MADHAV PRASAD AGGARWAL & ANR. versus AXIS BANK LTD. & ANR.

[2019] 8 S.C.R.

MADHAV PRASAD AGGARWAL & ANR.

AXIS BANK LTD. & ANR.

(Civil Appeal No. 5126 of 2019)

BJULY 01, 2019

[A. M. KHANWILKAR AND AJAY RASTOGI, JJ.]

Code of Civil Procedure, 1908:

Order 7 Rule 11(d) – Rejection of plaint – Relief of rejectionCof plaint, sought by one of the defendants – Permissibility – Held:In exercise of powers u/Or. 7 r. 11(d) the plaint has to be rejected asa whole or not at all – Such relief cannot be pursued only in respectof one of the defendants – In the present case rejection of plaintonly qua respondent No. 1 by the High Court in exercise of powersu/Or. 7 r. 11(d) was replete with jurisdictional error.

Allowing the appeals, the Court

HELD : 1. The plaint can and must be rejected in exerciseof powers under Order 7 Rule 11(d) of CPC on account of non-compliance of mandatory requirements or being replete with anyEinstitutional deficiency at the time of presentation of the plaint,ascribable to clauses (a) to (f) of Rule 11 of Order 7 of CPC. Theplaint as presented must proceed as whole or can be rejectedas whole but not in part. In that sense, the relief claimed byrespondent No.1 in the notice of motion(s) which commended tothe High Court, is clearly jurisdictional error. The fact that oneFor some of the reliefs claimed against respondent No.1 in theconcerned suit is barred by Section 34 of 2002 Act or otherwise,such objection can be raised by invoking other remedies includingunder Order 6 Rule 16 of CPC at the appropriate stage. That canbe considered by the Court on its own merits and in accordanceGwith law. Although, the High Court has examined thosematters in the impugned judgment the same should stand effaced.[Para 13] [1069-B-E]

2. fortiori, the appeals must succeed on the sole groundthat the principal relief claimed in the notice of motion filed by

respondent No.1 to reject the plaint only qua the said respondentand which commended to the High Court, is replete withjurisdictional error. Such relief “cannot be entertained” inexercise of power under Order 7 Rule 11(d) of CPC. That poweris limited to rejection of the plaint as whole or not at all.[Para 15] [1069-G-H; 1070-A]

Sejal Glass Limited v. Navilan Merchants Private Limited(2018) 11 SCC 780 : [2017] 7 SCR 557 – relied on.

Mardia Chemicals Ltd. and Ors. v. Union of India andOrs. (2004) 4 SCC 311 : [2004] 3 SCR 982 ; JagdishSingh v. Heeralal and Ors. (2014) 1 SCC 479 : [2013]12 SCR 232 ; State Bank of India v. Smt. Jigishaben B.Sanghvi and Ors. 2011 (3) Bom. C. R. 187 ; ArasaKumar v. Nauammal II (2015) BC 127 ; M.V. “SeaSuccess I” v. Liverpool and London SteamshipProtection and Indemnity Association Ltd. and Ors. AIR2002 Bombay 151 ; Nahar Industrial EnterprisesLimited v. Hong Kong and Shanghai BankingCorporation (2009) 8 SCC 646 : [2009] 12 SCR 54– referred to.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5126of 2019.

From the Judgment and Order dated 26.10.2018 of the HighCourt of Judicature at Bombay in Appeal No. 360 of 2017.

With

Civil Appeal Nos. 5127, 5128, 5129 of 2019.

AMukul Rohtagi, Shyam Divan, Sr. Advs., Satyam Vaishnav,Ms. Rukhmani Bobde, Tanuj Agarwal, Manu Bajaj, Govind Manoharan(for M/S. Parekh & Co.), Siddhesh Kotwal, Ms. Bansuri Swaraj,Ms. Shreya Bhatnagar, Raghunatha Sethupathy, Gagan Narang,Ms. Arshiya Ghose, Ms. Astha Sharma, Nirnimesh Dube, Advs. for theAppellants.B

Dr. Abhishek Manu Singhvi, Parag P. Tripathi, Sr. Advs., BishwajitDubey, Bhalchandra Palav, Ms. Srideepa Bhattachryya, Ms. RuchiChoudhury, Lalltaksh Joshi, (for M/S. Cyril Amarchand Mangaldas),Abhimanyu Bhandari, Ms. Ashima Singhal, Naveen Kumar, Advs. forthe Respondents.C

The Judgment of the Court was delivered by

A. M. KHANWILKAR, J. 1. Leave granted.

2. These appeals take exception to the common judgment andorder passed by the High Court of Judicature at Bombay (OrdinaryDOriginal Civil Jurisdiction) in Appeal Nos.360, 361, 362 and CommercialAppeal No.172 of 2017 dated 26[th] October, 2018, whereby the notice ofmotion(s) filed by respondent No.1-Axis Bank Ltd. (one of the defendantin the suits filed by the respective appellant(s)) came to be allowed andas result of which, the suit filed by the concerned appellant(s) hadEbeen dismissed as against respondent No.1-Axis Bank Ltd., by invokingthe provisions of Order 7 Rule 11(d) of the Civil Procedure Code (forshort “CPC”).

3. The appellant(s) being the original plaintiff(s) in the respectivesuit(s) wanted to purchase flats in project known as ‘Orbit Heaven’F(for short “the project”) being developed by Orbit Corporation Ltd. (InLiq.) (for short “The builder”), at Nepean Sea Road in Mumbai and infurtherance thereof parted with huge amounts of money to the builderranging in several crores although the construction of the project wasunder way. The appellant(s) had started paying installments towards theconsideration of the concerned flats from 2009. Admittedly, no registeredGagreement/document for purchase of concerned flats has been executedin favour of respective appellant(s). The appellant(s), however, wouldrely on the correspondence and including the letter of allotment issuedby the builder in respect of concerned flats - to assert that there was anagreement between them and the builder in respect of the earmarkedHflat(s) mentioned therein and which had statutory protection.

4. The respondent No.1-bank gave loan facility to builder againstthe project only around year 2013, aggregating to principal sum of Rupees150 Crores in respect of which mortgage deed is said to have beenexecuted between the builder and the bank. That transaction came tothe notice of the concerned plaintiff(s) only after publication of publicnotice on 13[th] September, 2016 in Economic Times, informing the generalpublic that the said project (Orbit Heaven) has been mortgaged. Thesum and substance of the assertion made by the appellant(s) is that theappellant(s) were kept in the dark whilst the mortgage transaction wasexecuted between the builder and the bank whereunder their rights havebeen unilaterally jeopardised, to receive possession of the concernedflats earmarked in the allotment letter(s) and in respect of which theconcerned appellant(s) have paid substantial contribution and theaggregate contribution of all the plaintiff(s) would be much more thanthe loan amount given by the bank to the builder in terms of the mortgagedeed for the entire project. In this backdrop, the concerned appellant(s)had asked for reliefs not only against the builder but also concernedparties joined as defendant(s) in the suit(s) filed by them and includingrespondent No.1-bank.

5. The reliefs claimed by the concerned appellant(s) in separatesuit(s) filed by them are more or less similar. We may presently refer tothe reliefs claimed in suit No.8 of 2017 filed by Padma Ashok Bhatt(appellant in civil appeal arising from SLP (C) No.30900 of 2018), thesame read thus:

“The Plaintiff therefore prays:

(a) That the Defendant No.1 be ordered and decreed tocomplete the Flat Nos.2302 and 2402 in the Project“Orbit Haven” situate at Darabshaw Lane, Nepean SeaRoad, Mumbai-400036 as per the agreement being letterof confirmation dated 16[th] April 2009 and receiptsexecuted by Defendant No.1 in favour of the Plaintiffand hand over the possession of Flat Nos.2302 and 2402to the Plaintiff and that the Defendant No.1 andDefendant No.15 be jointly and/or severally be orderedand directed to comply with all the obligations underMaharashtra Ownership Flats Act including, but notlimited to, (i) the execution of the Agreement in termsof Section 4 of Maharashtra Ownership Flats Act, (ii)

completing the building as per the sanction plan assanctioned by Municipal Corporation of Greater Mumbai,(iii) to delivery vacant and peaceful possession of therespective flats, (iv) to form the Society or body of theCorporation as provided under Maharashtra OwnershipFlats Act and to convey the land along with the buildingin favour of the Society or body of Corporation as perMaharashtra Ownership Flats Act.

(b) That the Plaintiff is also entitled for declaration thatthere is no legal, valid enforceable lien, charge ormortgage in favour of Defendant No.15 in respect ofthe building or any part thereof known as Orbit Haven,situated at Darabshaw Lane, Napeansea Road,Mumbai-400036;

(c) The Defendant No.1 be also ordered and directed todisclose all their assets, properties including the personalproperties of the Directors and its sister concernparticularly M/s Apex Hotel Enterprise Pvt. Ltd. onAffidavit before this Hon’ble Court, within the periodof two weeks or such other time as this Hon’ble Courtmay deem fit and proper;

(d) This Hon’ble Court be pleased to pass an order ofinjunction restraining the Defendant No.1 from in anymanner creating any third party rights in respect of allthe properties that may be disclosed by the DefendantNo.1, pursuant to the orders of this Hon’ble Court onAffidavit;

(e) The Plaintiff is also entitled for an order and directionthat the Defendant No.1 be ordered and directed to giveclear and marketable title in respect of flat being FlatNos.2302 and 2402 and the building Orbit Haven,situated at Darabshaw Lane, Napeansea Road,Mumbai-400036 and to enter into and register theAgreement as provided under the provisions ofMaharashtra Ownership Flats Act;

(f) The Defendant No.1 be also ordered and directed toindemnify the Plaintiff in respect of all claims, charges

[A. M. KHANWILKAR, J.]

that may be made by anybody in respect of Flat Nos.2302and 2402 at Orbit Haven, situated at Darabshaw Lane,Napeansea Road, Mumbai-400036 and keep the sameindemnified till the registration of the Agreement andConveyance of the land in favour of the Society thatmay be formed;

(f1) Without prejudice to the reliefs as claimedhereinabove and in the alternative and in the event thisHon’ble Court comes to the conclusion that the specificperformance of the suit flat cannot or ought not to begranted, in such an event, the Plaintiff is entitled forrefund of the amount of Rs.9,23,50,000/- (Rupees NineCrores Twenty Three Lakhs Fifty Thousand Only) paidby the Plaintiff to Defendant No.1 along with interestthereon @12% from the date of payment till repaymentand cost.

(f2) It be declared that the payment of the amount asstated in prayer (f1) stands validly charged on the landand in the flat Nos.2302 and 2402.

(f3) In the event of failure to pay the amount as statedin prayer (f1), directions be issued for enforcement ofthe Plaintiff’s charge upon the suit plot of land and FlatNos.2302 and 2402.

(f4) In addition to the amount as prayed in prayer (f1)the Defendant be also ordered and decreed to paydamages of Rs.15,00,00,000/- (Rupees Fifteen CroresOnly) to the Plaintiff.

(g) This Hon’ble Court be pleased to appoint CourtReceiver, High Court, Bombay, as Receiver under allpowers under Order XL Rule 1 of Code of CivilProcedure, in respect of suit building Orbit Haven andthe Plot of Land being Plot No.12, 8, Darabshaw Road,Off Nepean Sea Road, admeasuring 1105.00 squareyards i.e. 923.92 sq. mtrs. Or thereabouts and registeredwith Collector of Land Revenue under Collector’s OldNos.573 and 104A and Collector’s New Nos.2736 and11317 old Survey No.48 and New Survey Nos.3 and 4/

7139 and Cadastral Survey Nos.8/593 of Malabar Hilland Cumballa Hill Division bearing Municipal WardNo.D-3326 (4) and Street No.76(a), to do followingthings and/or such other things as this Hon’ble Courtmay deem fit and proper:-

i.To take complete charge of the said building;

ii.To call for the balance money from the FlatPurchasers as mentioned in Exhibit ‘E’, beingPlaintiff and Defendant Nos.2 to 14;

iii.To execute the Agreement for and on behalf ofDefendant No.1 with the Plaintiff as providedunder the provisions of MOFA on payment ofstamp duty, registration charges and all otherincidental charges to be paid by the Plaintiff;

iv.To pay all requisite fees to MunicipalCorporation of Greater Mumbai as may berequired for further progress of the work;

v.To appoint the existing Architect, who are theArchitect to complete the said Project;

vi.To appoint the existing Contractor of the saidbuilding, to complete the work;

vii.To appoint the existing Structural Engineer whohave already been the Structural Engineer ofthe said Project;

viii.To pay all fees/charges in respect of theaforesaid persons;

ix.To regularly submit report to this Hon’ble Courtwith regard to the progress and any othermeasures that may be required for completionof the Project;

x.To make all application to Corporation and allother Semi-Government Authorities as may berequired for completing the said building OrbitHaven.

xi.After completion of the Project, to apply forAOccupancy Certificate and CompletionCertificate.

xii.To hand over the flats after completion to thePlaintiff.

(h) Interim and ad-interim in terms of prayers (c) to (g) begranted;

(i) Cost of the suit be provided;

(j) Such further and other reliefs as the nature andcircumstances of the case may require be granted.”

6. The respondent No.1-bank (defendant No.15) appeared in theconcerned suit and filed notice of motion for identical relief, as claimedin notice of motion No.1206 of 2017 in suit No.8 of 2017. The reliefclaimed in the subject notice of motion(s) was limited to reject the plaintqua respondent No.1 herein, in exercise of powers under Order 7 Rule11(d) of CPC on the ground that the suit(s) against the said respondentwould be barred by provisions of Section 34 of The Securitisation andReconstruction of Financial Assets and Enforcement of Security InterestAct, 2002 (for short “2002 Act”). The reliefs claimed in notice of motionNo.1206 of 2017 in suit No.8 of 2017, read thus:

“(a) That the plaint in suit no.8 of 2017 be rejected qua theapplicant/defendant No.15;

(b) that pending the hearing and final disposal of the Notice ofMotion the suit be stayed;

(c) that pending the hearing and final disposal of the notice ofmotion the status-quo granted vide dated 3[rd] March, 2017, of thisHon’ble Court be vacated;

(d) for ad-interim relief in terms of prayers (b) and (c) above;

(e) for such further and other relief as the nature andcircumstances of the case may require; and

(f) costs.”

(emphasis supplied)

AAs aforementioned, the reliefs claimed in the plaint and the noticeof motion in the respective suit(s) which are the subject matter of thepresent set of appeals are similar, albeit with minor variation. That,however, need not detain us from considering the common question whichhas arisen for our consideration in the present appeals.

B7. Be that as it may, the notice of motion(s) in the concernedappeals came to be dismissed by the learned Single Judge of the HighCourt by common judgment dated 26[th] July, 2017, on the finding thatthere was no bar from entertaining civil suit(s) in respect of any othermatter which is outside the scope of matters required to be determinedby the Debt Recovery Tribunal (for short “DRT”) constituted underC2002 Act. The learned Single Judge held that the facts of the presentcase clearly indicate that the cause of action and the reliefs claimed bythe concerned plaintiff(s) fell within the excepted category and the barunder Section 34 read with Section 17 of 2002 Act would be noimpediment in adjudicating the subject matter of the concerned suit. TheDlearned Single Judge referred to decisions of this Court in Mardia

Chemicals Ltd. and Ors. Vs. Union of India and Ors.[1], JagdishSingh Vs. Heeralal and Ors.[2]and of High Courts in State Bank ofIndia Vs. Smt. Jigishaben B. Sanghvi and Ors.[3]and Arasa KumarVs. Nauammal[4]. However, the learned Single Judge rejected theargument/objection raised by the appellant(s) that it is impermissible toEreject the plaint only against one of the defendant(s), in exercise of powerunder Order 7 Rule 11(d) of CPC by relying on the decision of theDivision Bench of the same High Court in M.V. “Sea Success I” Vs.Liverpool and London Steamship Protection and IndemnityAssociation Ltd. and Ors.[5] As the notice of motion moved by respondentFNo.1-bank came to be dismissed, respondent No.1 carried the matter inappeal before the Division Bench by way of separate five appeals in theconcerned suit. All these appeals came to be allowed by the DivisionBench vide impugned judgment.

8. The impugned judgment has reversed the opinion of the learnedGSingle Judge that bar under Section 34 will not come in the way of theappellants/plaintiffs. The Division Bench also opined that the averments1 (2004) 4 SCC 3112 (2014) 1 SCC 4793 2011 (3) Bom. C. R. 1874 II (2015) BC 127H5 AIR 2002 BOMBAY 151

in the concerned plaint do not spell out the case of fraud committed bythe bank and/or the builder. As result of which, the Court held that thesuit(s) instituted by the appellant(s) did not come within the exceptedcategory predicated in Mardia Chemicals Ltd. (supra) and thus theplaint against respondent No.1-bank was not maintainable, being barredby Section 34 of the 2002 Act.

9. Feeling aggrieved, out of the five plaintiff(s) only four of themhave chosen to file the present appeals. They have assailed every reasonassigned by the Division Bench both on facts and the law. It is urgedthat the plaint cannot be rejected only against one of the defendant(s)but it could be rejected as whole. To buttress this contention reliancehas been placed on Sejal Glass Limited Vs. Navilan Merchants PrivateLimited[6]. According to the appellant(s), even otherwise the decisionsconsidered by the High Court to hold against the appellant(s) that thesuit(s) filed by them were barred by Section 34 of 2002 Act were inapplicable to the fact situation of the present case being case of thirdparty claiming right under an agreement which has the statutory protectionunder the provisions of The Maharashtra Ownership Flats (Regulationof the Promotion of Construction, Sale, Management and Transfer) Act,1963 (for short “1963 Act”). The appellant(s) would also urge that thebar under Section 34 has no bearing on the subject matter of the suitfiled by the respective appellant(s) and the nature of reliefs claimed bythem including against respondent No.1-bank. The presence ofrespondent No.1 in the said suit would be proper, even if not necessaryparty. It is urged that the impugned judgment cannot be countenanced.

10. Per contra, respondent No.1-bank would urge that the DivisionBench was justified in allowing the notice of motion filed by respondentNo.1-bank to reject the plaint qua the bank being barred by Section 34of the 2002 Act. According to the said respondent, the appellant(s) arenot genuine home buyers but are investors of developers i.e. OrbitCorporation Ltd. (In Liq.). Due to the close acquaintance/businessrelationship, the concerned appellant(s) took commercial unsecured riskby purportedly investing huge amount under the guise of purchasing flatsand entered into transactions which were contrary to the provisions of1963 Act. Thus, the appellant(s) cannot claim any right merely on thebasis of self-serving allotment letter pertaining to the concerned flat,

6 (2018) 11 SCC 780

Apurportedly given by the builder. Noticeably, contends learned counselfor respondent No.1 that the averments in the plaint(s) regarding allegationof fraud played upon the appellant(s) are vague and general. The sameare baseless and unsubstantiated. Rather, no case can be culled outfrom the averments in the plaint so as to hold that the suit filed by theconcerned appellant(s) comes within the excepted category predicatedBin Mardia Chemicals Ltd. (supra). Respondent No.1 has supportedthe impugned judgment of the Division Bench and would contend thatthe bank is not necessary or even proper party to suit for specificperformance of the alleged agreement and including in relation toalternative relief of damages claimed against the developers.

11. We do not deem it necessary to elaborate on all other argumentsas we are inclined to accept the objection of the appellant(s) that therelief of rejection of plaint in exercise of powers under Order 7 Rule11(d) of CPC cannot be pursued only in respect of one of the defendant(s).In other words, the plaint has to be rejected as whole or not at all, inDexercise of power Order 7 Rule 11 (d) of CPC. Indeed, the learnedSingle Judge rejected this objection raised by the appellant(s) by relyingon the decision of the Division Bench of the same High Court. However,we find that the decision of this Court in the case of Sejal Glass Limited(supra) is directly on the point. In that case, an application was filed bythe defendant(s) under Order 7 Rule 11(d) of CPC stating that the plaintEdisclosed no cause of action. The civil court held that the plaint is to bebifurcated as it did not disclose any cause of action against the director’sdefendant(s) 2 to 4 therein. On that basis, the High Court had opinedthat the suit can continue against defendant No.1-company alone. Thequestion considered by this Court was whether such course is open toFthe civil court in exercise of powers under Order 7 Rule 11(d) of CPC.The Court answered the said question in the negative by adverting toseveral decisions on the point which had consistently held that the plaintcan either be rejected as whole or not at all. The Court held that it isnot permissible to reject plaint qua any particular portion of plaintincluding against some of the defendant(s) and continue the same againstGthe others. In no uncertain terms the Court has held that if the plaintsurvives against certain defendant(s) and/or properties, Order 7 Rule11(d) of CPC will have no application at all, and the suit as whole mustthen proceed to trial.

12. In view of this settled legal position we may now turn to thenature of reliefs claimed by respondent No.1 in the notice of motionconsidered by the Single Judge in the first instance and then the DivisionBench of the High Court of Bombay. The principal or singular substantiverelief is to reject the plaint only qua the applicant/respondent No.1 herein.No more and no less.

13. Indubitably, the plaint can and must be rejected in exercise ofpowers under Order 7 Rule 11(d) of CPC on account of non-complianceof mandatory requirements or being replete with any institutionaldeficiency at the time of presentation of the plaint, ascribable to clauses(a) to (f) of Rule 11 of Order 7 of CPC. In other words, the plaint aspresented must proceed as whole or can be rejected as whole butnot in part. In that sense, the relief claimed by respondent No.1 in thenotice of motion(s) which commended to the High Court, is clearly ajurisdictional error. The fact that one or some of the reliefs claimedagainst respondent No.1 in the concerned suit is barred by Section 34 of2002 Act or otherwise, such objection can be raised by invoking otherremedies including under Order 6 Rule 16 of CPC at the appropriatestage. That can be considered by the Court on its own merits and inaccordance with law. Although, the High Court has examined thosematters in the impugned judgment the same, in our opinion, should standeffaced and we order accordingly.

14. Resultantly, we do not wish to dilate on the argument of theappellant(s) about the inapplicability of the judgments taken into accountby the Division Bench of the High Court or for that matter the correctnessof the dictum in the concerned judgment on the principle underlying theexposition in Nahar Industrial Enterprises Limited Vs. Hong Kongand Shanghai Banking Corporation[7]to the effect that the DRT andalso the appellate authority cannot pass decree nor it is open to it toenter upon determination in respect of matters beyond the scope of poweror jurisdiction endowed in terms of Section 17 of the 2002 Act. We leaveall questions open to be decided afresh on its own merits in accordancewith law.15. fortiori, these appeals must succeed on the sole ground thatthe principal relief claimed in the notice of motion filed by respondentNo.1 to reject the plaint only qua the said respondent and which

7 (2009) 8 SCC 646

1070SUPREME COURT REPORTS

Acommended to the High Court, is replete with jurisdictional error. Such arelief “cannot be entertained” in exercise of power under Order 7 Rule11(d) of CPC. That power is limited to rejection of the plaint as wholeor not at all.

16. In view of the above, these appeals are allowed. Resultantly,Bthe impugned judgment and order of the Division Bench of the HighCourt in the concerned appeals are set-aside and instead the order ofthe learned Single Judge dismissing the notice of motion(s) in theconcerned suit(s), is restored. Thus, the notice of motion taken out byrespondent No.1 in the concerned suit(s) are dismissed with liberty torespondent No.1, as aforementioned. All pending interim applicationsCare also disposed of. No order as to costs.

Kalpana K. Tripathy

Appeals allowed.