HIGH COURT OF JUDICATURE AT ALLAHABAD AFR Reserved Case :- SECOND APPEAL No. - 49 of 2013 Appellant :- Raj Kumar Respondent :- M/S Modi Spinning And Weaving Company Ltd. And Another Counsel for Appellant :- Amit Saxena Counsel for Respondent :- Madan Mohan,Kartikeya Saran,Rakesh Pandey,Shailesh Upadhyay,Siddharth Srivastava Hon'ble Ashwani Kumar Mishra,J.
1.Plaintiff-appellant has filed the present appeal challenging the judgment and decree dated 30th January, 2012 passed by the trial court dismissing the Original Suit No.1396 of 2011, as well as the judgment and order dated 6.10.2012 passed by the Additional District Judge, Ghaziabad, rejecting his Civil Appeal No.81 of 2012.
2.Respondents in the present appeal have already appeared and learned counsel for the parties submit that the present appeal be finally decided on the substantial question nos. A, E, F & G framed in the present appeal, which are reproduced:-
"A. Whether the courts below have committed a manifest error of law in rejecting the suit of the plaintiff under Order VII Rule 11(d) C.P.C. on the basis of the averments made in the written statement ?
E. Whether the courts below have committed a manifest procedural error in dismissing the suit of plaintiff under Order VII Rule 11(d) C.P.C. as barred by section 26 of The Sick Industrial Companies (Special Provisions) Act, 1985 rather than framing an issue of law and deciding the same as a preliminary issue ?
F. Whether the courts below in ignoring to consider that the issue of legal bar to the suit raised by the defendant in his written statement can be considered and decided only after relevant evidence is adduced by either side and thus have committed an error of law in dismissing the suit under Order VII Rule 11 (d) C.P.C. ?
G. Whether the courts below have erred in law in dismissing the suit of the plaintiff in reading the documents filed by the defendants, which had yet not been exhibited and as such were inadmissible in evidence ?"
3.In view of the prayer made by learned counsel for the parties, the appeal has been heard on the substantial questions, and is being decided finally by this judgment.
4.Plaintiff-appellant has filed Original Suit No.1396 of 2011 for permanent injunction restraining the defendants-respondents as well as their agents from interfering with the plaintiff's possession over the disputed house situated upon 81 Sq. yard land bearing House No.B-94, First Floor, Satish Park, Modi Nagar, District Ghaziabad. A further prayer has been made that the defendants and their agents be restrained from interfering with the passage available to the plaintiff from the lawn on the northern side, and from transferring the same to anyone else. Suit has been filed against the respondent no.1 company as well as respondent no.2, who is occupying the ground floor of the house in which the plaintiff is residing on the first floor.
5.Plaintiff alleges that defendant no.1 is a registered company, wherein he had been working from 1972 to 1995 in its 'D' unit, which is lying closed since 1997, and that he has not been paid his funds, gratuity and other service benefits, nor the accounts have been settled. It is stated that in 1997, the plaintiff had made an application for allotment of a residential house, upon which first floor of the House No. B-94 had been allotted to him on payment of monthly rent of Rs.600/- per month, and that he is peacefully continuing to be in its possession ever since then, whereas defendant no.2 is residing on the ground floor of the same premises. It is asserted that the main entrance of defendant no.2 is on the southern side after which there exists a lawn, whereas the plaintiff uses his door on the northern side, on which side his sewer is also laid, and there exists a lawn as well. As per the plaint averments, the plaintiff had accepted an offer to purchase first floor of the house alongwith lawn on the northern side and Garage no.12, and an advance of a sum of Rs.10,000/- was also paid, and the plaintiff was also called in the office of the defendant company in this regard. In para 7 of the plaint, it is stated that officers of the company have informed the plaintiff that there are some legal hindrances in execution of the sale deed, which shall be removed and thereafter, the property would be sold to him. It has been stated that defendants are trying to forcibly dispossess the plaintiff from the house in his possession, and therefore, suit has been filed seeking injunction.
6.In the suit, a written statement has been filed on behalf of both the defendants. The defendant company in its written statement has stated that the company has already been declared a sick unit under the provisions of The Sick Industrial Companies (Special Provisions) Act, 1985, and a scheme has been formulated for its revival by the Board of Industrial Finance and Reconstruction, which has been approved by the Delhi High Court in Petition No. 7424 of 2007. It has been stated that dues of the workers are required to be paid as per the scheme, and by virtue of the provisions of Sections 26 and 32 of the Act of 1985, the suit itself was not maintainable. It has been stated that the sum of Rs.10,000/-, deposited by the plaintiff, was never encashed, and the scheme, under which the plaintiff had applied for purchase of house, has already come to an end. The company denied that plaintiff was its employee and his status has been shown merely as that of a licensee, who has got no right to seek the relief claimed in the suit, which was alleged to be barred under Sections 34, 38 and 41 of the Specific Relief Act. It has also been stated that no cause of action has arisen for filing of the suit. Defendant no.2 has also adopted a similar stand in his written statement, and it has been stated that once the sanctioned scheme under the Act of 1985 is in existence then no right can be claimed over it by the licensee and the suit is barred.
7.It appears that after the written statement had been filed, an application came to be moved under Order VII Rule 11 read with Section 151 of CPC, 1908 on behalf of defendants, stating that defendant company is a sick company under the Act of 1985, and the rehabilitation scheme was already sanctioned by the Delhi High Court, and that the plaintiff has never been an employee of the company, and the suit itself is barred under Sections 36 and 32. It was also stated that the suit is malicious, frivolous, vexatious and amounts to an abuse of the process of the court and deserved to be dismissed with heavy costs. A reply to this application was filed by the plaintiff reiterating his stand that he had been employed in the company from 1972 to 1995, and that the copy of the rehabilitation scheme has not been placed on record of the suit. It was also stated that the application itself was not maintainable. Plaintiff also brought on record copy of the rent receipt as well as documents showing his intentions to purchase the suit property. Trial court on the application filed under Order VII Rule 11 read with Section 151 CPC took note of the stand taken by the defendants in their written statement, and observed that the documents, which have been brought on record alongwith written statement by the defendants supported with affidavit can always be read in evidence. It was observed that as the company has already been declared a sick unit and a rehabilitation scheme is pending, therefore, the suit is barred under Section 26 of the Act. With these findings, application no.34C-2 under Order VII Rule 11 read with Section 151 CPC has been allowed, and the suit has been dismissed. Aggrieved against the dismissal of suit by the trial court, plaintiff preferred an appeal. Reliance was placed upon various decisions of the Apex Court in the case of Popat and Kotecha Property Vs. State Bank of India Staff Association [2005 (61) ALR 457] and in case of Sopan Sukhdeo Sable and others Vs. Assistant Charity Commissioner and others [2004 (55) ALR 260], in order to contend that for considering the application under Order VII Rule 11 CPC, only plaint averments can be seen, and the stand taken in the written statement is not required to be examined at such stage. Appellate court having noticed these judgments observed that by virtue of Order VI Rule 2 of the Code of Civil Procedure, 1908, the plaintiff is required to furnish a statement in a concise form of the material facts on which the party pleading relies for his claim or defence, and such narration is a primary requirement. Lower appellate court observed that there was a deliberate omission made in the plaint with regard to the company being sick, and the pendency of rehabilitation scheme, which apparently was with an intent to get over the bar created under the Act of 1985 in filing the suit. It has also been stated that even after the Act of 1985 has been repealed, the provisions of Section 26 would continue to operate, when rehabilitation scheme has been sanctioned, and for such purposes, the provisions of Section 4 of the Sick Industrial Companies (Special Provisions) Repeal Act, 2003 has been referred. It is stated that once the rehabilitation scheme has been approved, the operating agency under Section 424D of the Companies Act, 1956 was subject to jurisdiction of the Tribunal, and there was a bar to the civil court jurisdiction. With these averments, the appeal has been dismissed.
8.Learned counsel for the plaintiff-appellant submits that in view of the law settled, none of the evidence or materials relied upon in written statement could have been looked into while considering the application under Order VII Rule 11(d) of the Code, and only the plaint averments could have formed the basis for consideration of application. Various authorities in support of the arguments have been pressed with reference to substantial questions, noticed above, which shall be dealt with later.
9.Sri Rakesh Pandey, learned counsel for the defendant-respondent no.2 as well as Sri Kartikeya Saran appearing for the defendant-respondent no.1 submit that the factum of company being sick and sanction of rehabilitation scheme was within the knowledge of the plaintiff, and the same can be inferred from para 7 of the plaint, which states that there was legal complications in not executing the sale deed. Learned counsels submit that by virtue of Order VI Rule 2 of the Code, it is incumbent upon the plaintiff to disclose relevant material facts including cause of action for filing of suit, and non-disclosure of it would attract provisions of Order VII Rule 11(a) of the Code as well in the facts of the present case. Learned counsel has stated that in fact no cause of action had arisen for filing of the suit, and the courts below have rightly rejected the plaintiff's suit. Attention of the Court has also been invited to the provisions of sub-rule 2 of rule 2 of Order XIV of the Code.
10.In order to appreciate the submissions advanced by learned counsel for the parties, it is necessary to notice the provisions of Sections 26 and 32 of the Act of 1985, which are reproduced:-
"26. Bar of jurisdiction.--No order passed or proposal made under this Act shall be appealable except as provided therein and no civil court shall have jurisdiction in respect of any matter which the Appellate Authority or the Board is empowered by, or under, this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act.
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32. Effect of the Act on other laws.--
(1) The provisions of this Act and of any rules or schemes made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other law except the provisions of the Foreign Exchange Regulation Act, 1973 (46 of 1973) and the Urban Land (Ceiling and Regulation) Act, 1976 (33 of 1976) for the time being in force or in the Memorandum or Articles of Association of an industrial company or in any other instrument having effect by virtue of any law other than this Act.
(2) Where there has been under any scheme under this Act an amalgamation of a sick industrial company with another company, the provisions of section 72A of the Income-tax Act, 1961 (43 of 1961), shall, subject to the modifications that the power of the Central Government under that section may be exercised by the Board without the Central Government under that section may be exercised by the Board without any recommendation by the specified authority referred to in that section, apply in relation to such amalgamation as they apply in relation to the amalgamation of a company owning an industrial undertaking with another company."
A perusal of the provisions go to show that no order passed or proposal made under the Act of 1985 shall be appealable except as provided under the Act, and no civil court shall have jurisdiction in respect of any matter, which the Appellate Authority or the Board is empowered by, or under, the Act of 1985 to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under the Act.
11.In the facts of the present appeal, it is to be seen as to whether the suit is barred under the Act of 1985. Law is settled that for the purposes of consideration of an application filed under Order VII Rule 11(d), only the plaint averments are to be looked into, and if without any doubt or dispute, the suit is barred by any law enforce, then alone such an application can succeed. Disputed questions cannot be adjudicated at the time of consideration of application under Order VII Rule 11 CPC. After noticing the previous judgments, the ratio of law was laid down in the case of Popat and Kotecha Property Vs. State Bank of India Staff Association (supra) in paragraph nos. 10 to 16 of the judgment, which are reproduced:-
"10. Clause (d) of Order VII Rule 7 speaks of suit, as appears from the statement in the plaint to be barred by any law. Disputed questions cannot be decided at the time of considering an application filed under Order VII Rule 11 CPC. Clause (d) of Rule 11 of Order VII applies in those cases only where the statement made by the plaintiff in the plaint, without any doubt or dispute shows that the suit is barred by any law in force.
Order VII Rule 11 of the Code reads as follows:
"Order VII Rule 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 fixed by the court, fails to do so;
(c) where the relief claims is properly valued but the plaint is written upon paper insufficiently stamped, and the plaintiff, on being required by the Court to supply the requisite stamp-paper within a time to be fixed 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 filed in duplicate;
(f) where the plaintiff fails to comply with the provisions of rule 9.
Provided that the time fixed by the Court for the correction of the valuation or supplying of the requisite stamp-paper shall not be extended unless the Court, for reasons to be recorded, is satisfied that the plaintiff was prevented by any cause of an exceptional nature for correcting the valuation or supplying the requisite stamp- paper, as the case may be, within the time fixed by the Court and that refusal to extend such time would cause grave injustice to the plaintiff."
11. In the present case the respondent has relied upon clause (d) of Rule 11.
12. Before dealing with the factual scenario, the spectrum of Order VII Rule 11 in the legal ambit needs to be noted.
In Saleem Bhai and Ors. v. State of Maharashtra and Ors. (2003 (1) SCC 557) it was held with reference to Order VII Rule 11 of the Code that the relevant facts which need to be looked into for deciding an application thereunder are the averments in the plaint. The trial Court can exercise the power at any stage of the suit - before registering the plaint or after issuing summons to the defendant at any time before the conclusion of the trial. For the purposes of deciding an application under clauses (a) and (d) of Order VII Rule 11 of the Code, the averments in the plaint are the germane; the pleas taken by the defendant in the written statement would be wholly irrelevant at that stage.
In I.T.C. Ltd. v. Debts Recovery Appellate Tribunal and Ors. (1998 (2) SCC 70) it was held that the basic question to be decided while dealing with an application filed under Order VII Rule 11 of the Code is whether a real cause of action has been set out in the plaint or something purely illusory has been stated with a view to get out of Order VII Rule 11 of the Code.
The trial Court must remember that if on a meaningful and not formal reading of the plaint it is manifestly vexatious and meritless in the sense of not disclosing a clear right to sue, it should exercise the power under Order VII Rule 11 of the Code taking care to see that the ground mentioned therein is fulfilled. If clever drafting has created the illusion of a cause of action, it has to be nipped in the bud at the first hearing by examining the party searchingly under Order X of the Code. (See T. Arivandandam v. T.V. Satyapal and Anr. (1977 (4) SCC 467).
It is trite law that not any particular plea has to be considered, and the whole plaint has to be read. As was observed by this Court in Roop Lal Sathi v. Nachhattar Singh Gill (1982 (3) SCC 487), only a part of the plaint cannot be rejected and if no cause of action is disclosed, the plaint as a whole must be rejected.
In Raptakos Brett & Co. Ltd. v. Ganesh Property (1998 (7) SCC 184) it was observed that the averments in the plaint as a whole have to be seen to find out whether clause (d) of Rule 11 of Order VII was applicable.
13. There cannot be any compartmentalization, dissection, segregation and inversions of the language of various paragraphs in the plaint. If such a course is adopted it would run counter to the cardinal canon of interpretation according to which a pleading has to be read as a whole to ascertain its true import. It is not permissible to cull out a sentence or a passage and to read it out of the context in isolation. Although it is the substance and not merely the form that has to be looked into, the pleading has to be construed as it stands without addition or subtraction of words or change of its apparent grammatical sense. The intention of the party concerned is to be gathered primarily from the tenor and terms of his pleadings taken as a whole. At the same time it should be borne in mind that no pedantic approach should be adopted to defeat justice on hair- splitting technicalities.
14. Keeping in view the aforesaid principles the reliefs sought for in the suit as quoted supra have to be considered. The real object of Order VII Rule 11 of the Code is to keep out of courts irresponsible law suits. Therefore, the Order X of the Code is a tool in the hands of the Courts by resorting to which and by searching examination of the party in case the Court is prima facie of the view that the suit is an abuse of the process of the court in the sense that it is a bogus and irresponsible litigation, the jurisdiction under Order VII Rule 11 of the Code can be exercised.
15. Order VI Rule 2(1) of the Code states the basic and cardinal rule of pleadings and declares that the pleading has to state material facts and not the evidence. It mandates that 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.
16. There is distinction between 'material facts' and 'particulars'. The words 'material facts' show that the facts necessary to formulate a complete cause of action must be stated. Omission of a single material fact leads to an incomplete cause of action and the statement or plaint becomes bad. The distinction which has been made between 'material facts' and 'particulars' was brought by Scott, L.J. in Bruce v. Odhams Press Ltd. (1936) 1 KB 697 in the following passage:
"Rule 11 of Order VII lays down an independent remedy made available to the defendant to challenge the maintainability of the suit itself, irrespective of his right to contest the same on merits. The law ostensibly does not contemplate at any stage when the objections can be raised, and also does not say in express terms about the filing of a written statement. Instead, the word 'shall' is used clearly implying thereby that it casts a duty on the Court to perform its obligations in rejecting the plaint when the same is hit by any of the infirmities provided in the four clauses of Rule 11, even without intervention of the defendant. In any event, rejection of the plaint under Rule 11 does not preclude the plaintiffs from presenting a fresh plaint in terms of Rule 13."
The above position was highlighted in Sopan Sukhdeo Sable and Ors. v. Assistant Charity Commissioner and Ors. (2004 (55) ALR 260)."
12.In view of the law settled, as noticed above, when the facts of the case are examined, this Court finds that the suit itself had been filed seeking relief of injunction and for restraining the defendants from forcibly evicting the plaintiff, or from transferring it to anyone else. The courts below as well as learned counsels appearing for the respondents have strenuously urged that the suit itself is barred under Order VII Rule 11 of the Code, in view of Section 26 of the Act. Section 26, as noticed above, puts a bar on the jurisdiction of civil court in respect of a matter, which under the Act requires determination by the Board, and no injunction can be granted in respect of an action taken pursuant to the power conferred under the Act. A perusal of the plaint clearly goes to show that no reference has been made to declaration of the company as a sick unit or framing of any scheme for rehabilitation. Plaintiff has essentially sought protection of his right in respect of first floor of the house, in which he admittedly is residing, and has further sought restraint against the defendants from interfering in his passage on the northern side from the lawn. It has not been shown as to in what manner the prayer for grant of injunction against forcible dispossession of plaintiff would adversely affect the provisions of Act of 1985, or of any scheme for rehabilitation framed therein.
13.Before the suit could be held to be not maintainable, it would have to be demonstrated from the plaint case itself that the suit is barred in law. Both the courts below have essentially relied upon the fact that defendant no.1 is a sick company under the Act, and a scheme for its rehabilitation is already approved. However, in order to hold that suit itself is not maintainable, a further finding would have to be returned that grant of injunction is in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act.
14.From the plaint averments, necessary ingredients to attract bar of Section 26 of the Act of 1985 is apparently not made out. Even the factum of defendant company being sick or that a rehabilitation scheme has been sanctioned would not lead to the bar of Section 26 getting attracted, unless it is shown that injunction claimed is in respect of any action taken or to be taken in pursuance of any power conferred by or under the Act of 1985. In the absence of it, the suit cannot be dismissed under Order VII Rule 11 CPC.
15.Learned counsel for the respondent has relied upon observation of Hon'ble Supreme Court in T. Arivandandam v. T.V. Satyapal and Anr. (1977 (4) SCC 467), in order to contend that if on a meaningful and not formal reading of the plaint, it is manifestly shown to be vexatious and meritless in the sense of not disclosing a clear right to sue, the court should exercise power under Order VII Rule 11 of the Code to see that ground mentioned therein is fulfilled. Mere illusion of cause of action due to clever drafting has to be nipped in the bud at the first hearing itself. The judgment relied upon by the learned counsel was based upon its peculiar facts, where the cause sought to be pressed had already been adjudicated in the past, and in teeth of such final adjudication, a frivolous cause was being raised by the plaintiff. In the opinion of the Court, observation relied upon would not have a material bearing in the facts of the present case. Even if it is assumed for the sake of argument that appellant had not disclosed the factum of defendant no.1 being a sick unit or of framing of rehabilitation scheme, it would not be sufficient to reject the plaint unless it is shown that grant of injunction is in respect of any action taken or to be taken in pursuance of any power conferred under the Act, which would require adjudication in this regard.
16.This Court finds substance in the argument advanced by learned counsel for the appellant that relief of injunction essentially claimed in the suit is for protecting the possession of plaintiff over the house in question as well as its alleged passage through lawn on the northern side, which has not been shown to be apparently in conflict with the rehabilitation scheme, and unless it is proved otherwise on the basis of evidence to be adduced on the issue, such a conclusion would not be permissible at the stage of consideration of application under Order VII Rule 11 of the Code.
17.Even otherwise, a question had been raised with regard to suit being barred under Section 26 of the Act of 1985, vide written statement and evidence in that regard, was required to have been adjudicated by the civil court, before it could be held that suit was not maintainable in view of Section 26 of the Act of 1985. From the plaint allegations itself, such a conclusion was impermissible.
18.So far as submission of Sri Rakesh Pandey with regard to non-disclosure of cause and consequent dismissal of suit under Order VII Rule 11(a) is concerned, it is to be noticed that no such plea was in fact pressed before the courts below, and therefore, this Court would not be justified in scrutinizing the plaint averments at the stage of second appeal, so as to rule on the question relating to accrual of cause. This issue can always be raised before the civil court at the first instance.
19.In view of the discussions, aforesaid, this Court is of the opinion that in the peculiar facts and circumstances of the present case, the courts below were required to have at least framed a preliminary issue relating to maintainability of the suit, and after allowing the parties to lead evidence on the issue of jurisdiction, proceed with the adjudication of suit. It would be relevant to refer to the provisions of sub-rule 2 of Order XIV Rule 2 of the Code of Civil Procedure, 1908, which is reproduced:-
"Order XIV Rule 2: Court to 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."
20.Reliance has been placed upon a Division Bench judgment of this Court in the case of Subhash Bhalla Vs. Jai Devi [2008(4) ADJ 495]. Para-8 of the said judgment is reproduced:-
"8. According to Mr. Daga the Clause (d) of Rule 11 applies in this case. According to us, there is gulf difference between the suit is barred by any law or plaint is barred by any law which he overlooked. When the suit is barred by law it hits directly by Sub-rule (2) Rule 2 of Order 14 of the Code. But when the plaint is barred by law as under Order 7, Rule 11 of the Code it has to be subjective satisfaction of the Court as to whether question of rejection of plaint is arising out of law or out of fact or out of mixed question of law and fact. Only in the first category cases Court frames a preliminary issue and pass an appropriate order irrespective of framing or deciding other issues. It can so happen postponing the other issues or placing such issue as preliminary issue above other issue/s. It is always open to the Court to ascertain demurrer at any stage provided such cause is available. The appellate court did not debar the Appellants/Plaintiffs to get it adjudicated by the trial court in an appropriate manner but not the way it was done."
21.In the facts of the present case, allegation in the written statement and the application for dismissal of suit is that the suit itself is barred by virtue of Section 26 of the Act of 1985. The trial court, therefore, could have framed such preliminary issue in order to determine the question as to whether the suit itself was maintainable before the civil court. This, however, was not done. The courts below, therefore, could not have dismissed the suit on the basis of materials relied upon by the defendants, which were brought on record alongwith an affidavit, in support of application, and also alongwith written statement, as has been done in the present case. The judgments of the courts below thus cannot be sustained, and the substantial questions on which the appeal has been heard is answered by holding that the suit could not have been dismissed by the courts below under Order VII Rule 11 on the basis of averments made in the written statement, and that the courts below have committed an error in dismissing the suit instead of framing an issue of law and deciding the same as a preliminary issue. It is also observed that such a conclusion could have been reached, only after the trial court was satisfied on the basis of materials available on record that necessary ingredients to attract bar of Section 26 of the Act of 1985 were present in the facts of the present case.
22.Consequently, the second appeal succeeds, and is allowed. Judgment and decree dated 30th January, 2012 passed by the trial court in Original Suit No.1396 of 2011, as well as judgment and order dated 6.10.2012 passed in Civil Appeal No.81 of 2012, by the Additional District Judge, Ghaziabad, are set aside. The suit is restored to its original number. Trial court shall proceed further in the matter, in accordance with law, keeping in view the observations made in the present judgment.
Order Date :- 21.9.2015 Anil