2020 (7) TMI 786 - SC - Indian Laws

Maintainability of suit - time limitation - bogus cheque - legal action initiated for over a period of 5 and years from the execution of the Sale Deed in 2009 Order VII Rule 11(d), Code of Civil Procedure for payment of the balance sale consideration - HELD THAT - The Plaintiffs have admitted the execution of the registered Sale Deed dated 02.07.2009 in favour of Defendant No. 1/Respondent No. 1 herein - The case made out in the Plaint is that even though they had executed the registered Sale Deed dated 02.07.2009 for a sale consideration of ₹ 1,74,02,000, an amount of only ₹ 40,000 was paid to them. The remaining 31 cheques mentioned in the Sale Deed, which covered the balance amount of ₹ 1,73,62,000 were alleged to be bogus or false , and allegedly remained unpaid. If the case made out in the Plaint is to be believed, it would mean that almost 99% of the sale consideration i.e. ₹ 1,73,62,000 allegedly remained unpaid throughout. It is, however inconceivable that if the payments had remained unpaid, the Plaintiffs would have remained completely silent for a period of over 5 and years, without even issuing a legal notice for payment of the unpaid sale consideration, or instituting any proceeding for recovery of the amount, till the filing of the present suit in December 2014 - the definition of sale indicates that there must be a transfer of ownership from one person to another i.e. transfer of all rights and interest in the property, which was possessed by the transferor to the transferee. The transferor cannot retain any part of the interest or right in the property, or else it would not be a sale. The definition further indicates that the transfer of ownership has to be made for a price paid or promised or part paid and part promised . Price thus constitutes an essential ingredient of the transaction of sale. Even if the averments of the Plaintiffs are taken to be true, that the entire sale consideration had not in fact been paid, it could not be a ground for cancellation of the Sale Deed. The Plaintiffs may have other remedies in law for recovery of the balance consideration, but could not be granted the relief of cancellation of the registered Sale Deed - the suit filed by the Plaintiffs is vexatious, meritless, and does not disclose a right to sue. The plaint is liable to be rejected Under Order VII Rule 11(a). The present case is a classic case, where the Plaintiffs by clever drafting of the plaint, attempted to make out an illusory cause of action, and bring the suit within the period of limitation - the Plaintiffs have failed to discharge the onus of proof that the suit was filed within the period of limitation. The plaint is therefore, liable to be rejected Under Order VII Rule 11(d) of Code of Civil Procedure. The Plaintiffs have also prayed for cancellation of the subsequent Sale Deed dated 01.04.2013 executed by Respondent No. 1 in favour of Respondent Nos. 2 and 3; since the suit in respect of the 1st Sale Deed dated 02.07.2009 is rejected both under clauses (a) and (d) of Order VII Rule 11, the prayer with respect to the 2nd Sale Deed dated 01.04.2003 cannot be entertained. The present suit filed by the Plaintiffs is clearly an abuse of the process of the court, and bereft of any merit - appeal dismissed.

Summary

Issues Involved:
1. Whether the suit filed by the plaintiffs was barred by limitation.
2. Whether the plaintiffs had a valid cause of action for cancellation of the Sale Deed dated 02.07.2009.
3. Whether the subsequent Sale Deed dated 01.04.2013 could be declared illegal, void, and ineffective.
4. Whether the Trial Court and High Court were correct in rejecting the plaint under Order VII Rule 11 of the Code of Civil Procedure.

Detailed Analysis:

1. Barred by Limitation:
The primary issue was whether the suit filed by the plaintiffs was barred by limitation. The Trial Court and High Court both held that the suit was filed beyond the period of limitation. The Sale Deed in question was executed on 02.07.2009, and the suit was filed on 15.12.2014, well beyond the three-year limitation period prescribed under Articles 58 and 59 of the Limitation Act, 1963. The courts noted that the plaintiffs did not raise any grievance regarding the non-payment of the sale consideration for over five years, which indicated that the suit was time-barred.

2. Cause of Action for Cancellation of Sale Deed:
The plaintiffs contended that the Sale Deed dated 02.07.2009 should be canceled as the full sale consideration was not paid. They alleged that only ?40,000 was paid through six cheques, and the remaining 30 cheques for ?1,73,62,000 were "bogus." However, the courts found that the plaintiffs had acknowledged the receipt of the full sale consideration in the Sale Deed itself. The courts also noted that the plaintiffs did not take any legal action for the alleged non-payment for over five years, which undermined their claim. The courts held that even if the entire sale consideration was not paid, it could not be a ground for cancellation of the Sale Deed under Section 54 of the Transfer of Property Act, 1882.

3. Subsequent Sale Deed Dated 01.04.2013:
The plaintiffs also sought to cancel the subsequent Sale Deed dated 01.04.2013, executed by Respondent No. 1 in favor of Respondent Nos. 2 and 3. The courts held that since the suit in respect of the first Sale Deed dated 02.07.2009 was barred by limitation and lacked a valid cause of action, the prayer for cancellation of the subsequent Sale Deed could not be entertained. The courts noted that Respondent Nos. 2 and 3 were bona fide purchasers for valuable consideration, and there was no privity of contract between the plaintiffs and Respondent Nos. 2 and 3.

4. Rejection of Plaint Under Order VII Rule 11:
The courts analyzed the provisions of Order VII Rule 11 of the Code of Civil Procedure, which allows for the rejection of a plaint if it does not disclose a cause of action or is barred by any law. The courts found that the plaint did not disclose a valid cause of action and was barred by limitation. The courts emphasized that the power to reject a plaint under this provision is a drastic one and must be exercised with caution. However, in this case, the courts concluded that the suit was manifestly vexatious, meritless, and an abuse of the process of the court. Therefore, the rejection of the plaint was justified.

Conclusion:
The Supreme Court upheld the decisions of the Trial Court and High Court, dismissing the civil appeal with costs. The courts found that the suit was barred by limitation, lacked a valid cause of action, and was an abuse of the process of the court. The plaintiffs were ordered to pay costs of ?1,00,000 to Respondent Nos. 2 and 3 within twelve weeks.