2017 (8) TMI 1741 - SC - Indian Laws

Rejection of plaint - plaint disclosed no cause of action - Order VII Rule 11 of the Code of Civil Procedure, 1908 - Applicability of Order VI Rule 16 for striking out pleadings - Applicability of Provisions of Order XIV Rule 2. Rejection of plaint under Order VII Rule 11 of the Code of Civil Procedure, 1908 - HELD THAT - What is important to remember is that the provision refers to the plaint which necessarily means the plaint as a whole. It is only where the plaint as a whole does not disclose a cause of action that Order VII Rule 11 springs into being and interdicts a suit from proceeding - It is settled law that the plaint as a whole alone can be rejected Under Order VII Rule 11. Applicability of Order VI Rule 16 for striking out pleadings - HELD THAT - Order VI Rule 16 would not apply in the facts of the present case. There is no plea or averment to the effect that, as against the Directors, pleadings should be struck out on the ground that they are unnecessary, scandalous, frivolous, vexatious or that they may otherwise tend to prejudice, embarrass or delay the fair trial of the suit or that it is otherwise an abuse of the process of the Court. Applicability of Provisions of Order XIV Rule 2 - HELD THAT - The Court is vested with a discretion under this order to deal with an issue of law, which it may try as a preliminary issue if it relates to the jurisdiction of the Court, or is a bar to the suit created for the time being in force. Obviously, this provision would apply after issues are struck i.e. after a written statement is filed. This provision again cannot come to the rescue of learned Counsel for the Respondent. The impugned judgment set aside and the Defendants in the suit granted a period of eight weeks from today within which to file their written statement after which the suit will proceed to be tried - appeal disposed off.

Summary

Issues:
- Application Under Order VII Rule 11 stating no cause of action disclosed
- Interpretation of Order VII Rule 11 of the Code of Civil Procedure, 1908
- Rejection of plaint as a whole under Order VII Rule 11
- Application of Order VI Rule 16 for striking out pleadings
- Provisions of Order XIV Rule 2 for judgment on all issues

Analysis:

The judgment involves the Respondent filing a Civil Suit seeking a money decree and other reliefs. The Defendant(s) filed an application Under Order VII Rule 11 stating that the plaint disclosed no cause of action. The impugned judgment bifurcated the plaint, holding that it discloses no cause of action against certain Defendants but allowed the suit to continue against the Company. The Supreme Court found this judgment to be erroneous on the principle that Order VII Rule 11 applies to the plaint as a whole. Citing legal precedents, the Court emphasized that the rejection of a plaint under Order VII Rule 11 must be in its entirety and not in part.

The Court clarified that if a part of the plaint cannot proceed, it does not mandate the rejection of the entire plaint under Order VII Rule 11. The judgment distinguished between rejecting the plaint as a whole and striking out pleadings under Order VI Rule 16, which applies when pleadings are unnecessary, scandalous, or prejudicial to the fair trial of the suit. Additionally, the Court discussed the provisions of Order XIV Rule 2, which require the Court to pronounce judgment on all issues, even if a case is disposed of on a preliminary issue.

Ultimately, the Supreme Court set aside the impugned judgment and granted the Defendants eight weeks to file their written statement, after which the suit would proceed to trial. The judgment did not address the Commercial Courts Act, leaving that aspect open for further consideration.