2017 (10) TMI 1625 - HC - Indian Laws

Rejection of application filed by the applicant under Order VII Rule 10 and 11 read with Section 151 of CPC - seeking return and/or rejection of the plaint - whether the plaint discloses the cause of action and whether the suit is barred under any law as contemplated in Clause (a) and Clause (d) respectively of Rule 11 of Order VII? HELD THAT - Order VI Rule 2 requires that every pleadings shall contain and contain only a statement in concise form and of material facts on which the party pleading relies for his claim or defence as the case may be but not the evidence by which they are to be proved. Thus though the pleadings must contain a statement in concise form of material facts it need not contain the evidence by which they are to be proved. At this juncture it would be also relevant to mention that Order VII Rule 1 states as to what particulars should be contained in the plaint and as per Clause (e) of the said Rule the plaint must contain the facts constituting the cause of action and when it arose. As per Clause (f) thereof the plaint also must contain the facts showing that the Court has jurisdiction. Order VI Rule 2 and Order VII Rule 1 it clearly emerges that the pleadings i.e. the plaint in the instant case must state the material facts constituting the cause of action and as to when it arose and omission of a single material fact leads to an incomplete cause of action and the plaint becomes bad. Such infirmity may attract Clause (d) of Rule 11 of Order VII. The word shall used in Order VII Rule 11 also cast duty on the Court to reject the plaint when it is hit by any of the clauses mentioned in Rule 11. In the instant case the applicant Bank having already initiated the proceedings under Section 17 of the DRT Act for crystallizing their dues as permitted by the BIFR the suit filed by the respondent - plaintiff seeking reliefs in respect of the same subject matter would be completely barred under Section 18 of the said Act. It cannot be gainsaid that under Section 17 the Tribunal has powers and jurisdiction to entertain and decide applications from the banks and financial institutions for recovery of debts and under Section 18 no other Court or authority has jurisdiction or powers in relation to the matters specified in Section 17 - when the applicant Bank has filed the proceedings before the DRT the respondent was expected to claim set off or counter-claim in respect of the transactions in question which were also the subject matter of the proceedings before the DRT. The respondent could not have asked for the prayers in the suit seeking stay of the proceedings pending before the DRT Mumbai which was not the Tribunal subordinate to the trial Court. As held by Supreme Court in case of T. ARIVANDANDAM VERSUS T.V. SATYAPAL ANOTHER 1977 (10) TMI 116 - SUPREME COURT followed in N.V. SRINIVASA MURTHY AND ORS. VERSUS MARIYAMMA (DEAD) BY PROPOSED LRS. AND ORS. 2005 (7) TMI 705 - SUPREME COURT and various other cases if clever drafting has created an illusion of a cause of action the Court must nip it in the bud at the first hearing. The Court is of the opinion that the plaint not disclosing the cause of action and even otherwise barred under the provisions contained in Section 18 of the DRT Act deserves to be rejected under Clause (a) and (d) of Rule 11 of Order VII. The Court is also of the opinion that the suit filed by the respondent is absolutely vexatious and dishonest litigation filed with a view to misuse and abuse the process of law to avoid payments to the applicant Bank. The trial Court having failed to discharge the statutory duty cast upon it under Order VII Rule 11 and having failed to exercise the jurisdiction vested in it the impugned order passed by it deserves to be set aside and is hereby set aside. The Civil Revision Application stands allowed.

Summary

Issues Involved:
1. Territorial Jurisdiction of the Trial Court
2. Cause of Action and Material Facts
3. Bar under the Recovery of Debts Due to Banks and Financial Institutions Act (RDDBFI Act)
4. Bar under the Specific Relief Act
5. Bar under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act)
6. Maintainability of the Composite Application under Order VII Rule 10 and 11

Detailed Analysis:

1. Territorial Jurisdiction of the Trial Court:
The applicant Bank challenged the trial court's jurisdiction, arguing that the Master Agreement and Term Loan Agreement were executed in Mumbai, and all related legal proceedings were pending in Mumbai courts. The respondent-plaintiff contended that part of the cause of action arose in Khambhaliya, where the agreements were signed, and the factory was located. The court concluded that the trial court lacked territorial jurisdiction, as the agreements and related proceedings were centered in Mumbai.

2. Cause of Action and Material Facts:
The court emphasized the necessity for the plaint to state material facts constituting the cause of action and when it arose. The respondent-plaintiff failed to specify these details, particularly regarding the illegality of the agreements and the exact timing and nature of the alleged fraud. The court noted that the omission of such material facts rendered the plaint defective, leading to the conclusion that it did not disclose a cause of action.

3. Bar under the Recovery of Debts Due to Banks and Financial Institutions Act (RDDBFI Act):
The applicant Bank argued that the Debts Recovery Tribunal (DRT) had exclusive jurisdiction over the matter, as the Bank had already initiated recovery proceedings under the RDDBFI Act. The court agreed, citing Sections 17 and 18 of the RDDBFI Act, which bar civil court jurisdiction in matters specified under Section 17. The court found that the suit before the civil court was barred, as the DRT was already handling the recovery proceedings.

4. Bar under the Specific Relief Act:
The applicant Bank contended that the suit was barred under Section 41(b) and 41(h) of the Specific Relief Act, which prohibit injunctions to restrain proceedings in a court not subordinate to the one granting the injunction and when equally efficacious relief can be obtained through other means. The court agreed, noting that the respondent-plaintiff should have sought relief through counterclaims or set-offs in the DRT proceedings rather than filing a separate suit.

5. Bar under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act):
The applicant Bank argued that the suit was barred under Section 34 of the SARFAESI Act, which restricts civil court jurisdiction over matters related to the enforcement of security interests. The court concurred, finding that the suit sought to impede the Bank's enforcement actions under the SARFAESI Act, further supporting the rejection of the plaint.

6. Maintainability of the Composite Application under Order VII Rule 10 and 11:
The court addressed the issue of the maintainability of a composite application under Order VII Rule 10 and 11. It concluded that such an application was not maintainable, as the provisions are mutually exclusive. However, considering the applicant's submission, the court treated the revision application as one filed against the order rejecting the application under Rule 11 of Order VII.

Conclusion:
The court found that the plaint did not disclose a cause of action, was barred by the RDDBFI Act, Specific Relief Act, and SARFAESI Act, and was filed with mala fide intentions to misuse the process of law. The trial court's order was set aside, and the plaint was rejected under Clause (a) and (d) of Rule 11 of Order VII of CPC. The Civil Revision Application was allowed, and the request to stay the operation of the order was rejected.