RUNGTA AND DAGA INVE... v. VITTHALRAO DHONDIBA ...

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1. This revision is fled under Section 115 of the Code of Civil Procedure against the order dated 1^stSeptember 2022 passed by the Civil Judge Junior Division, Aurangabad below Exhibit 13 in Special Civil Suit No. 12/2022, rejecting application fled by defendant No. 1 under Order VII Rule 11 of the Code of Civil Procedure.

2. Applicant is defendant No. 1 in Special Civil Suit No. 12/2022 which is fled for specifc performance of contract. The applicant/defendant No. 1-company fled application (Exhibit 13) before the Trial Court under Order VII Rule 11 of the Code of Civil Procedure for rejection of plaint against this defendant. It is contended therein that there is no privity of contract between plaintiffs and defendant No. 1 to the agreement dated 19^thOctober, 2013. It is also claimed that there is no cause of action disclosed against this defendant in the plaint. It is also contended in the application that there is no pleading in the plaint about defendant No. 1 - company passing any resolution in favour of any person, more particularly defendants No. 2 to 4, to sell the suit property and, in absence of such resolution, the property of the company cannot be transferred or any right could not be said to have been created. It is

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further claimed that plaintiffs admitted in plaint that defendant No. 1-company was under liquidation at the relevant time and therefore, plaintiffs could have approached to the offcial Liquidator for alleged transaction. On these contentions, rejection of plaint is sought by defendant No. 1.

3. The said application is opposed by plaintiffs with the contention that the same is fled by defendant No.1 in collusion with other defendants who are interested in not performing their part of the contract. It is further contended that the cause of action has been clearly spelt out in the plaint and the entire facts need to be considered in order to ascertain the cause of action against all defendants. With regard to issues raised by defendant No. 1, it is contended that the said issues cannot be considered at this stage, which would be subject matter of fnal hearing for its decision on recording of evidence.

4. Learned counsel for applicants submitted that from the reading of the plaint, it is clear that there is no privity of contract between plaintiffs and defendant No. 1 because admittedly, the agreement in question is executed by other defendants and not by

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defendant No. 1. he also submitted that since admittedly company was under liquidation at relevant time, no transaction in rspect of suit property could have been effected and this issue goes to root of the matter. He further submits that learned Trial Court has committed error in rejecting the application on the ground that plaint cannot be rejected in part. To support this contention he has placed reliance on judgment of Hon'ble Apex Court in the case of Church of Christ Charitable Trust and Educational Charitable Society represented by its Chairman vs. Ponniamman Educational Trust represented by its Chairperson / Managing Trustee, (2012) 8 SCC

706. By referring to this judgment, it is contended that rejection of plaint may not be allowed partly however, it can be entirely rejected against one of the defendants. He further placed reliance on the judgment of this Court in Civil Revision Application No. 116/2019 in the case of Chetana Shankar Manapure vs. Bandu s/o Tanaji Barapatre, wherein by following the judgment of Church of Christ Charitable Trust (supra), this Court has held that the subsequent judgments passed by the Hon'ble Apex Court without considering the above judgment need not be considered and that the judgment in the case of Church of Christ Charitable Trust (supra) holds the feld. In

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the said judgment, by applying the law laid down by the Hon'ble Apex Court, plaint was rejected against one of the defendants.

5. Learned counsel for respondents opposed the said submissions stating that the defence of the defendant cannot be considered for the purpose of deciding application under Order VII Rule 11 of the Code of Civil Procedure. According to him, there is specifc averment in the plaint that when the company was under liquidation, hundred percent share holders approached the plaintiffs for raising funds against which they agreed to sell the property. According to him, there is no bar for entering into agreement, which does not amount to transfer of property. He also contended that after liquidation was lifted, defendants have sought additional compensation for executing sale. According to him, the questions including as whether there was any resolution passed by defendant No. 1-company authorising the other defendants to execute the agreement can be decided only on leading evidence and not at this stage. Thus, according to him, there is no error committed by the Trial Court in rejecting the application for causing interference therein.

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6. Order VII Rule 11 of the Code of Civil Procedure provides for rejection of plaint only in the following cases :

11. Rejection of plaint.- The plaint shall be rejected in the following cases:—

(a) where it does not disclose a cause of action;

(b) where the relief claimed is undervalued, and the plaintiff, on being required by the court to correct the valuation within a time to be fxed by the court, fails to do so;

(c) where the relief claimed is properly valued, but the plaint is written upon paper insuffciently stamped, and the plaintiff, on being required by the court to supply the requisite stamp paper within a time to be fxed by the Court, fails to do so;

(d) where the suit appears from the statement in the plaint to be barred by any law;

(e) where it is not fled in duplicate;

(f) where the plaintiff fails comply with the provision of Rule 9.

Provided that the time fxed by the court for the correction of the valuation or supplying of the requisite stamp papers shall not be extended unless the court, for reasons to be recorded, is satisfed that the plaintiff was prevented by any cause of an exceptional nature from correcting the valuation or supplying the requisite stamp papers, as the case may be within the time fxed by the court and that refusal to extend such time would cause grave injustice to the plaintiff.

In the instant case, applicant is seeking rejection of plaint on the ground that the plaint does not disclose cause of action

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against defendant No. 1 and that the suit appears from the statement in the plaint to be barred by any law. The other contingencies have no application to the present case.

7. Aforestated provisions under Order VII Rule 11 of the Code of Civil Procedure empowers the Courts to summarily dismiss a suit at threshold, without recording evidence and conducting trial. The Court while exercising such power must ensure that the case is covered by at least one of grounds provided therein. Hon'ble Apex Court in the case of Liverpool and London S.P. and I Association Ltd. vs. M. V. sea Success I and Another, 2004(9) SCC 512, has clarifed that Courts, while dealing with such application must determine whether plaint discloses cause of action. The averment in plaint read in conjunction that documents relied upon be scrutinised. It is further held that while determining application for rejection of plaint, the Court should consider only plaint and not written statement or even application under Order VII Rule 11 of the Code of Civil Procedure. Whether plaint discloses a cause of action is essentially a question of fact and it must be found out from plain reading of plaint by treating said averments to be correct. The plaint must be considered as it stands, without addition or subtraction of words.

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8. Perusal of the pleadings in the plaint clearly indicate that there is averment to the effect that defendant No. 1 which is a private limited company, a juristic person, is owner of the suit property. It is further pleaded that at the relevant time, the said company was under liquidation and hence other defendants who were the only share holders of the said company entered into the agreement in question to sell the suit property to the plaintiffs. Perusal of the terms of agreement as disclosed in paragraph No. 5 of the plaint indicates that the agreement in question was for and on behalf of defendant No. 1. It is specifcally pleaded in the plaint that after revival of the company, notice was issued to the defendants calling upon them to execute the sale-deed pursuant to the agreement in question but defendants vide notice dated 8^thOctober, 2020, sought enhancement of the consideration to execute sale-deed. At this stage, the pleading in the plaint must be accepted as correct. The said pleading more than specifcally demonstrates that it is a specifc case of the plaintiffs that after revival of the company from liquidation, there is no denial of the liability by the defendants to execute the sale-deed pursuant to the agreement to sell. Thus it becomes a matter of evidence as to whether the other defendants had authority to execute agreement to sell in respect of defendant No. 1

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company or even it amounts to ratifcation by defendant No. 1. The pleading in respect of non denial of execution of agreement and demand for enhanced consideration is specifcally alleged against all defendants.

9. It is sought to be contended that since at the relevant time defendant No. 1 company was under liquidation, there could not have been any agreement in respect of the properties of the company without consent of the Liquidator. Order VII Rule 11(d) of the Code of Civil Procedure speaks about rejection of the plaint where the suit appears from the statement in the plaint to be barred by any law. It is pertinent to note that defendant No. 1 does not show that the suit itself being barred by any law. What is sought to be contended is that the agreement in question is not valid and therefore the plaintiffs would not be entitled to seek enforcement thereof. Bar of the suit by any law cannot be equated with not entitlement of plaintiffs to get the relief in suit. Defendant No.1 has not been able to show under which provisions of law the present suit is barred.

10. With regard to non-disclosure of cause of action, it is pertinent to note that the isolated statements in the plaint or even

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formal clause indicating cause of action per se do not constitute cause of action in the plaint. The cause of action is a bundle of facts which are narrated in the plaint. A bare perusal of the plaint herein indicates that the cause of action againt all defendants including defendant No. 1 has been clearly spelt out.

11. It is argued on behalf of defendant No. 1 that plaintiff has failed to make averments with regard to the resolution of the Board of Directors authorising the other defendants to execute the agreement to sell on behalf of the company. This is a defence of defendant No. 1 for challenge to the execution of the agreement in respect of defendant No. 1's property by its share holders. The Court need not consider defence for the purpose of decision on application under Order VII Rule 11 of the Code of Civil Procedure.

12. The defendant No. 1 is owner of suit property. The agreement in question is executed by all its share holders, apparently not for their individual cause. Thus, the defendant No. 1 is not only proper but necessary party to the suit. The learned Trial Court has not rejected the application under Order VII Rule 11 of the Code of Civil Procedure solely on the ground that the application cannot be

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rejected against one of the defendants but observations are made with regard to disclosure of cause of action against defendant No. 1. Since the application is not dismissed on the sole ground that it cannot be accepted against one of the defendants, the judgment cited in the case of Church of Christ Charitable Trust and Chetana Manapure (supra) has no application to the present case. As the said issue has no bearing on the out come of the present application, this Court is not inclined to record any fnding in that regard. On perusal of the plaint and application fled by defendant No. 1 under Order VII Rule 11 of the Code of Civil Procedure, this Court fnds no perversity in the fndings recorded by the learned Trial Court while rejecting the application.

13. One more aspect deserves consideration at this stage is that plaint and document of agreement to sell, suffciently demonstrates that at the relevant time when defendant No. 1 company was under liquidation, it is not the case where any personal transactions are entered into by other defendants. The transaction pertains to the property owned by defendant No. 1, Private Limited Company, executed by all its share holders. Unlike in case of Chetana Manapure (supra) where it was held by Trial Court that it

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was almost a practice of fraud on revision applicant and that agreement was null and void, in the instant case, no malafdes are seen much less any fraud being played by plaintiffs upon the defendant No. 1. On the contrary, there is reason to believe the submissions made by learned counsel for plaintiffs that in collusion with others defendant No. 1 has fled application for rejection of plaint, as it can be seen that application is fled through Madhusudan Daga, who is not only another defendant but is also signatory of the agreement to sell. At this stage, this Court does not fnd the suit malicious,vexatious or without merit.

14. In the result, application stands rejected. Cost in cause.

( R. M. JOSHI)

Judge

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