2017 (12) TMI 849 - HC - Companies Law

Application under Order 7 Rule 11 of the Code of Civil Procedure - cheques bounced with the remarks, account closed - debts - application at Exhibit11 that is prior to leave to defend application for rejecting the plaint under Order 7 Rule 11 (a) (d) of the Code of Civil Procedure - main thrust of the contention is that there is no cause of action reflecting from the bare reading of the plaint and the suit is barred by law - Held that - Considering the chronology of events, and the facts which are entangled, the Court deems it proper that Order 7 Rule 11 of the Code of Civil Procedure application is required to be heard afresh in detail. Hence, in view of the proposition of law, if the ground is sufficiently explained, the Court need not to deal with all other aspects which are raised by way of contention and therefore, the Court deems it proper to dispose of the present revision application only on this solitary ground with necessary consequential directions in the interest of justice. Considering the aforesaid circumstance, the order dated 12.10.2015 is quashed and set aside hereby with a direction to the learned 5th Additional Senior Civil Judge, Gandhidham to deal with and decide the application at Exhibit11 submitted under Order 7 Rule 11 of the Code of Civil Procedure afresh by extending proper opportunities to the respective parties appearing in the suit and shall pass a reasoned order dealing with rival contentions in the proceedings.

Issues Involved:
1. Legality and validity of the order dated 12.10.2015.
2. Jurisdiction of the Court at Gandhidham.
3. Application under Order 7 Rule 11 of the Code of Civil Procedure.
4. Cause of action and its reflection in the plaint.
5. Order of proceedings in summary suits.

Issue-Wise Detailed Analysis:

1. Legality and Validity of the Order Dated 12.10.2015:
The applicants challenged the legality and validity of the order dated 12.10.2015 passed below Exhibit 11 in Special Civil Suit No. 11 of 2015. The trial judge rejected the application under Order 7 Rule 11 of the Code of Civil Procedure, stating that the cause of action reflects and that the application cannot be entertained before granting leave to defend. The High Court found this reasoning erroneous and in conflict with established legal principles, specifically citing the case of Satellite Television Asian Region Ltd.

2. Jurisdiction of the Court at Gandhidham:
The applicants argued that the Court at Gandhidham had no jurisdiction to entertain the suit since the registered offices of the companies were outside Gujarat, and the transactions were subject to Mumbai jurisdiction. The delivery of goods from Kandla and the mention of "Subject to Gandhidham jurisdiction" in the Tax/Retail Invoice were points of contention. The High Court noted that these jurisdictional issues needed to be properly examined by the trial court.

3. Application under Order 7 Rule 11 of the Code of Civil Procedure:
The main contention was whether the application under Order 7 Rule 11 could be entertained before the leave to defend was granted. The High Court referred to the decision in Satellite Television Asian Region Ltd., which established that such applications should be considered at any stage, even before deciding the application for leave to defend. The trial court's refusal to entertain the application under Order 7 Rule 11 before granting leave to defend was deemed incorrect.

4. Cause of Action and Its Reflection in the Plaint:
The applicants contended that no cause of action was reflected in the plaint, and the suit was barred by law. The trial court had opined that the cause of action was reflected in the plaint. However, the High Court found that the trial court did not provide an independent and cogent conclusion on this matter. The High Court emphasized the need for a detailed examination of whether the cause of action was indeed reflected in the plaint.

5. Order of Proceedings in Summary Suits:
The High Court highlighted that the trial court should have considered the application under Order 7 Rule 11 before addressing the leave to defend application. This approach aligns with the purpose of Order 7 Rule 11, which is to ensure that non-maintainable suits are dismissed at the earliest stage. The High Court directed the trial court to hear the application under Order 7 Rule 11 afresh and provide a reasoned order.

Conclusion:
The High Court quashed the order dated 12.10.2015 and directed the trial court to reconsider the application under Order 7 Rule 11 of the Code of Civil Procedure afresh, providing proper opportunities to the parties and passing a reasoned order. The trial court was instructed to decide this application before addressing the leave to defend application, ensuring that all contentions raised by the parties are considered independently and in accordance with the law. The revision application was allowed, and the rule was made absolute.

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