Mac Associates vs Sp Singh Chandel & Anr.
2013 Latest Caselaw 574 Del

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* IN THE HIGH COURT OF DELHI AT NEW DELHI

+     RFA 518/2011

                                    Decided on 7th February, 2013

      MAC ASSOCIATES                               ..... Appellant


                        Through      :Mr.   J.P.  Sengh,  Sr.
                                     Advocate with Mohd. Anis
                                     Rehman, Mr. Sumeet Batra
                                     and Ms. Ankita Gupta,
                                     Advs.

                        Versus


      SP SINGH CHANDEL & ANR.              ..... Respondents

                        Through      :Mr. Shekhar Nanavaty,
                                     Adv. for respondent no. 1
                                     Mr. Vikrant Mittal, Adv. for
                                     respondent no. 2


CORAM:
HON'BLE MR. JUSTICE A.K. PATHAK

A.K. PATHAK, J.(ORAL)


1.    Admit.

2. Arguments heard and trial court record perused.

3. By the order impugned in this appeal trial court has rejected

the plaint under Order 7 Rule 11 of Code of Civil Procedure, 1908

("Code", for short).

4. Appellant filed a suit for possession and permanent

injunction against the respondents. It was alleged in the plaint that

respondent no. 2 was owner of the property admeasuring 100

square yards and bearing no. WZ 251-B, Western Portion, Street

No. 1, Virender Nagar, New Delhi - 110058. Respondent no. 1

was sub-contractor (builder), who used to work for and on behalf

of appellant on various construction projects on commission basis.

In the month of May, 2006, respondent no. 2 approached the

appellant with a proposal for redevelopment of the said property. It

was agreed between them that the appellant would raise new

construction after demolishing the old structure at its own

expenses. The construction would be carried out in accordance

with the sanctioned site plan and would be completed within six

months from the date of handing over of the site by respondent no.

2. After completion of construction, respondent no. 2 would

become absolute owner of the ground and second floors with roof

rights; whereas appellant would be owner of first floor (for short

hereinafter referred to as "suit property") with common passage

and staircase. Respondent no. 2 agreed to execute the Sale Deed of

first floor in favour of appellant after completion of construction.

Appellant paid a sum of `1 lac to respondent no. 2, vide cheque

bearing no. 025404 dated 23rd May, 2006 drawn on Vijaya Bank,

New Delhi. Terms and Conditions, as agreed between the

appellant and respondent no. 2, were incorporated in the

Collaboration Agreement dated 23rd May, 2006, which was

executed by respondent no. 1 for and on behalf of the appellant.

From the funds made available by the appellant, respondent no. 1

completed the construction in the month of December, 2008.

However, respondent no. 2 neither handed over possession nor

executed Sale Deed in favour of appellant in respect of the suit

property. Instead respondents filed a collusive suit for permanent

and mandatory injunction in the trial court. Said suit was filed by

the respondent no. 1 against respondent no. 2. It was alleged that

the respondents had breached the terms and conditions of the

agreement and understanding between the parties, thus, were

jointly and severally liable to handover possession to the appellant.

5. In the written statement, respondent no. 1 alleged that

Collaboration Agreement dated 23rd May, 2006 was executed

between respondent no. 1 and respondent no. 2 and appellant had

nothing to do with the same. Appellant was not a party to the

Agreement. No cause of action had arisen in favour of appellant

for filing the suit, thus, the same was liable to be dismissed under

Order 7 Rule 11 of the Code. There was no privity of contract

between the appellant and respondents. Respondent no. 1 was an

uneducated person. He was a builder. He had undertaken certain

works for appellant in the past and certain amounts were due from

the appellant, thus, the cheque of `1 lac was taken from the

appellant by him favouring respondent no. 2. Appellant had

fabricated certain blank vouchers signed by respondent no. 1 in

good faith, which were misused. Respondent no. 1 denied that he

was „sub-contractor‟ of the appellant in respect of the work done in

the property in question. Respondent no. 1 alleged that respondent

no. 2 did not handover first floor to him after completion of

construction, instead she threatened to sell it off to someone else,

thus, respondent no. 1 was forced to file a suit for injunction

against the respondent no. 2.

6. Respondent no. 2 also alleged in her written statement that

there was no privity of contract between her and the appellant.

Appellant was not a party to the Collaboration Agreement dated

23rd May, 2006 entered into between her and respondent no. 1. She

did not meet appellant at any stage. In terms of the Collaboration

Agreement, first floor without roof rights was to be transferred by

her in favour of respondent no. 1. She was not liable to transfer the

property to an unknown person.

7. Law relating to rejection of plaint under Order 7 Rule 11 of

the Code is well settled. The trial court can exercise the power

under Order 7 Rule 11 of the Code 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. Order 7 Rule 11 of the

Code, inter alia, mandates rejection of plaint when it does not

disclose a cause of action. An application under this provision is to

be decided entirely on a perusal of plaint and documents filed

along with it. Defence of the defendant is not relevant for the

purpose of Order 7 Rule 11 of the Code nor can it be looked into.

The court has to peruse the plaint as a whole to find out whether it

discloses a cause of action or not. If the plaint discloses cause of

action it cannot be rejected by the court exercising the powers

under Order 7 Rule 11 of the Code. Whether the plaint discloses

cause of action is a question of fact which has to be gathered on the

basis of averments made in the plaint and taking those averments to

be correct as a whole together with the documents filed along with

the plaint. If the case is based on documents the same have also to

be read along with the averments made in the plaint to find out if

there is any cause of action for filing the suit.

8. In M/s. Texem Engineering vs. M/s. Texcomash Export, 179

(2011) Delhi Law Times 963, a Division Bench of this Court has

held, thus, "There can be no gainsaying that an application under

Order VII Rule 11 of the CPC for rejection of the plaint has to be

decided entirely on a perusal of the plaint and documents filed

along with it. If authorities are required for this proposition, we

need not travel beyond the latest exposition of the law contained in

Liverpool & London S.P.& I Association Ltd. vs. M.V. Sea

Success I, (2004) 9 SCC 512. More recently, in Mayar (H.K.) Ltd.

v. Owners & Parties, Vessel M.V. Fortune Express, (2006) 3 SCC

100 it has yet again been clarified that the Court cannot reject a

plaint under Order VII Rule 11 of the CPC on the basis of the

allegations made in the Written Statement. In other words, the

defence to the suit is not relevant for the purposes of Order VII

Rule 11 of the CPC".

9. Learned Senior Counsel for the appellant has vehemently

contended that except the averments made in the plaint nothing else

can be looked into. Even the documents filed along with the plaint

cannot be considered for deciding the application under Order 7

Rule 11 of the Code. He has placed reliance on Inspiration Clothes

& U vs. C.I. Ltd. 88 (2000) Delhi Law Times 769 (DB). I have

perused the judgment and I do not find any such proposition of law

having been laid down by this judgment. On the contrary, it has

been held that the documents accompanying plaint can be looked

into. In para 10 of the judgment, it has been held thus, "To enable

a Court to reject a plaint on the ground that it does not disclose a

cause of action, it should look at the plaint and documents

accompanying the plaint only and nothing else. The Court,

however, cannot look at the defence of the defendant or the

documents relied upon by the defendant." Reliance has been

placed by the Division Bench on D. Ramchandran vs. R.V.

Janakiraman and Ors. (1999) 3 SCC 267 for taking such a view.

10. In the backdrop of above settled legal position, if the

averments made in the plaint coupled with the documents filed in

support thereof are considered, I do not find any locus standi in

favour of the appellant to institute a suit for possession, inasmuch

as, no cause of action has arisen in its favour for seeking

possession of the suit property. During the course of hearing,

learned Senior Counsel for the appellant has vehemently contended

that respondent no. 1 was an agent of appellant and had entered

into the Collaboration Agreement with the respondent no. 2, in the

capacity of agent of the appellant, thus, the suit premises fell in

share of appellant after the construction was complete and

respondent no. 2 was under legal obligation to execute the Sale

Deed and handover the possession thereof to appellant. However,

a perusal of the Collaboration Agreement and other documents

placed on record of the trial court by the appellant do not indicate

that the respondent no. 1 was agent of appellant and that he had

entered into the Collaboration Agreement with respondent no. 2 as

an agent of appellant. Alleged financial dealings between the

appellant and respondent no. 1 dehors the agreement are not

sufficient to indicate that respondent no. 1 was agent of appellant in

respect of the Collaboration Agreement. Collaboration Agreement

has been executed between the respondent no. 1 and respondent no.

2 on 23rd May, 2006. There is no whisper in the said Agreement

that same was being entered into by respondent no. 1 as agent of

appellant nor is there any mention of appellant in the Agreement.

11. Clause 16 of the Collaboration Agreement reads as under:-

"16. That after completion of Construct of the Building, the First Party will be the absolute owner of Ground Floor and Second Floor with roof right and the Second Party will become the owner of the First Floor without roof right with common passage and stair and the First Party will execute documents in favour of Second Party in respect of First Floor without roof rights."

12. In terms of Clause 16 of the Collaboration Agreement, first

floor without roof right with common passage and staircase was to

fall in the share of respondent no. 1 and respondent no. 2 was to

execute the documents in favour of respondent no. 1. Appellant

has no cause of action in its favour to seek possession of the first

floor from respondent no. 2. Thus, the view taken by trial court

that respondent no. 2 did not owe any liability to handover the

possession of the first floor and appellant had no locus standi to

sue, inasmuch as, same was without any cause of action, does not

suffer from any illegality, infirmity or perversity.

13. If the matter is viewed from another angle then also suit for

possession on the basis of Collaboration Agreement, which at best

can be taken at par with the Agreement to Sell, is not maintainable

even if, for the sake of arguments, it is accepted that the respondent

was agent of appellant. Agreement to Sell does not vest any right

in favour of a person to the possession of property. Even if a

person is put in possession of property through an Agreement to

Sell, he cannot protect his possession on the pretext of part

performance under Section 53-A of the Transfer of Property Act,

1882 unless such an agreement is a registered document. Section

17 (1A) of the Registration Act, 1908, which has come into force

with effect from 24th September, 2001, reads as under:-

Documents containing contracts to transfer for consideration, any immoveable property for purpose of Section 53-A of the Transfer of Property Act, 1882 shall be registered if they have been executed on or after the commencement of the Registration and other Related Laws (Amendment) Act, 2001 and if such documents are not registered on or after such commencement, they shall have no effect for the purpose of the said Section 53-A.

Once a person cannot even protect the possession, which he is

holding, in absence of an unregistered Agreement to Sell, then how

such a person can seek possession on the basis of such a document.

In Sunil Kapoor v/s Himmat Singh & Ors. 167 (2010) Delhi Law

Times 806, a Single Judge of this Court has held thus "a mere

agreement to sell of immovable property does not create any right

in the property save the right to enforce the said agreement. Thus,

even if the respondents/plaintiffs are found to have agreed to sell

the property, the petitioner/defendant would not get any right to

occupy that property as an agreement purchaser. This Court in

Jiwan Das v/s Narain Das, AIR 1981 Delhi 291 has held that in

fact no right inure to the agreement purchaser, not even after the

passing of a decree for specific performance and till conveyance in

accordance with law and in pursuance thereto is executed."

14. A suit which is without any cause of action, inasmuch as, is

frivolous, vexatious and meritless has to be thrown out at the

nascent stage since its continuance will not only burden the already

overburdened judicial infrastructure but will also result in

harassment of the opposite party which has to face rigmarole of full

trial. Accordingly, I am of the view that appellant had no legal

right to seek possession of the suit property on the basis of

Collaboration Agreement. Suit is, thus, without any cause of

action. In T. Arivanandam vs. T. Satyapal, AIR 1977 SC 2421,

Supreme Court held thus, "if on a meaningful - not formal reading

of the plaint it is manifestly found to be vexatious and meritless, in

the sense of not disclosing a right to sue, the judge should exercise

his power under Order 7 Rule 11 of the Code taking care to see that

the ground mentioned therein is fulfilled. Supreme Court has

reiterated the same principle in I.T.C. Ltd. vs. Debts Recovery

Appellate Tribunal, AIR 1998 SC 634, in the following terms:-

"Question is whether a real cause of action has been set out in the plaint or something purely illusory has been stated with the view to get out of Order 7 Rule 11 CPC. Clever drafting creating illusions are not permitted in law and a clear right to sue should be shown in the plaint."

15. For the foregoing reasons, appeal is dismissed being devoid

of merits.

A.K. PATHAK, J.

FEBRUARY 07, 2013 rb