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SATYA POWER AND ISPAT LIMITED, v. Smt. Nidhi Singh Kshatri,

Chhattisgarh High Court

Aug 6, 2024

Judgment

CaseIQ

Smart Summary (Beta)

Factual and Procedural Background

The applicant, Satya Power And Ispat Limited, challenged the order of the learned Third Civil Judge Class-I, Bilaspur, which rejected an application under Order 7 Rule 11 (a)(c)(d) of the Civil Procedure Code (CPC). The underlying dispute arose from a civil suit filed by the plaintiff, Smt. Nidhi Singh Kshatri, seeking a declaration that a sale deed dated 12.07.2023 in favor of the applicant was null and void due to non-payment of consideration. The plaintiff alleged that although a cheque was handed over at the time of registration, it was dishonoured due to lack of confirmation from the defendant, and the consideration amount was never received. The plaintiff served a legal notice and subsequently filed suit for cancellation of the sale deed and permanent injunction. The defendant/applicant moved to dismiss the suit on the grounds that the consideration was either paid or tendered, the sale deed was validly executed, and the suit was not maintainable for non-payment of consideration. The trial court rejected the defendant's application, holding that the suit was properly valued, court fees were paid, and under Section 54 of the Transfer of Property Act, a sale deed without consideration is null and void. The applicant then filed the present petition challenging the trial court's order.

Legal Issues Presented

Whether a civil suit for cancellation of a registered sale deed is maintainable solely on the ground of non-payment of consideration.
Whether the application under Order 7 Rule 11 (a)(c)(d) of the CPC filed by the defendant/applicant for rejection of the plaint was rightly rejected by the trial court.
The applicability and interpretation of Section 54 of the Transfer of Property Act, 1882, in relation to the validity of the sale deed when consideration is not paid.

Arguments of the Parties

Applicant's Arguments

The defendant/applicant was ready and willing to pay the consideration amount and remains ready to do so.
The entire amount of consideration was transferred to the plaintiff’s bank account but was refunded.
The registered sale deed was executed strictly according to applicable rules and the title passed in favor of the defendant.
The civil suit for cancellation of the sale deed on the ground of non-payment of consideration is not maintainable.
Relied on the Supreme Court judgment in Dahiben Vs. Arvindbhai Kalyanji Bhanusali (Gajra) dead through legal representatives and others, 2020(7) SCC 366, which holds that non-payment of full sale consideration is not a ground for cancellation of sale deed.

Plaintiff's Arguments

No payment was made against the sale deed and thus the sale deed cannot be considered legally valid.
Possession of the property was not handed over to the defendant/applicant.
The suit is maintainable under Section 54 of the Transfer of Property Act.
The issue of payment cannot be decided as a preliminary issue since it requires evidence from both parties.
Supported by the Supreme Court judgment in Eldeo Housing and Industries Limited Vs. Ashok Vidyarthi and others, 2023 LiveLaw (SC) 1033, which states documents outside the plaint cannot be considered at the stage of Order 7 Rule 11 CPC application and merits cannot be examined at that stage.

State's Arguments

The State’s counsel submitted that there is a dispute between the plaintiff and defendant No.1.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Dahiben Vs. Arvindbhai Kalyanji Bhanusali (Gajra) dead through legal representatives and others, 2020(7) SCC 366	Non-payment of entire sale consideration is not a ground for cancellation of the sale deed; plaintiffs have other remedies for recovery of balance consideration.	The Court relied on this precedent to hold that the civil suit for cancellation of the sale deed on the ground of non-payment of consideration is not maintainable and the sale deed confers title immediately upon execution.
Eldeo Housing and Industries Limited Vs. Ashok Vidyarthi and others, 2023 LiveLaw (SC) 1033	Documents outside the plaint cannot be considered at the stage of Order 7 Rule 11 CPC application; merits of the controversy cannot be examined at this stage.	The Court applied this principle to reject the plaintiff’s reliance on documents outside the plaint and to affirm that the trial court erred in rejecting the defendant’s application without proper legal basis.

Court's Reasoning and Analysis

The Court examined the facts and pleadings, noting the plaintiff’s ownership of the disputed property and the execution of the sale deed in favor of the defendant with a stated consideration of Rs. 7,00,000/-. The cheque given as consideration was dishonoured due to lack of confirmation, and the plaintiff filed suit for cancellation of the sale deed. The defendant’s application under Order 7 Rule 11 CPC argued the suit was not maintainable as the consideration was either paid or tendered and that the sale deed was validly executed.

The Court analyzed the binding precedent set by the Supreme Court in Dahiben, which clarified that non-payment of the entire sale consideration cannot be a ground for cancellation of a sale deed, and the plaintiffs have alternative remedies to recover unpaid amounts. The Court further considered the interpretation of Section 54 of the Transfer of Property Act, which defines “sale” as a transfer of ownership for a price paid or promised, including part payment and part promise.

The Court also referred to the Supreme Court’s ruling in Eldeo Housing, which restricts consideration of documents outside the plaint at the stage of Order 7 Rule 11 application and precludes examining merits at that stage.

Applying these principles, the Court concluded that the trial court erred in rejecting the defendant’s application to dismiss the suit as the civil suit for cancellation of the sale deed solely on grounds of non-payment of consideration is not maintainable. The purchaser obtains title immediately upon execution of the sale deed under Section 54. The Court found no additional evidence from the plaintiff to justify cancellation.

Holding and Implications

The Court set aside the trial court’s order dated 15.02.2024 and allowed the application under Order 7 Rule 11 (a)(c)(d) of the CPC filed by the defendant/applicant, thereby rejecting the plaint.

The Court directed that the defendant is to pay the consideration amount to the plaintiff within 60 days along with interest at 6% per annum. The decision effectively upholds the validity of the registered sale deed despite the dispute over payment, limiting the remedy of cancellation of sale deed on non-payment grounds. No new precedent was established; rather, the Court reaffirmed existing Supreme Court jurisprudence on the matter. The suit is dismissed, and the parties are left to pursue alternate remedies for recovery of the consideration amount.

Show all summary ...

2024:CGHC:29244

AFR

HIGH COURT OF CHHATTISGARH AT BILASPUR

CR No. 65 of 2024

Satya Power And Ispat Limited, (Pan-Aahcs4472n), Through The Director Shikhar Agrawal S/o Ramavtar Agrawal, Aged About 40 Years, R/o Hansa Vihar Shrikant Marg, Bilaspur Tahsil And District Bilaspur Chhattisgarh.

... Applicant versus

1. Smt. Nidhi Singh Kshatri, W/o Manindra Singh, Aged About 38 Years Through The Power Of Attorney -Manindra Singh, Aged About 44 Years, S/o Shri Mahendra Singh, Akhada, Tilak Nagar, Tahsil And District Bilaspur Chhattisgarh. 495001

2. State Of Chhattisgarh, Through The Collector, District : Bilaspur, Chhattisgarh

... Respondents

For Applicant : Mr. Goutam Khetrapal, Advocate For Respondent

No.1

: Mr. Siddhant Tiwari, Advocate

For

State/respondent

No.2

: Mr. Satish Gupta, G.A.

(Hon'ble Shri Justice Rakesh Mohan Pandey) Order On Board

06/08/2024

1) The applicant has challenged the order passed by the learned Third Civil Judge Class-I, Bilaspur, District Bilaspur (C.G.) in Civil Suit No. 336-A/2023 dated 15.02.2024 whereby an application moved under Order 7 Rule 11(a)(c)(d) of the CPC was rejected.

2) The facts of the present case are that the plaintiff/non-applicant No.1 filed a Civil Suit for declaration to the effect that the sale deed executed

by her on 12.07.2023 in favour of the applicant/defendant No.1 in respect of the land bearing Survey Nos. 423/2 and 423/3 situated at Village-Gatuari, Patwari Circle No. 21, Tehsil and District-Bilaspur (C.G.) is null and void as the consideration was not paid. It is further stated that defendant No.1 agreed to purchase the land belonging to the plaintiff and at the time of registration of the sale deed, a cheque bearing No. 304548 payable at the State Bank of India dated 12.07.2023 was handed over. After registration of the sale deed, the cheque was presented before the Bank of Baroda, Branch Bilaspur (C.G.) and the same was dishonoured as confirmation from the client could not be received by the concerned branch of the Bank. The plaintiff served a legal notice upon defendant No.1 and thereafter filed a Civil Suit on 11.08.2023 to declare the sale deed dated 12.07.2023 null and void and for a permanent injunction.

3) The defendant No.1/applicant moved an application under Order 7 Rule 11 (a)(c)(d) of CPC on the ground that though a cheque was issued in favour of the plaintiff, in the absence of confirmation on the part of defendant No.1, it was dishonoured. It is further pleaded that later on, the entire amount of consideration was transferred to the bank account of the plaintiff but it was refunded. It is further pleaded that the sale deed cannot be declared null and void on the grounds of non- payment of consideration. It is argued that in the absence of a cause of action, the suit is not maintainable. It is also pleaded that the plaintiff herself is not ready to accept the consideration.

4) The application under Order 7 Rule 11 (a)(c)(d) of CPC was replied to by the plaintiff and its contents were denied. Learned Trial Court vide order dated 15.02.2024 rejected the application holding that the civil

suit was properly valued and proper Court Fees were affixed. The consideration is not paid to the plaintiff and according to the provisions of Section 54 of the Transfer of the Property Act, 1882, the sale deed without consideration is null and void.

5) Mr. Khetrapal, the learned counsel appearing for the applicant/defendant No.1 submitted that defendant No.1 was ready to make payment of consideration and he is still ready. He further submitted that the amount of consideration was transferred to the bank account of the plaintiff but the same was refunded to defendant No.1. He also submitted that the registered sale deed was executed strictly in accordance with the applicable Rules and title passed in favour of defendant No.1. He further argued that the civil suit for cancellation of sale deed on the ground of non-payment of consideration is not maintainable. In support of his submissions, he placed reliance on the judgment passed by the Hon'ble Supreme Court in the matter Dahiben Vs. Arvindbhai Kalyanji Bhanusali (Gajra) dead through legal representatives and others reported in 2020(7) SCC 366.

6) On the other hand, the learned counsel appearing for non-applicant No.1/plaintiff would oppose the submissions made by Mr. Khetrapal. Mr. Tiwari submitted that a single penny was not paid against the execution of the sale deed, therefore, it cannot be said that a legal sale deed was executed between the parties. He further argued that possession was also not handed over to defendant No.1 and according to Section 54 of the Transfer of the Property Act, the suit would be maintainable. He also argued that the issue involved in the present case cannot be decided as a preliminary issue as it requires evidence of both the parties, therefore, the learned Trial Court rightly rejected the

application moved by defendant No.1.

7) Mr. Gupta, the learned Government Advocate appearing for the State submitted that there is a dispute between the plaintiff and defendant No.1.

8) I have heard learned counsel appearing for the parties and perused the documents placed on the record.

9) From a perusal of the plaint, it is quite vivid that the plaintiff/non- applicant No. 1 namely, Smt. Nidhi Singh Khastri was the owner of Survey Nos. 423/2 & 423/3 admeasuring 0.2020 hectares and 0.0810 hectares situated at Village-Gatouri, Patwari Circle No.21, Tehsil and District Bilaspur (C.G.). She agreed to alienate her property to defendant No.1 in consideration of Rs.7,00,000/-. The sale deed was executed and registered on 12.07.2023 and on that date, cheque No. 304548 of the State Bank of India amounting to Rs. 7,00,000/- was handed over to the plaintiff by defendant No.1. The cheque was presented before the Bank of Baroda, Branch Bilaspur but it was returned in the absence of confirmation on the part of defendant No.1 and the plaintiff was informed in this regard on 14.07.2023. 10)A legal notice was served upon defendant No.1 and thereafter, a civil suit was filed on 11.08.2023. The plaintiff has sought relief with regard to the cancellation of the sale deed and for a permanent injunction on the ground that the suit property is still in her possession. 11)The application under Order 7 Rule 11 (a)(c)(d) of CPC was moved by defendant No.1 on 18.01.2024 on the ground that as no cause of action has arisen, the civil suit is not maintainable. It is also stated that on the grounds of non-payment of consideration, the suit is not maintainable. The application was replied to and later on, the learned

trial Court rejected the application. 12)The issue with regard to the dismissal of the civil suit only on the ground of non-payment of consideration is no more res integra. 13)The Hon'ble Supreme Court in the matter of Dahiben (supra) held that if the entire sale consideration is not paid, it cannot be a ground for cancellation of the sale deed. It is further held that the plaintiffs may have other remedies in law for recovery of the balance consideration. With regard to Section 54 of the Transfer of Property Act, it is held that

"sale" indicates transfer of ownership from one person to another including transfer of all rights and interest in the property. After the sale, the transferor cannot retain any part of the interest or right in the property. It is further held that the definition of 'Sale' includes the transfer of ownership for a "price paid or promised or part paid and part promised". Paras 29.7 and 29.9 which are relevant are as under:-

"29.7 Section 54 of the Transfer of Property Act, 1882 provides as under:

"54. 'Sale' defined.—'Sale' is a transfer of ownership in exchange for a price paid or promised or part-paid and part- promised."

The definition of "sale" indicates that there must be a transfer of ownership from one person to another i.e. transfer of all rights and interest in the property, which was possessed by the transferor to the transferee. The transferor cannot retain any part of the interest or right in the property, or else it would not be a sale. The definition further indicates that the transfer of ownership has to be made for a

"price paid or promised or part paid and part promised". Price thus constitutes an essential ingredient of the transaction of sale.

29.9 In view of the law laid down by this Court, even if the averments of the Plaintiffs are taken to be true, that the entire sale consideration had not in fact been paid, it could not be a ground for cancellation of the Sale Deed. The Plaintiffs may have other remedies in law for recovery of the balance consideration, but could not be granted the relief of cancellation of the registered Sale Deed. We find that the suit filed by the Plaintiffs is vexatious, meritless, and does not disclose a right to sue. The plaint is liable to be rejected under

Order VII Rule 11 (a)." 14)Learned counsel appearing for Non-applicant No.1/plaintiff has placed reliance on the judgment passed by the Hon'ble Supreme Court in the matter of Eldeo Housing and Industries Limited Vs. Ashok Vidyarthi and others reported in 2023 LiveLaw (SC) 1033 wherein it is held that the documents produced to reject a plaint cannot be considered while deciding the application under Order 7 Rule 11 (a)(c)

(d) of CPC. It is further held that no amount of evidence or merits of the controversy can be examined at that stage. Para 26 is reproduced herein below:-

"26.However, the fact remains that all the aforesaid documents, referred to by the respondent in support of his plea for rejection of the plaint, cannot be considered at this stage as these are not part of the record with the Court filed along with the plaint. This is the stand taken by the respondent-defendant in the application filed under Order VII Rule 11 C.P.C. As noticed above, no amount of evidence or merits of the controversy can be examined at the stage of decision of the application under Order VII Rule 11 C.P.C. Hence, in our view, the impugned order of the High Court passed in the Review Application deserves to be set aside. Ordered accordingly."

15) In the present case, there is only one dispute about whether the consideration was transferred to the plaintiff/seller or not. From a perusal of the plaint averments, the application moved under Order 7 Rule 11(a)(c)(d) of CPC and its reply, it can be gathered that the consideration was not passed to the seller/plaintiff. The civil suit was filed for cancellation of the sale deed only on the ground that the consideration was not paid to the plaintiff. As held by the Hon'ble Supreme Court, the civil suit would not be maintainable for cancellation of the sale deed only on the grounds of non-payment of consideration. The purchaser got the title of the property immediately after the execution of the sale deed according to the provisions of Section 54 of

the Transfer of the Property Act. The applicant has not produced any additional document to substantiate his submissions therefore the judgment relied on by the learned counsel for non-applicant No. 1 is of no help.

16)Taking into consideration the above-stated facts and the law laid down by the Hon'ble Supreme Court, in the opinion of this Court, the learned Court below committed an error of law in rejecting the application moved by defendant No.1 under Order 7 Rule 11 (a)(c)(d) of CPC, therefore, the order dated 15.02.2024 passed by the learned Third Civil Judge Class-I, Bilaspur, District-Bilaspur (C.G.) in Civil Suit No.336-A/2023 is hereby set aside and the application under Order 7 Rule 11 (a)(c)(d) of CPC moved by applicant/defendant No.1 is hereby allowed. Consequently, the plaint is rejected. As defendant No.1 is ready to make payment of consideration, it is directed that the amount of consideration shall be paid by defendant No.1 to the plaintiff within a period of 60 days along with interest @ 6% p.a.

17)With the aforesaid observation(s)/direction(s), the present petition is

disposed of.

Sd/-

(Rakesh Mohan Pandey)

JUDGE

Rekha