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2022 (4) TMI 195 - SC - Indian LawsDishonor of Cheque - Plaint was filed that Cheque was issued as security and misused by the defendant - Jurisdiction of Revisional Court in rejecting the plaint - Whether the High Court was justified in setting aside the order passed by the revisional court in C.R.P. No.5 of 2012 and thereby remanding the matter to the said court for reconsideration on the premise that the revisional court had exceeded its jurisdiction in rejecting the plaint? - HELD THAT - The revisional court considered the revision and allowed the application filed under Order VII Rule 11 of CPC which had the effect of finally disposing of the suit. It is against the said order that the plaintiff filed the writ petition before the High Court which was allowed and the matter was remanded to the revisional court for fresh consideration with an observation that the revisional court may, in turn, remand the matter to the trial court if necessary. This was on the premise that the revisional court had exceeded the jurisdiction vested in it by acting illegally in allowing the application filed under Order VII Rule 11 of CPC. The High Court was not right in observing that the revisional court had exceeded its jurisdiction and it could not have allowed the application filed under Order VII Rule 11 of CPC and thereby reversed the order of the trial court and finally disposed of the suit. In fact, the High Court has failed to appreciate the second proviso to Section 115 of CPC (Orissa amendment) in its true perspective. The revisional court, being the High Court or the District Court, as the case may be, can reverse an order which would finally dispose of the suit or other proceeding - the High Court was not justified in setting aside the said order and remanding the matter to the revisional court (District Court) to consider afresh, the application filed by defendant no.1/appellant herein under Order VII Rule 11 of CPC seeking rejection of the plaint. Whether, the revisional court (District Court) was justified in allowing the application filed under Order VII Rule 11 of CPC and thereby rejecting the plaint filed by the plaintiff/respondent no.1 herein? - HELD THAT - In Sopan Sukhdeo Sable and Ors. vs. Assistant Charity Commissioner and Others 2004 (1) TMI 726 - SUPREME COURT , it was held that Rule 11 of Order VII lays down an independent remedy made available to the defendant to challenge the maintainability of the suit itself, irrespective of his right to contest the same on merits. The law ostensibly does not contemplate any stage when the objections can be raised, and also does not say in express terms about the filing of a written statement. It was held that the word shall is used to clearly imply that a duty is cast on the Court to perform its obligations in rejecting the plaint when the same is hit by any of the infirmities provided in the four clauses of Rule 11, even without intervention of the defendant. On a reading of the plaint, in the instant case it is noted that it discloses a cause of action inasmuch as the MoU dated 17th January, 2009, entered into between the plaintiff and defendant no.1 in the presence of defendant no.2 and the acts done pursuant to the said MoU is the basis for the grievance of the plaintiff. According to the plaintiff, a cheque for ₹ 56 lakhs was issued by him in favour of defendant no.1 and handed over to Sri Dilip Das, Advocate defendant no.2 as security with an understanding that the said cheque will not be handed over by defendant no.2 to defendant no.1 unless defendant no.1 fulfils its undertaking and carries out the responsibility of saving the licence to plot No. RS4, issued in favour of the plaintiff by the Paradeep Port Trust Authority, from being cancelled. As a result, the plaintiff would continue to remain as the licensee of the Paradeep Port Trust Authority visavis the said plot - defendant no.1 is duty bound to return the cheque to the plaintiff but, on the other hand, the defendants are trying to harass the plaintiff by presenting the cheque and hence certain reliefs were sought in the suit. The relief of declaration was sought to the effect that the cheque handed over by the plaintiff to defendant no.2 was as a security; that the cheque had been illegally handed over by defendant no.2 to defendant no.1 in violation of the terms and conditions of the MoU dated 17th January, 2009 and that the plaintiff is neither liable to deliver 3876 MT of iron ore fines to defendant no.1 nor to pay an amount of ₹ 56 lakhs since defendant no.1 had failed to save the licence of plaintiff s plot from cancellation by the Paradeep Port Trust Authority. In the instant case, on a reading paragraph 13 of the plaint, it is evident that cheque issued had been dishonoured and defendant no.1 had issued notice under Section 138 of N.I. Act on 10th June, 2009, to the plaintiff and its Managing Director replied to the same through their advocate on 23rd June, 2009. Therefore, it is evident that the plaintiff by seeking the aforesaid reliefs is in substance frustrating the right of defendant no.1 to take steps under the provisions of N.I. Act for releasing the amount of cheque issued by the plaintiff to defendant no.1 for a sum of ₹ 56 lakhs by filing a civil suit and/or by initiating a criminal prosecution. In other words, by seeking such a declaration that the cheque was issued as a security and that the same was illegally handed over by defendant no.2 to defendant no.1 in violation of the terms and conditions of the MoU, the plaintiff in substance is making an attempt to frustrate proceedings being initiated under Section 138 of the N.I. Act or for recovery of the amount by filing a civil suit. While the plaintiff has certain grievances arising from the MoU, against the defendants which may give rise to seek appropriate remedies in law, the aforesaid three declaratory reliefs sought in the plaint are barred by law. Hence, the plaint is liable to be rejected in exercise of jurisdiction under Order VII Rule 11 CPC - the revisional court was justified in rejecting the plaint but the High Court has erroneously set aside the order of the revisional court without appreciating the facts and circumstances of the case and has simply remanded the matter to the revisional court to reconsider the revision afresh on the premise that the revisional court did not have the jurisdiction to reject the plaint under Section 115 of the CPC. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Jurisdiction of the revisional court under Section 115 of the CPC (Orissa Amendment). 2. Applicability of Order VII Rule 11 of CPC for rejection of the plaint. 3. Whether the suit is barred under the Specific Relief Act (SR Act). 4. Whether the plaint discloses a cause of action. 5. The effect of the plaintiff seeking declaratory reliefs without consequential reliefs. 6. The legality of the plaintiff's attempt to frustrate defendant no.1's remedies under the Negotiable Instruments Act (NI Act). Issue-wise Detailed Analysis: 1. Jurisdiction of the Revisional Court under Section 115 of the CPC (Orissa Amendment): The High Court set aside the order of the revisional court, asserting that the revisional court exceeded its jurisdiction by rejecting the plaint. However, the Supreme Court held that the revisional court acted within its jurisdiction as per the second proviso to Section 115 of the CPC (Orissa Amendment), which allows the revisional court to reverse an order if it would finally dispose of the suit or prevent a failure of justice. The revisional court's rejection of the plaint was deemed appropriate and within its jurisdiction. 2. Applicability of Order VII Rule 11 of CPC for Rejection of the Plaint: The revisional court allowed the application under Order VII Rule 11 of CPC, which led to the rejection of the plaint. The Supreme Court affirmed this action, stating that the court must reject a plaint if it does not disclose a cause of action or is barred by law. The High Court's remand for reconsideration was incorrect, as the revisional court had the authority to reject the plaint under the Orissa amendment to Section 115 of the CPC. 3. Whether the Suit is Barred under the Specific Relief Act (SR Act): The defendant argued that the suit was barred under the SR Act because the plaintiff sought only declaratory reliefs without consequential reliefs. The Supreme Court noted that the proviso to Section 34 of the SR Act requires a plaintiff to seek further relief if able, and this issue should be considered at the final adjudication of the suit. However, the Supreme Court found that the declaratory reliefs sought were, in substance, attempts to prevent the defendants from pursuing legal remedies under the NI Act, which is barred by law. 4. Whether the Plaint Discloses a Cause of Action: The Supreme Court found that the plaint did disclose a cause of action based on the MoU between the parties and the subsequent actions. The plaintiff's grievances regarding the cheque and the alleged breach of the MoU by defendant no.1 provided a basis for the suit. However, the reliefs sought were legally untenable as they aimed to prevent legal proceedings under the NI Act. 5. The Effect of the Plaintiff Seeking Declaratory Reliefs without Consequential Reliefs: The Supreme Court held that the omission to seek consequential reliefs would be relevant only if the court grants the declaratory reliefs. Since the declaratory reliefs sought were barred by law, the issue of consequential reliefs became moot. The court emphasized that the plaintiff's suit was an attempt to prevent the defendants from exercising their legal rights, which is not permissible. 6. The Legality of the Plaintiff's Attempt to Frustrate Defendant No.1's Remedies under the NI Act: The Supreme Court highlighted that the plaintiff's suit was essentially an attempt to prevent defendant no.1 from initiating proceedings under Section 138 of the NI Act for the dishonoured cheque. Such an attempt is barred by Sections 41(b) and (d) of the SR Act, which prohibit injunctions to restrain legal proceedings. The court held that the plaintiff cannot seek reliefs that would frustrate the defendants' legal remedies. Conclusion: The Supreme Court set aside the High Court's order and restored the revisional court's decision to reject the plaint. The court clarified that the rejection of the plaint does not prevent the plaintiff from filing a new suit seeking appropriate reliefs in accordance with the law. The appeal was allowed, and each party was directed to bear its own costs.
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