M/S Spearhead Digital Studio Pvt. ... vs H.K. Mitroo
2014 Latest Caselaw 1938 Del

     IN THE HIGH COURT OF DELHI AT NEW DELHI

                    Order Reserved on: 18 th February, 2014
                     Order Pronounced on: 17 th April, 2014

                       CS(OS) 1280/2013

M/ S S PEARHEAD D IGITAL S TUDIO P VT . L TD .        .... P LAINTIFF

                         Through:    Mr. Arvind   Nayar,   Mr.
                                     Anshu Bhanot and Mr.
                                     Prateek Kumar Srivastava,
                                     Advocates.

                               versus

H.K. M ITROO                                        ....D EFENDANT

                         Through:    Mr. P.S. Bindra and Ms.
                                     Shweta      Priyadarshini,
                                     Advocates.

       CORAM:

       HON'BLE MR. JUSTICE SANJEEV SACHDEVA

SANJEEV SACHDEVA, J.

IA 15339/2013 (On behalf of the Defendant Under order 7 rule 11 Code of Civil Procedure)

1. The Defendant has moved this application under Order

VII Rule 11 seeking rejection of the plaint on the

ground that the plaint does not disclose a cause of

action.

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2. The Plaintiff has filed the pre sent suit seeking specific

performance of an oral agreement to sell allegedly

entered into between the Defendant and the Plaintiff

for a total sale consideration of Rs.84,00,000/ - out of

which the Plaintiff claims that a sum of Rs.55,60,000/-

stands paid to the Defendant.

3. The case of the Plaintiff is that the Plaintiff is running

its business from the suit premises being C -161, Okhla

Industrial Area, Phase-I, New Delhi consisting of

basement, ground floor, first floor and second floor.

The Defendant inducted the Plaintiff as his tenant by a

lease agreement dated 01.04.2000. The term of the

lease under the Lease agreement was stated to be 11

months which term expired on 31.03.2001.

4. The Plaintiff pleads that by virtue of an oral agreement

to sell, the Plaintiff continued to retain possession and

paid two instalments each month i.e. Rs.10,000/-

towards monthly rental and Rs.50,000/- per month as

part of the sale consideration towards oral agreement

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to sell.

5. As per the Plaintiff, the lease agreement dated

01.04.2000 stipulated that the monthly rental shall be

Rs.10,000/- per month. It is the case of the Plaintiff

that at the time of inception of the tenancy, the

Defendants showed his inclination to sell off the suit

property for a sale consideration of Rs. 60,00,000/-.

However, as the Plaintiff expressed his inability to pay

the entire sale consideration in one go, the Plaintiff

proposed that he shall pay Rs.10,000/- towards

monthly rental and Rs.50,000/- per month towards part

sale consideration. As per the Plaintiff, the Defendant

proposed that since the property was being purchased

in instalments, he would sell the same at

Rs.84,00,000/-. This proposal is alleged to have been

accepted by the Plaintiff and accordingly, the Plaintiff

started paying a sum of Rs.60,000/- per month i.e.

Rs.10,000/- towards rental and Rs.50,000/- towards

part sale consideration. Learned counsel for the

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Plaintiff had contended that the so called oral

agreement was also arrived at on 01.04.2000 on the

date when the lease commenced.

6. As per the Plaintiff the payments in the above terms

were made from the very inception of the tenancy till

the year 2008 and thereafter the monthly instalment

towards the sale price was increased to Rs.65,000/-

and the Plaintiff paid Rs.75,000/- per month i.e.

Rs.10,000/- towards rental and Rs.75,000/- towards

part sale consideration.

7. The Plaintiff claims to have paid a sum of

Rs.55,60,000/- towards sale consideration in

instalments and Rs.11,60,000/- towards rental till July

2009.

8. On 23.02.2010, the Plaintiff filed a suit for injunction

before the Court of Senior Civil Judge, Patiala House

Courts, New Delhi. In the said suit, the Plaintiff took a

plea that after the execution of the lease agreement,

the Defendant showed his willingness to sell the suit

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property. As per the Plaintiff, the Defendant disputed

the said oral agreement by filing his written statement

in the said suit and also filing a suit for possession,

arrears of rent, mesne profit and damages before the

Court of the District Judge, Saket, New Delhi for

ejectment of the Plaintiff. The Plaintiff thereafter filed

the present suit for specific performance of the oral

agreement to sell.

9. The Defendant has filed the written statement

disputing the stand of the Plaintiff. For the purposes of

consideration of an application under Order VII Rule

11 CPC, what is required to be examined is the

averments in the plaint and the supporting documents

filed and relied upon by the Plaintiff. The defence of

the Defendant and the averments raised in the wri tten

statement are not germane for the purposes of the

disposal of the application under Order VII Rule 11.

10. The Supreme Court of India in the case of S OPAN

S UKHDEO V . A SSISTANT C HARITY C OMMISS IONER (2004) 3

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SCC 137 has laid down that for the purposes of

deciding an application under Order 7 Rule 11, the

averments made in the plaint are germane and the

pleas taken by the Defendant in the written statement

would be irrelevant. Further, the court also

emphasized that a meaningful and not formal reading

of the plaint was to be adopted so as to nip in the bud

any clever drafting of the plaint to create an illusion of

a cause of action .

11. The court has to see the averments in the plaint to

decide whether the suit discloses a triable cause of

action. A meaningful an d not a formal reading of the

plaint has to be adopted to determine whether the

plaint discloses a cause of action or a clever drafting

methodology has been used to create a semblance of

a cause of action . Where the Court comes to a

conclusion that by adop ting a method of clever drafting

a semblance of a cause of action is being created , the

court has to nip the vexatious and m eritless litigation in

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the bud.

12. The Supreme Court in the case of T. A RIVANDANDAM

VS . T.V. S ATYAPAL (1977) 4 SCC 467 has laid down a s

under:-

"5. We have not the slightest hesitation in condemning the petitioner for the gross abuse of the process of the court repeatedly and unrepentently resorted to. From the statement of the facts found in the judgment of the High Court, it is perfectly plain that the suit now pending before the First Munsif's Court, Bangalore, is a flagrant misuse of the mercies of the law in receiving plaints. The learned Munsif must remember that if on a meaningful

-- not formal -- reading of the plaint it is manifestly vexatious, and meritless, in the sense of not disclosing a clear right to sue, he should exercise his power under Order 7, Rule 11 CPC taking care to see that the ground mentioned therein is fulfilled. And, if clever drafting has created the illusion of a cause of action, nip it in the bud at the first hearing by examining the party searchingly under Order

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10, CPC. An activist Judge is the answer to irresponsible law suits. The trial courts would insist imperatively on examining the party at the first hearing so that bogus litigation can be shot down at the earliest stage........"

13. The Supreme Court in the case of T. A RIVANDANDAM

(SUPRA ) has laid down that where the suit is a flagrant

misuse of the mercies of the law in receiving a plaint,

the court has to give a meaningful reading of the plaint

and not a mere formal meaning. Where on a

meaningful reading of the plaint it is mani festly

vexatious or meritless in the sense of not disclosing a

clear right to sue, the Court should exercise its power

under Order VII Rule 11 taking care to see that the

grounds mentioned therein are fulfilled. If by cleaver

drafting illusion of a cause of action is created, the

court can nip it in the bud.

14. Learned counsel for the Defendant has submitted that

the stand of the Plaintiff on its own showing does not

disclose a cause of action. He contended that the

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Plaintiff in the suit for permanent injunction filed by the

Plaintiff before the Court of Additional District Judge

had filed the Statement of Accounts alongwith copies

of TDS certificates. The Statement of Accounts and

the TDS certificates filed by the Plaintiff before the

District Judge evidenced that for every payment made

by the Plaintiff either towards the so called rental or

part sale consideration, TDS was deduct ed. The

Statement of Accounts and the TDS certificates filed

by the Defendant have been admitted by the Plaintiff.

Learned counsel for the Defendant submitted that

since TDS is deducted on payment made towards rent

and not towards payment of sale consideration,

establishes that all the payments made by the Plaintiff

were towards rental and not towards sale

consideration and if the payment made by the Plaintiff

was towards the sale consideration, there was no

question of the Plaintiff deducting any amount towards

TDS and issuing TDS certificates. The fact that the

Plaintiff was deducting TDS, it was contended by the

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Defendant, fortifies the fact that the entire payment

was towards the payment of rent.

15. On examination of the plaint in the light of the settled

principles of law governing order 7 rule 11 , I am of the

view that the Plaint is liable to be rejected.

16. There is a clear contradiction in the case of the Plaintiff

with regard to the date on which the alleged oral

agreement is stated to have been arrived at. The

averments in the plaint as well as the submission of

the counsel for the Plaintiff is that the oral agreement

was arrived at simultaneously with the execution of the

lease deed on 01.04.2000 and further the payment of

Rs. 50,000/- is also stated to have commenced with

the payment for rental of Rs. 10,000/-. In the suit for

permanent injunction filed by the Plaintiff, the

contention is that after the execution of the lease

agreement, the Defendant showed his willingness to

sell the property.

17. It is averred in the plaint tha t on 01.04.2000 the

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Defendant inducted the Plaintiff as its tenant vide a

lease agreement dated 01.04.2000. The Lease was for

a period of 11 months only and expired on 31.03.2001.

The tenanted premises are claimed to be basement,

ground floor, first floor and second floor of the

property.

18. Perusal of the Lease agreement dated 01.04.2000

relied upon and filed by the Plaintiff shows that the

agreement is typed on a stamp paper of Rs. 10/-. The

premises described in the same and extra cted by the

Plaintiff in Para 5 of the plaint is Ground floor,

basement, mezzanine floor and that the entire first

floor is retained by the lessor for his personal use and

also a office on the ground floor. The period of lease

mentioned in 5 years expiring on 31.03.2005. The

stamp paper on which the said lease agreement is

typed bears the date on sale as 19 May 2000. The

lease agreement is insufficiently stamped and is also

unregistered. There is a clear contradiction in the

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averments in the plaint and the lease agreement filed

by the Plaintiff in respect to the tenancy premises and

also the term of the tenancy.

19. Further the contradictions in the plaint and also the

documents filed by the Plaintiff create an ambiguity in

the date on which the so called oral agreement is

arrived at. Further it creates an ambiguity in the extent

of the premises that are alleged to have been agreed

to be sold.

20. For the creation of the lease , the parties are alleged to

have executed a lease agreement on 01.04.2000 . The

counsel for the Plaintiff could not answer the query as

to when on 01.04.2000 a lease agreement could be

executed between the parties for creation of lease ,

then why the parties did not execute a n agreement to

sell which is also allegedly entered into

simultaneously.

21. The terms of the oral agreement are also not clear.

The period in which the payment is to be made is also

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not averred in the plaint. What is contended is that the

sale consideration agreed upon is Rs.84,00,000/- to be

paid in instalments of Rs.50,000/- per month. The

annual payment would be Rs. 6,00,000/- and at this

rate if the Defendant were not to charge any interest

the payments would be completed in 14 years. Even if

the averments of the Plaintiff were to be taken on their

face value that the sale consideration was increased

from 60,00,000/- to 84,00,000/- as payment was being

made in instalments would imply that the payment

would be spread over a period of 14 years and carry

simple interest of only 2.85% per annum. The property

is stated to be 2200 square feet each on basement,

ground, first and second floor (i.e. 8800 square feet)

and situated in Okhla Phase - I, New Delhi and

allegedly rented out for Rs. 10,000/- per month.

22. The contradictions do not lend credence to there being

any oral agreement to sell. The terms and conditions

of sale are not clearly established. It is further

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inconceivable that a party would enter into a lease

agreement by a written document and on the same

date not reduce the terms of the agreement to sell in

writing. There is also no plausible explanation as to

why TDS is deducted on payments made towards the

alleged sale consideration. It is apparent that the story

of an oral agreement to sell has been created only as

counterblast to the demand for vacations of the

tenancy premises by the Defendants against the

Plaintiff.

23. The plaint fails to show a clear cause of action to sue.

A meaningful reading of the plaint clearly discloses

that a clever drafting methodology has been used to

create a semblance of a cause of action. It is the duty

of the court to nip, the vexatious and meritless

litigation, in the bud.

24. The methodology of clever drafting to create a

semblance of cause of action is further exposed when

a comparison is drawn between the plaint filed by the

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Plaintiff seeking permanent injunction and the present

plaint.

25. In the suit filed by the Plaintiff against the Defendant

seeking permanent injunction, the Plaintiff has averred

as under:

"8. That the threats of forceful and illegal dispossession from the Defendant continued after July, 2009 and on 19.02.2010 the Defendant alongwith his muscle men and with the help .......

13 ......, the cause of action further arose in July, 2009 when the Plaintiff company offered the Defendant to accept the balance sale consideration but the intentions of the Defendant became malafide and the Defendant refused to accept the balance sale consideration and started extended threats for forceful dispossession of the Plaintiff from the suit premises. The cause of action further arose on 19.02.2010 when ......"

(emphasis supplied)

In the Present plaint the Plaintiff has very cleverly

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omitted to mention about the refusal by the Defendant

in July 2009. The Plaintiff has contended that it was for

the first time in the Written Statement filed by th e

Defendant to the suit for Permanent Injunction filed by

the Plaintiff, that the Defendant disputed the oral

agreement to sell. Even in the case of action

paragraphs the averments about July, 2009 are

missing.

26. The omission of the alleged events of July 2009 is not

bonafide omission but clearly a conscious decision.

The Plaintiff has filed the present suit for specific

performance of an oral agreement to sell. Even if

assuming there was any such agreement, the

limitation to sue on such an oral agreement w ould

commence from the date stipulated for performance

and if no date is stipulated then when the performance

is refused. As per the suit for permanent injunction, the

Defendant refused to perform the agreement in July

2009 and as such the cause of action would accrue

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and time would start to run on refusal. The present

plaint was first presented on 30.04.2013 and then

refilled after a substantial delay on 03.07.2013 , even if

the date of first filing is taken as the relevant date, the

plaint is barred by lim itation being filed after a lapse of

a period of 3 years from the date of alleged refusal in

July 2009.

27. In the case of A SHOK M AILK VS R AMESH M AILK 2008

(150) DLT 693 a single judge of this court while

dealing with an application seeking rejection of the

plaint seeking specific performance of an oral

agreement to sell held as under:

"9. In any event, the limitation prescribed for a suit for specific performance of a contract as per Article 54 of the Schedule to the Limitation Act, 1963 is three years. The time from which the period begins to run is the date fixed for the performance or, if no such date is fixed, when the Plaintiff has notice that the performance is refused. As per the averments made in the plaint, there was no dated fixed

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for the performance. Therefore, the time from which the period begins to run would be when the Plaintiff had notice that performance was refused. The averments contained in the plaint disclose that the Plaintiff asked the Defendant to execute the sale deed in March, 1993, but he did not. Therefore, the starting point of limitation would be March, 1993. The suit was filed on 05.09.2001. It was beyond the period of three years stipulated under the Limitation Act, 1963. Accordingly, the suit is time barred and the plaint is liable to be rejected on the ground that the suit appears from the statements made in the plaint to be barred by any law (in this case the law of limitation).

28. Learned counsel for the Plaintiff relied on the judgment

of the Supreme Court in A LKA B OSE VS . P ARMATMA

D EVI AND ORS . (2009) 2 SCC 582 to contend that an

agreement to sell comes into existence when vendor

agrees to sell and the purchaser agrees to purchase,

for an agreed consideration on agreed terms and that

it can be oral. The proposition of law that there can be

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an oral agreement to sell is no longer res -integra.

However the said judgment does not further the case

of the Plaintiff as the facts in the present case do not

show that there was ever any agreement between the

parties for sale of the property. As enumerated

hereinabove there are various contradictions in the

case of the Plaintiff that belie the very factum of any

agreement to sell.

29. Further reliance by the learned counsel for the Plaintiff

further on the judgment of this Court in A RUNESH

P UNETHA VS . B OS TON S CIEN TIFIC C ORPORA TION AND

ORS . 2006 (3) AD (D ELHI) 141 also does not further the

case of the Plaintiff. The Single Judge of this court

held that so long as the claim discloses some cause of

action or raises some questions fit to be decided by a

judge, the mere fact that the case is weak and not

likely to succeed is no ground for striking it out. In the

facts of the present case it is not the strength or the

weakness of the case of the Plaintiff that is in issue,

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what is in issue is whether the plaint discloses any

cause of action. The bundle of facts pleaded read in

the light of the documents of the Plaintiff do not

disclose a cause of action rather they show a clear

contradiction in the stand of the Plaintiff.

30. The Plaint does not disclose any clear cause of action

and a clever drafting methodology has been adopted

to create a semblance of cause of action. The suit is

also time barred and the plaint is liable to be rejected

on the ground that the suit appears from the

averments made in the plaint and the supporting

documents filed by the Plaintiff to be barred by the law

of limitation.

31. The application of the Defendant under Order 7 rule 11

is accordingly allowed and the Plaint is rejected with

costs quantified at Rs. 25,000/-.

SANJEEV SACHDEVA, J April 17, 2014 St

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