admitted execution of a Power of Attorney in favour of defendant No.1 and contended that the sale deeds were executed lawfully under that authority; they relied on Exhs.19 and 23 under Order VII, Rule 11 to seek dismissal.
They asserted that the plaintiff was the real brother of defendant No.1 and that the sale consideration had been transferred to the plaintiff's account — facts which, they said, were suppressed in the plaint.
Respondent No.2 (advancing a counter-claim) argued that Order VIII, Rule 6-A(1) permits a defendant to set up a counter-claim for a cause of action accruing before or after filing of the suit but before delivery of defence, and that the cause of action for his counter-claim had accrued before he delivered his written statement; therefore the counter-claim was not time-barred.
Respondent No.2 further argued that objections to the counter-claim involve questions of both law and fact and that the petitioner had not raised jurisdictional or specific statutory bars which would require preliminary disposal.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Maharaj Shri Manvendrasinhji R. Jadeja v. Rajmata Vijaykunverba Wd/o Maharaja Mahendra-sinhji, 1999 (1) GLR 261	Scope of Order VII, Rule 11: plaint must disclose a cause of action; court looks to averments in the plaint (and documents annexed) and may apply statutory provisions and case-law to those averments.	Used to explain that at the stage of an Order VII, Rule 11 challenge the Court examines the plaint's averments and may reject a cleverly drafted but illusory cause of action; framed the analytical approach applied to the plaint in this case.
ITC Ltd. v. Debts Recovery Appellate Tribunal, AIR 1998 SC 634	Principle that mere use of words like "fraud" does not of itself constitute a cause of action; clever drafting to create illusion of cause of action can be scrutinised under Order VII, Rule 11.	Cited to support the proposition that repetition of the words "fraud" or "collusion" without material particulars cannot sustain a cause of action; Court applied this reasoning to find the plaint deficient.
Azhar Hussain v. Rajiv Gandhi, AIR 1986 SC 1253	Order VII, Rule 11 powers may be exercised even after framing of issues; framing of issues does not preclude considering rejection of the plaint at any subsequent stage.	Relied upon to reject the contention that Order VII, Rule 11 could not be invoked after issues had been framed; supported the Court's authority to consider plaint-defect even at later stages.
Samar Singh v. Kedar Nath, AIR 1987 SC 1926	Followed Azhar Hussain on applicability of Order VII, Rule 11 after issues are framed.	Reinforced the proposition that rejection under Order VII, Rule 11 may occur after framing of issues.
Abdul Gafur & another v. State of Uttarakhand and others, (2008) 10 SCC 97 : AIR 2009 SC 413	Pleadings rule: plaint must contain material facts; court must consider averments in their entirety when assessing cause of action; cannot decide solely by looking at reliefs claimed.	Invoked to stress that the Court must have regard to the factual averments in the plaint (not just the reliefs) to decide whether a cause of action is disclosed; supported rejection where material particulars are missing.
T. Arivandandam (as referenced through Krishna Iyer, J.) — AIR 1977 SC 2421 (referenced)	Judicial caution against ritual repetition of allegations to create an illusion of cause of action; courts can unravel such drafting under Order VII, Rule 11.	Quoted in the ITC discussion and used as an underlying principle that mere allegations without particulars cannot sustain a plaint.
Ramesh Chand Ardawatiya v. Anil Panjwani, AIR 2003 SC 2508	Counter-claim principle: counter-claims should be pleaded in the written statement and the right to set up counter-claim runs with right of filing written statement.	Used when considering whether a late counter-claim could be permitted and to explain the relationship between written statement and counter-claim pleadings.
Rohit Singh & others v. State of Bihar, AIR 2007 SC 10	Although a counter-claim can be filed even after the written statement, it ordinarily cannot be raised after issues are framed and evidence is closed.	Relied upon to underline that a belated counter-claim after framing of issues and closure of evidence is generally impermissible.
Smt. Shanti Rani Das Dewanjee v. Dinesh Chandra Day, AIR 1997 SC 3985	Support for the proposition that cause of action for counter-claim should arise before the defendant has filed written statement (timing and accrual considerations).	Used by the respondents to support the argument that the cause of action for the counter-claim had accrued prior to filing written statement and so was maintainable.
Oriental Ceramic Products Pvt. Ltd. v. Calcutta Municipal Corporation, AIR 2000 Cal 17	Where no reason is given for failure to raise a counter-claim earlier (before issues or before close of plaintiff's evidence), belated counter-claim may be rejected to avoid prejudice to plaintiff.	Applied to stress that a belated counter-claim may be rejected if the defendant gives no reason for delay and the plaintiff would be prejudiced in defending the counter-claim.
Church of North India v. Lavajibhai Ratanjibhai, AIR 2005 SC 2544 (referenced)	Principle that averments disclosing cause of action and reliefs should be considered in their entirety when testing maintainability.	Quoted in support of the need to consider the plaint in entirety to determine if the cause of action is disclosed.

Court's Reasoning and Analysis

The Court proceeded in two related strands of analysis: (A) whether the plaint disclosed a cause of action under Order VII, Rule 11 CPC, and (B) the permissibility and maintainability of a belated counter-claim under Order VIII, Rule 6-A(1) CPC.

(A) Analysis under Order VII, Rule 11

The Court reiterated the settled legal principle that, when considering an application under Order VII, Rule 11, the Court must look to the averments in the plaint (and documents filed with it) to determine whether a cause of action is disclosed; defences are not to be considered at that stage (as explained in the authorities cited).
Applying those principles to the plaint, the Court noted that the plaint itself admitted the execution of a Power of Attorney by the plaintiff in favour of defendant No.1 and the execution of the sale deed by defendant No.1 acting as attorney.
The plaint alleged misuse of the POA and collusion/fraud between defendant No.1 and defendant No.2, but the Court found there were no material particulars in the plaint explaining how the alleged misuse, collusion or fraud occurred. The plaint repeatedly used words like "fraud" and "collusion" without stating the mode, manner, particulars, dates or items as required when pleadings rely on misrepresentation, fraud or breach of trust (Order VI, Rules 2 and 4 CPC).
The Court observed that the POA purportedly granted the power to sell the property; there was no pleading that the POA had been cancelled prior to the sale, nor was there a specific prayer seeking cancellation of the POA. Thus, unless the POA was pleaded as cancelled, the authority to sell would continue.
The Court rejected the appellant's contention that mere low sale consideration alone makes the sale collusive; counsel could not point to pleadings supporting that contention.
Because the plaint lacked the necessary material particulars to demonstrate a cause of action based on fraud, collusion or misuse of fiduciary capacity, the Court held the plaint did not disclose a cause of action for the reliefs sought and therefore Order VII, Rule 11 applied. The Court also noted that the plaintiff had not applied to amend the plaint prior to the Order VII, Rule 11 disposal; and at that stage, without pleadings, evidence cannot be permitted to supply the missing particulars.

(B) Analysis of the Counter-claim under Order VIII, Rule 6-A(1)

The Court set out the statutory text of Order VIII, Rule 6-A and related provisions (including Order VIII, Rule 6-B), and noted the rule permits a defendant to set up a counter-claim for a cause of action accruing to the defendant either before or after filing of the suit but before the defendant has delivered his defence or before the time for delivering defence expires.
The Court referred to precedents explaining that the right to set up a counter-claim ordinarily runs with the right to file a written statement and that a counter-claim is to be pleaded in the written statement; it also recognized the authority that, while a counter-claim can be filed after the written statement in some circumstances, it should not be permitted after issues are framed and evidence is closed (Rohit Singh and related cases).
In the present facts as pleaded, defendant No.2 filed his written statement on 17-6-2002, issues were framed, and after nearly four years (on 29-5-2006) defendant No.2 filed a counter-claim. The trial Court had rejected the appellant's application to reject that counter-claim as a preliminary issue, stating that the appellant did not raise jurisdictional grounds or a specific statutory bar; the appellate Court found that the trial Court's reasoning was cryptic and that it had not properly examined whether the counter-claim was barred by limitation or whether the defendant had justification for the belated filing.
The Court referred to authority (Oriental Ceramic) that a belated counter-claim may be rejected where no reason is given for delay and where allowing it would seriously prejudice the plaintiff. The Court held that the trial Court ought to have examined the objections (including limitation) more carefully instead of leaving the matter to be decided later in the trial without adequate justification.

Holding and Implications

Core Ruling: The Court held that the impugned order of the trial Court cannot be sustained in law and accordingly quashed the impugned order. In consequence, the Court stated: this application is allowed. The Court directed that there shall be no order as to costs.

Implications:

The immediate effect is that the trial Court's order dated 03.04.2006 (and the impugned related order) has been quashed by the Court in this opinion and the application before this Court has been allowed.
The Court's reasoning confirms and applies established principles governing Order VII, Rule 11 (that a plaint must disclose a cause of action and that mere repetition of words like "fraud" or "collusion" without particulars is insufficient) and the principles governing the timing and pleading of counter-claims under Order VIII, Rule 6-A.
No broader or novel precedent is announced beyond applying settled principles: the decision rests on the Court's application of existing statutory provisions and case-law to the facts and pleadings before it.

Disposition recorded in the opinion: "Application allowed." No order as to costs.

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Chandrakant Kantilal Jhaveri v. Madhuriben Gautambhai

Jayant Patel, J.:-

The present appeal arises against the judgment and order dated 03.04.2006 passed below applications Exhs.19 and 23 under order vii, rule 11 of the civil procedure code, whereby the Suit has been dismissed.

2. The short facts of the case appears to be that the plaintiff (for the sake of convenience, the parties shall be referred to as per their status in the plaint or in the present appeal) filed the suit being Special Civil Suit No. 23/04 in the Court of the Civil Judge (SD), Ahmedabad Rural for a declaration that the transaction of the Sale Deeds for the land at Survey Nos. 436/1 and 436/2 at village Gota, Taluka Dascroi, Ahmedabad as bogus and unauthorized and be quashed and set aside. It was also prayed that the decree be passed for cancellation of the documents referred to in paras 3 and 4 executed in favour of the defendants 1 and 2. The third prayer in the suit was that the defendant No. 2 be directed to hand over the possession of the property to plaintiff. The fourth prayer in the suit was that defendant No. 2 be restrained from transferring or alienating the property by sale, mortgage or gift in any manner.

3. The plaintiff in the said suit submitted an application Exh.5 for interim injunction to restrain the defendant No. 2 from transferring or alienating property by sale, mortgage, gift or otherwise until final disposal of the suit. The learned Judge did not grant any ex-parte injunction, but passed the order for issuing notice on 04.02.2002. The defendants appeared in the suit and thereafter, the defendant No.1 submitted an application for dismissal of the suit being Exh.19 under order vii, rule 11 of the civil procedure code. Similarly, the defendant No. 2 also submitted an application for dismissal of the suit being Exh.23 under Order VII, Rule 11. Both the defendants contended inter alia that the plaintiff is the real brother of defendant No. 1 and a Power of Attorney was also executed in favour of defendant No. 1 and based on such Power of Attorney, the Sale Deeds are executed. It was also stated that the consideration of the sale of the property is transferred in the account of the plaintiff and therefore, the said fact has been suppressed.

4. The learned Judge heard the application Exh.5 for interim injunction as well as the application Exhs.19 and 23 for dismissal of the suit under order vii, rule 11 of the civil procedure code and found that the fact of execution of the Power of Attorney upon which the reliance has been placed by the defendant has been suppressed by the plaintiff in the suit and the so-called communication for cancellation of the Power of Attorney is after execution of the Sale Deed. It was found by the learned Judge that the sale consideration is also transferred in the account of the plaintiff and, therefore, the learned Judge found that it is not a case for grant of any interim injunction. It was also found by the learned Judge thereafter that the Suit was not maintainable under order vii, rule 11 of the civil procedure code because there is no lawful valid cause for preferring the suit and ultimately, the injunction application was rejected and the suit was also dismissed under order vii, rule 11 of the civil procedure code vide order dated 03.04.2006. Under these circumstances, the present appeal before this Court.

5. It is by now well settled that for the purpose of considering the case under order vii, rule 11 of the civil procedure code, averments made in the plaint are only required to be taken into consideration and the defence may not be taken into consideration. This Court had an occasion to consider the said aspects in the case of Maharaj Shri Manvendrasinhji R. Jadeja v. Rajmata Vijaykunverba Wd/o Maharaja Mahendra-sinhji, reported at 1999 (1) GLR 261 at paras 14, 15 and 16, which reads as under:

"14. Having noticed brief summary of the plaint and prayers earlier, it would be relevant to refer to the provisions of order 7, rule 11(a) of the cpc and the scope thereof. order 7, rule 1 l(a) of the cpc provides that the plaint shall be rejected in case where it does not disclose a cause of action. order 7, rule ll(a) of the cpc is mandatory and if it is found that the plaint does not disclose a cause of action, the Court has no option but to reject the plaint. To find out whether a plaint discloses a cause of action or not, the Court has to look only to the averments made in the plaint. When a plaint is based on a document filed along with the plaint, it can, however, be considered to ascertain if plaint discloses any cause of action. Cause of action means every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to judgment. The words "cause of action" mean the whole bundle of material facts which are necessary for the plaintiff to prove in order to entitle him to the reliefs claimed in the suit. What is to be done by the Court at the stage of deciding as to whether the plaint discloses any cause of action or not is to Find out from the allegation of the plaint itself as to whether a bogus, wholly vexatious or frivolous litigation is sought to be initiated under the garb of ingenuous drafting of the plaint or not because it is the duty of the Court to guard against the mischief of a litigant misusing the process of court by entering into a false litigation merely for the purpose of harassing the other party and to nip in the bud the litigation which is sham and shabby in character. In order to find out whether the plaint discloses a cause of action or not, the averments made in the plaint and documents annexed thereto should be scrutinised meaningfully and if on such scrutiny it is found that the plaint does not disclose cause of action, it has got to be rejected in view of the provisions of order 7. rule 1 l(a) of the cpc. When it is said that the Court should take into consideration the averments made in the plaint for the purpose of deciding the question whether the averments made in the plaint disclose cause of action or not, it does not mean that the Court is precluded from applying the statutory provisions or case-law to the averments made in the plaint. If an assertion made in the plaint is contrary to statutory law or case-law, it cannot be considered as disclosing cause of action. In ITC Ltd., (AIR 1998 SC 634) (supra), bank had filed suit against the appellant and others and claimed relief for a sum of Rs. 52,59,639-66 ps. After the suit was filed, it was transferred to the Debt Recovery Tribunal. Before the Tribunal, an application was filed by the appellant under order 7, rule 11 of the cpc for rejecting the plaint, so far as appellant was concerned, on the ground that no valid cause of action had been shown against the appellant. That application was rejected by the Tribunal. Against the said order, an appeal was filed before the Debts Recovery Appellate Tribunal. The appeal was dismissed in limine. Thereupon a writ petition was filed by the appellant, which was dismissed holding that the question should be decided at the trial. Against that judgment, the appellant had filed an appeal before the Division Bench of the High Court, which was also dismissed. The matter was thereafter earned before the Supreme Court. After taking into consideration the decided cases on the point whether there was fraudulent movement of goods under which letter of credit was obtained which in turn entitled the bank to file the suit, the Supreme Court held that that point was already decided by decision of the Supreme Court in U.P. Co-operative Federation's case and, therefore, the allegation of non-supply of goods by the sellers to the buyers did not by itself amount, in law, to a plea of "fraud" as understood in this branch of the law and hence by merely characterising alleged non-movement of goods as "fraud", the bank was not entitled to claim that there was a cause of action based on fraud or misrepresentation. While allowing the appeal, what is emphasized by the Supreme Court is that the question 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, R. 11 of the CPC has to be decided with reference to averments made in the plaint and clever drafting creating illusions of cause of action are not permitted in law and a clear right to sue should be shown in the plaint. In view of this decision of the Supreme Court, it is evident that if something purely illusory has been stated with a view to get out of order 7, rule 11 of the cpc by resorting to clever drafting, it cannot be said that the plaint discloses a cause of action and if a clear right to sue is not shown in the plaint, it is liable to be rejected.

15. In the light of scope of order 7, rule 1 l(a) of the cpc, we would now proceed to examine different submissions made on behalf of the appellant. The submission that the plaint was presented on December 26,1978, whereas issues for determination were framed by the learned Judge on July 21,1981 and therefore the application filed by the respondent under order 7, rule 11(a) of the cpc on June 26, 1996 should not have been entertained at such a long distance of time, has no substance. As noted earlier, the provisions of order 7, rule 11 (a) of the code of civil procedure are mandatory in nature. It is the duty of the Court to reject the plaint which does not disclose cause of action. If a plaint can be rejected at threshold of the proceedings, we do not see any reason as to why it cannot be rejected at any subsequent stage of the proceedings. Even if after framing of issues, the basic defect in the plaint persists, namely, absence of cause of action, it is always open to the contesting defendants to insist that the plaint be rejected under order 7, r.11 of the cpc and the Court would be acting within its jurisdiction in considering such a plea. order 7, rule 11 of the cpc does not place any restriction or limitation on the exercise of the court's power. It does not either expressly or by necessary implication provide that power under order 7, rule 11 of the cpc should be exercised at a particular stage only. In the view we are taking, we are fortified by the judgment of the Supreme Court rendered in the case of ITC Ltd., (AIR 1998 SC 634) (supra). Therein, the suit was filed by the Bank in the year 1985. In 1995, it was transferred to Debt Recovery Tribunal and thereafter an application was filed by the appellant under the provisions of order 7, rule 11 of the cpc for rejection of the plaint as not disclosing any cause of action against the appellant. The application filed by the appellant was rejected not only by the Tribunal and Appellate Tri-bunal, but also by the High Court. When the matter reached before the Supreme Court in the year 1997, it was contended that the power under order 7, rule 11 of the cpc should not be exercised after such a long lapse of time, more particularly when issues were framed. That plea has been negatived by the Supreme Court in following terms:-

"13. We may state that in the context of Order 7, rule 11, CPC, a contention that once issues have been framed, the matter has necessarily to go to trial has been clearly rejected by this Court in Azhar Hussain v. Rajiv Gandhi, (AIR 1986 SC 1253) (SCC p.324) as follows: (SCC para 12): (Para 12 of AIR)

"In substance, the argument is that the court must proceed with the trial, record the evidence, and only after the trial... is concluded that the powers under the Code of Civil Procedure for dealing appropriately with the defective petition which does not disclose cause of action should be exercised. With respect to the learned counsel, it is an argument which is difficult to comprehend. The whole purpose of conferment of such powers is to ensure that a litigation which is meaningless and bound to prove abortive should not be permitted to occupy the time of the court..."

The above said judgment which related to an election petition is clearly applicable to suits also and was followed in Samar Singh v. Kedar Nath, (AIR 1987 SC 1926). We, therefore, hold that the fact that issues have been framed in the suit cannot come in the way of consideration of this application filed by the appellant under Order 7, rule 11, CPC."

17. In view of settled legal position, plea that powers under order 7, rule 11 (a) of the cpc should not have been exercised after framing of issue cannot be upheld and is hereby rejected."

(Emphasis supplied)

6. The aforesaid shows that if it is found that the plaint does not disclose the cause of action, the Court has no option but to reject the plaint. But for deciding such aspects of cause of action, the Court should take into consideration the averments made in the plaint for the purpose of deciding the question as to whether the averment made in the plaint discloses the cause of action or not and while doing so, it cannot be said that the Court is precluded from applying the statutory provisions or case law to the averments made in the plaint. If the assertion made in the plaint is contrary to the statutory law or case law, it cannot be considered as the valid cause of action.

7. The examination of ,the facts of the present case as averred by the plaintiff in the plaint shows that the execution of the Power of Attorney by the plaintiff in favour of defendant No.1 has been admitted. The execution .of the Sale Deed by defendant No.1 in the .capacity as Power of Attorney of plaintiff is' also admitted. The basis of the suit is that there is misuse of the fewer of Attorney and the transactions are entered into between the defendant No.1 in favour of defendant No, 2 in collusion and are fraudulent. No material statement of fact are stated in the plaint as to how such transactions are entered into in collusion and are fraudulent transactions. the pertinent, aspect is mat the power of Attorney which, is referred to by the plaintiff does expressly provide for power to sell the property. Under these circumstances, unless the Power of Attorney is cancelled, the authority under the Power of Attorney would continue. It is not the case of the plain tiff that prior to the execution of the Sale Deed the Power of Attorney was cancelled nor there is any prayer in the seat for declaration that the Power of Attorney be declared as cancelled. There is no averment whatsoever about the details as to how the transactions have taken place in collusion between the defendant No.1 and defendant No. 2. No details are stated as to how the defendant No.1 has misused the Power of Attorney of the plaintiff. One ground stated in the plaint is that the intimation was not given by the defendant No. 1 to the plaintiff, but thereby, it cannot be said that any collusion or fraud is played since it is a matter between the plaintiff in the capacity as principal and the defendant No. 1 as attorney.

8. Under these circumstances, if there is no details whatsoever for any alleged fraud or collusion by the defendants, it can be said that the provisions of order vii, rule 11 of the civil procedure code would apply. The pertinent aspect is that if the averments stated in the plaint is considered as it, it does not disclose any cause of action for the prayers made in the suit.

9. Mr. Gandhi, learned counsel appearing for the appellant attempted to contend that as the property has been sold away at a very throwaway price by the Power of Attorney holder, i.e. defendant No. 1 in favour of defendant No. 2, the transaction is in collusion and fraudulent. However, Mr. Gandhi, learned counsel for the appellant has not been able to show us any averment in the plaint in support of the said contention. Further, merely because the quantum of consideration is less per se would not result into a ground for setting aside of the sale.

10. Apart from the above, there are no prayers in the plaint for declaration for cancellation of the Power of Attorney nor there is any averment in the plaint that the attorney has misused the fiduciary capacity by giving the material particulars of the alleged misuse.

11. It was contended by the learned counsel appearing for the appellant that the plaint could be amended and even in absence of the amendment in the plaint, the evidence could be led for showing the mode and manner of fraud by giving material particulars.

12. We are afraid such can be considered when the matter is at the stage of order vii, rule 11 of the civil procedure code. It is not the case of the plaintiff that any application for amendment was made and that was rejected by the Trial Court. Further, in absence of any pleadings, there would not be any issue over which the parties may lead the evidence. At this stage, we may refer to the provisions of the order vi, rules 2 and 4:

"2. Pleading to state material facts and not evidence -

(1) Every pleading shall contain, and contain only a statement in a concise form of the material facts on which the party pleading relies for his claim or defence as the case may be, but not the evidence by which they are to be proved.

(2) Every pleading shall, when necessary, be divided into paragraphs, numbered consecutively, each allegation being, so far as is convenient, contained in a separate paragraph.

(3) Dates, sums and numbers shall be expressed in a pleading in figures as well as in words."

"4. Particulars to be given where necessary -

In all cases in which the party pleading relies on any misrepresentation, fraud, breach of trust, wilful default, or undue influence, and in all other cases in which particulars may be necessary beyond such as are exemplified in the forms aforesaid, particulars (with dates and items, if necessary) shall be stated in the pleading."

13. The aforesaid shows that as per rule 2 of order vi of civil procedure code, the pleading has to contain a statement in a concise form of material facts on which the party relies for his claim or defence. But, it may not be evidence, which is to be proved. Rule 4 provides that whenever the pleading is for misrepresentation, fraud, breach of trust, willful default or undue influence, the particulars shall be stated in the pleadings. Neither exist in the present case for any material facts or particulars for the alleged collusion or fraud for which the prayers have been made in the plaint and everywhere the word fraud and collusion is used without any details or the mode or manner or material particular of such so-called fraud or collusion.

14. In order to further consider the scope of judicial scrutiny while exercising the power under order vii, rule 11 of the code of civil procedure, the reference to the decision of the Apex Court in the case of Abdul Gafur & another v. State of Uttarakhand and others, reported in (2008) 10 SCC 97 : (AIR 2009 SC 413) would be relevant. In the said decision, at para 19, it was observed by the Apex Court as under: (Para 16 of AIR)

"19. It is trite that the rule of pleadings postulate that a plaint must contain material facts. When the plaint read as a whole does not disclose material facts giving rise to a cause of action which can be entertained by a civil court, it may be rejected in terms of order 7, rule 11 of the code. Similarly, a plea of bar to jurisdiction of a civil court has to be considered having regard to the contentions raised in the plaint. For the said purpose, averments disclosing cause of action and the reliefs sought for therein must be considered in their entirety and the court would not be justified in determining the question, one way or the other, only having regard to the reliefs claimed dehors the factual averments made in the plaint. (See: Church of North India v. Lavajibhai Ratanji-bhai (AIR 2005 SC 2544)

15. At this stage, we may refer to the decision of the Apex Court in the case of "I.T.C. Limited v. Debts Recovery Appellate Tribunal" reported at AIR 1998 SC 634 and more particularly the observations made by the Apex Court at para 27, which reads as under:

"27. As stated above, non-movement of goods by the seller could be due to a variety of tenable or untenable reasons, the seller may be in breach of the contract but that by itself does not permit a plaintiff to use the word 'fraud' in the plaint and get over any objections that may be raised by way of filing an application under Order 7. Rule 11. CPC. As pointed out by Krishna Iyer, J. in T. Arivandandam's case (AIR 1977 SC 2421), the ritual of repeating a word or creation of an illusion in the plaint can certainly be unravelled and exposed by the Court while dealing with an application under order 7, rule 1 l(a). Inasmuch as the mere allegation of drawal of monies without movement of goods does not amount to a cause of action based on 'fraud', the Bank cannot take shelter under the words 'fraud' or 'misrepresentation' used in the plaint." We find that here also, except again and again using the word "collusion" and "fraud" in the plaint, no details have been given nor it is demonstrated in the manner in which any prejudice in law by breach of any rights in law has been caused resulting into valid cause of action.

ISA. It was submitted by the learned counsel for the appellant Mr. Gandhi that the plaint can be rejected under order vii, rule 11 of the civil procedure code only when the suit is barred by any statutory provisions.

16. It is true that the same is one of the requirements as provided under order vii, rule 11, clause (d) of the civil procedure code, but thereby it cannot be said that the suit if does not disclose the cause of action, order vii, rule 11 of the civil procedure code will have no applicability and the reason being that the clause expressly provides for disclosure of the cause of action.

17. In view of the above, we find that when the plaint does not disclose any valid cause of action for the relief prayed in the suit) plaint, no useful purpose would be served in entertaining the contention that the Trial Court did not consider the matter in detail Referring to the admitted facts of the case, learned counsel would explain that in his written statements, the defendant No. 2 did not choose to raise any counter claim. Instead, after four years during which period the defence of the defendants was closed and the proceedings in the suit had advanced by the trial Court framing the issues on the basis of the pleadings available on record, the defendant No. 2 has raised a counter claim. Learned counsel adds that since the defendant No. 2 had already submitted his defence, the provisions under order viii, rule 6a(1) of the code of civil procedure would debar him from filing his counter claim in the suit.

In support of his arguments, learned counsel would refer to and rely upon a judgment of the Supreme Court in the case of Ramesh Chand Ardawatiya v. Anil Panjwani, AIR 2003 SC 2508. Reliance has also been placed on another judgment of the Supreme Court in the case of Rohit Singh & others v. State of Bihar, AIR 2007 SC 10.

9. Per contra, the stand taken by the Respondent No. 2, who is the contesting respondent in this writ application, is that the petitioner's plea that the counter-claim advanced by the Respondent No. 2 is time barred, is misconceived. Referring to the provisions of order viii, rule 6a( 1) of the code of civil procedure, learned counsel for the Respondent No. 2 would argue that the defendant in the suit, in addition to his right of pleading, a set off under Rule 6, set up by way of counter claim against the claim of the plaintiff, any right or claim in respect of a cause of action accruing to the defendant against the plaintiff either before or after filing of the suit but before the defendant has delivered his defence or before the time limited for delivering his defence has expired, whether such counter claim is in the nature of claim for damages or not. Learned counsel explains that the cause of action for setting up the counter claim had accrued to the defendant/Respondent No. 2 even prior to the institution of the suit and does continue. The time prescribed in the provisions of order viii. rule 6a relates to accrual of the cause of action for instituting the counter claim. Learned counsel explains further that the essential requirement is that the cause of action for filing the counter claim should arise at least before the defendant had filed his written statement.

In support of his argument, learned counsel relies upon a judgment of the Supreme Court in the case of Smt. Shanti Rani Das Dewanjee v. Dinesh Chandra Day reported in AIR 1997 SC 3985.

10. Referring to the petitioner's ground that the counter claim cannot be allowed to be raised after framing of issues, learned counsel for the respondents would refer to the provisions of order xiv, rule 2(2) of the code of civil procedure, in his attempt to explain that under the aforesaid provisions, the party raising objections has to indicate that either the Court does not have jurisdiction or that the suit is barred under the provisions of law. Mere assertions that the averments contained in the counterclaim are contradictory to the statements contained in the written statement, cannot be taken as a tenable ground of objection.

11. From the rival submissions of the counsel for the parties, it appears that the plaintiff/petitioner had entered into two separate agreements for the same house. One with the defendant No.1/Respondent No. 1 and the other with the defendant No. 2/Respondent No.2.

The contradictions as the plaintiff/petitioner would want to point out in the pleadings of the defendant No. 2 is that whereas in the written statement the defendant No. 2 had agreed to execute the sale deed in favour of the plaintiff in respect of the house property, in the counter claim the defendant No. 2 has purportedly resiled from his earlier commitment of executing the sale deed and has sought to dispossess the plaintiff from the suit property.

12. On perusal of the impugned order of the Court below, it appears that the plaintiff's prayer for rejecting the counter claim set up by the defendant No. 2 and for deciding the issue as a preliminary issue, has been rejected on the ground that the objections raised by the petitioner involves both questions of law and facts and that the plaintiff has not raised the question of maintainability on the ground of jurisdiction or on the ground that the counter claim of the defendant is barred by any specific provision of law and therefore there was no necessity to decide upon the maintainability of the counter claim as a preliminary issue. The trial Court has however left the issue to be decided at the time of deciding the other issues.

13. The question which revolves around the controversy raised by the parties are :-

(i) Whether the counter claim of the defendant No. 2 under order viii, rule 6 a(1) can be allowed after the defendant No. 2 had delivered his defence?

(ii) Whether the counter claim of the defendant No. 2 can be allowed after expiry of about four years from the date of filing of his written statement when such claim is allegedly barred by limitation ?

14. To reiterate, the facts admitted are that the defendant No. 2, after filing his appearance, had submitted his written statement on 17-6-2002 and thereafter the trial Court had framed the issues and proceeded with the trial by allowing the plaintiff to lead his evidence.

After almost four years i.e. on 29-5-2006, the defendant No. 2 raised the counter claim by filing his application under the provisions of order viii, rule 6a(1) of the code of civil procedure.

The pleadings of the defendant No. 2 as originally declared in his written statement, appear to be contradictory to the counter claim set up by him.

It may be mentioned here that in the present writ application the operation of the impugned order of the trial Court dated 13-4-2007 has been stayed. However, the suit had proceeded and the defence evidence was also closed on 30-9-2009. The defendant No. 2 was however not allowed by the trial Court to adduce evidence in support of his counter claim.

15. order viii, rule 6a and 6b of the code of civil procedure reads as follows :-

6-A. Counter-claim by defendant.- (1) A defendant in a suit may, in addition to his right of pleading a set-off under Rule 6, setup, by way of counter- claim against the claim of the plaintiff, any right or claim in respect of a cause of action accruing to the defendant against the plaintiff either before or after the filing of the suit but before the defendant has delivered his defence or before the time limited for delivering his defence has expired, whether such counterclaim is in the nature of a claim for damages or not.

Provided that such counter-claim shall not exceed the pecuniary limits of the jurisdiction of the Court.

(2) Such counter- claim shall have the same effect as a cross- suit so as to enable the Court to pronounce a final judgment in the same suit, both on the original claim and on the counter-claim.

(3) The plaintiff shall be at liberty to file a written statement in answer to the counterclaim of the defendant within such period as may be fixed by the Court.

(4) The counter- claim shall be treated as a plaint and governed by the rules applicable to plaints.

6-B. Counter-claim to be stated.- Where any defendant seeks to rely upon any ground as supporting a right of counter-claim, he shall, in his written statement, state specifically that he does so by way of counter-claim.

16. It would be manifest from a reading of the above provisions of law that order viii, rule 6a of the code of civil procedure provides that the defendant in a suit may. in addition to his right of pleading a set off under Rule 6, set up by way of counter claim against the claim of the plaintiff, any right or claim in respect of a cause of action accruing to the defendant against the plaintiff either before or after filing of the suit but before the defendant has delivered his defence or before the time limited for delivering his defence has expired. (Emphasis supplied)

In the case of Ramesh Chand Ardawatiya (supra) the Supreme Court has explained that the pleading by way of counter claim runs with the right of filing a written statement and that such right to set up a counter claim is in addition to a right of pleading set off. A set off or counter claim has therefore to be pleaded in the written statement.

In the case of Rohit Singh (supra), the Supreme Court has explained that a counter claim, no doubt, could be filed even after the written statement is filed, but that does not mean that a counter claim can be raised after issues are framed and the evidence is closed.

17. As it appears from the averments contained in the petition under order viii, rule 6a, the defendant No. 2 has set up the counter claim for restoration of possession of the suit property on the ground that the plaintiff had committed breach of contract/agreement by failing to pay the balance of the consideration amount. The objections of the plaintiff/petitioner in this context was that the counter claim based on the purported breach of agreement, was time barred under the law of limitation.

18. The powers of the trial Court to pronounce judgment on the issues framed is laid down under the provisions of order xiv, rule 2 of the code of civil procedure. order xiv, rule 2(1) and (2) of the code of civil procedure, in particular, reads as under :-

2. Court to pronounce judgment on all issues.- (1) Notwithstanding that a case may be disposed of on a preliminary issue, the Court shall, subject to the provisions of sub-rule (2), pronounce judgment on all issues.

(2) Where issues both of law and of fact arise in the same suit, and the Court is of opinion that the case or any part thereof may be disposed of on an issue of law only, it may try that issue first if that issue relates to-

(a) the jurisdiction of the Court, or

(b) a bar to the suit created by any law for the time being in force, and for that purpose may, if it thinks fit, postpone the settlement of the other issues until after that issue has been determined, and may deal with the suit in accordance with the decision on that issue.

19. As observed from the facts pleaded, the plaintiff in his objections to the counter claim and his prayer for deciding the issue of maintainability of the counter claim of the defendant No. 2 as a preliminary issue, had pleaded that the counter claim is barred by limitation under the provisions of limitation act and that the pleadings in the counter claim are totally contradictory to the pleadings of the defendant in the written statement. It appears that the trial Court has not discussed the plaintiff's objections in proper perspective and has rejected his claim by a cryptic statement that the plaintiff has not raised the "ground of jurisdiction or that the counter claim is barred by specific provisions of law".

The trial Court ought to have examined the plaintiff's objections in the light of the ground as to whether the counter claim is barred by limitation or not, nor has it examined the issue as to whether, the provisions of law and the facts and circumstances of the case, the defendant could set up the belated counter claim.

20. In the case of Oriental Ceramic Products Pvt. Ltd. v. Calcutta Municipal Corporation, AIR 2000 Cal 17, a Bench of the Kolkata High Court has held that where no reason has been given as to why the defendants did not file counter claim at the time of filing of written statement or before settling of issues or before closing of evidence of plaintiff, a counter claim is liable to be rejected since the plaintiff would be seriously prejudiced in defending the counter claim if the same is admitted at such belated stage.

21. As observed in the same judgment, since the counter claim is to be treated as an independent plaint, the question whether it is barred by limitation, undoubtedly falls within the jurisdiction of the Court for determination at the stage when it is filed and if on the basis of the submissions made in such a plaint the claim appears to be barred by law of limitation, it would at once be liable for rejection under Order VII Rule 11(d) of the Code of Civil Procedure.

22. In the light of the above facts and circumstances and the discussions made, I am satisfied that the impugned order of the trial Court cannot be sustained in law and therefore the same is hereby quashed. In the result, this application is allowed. However, in the facts and circumstances of the case, there shall be no order as to cost.

Application allowed.

7, rule 11

Chandrakant Kantilal Jhaveri v. Madhuriben Gautambhai

Judicial Opinion Summary — Jayant Patel, J.

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Appellant (Plaintiff) — Primary Contentions

Respondents (Defendants) — Primary Contentions

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Chandrakant Kantilal Jhaveri v. Madhuriben Gautambhai

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