Karnataka High Court
Shri Mithun S/O Suresh Naidu vs Smt Charita Sunilkumar Sandra on 12 January, 2024
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RSA No. 100902 of 2023
IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH
DATED THIS THE 12TH DAY OF JANUARY, 2024
BEFORE
THE HON'BLE MR JUSTICE R.NATARAJ
REGULAR SECOND APPEAL NO.100902/2023(DEC/INJ)
BETWEEN:
SHRI MITHUN S/O. SURESH NAIDU,
AGE: ABOUT 40 YEARS, OCC: BUSINESS,
M/S. SHRI SURRESH HP GAS AGENCY,
R/O: FLAT NO.106, OM SHRI APARTMENT,
VIDYANAGAR, HUBBALLI - 580 031.
- APPELLANT
(BY SRI MALLIKARJUNSWAMY B. HIREMATH, ADVOCATE)
AND:
1. SMT. CHARITA SUNILKUMAR SANDRA,
AGE: ABOUT 60 YEARS, OCC: AGRICULTURE,
R/O: NO.38, TADAPATRI GALLI,
HUBBALLI - 580 031.
2. SHRI SUNILKUMAR GOPINATH SANDRA,
AGE: 56 YEARS, OCC: BUSINESS,
R/O: NO.38, TADAPATRI GALLI,
Digitally
signed by HUBBALLI - 580 031.
ROHAN
HADIMANI - RESPONDENTS
T (BY SRI SACHIN C. ANGADI,
ADVOCATE FOR CAVEATOR/R1 AND R2;
R2 - PRESENT IN PERSON)
THIS REGULAR SECOND APPEAL IS FILED U/SEC. 100 OF CPC,
PRAYING TO SET ASIDE THE ORDER DATED 30.10.2018 PASSED BY
THE II ADDITIONAL SENIOR CIVIL JUDGE AND J.M.F.C. HUBBALLI IN
O.S. NO.204/2018 ON I.A.NO.3 AND ALSO THE JUDGMENT AND
DECREE DATED 24.05.2023 PASSED BY THE BY THE V ADDL.
DISTRICT JUDGE, DHARWAD SITTING AT HUBBALLI DATED
24.05.2023 IN REGULAR APPEAL NO.178/2018 & ETC.
THIS REGULAR SECOND APPEAL, COMING ON FOR
ADMISSION, THIS DAY, THE COURT DELIVERED THE FOLLOWING:
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RSA No. 100902 of 2023
JUDGMENT
The plaintiff has filed this regular second appeal
challenging the order dated 30.10.2018 passed by the II Addl.
Sr. Civil Judge & JMFC, Hubballi in O.S. No. 204/2018 and the
judgment and decree passed by the V Addl. District Judge,
Dharwad sitting at Hubballi dated 24.05.2023 in R.A. No.
178/2018.
2. The suit in O.S. No. 204/2018 was filed for a declaration
that the lease deed dated 18.06.2015 executed in respect of
the suit schedule property was fraudulent and not binding upon
the leasehold rights of the plaintiff under the lease deed dated
04.10.2012 and consequently to injunct the defendants no.1
and 2 from illegally entering the suit property or threatening
dispossession or trespassing or disturbing the possession of the
plaintiff in the suit property.
3. The sum and substance of the averments made in the
plaint are that the defendant no.1 is the owner of the suit
property and that she executed a lease deed dated 04.10.2012
in favour of the plaintiff. The plaintiff claimed that he intended
to install a LPG gas outlet in the suit property. He claimed that
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since the LPG outlet was allotted to him on 24.12.2013, the
lease deed dated 04.10.2012 became redundant and after
discussion a rectification deed dated 10.01.2014 was executed
by the defendant no.1 in favour of the plaintiff on the same
terms. The plaintiff claimed that he had agreed to pay the
ground rent of Rs.5,000/- for a period of 15 years from the
date of commencement and thereafter had spent about Rs.30
lakhs for establishment of a godown and constructing a
compound around the suit property. The plaintiff claimed that
the defendant no.2 advised the plaintiff that the lease deed
dated 04.10.2012 and the rectification dated 10.01.2014 be
replaced by a composite document containing same terms.
Consequently, the plaintiff believing his words went to the
office of the Sub Registrar where a document was kept ready
and that he executed the same believing the words of
defendant no.2 that it was a mere reproduction of the lease
deed dated 04.10.2012. He claimed that he continued to pay
the rent at the rate of Rs.5,000/- per month as agreed under
the lease deed dated 04.10.2012. However, the plaintiff
received a notice dated 12.07.2018 issued on instructions of
the defendants no.1 and 2 terminating the tenancy and
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claiming arrears of rent at the rate of Rs.60,000/- per month.
The plaintiff claimed that he was aghast over this claim and
after verifying the lease deed he realised that the defendant
no.2 had unilaterally shown the rent as Rs.60,000/- per month
instead of Rs.5,000/- per month. The plaintiff claimed that the
very fact that he had paid the rent at the rate of Rs.5,000/- per
month till the defendants no.1 and 2 caused a notice of
termination of tenancy in the year 2018, indicated that the
plaintiff and defendant no.1 were consensus ad idem over the
rate of rent. He therefore claimed that he was tricked by the
defendants no.1 and 2 by getting a document executed
seeming as if the plaintiff had agreed to pay a sum of
Rs.60,000/- per month. He further contended that defendant
no.2 was closely related to him and defendant no.1 was his
wife and therefore, he believed the representations made of the
defendant no. 2. He also cited various instances to indicate
that he had reposed utmost faith and confidence in the
defendant no.2 and it was this which compelled him to execute
the lease deed dated 18.06.2015 on the say of the defendant
no.1. The plaintiff therefore sought for the reliefs mentioned
above.
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4. The defendant no.1 filed an application under Section 8 of
the Arbitration and Conciliation Act, 1996 (for short 'Act, 1996')
contending that the lease agreement dated 18.06.2015
contained an arbitration clause in terms of which the defendant
no.2 was the named Arbitrator and therefore, the suit for
declaration before the Civil Court was not maintainable. Soon
thereafter the defendant no.2 filed an application under Order
VII Rule 11(a), (b) & (d), Order 14 Rule 2(2) read with 151 of
CPC to reject the plaint as the civil court lacked jurisdiction in
view of the bar contained under Section 8 of the Arbitration and
Conciliation Act, 1996 and also that the suit was barred by the
Law of Limitation. This application was opposed by the plaintiff
who contended that suit was based on sufficient cause of action
and that the dispute was not arbitrable and therefore the
question of the suit being hit by Section 8 of the Act, 1996 did
not arise.
5. The trial court after considering the contentions urged by
the plaintiff and the defendant no.2, held that the plaintiff and
the defendant no.1 had entered into the lease deed dated
18.06.2015 with eyes wide open and that the plaintiff had after
more than three years filed the suit for declaration that lease
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deed dated 18.06.2015 was fraudulent. It held that in the facts
and circumstances of the case, the time prescribed for filing a
suit for declaration had long expired. It also held that there
was an express clause mentioned in the lease deed dated
18.06.2015 for resolution of dispute through arbitration and
consequently held that the suit filed by the plaintiff was not
maintainable. It also held that the plaintiff had created an
imaginary cause of action and had filed a suit based on
vexatious one and consequently it rejected the plaint,
unmindful of the fact that an application under Section 8 of the
Act, 1996 filed by the defendant no.1 was still pending
consideration. Being aggrieved by the said order, the plaintiff
filed R.A. No. 178/2018. The first appellate court too relying
upon the judgment of the Apex Court in Booz Allen and
Hamilton Inc. Vs. S.B.I. Home Finance Ltd., & Ors.1 held
that the suit for declaration was not maintainable before the
civil court and consequently it upheld the order passed by the
trial court and dismissed the appeal. Being aggrieved by the
same, the plaintiff has filed this appeal.
(2011) 5 SCC 532
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6. This appeal was admitted to consider the following
substantial questions of law.
1. Whether the trial court was justified in entertaining the
application filed by the defendant no.2 under Order VII
Rule 11 (a), (b) and (d), Order 14 Rule 2(2) r/w Sec. 151
of CPC when the defendant no.1 had filed an application
to refer the application under Section 8 of the Arbitration
and Conciliation Act, 1996?
2. Whether the trial court and the first appellate court were
right in rejecting the plaint on the ground that the suit
filed in the year 2018 in respect of a lease deed dated
18.06.2015 was barred by law of limitation and also on
the ground that the suit was manifestly vexatious and
meritless and that it did not disclose any right to sue?
7. Learned counsel for the plaintiff submitted that the
defendant no.2 was not a signatory to the lease deed dated
18.06.2015 but was arrayed as a party in the suit since certain
allegations were made against him in the plaint and therefore
he was a formal party against whom no reliefs were sought for.
He submitted that defendant no.2 was also the named
Arbitrator in the lease deed dated 18.06.2015 and hence he did
not have any locus standi to file an application under Order VII
Rule 11(a), (b) & (d), Order 14 Rule 2(2) read with 151 of CPC.
At any rate, he contends that the suit could not have been
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rejected at the instance of defendant no.2, more particularly
when an application filed by the defendant no.1 under Section 8
of the Act, 1996 was pending consideration. He therefore
submits that the trial court and the first appellate court
misdirected themselves in holding that the suit was
mischievous and that it was barred under Section 8 of the Act,
1996.
8. Per contra, learned counsel for defendants no.1 and 2
submitted that the suit was not only filed for the relief of
declaration that the lease deed dated 18.06.2015 was
fraudulent but also for perpetual injunction restraining the
defendants from disturbing the possession of the plaintiff in the
suit property. He therefore contends that defendant no.2 was
not a formal party but was a necessary party and therefore
defendant no.2 was entitled to file an application for rejection
of the application on the ground that the cause of action
mentioned in the plaint was illusory and a result of clever
drafting. He further contended that the plaintiff slept over his
right to file the suit within the limitation as prescribed but long
after the expiry of limitation that too after a notice of
termination was issued to him, he filed the present suit seeking
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for the relief of declaration. He contends that the suit was
therefore barred by law of limitation and hence rejection of
plaint under Order VII Rule 11(a), (b) & (d), Order 14 Rule 2(2)
read with 151 of CPC was justified. He did not dispute the fact
that an application filed by defendant no.1 under Section 8 of
the Act, 1996 was pending consideration.
9. I have heard learned counsel for the plaintiff and learned
counsel for the defendants. I have also perused the impugned
order passed by the trial court as well as the judgment passed
by the first appellate court. I have also perused the plaint,
application filed for rejection as well as the objections filed by
the plaintiff.
10. It is not in dispute that the defendant no.1 being the
owner of the suit property had executed a lease deed dated
04.10.2012 in favour of the plaintiff to enable the plaintiff to
seek allotment of a LPG dealership from a petroleum company.
It is also not in dispute that subsequent to the execution of the
lease deed, a LPG outlet was allotted to the plaintiff. It is also
not in dispute that the lease deed 04.10.2012 came to be
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rectified on 10.01.2014. The lease was to be in force for a
period of 15 years from 10.01.2014.
11. It is also not in dispute that a lease deed dated
18.06.2015 was executed by the plaintiff though he claimed
that the defendants no.1 and 2 had tricked him by mentioning
the rate of rent as Rs.60,000/- per month instead of a sum of
Rs.5,000/- per month that was originally agreed upon. The
plaintiff claimed that he came to know of the alleged fraud
committed by the defendant no.1 in collusion with the
defendant no.2 only after he received a notice of termination
during July, 2018 and thereafter when he caused a search of
the document, he realized that the rate of rent was mentioned
as Rs.60,000/- per month. It was on this ground that the
plaintiff sought for the relief of declaration that the lease deed
dated 18.06.2015 was fraudulent and did not affect his rights
under the lease deed dated 04.10.2012 in any manner
whatsoever and for perpetual injunction.
12. It is not in dispute that the defendant no.1 being the
lessor thereafter filed an application under Section 8 of the Act,
1996 contending that the lease deed dated 18.06.2015
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contained an arbitration clause for resolution of dispute
between the plaintiff and defendant no.1 and therefore the suit
for declaratory relief was not maintainable and that the parties
are liable to be referred to arbitration. Even before this
application was considered by the trial court the defendant no.2
filed an application under Order VII Rule 11(a), (b) & (d), Order
14 Rule 2(2) read with 151 of CPC to reject the plaint on the
ground that the suit was belated and was beyond the time
prescribed and also on the ground that the cause of action
mentioned by the plaintiff was illusory and a result of clever
drafting. He also claimed that when Sec. 8 of the Act, 1996
debarred filing of a suit, the plaintiff could not have approached
the court.
13. The trial court unmindful of the fact that the plaintiff had
pleaded in the plaint the circumstances under which he had
been tricked into believing that the recitals contained in the
lease deed dated 04.10.2012 were mirrored in the lease deed
dated 18.06.2015, could not have held that the cause of action
was mischievous and or vexatious and meritless.
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14. A perusal of the plaint averments would indicate that if
the suit is filed independently without reference to the
arbitration clause, the plaint did disclose some cause of action
which require to be investigated and adjudicated after trial.
The trial court could not have rejected the plaint on the ground
that the suit was barred by time as the plaintiff did mention in
the plaint that he came to know of the alleged fraud committed
by the defendant no.1 only after receipt of notice of
termination. The facts asserted by the plaintiff are therefore to
be established after a trial and certainly not at an interlocutory
stage by entertaining an application filed by defendant no.2.
Even otherwise, when the defendant no.1 had filed application
under Section 8 of the Act, 1996 the defendant no.2 who did
not have any substantive interest in the suit property and
against the relief sought for in the suit, could not have
ventured to file an application for rejection of the plaint.
Therefore, the trial court committed an error in allowing an
application filed by defendant no.2 and also committed an error
in rejecting the plaint. Therefore, the substantial questions of
law framed by this court are answered in favour of the plaintiff
and against the defendants and consequently this appeal is
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allowed and the impugned judgments passed by both the
courts are set aside and the suit is restored on the file of the
trial court.
15. The trial court is directed to consider the application filed
by the defendant no.1 under Section 8 of the Act, 1996 and
dispose of the same within a period of one month from the date
of receipt of a certified copy of this order.
16. It is made clear that any observations made by this court
regarding the maintainability of the suit is only for the limited
purposes of disposing this appeal and if a claim is made before
the Arbitrator, any observations made herein shall not affect
the Arbitrator or influence him in deciding the case on merits.
The plaintiff shall appear before the trial court on
31.01.2024.
The court fee paid by the appellant in this appeal as well
as before the trial court and the first appellate court is ordered
to be refunded.
SD/-
JUDGE
CT-ASC
