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TMI Blog2025 (4) TMI 1313X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings in OS No.25968 of 2018 pending before the Court of XIII Addl. City Civil & Sessions Judge, MayoHall Unit, Bengaluru (CCH-22) till the next date of hearing." 3.1. On 22.11.2024, the aforesaid interim order was extended by this Court and is in force till date. BRIEF FACTS 4. The appellant viz., R.B.A.N.M.S. Educational Institution, was established in the year 1873 as a public charitable trust, dedicated to serving first-generation learners from marginalized communities in urban Bangalore. In 1905, a significant parcel of land, then known as 'the Sappers Practice Ground,' was leased to the appellant. Subsequently, in 1929, this property was formally conveyed to the appellant by the Municipal Commissioner of Civil and Military Station of Bangalore. Since then, the appellant has been in continuous possession of the said property, utilizing it for various educational purposes including Pre-University Colleges, first-grade degree colleges, and sporting facilities serving both their institutions and the youth of Bangalore. 5. The respondents filed a suit bearing O.S.No.25968 of 2018 against the appellant, before the City Civil Court and Sessions Judge at Bangalore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant is before us with the present appeal. CONTENTIONS OF THE PARTIES 10. The learned counsel appearing for the appellant submitted that the alleged agreement to sell, which forms the fundamental basis of the suit, cannot create any interest in the suit schedule property as per Section 54 of the Transfer of Property Act, 1882. In this regard, the learned counsel relied on the judgment in Rambhau Namdeo Gajre v. Narayan Bapuji Dhotra Dead throught LRs. & Anr. (2004) 8 SCC 614, wherein, this Court held that a mere agreement to sell does not create any interest in the property. This position was further reinforced in the judgment in Suraj Lamp & Industries (P) Ltd. v. State of Haryana & Another (2012) 1 SCC 656, which reiterated that a contract for sale merely confers a limited right under Section 53-A of the Transfer of Property Act, 1882. The learned counsel also highlighted the practical application of this principle in K. Basavarajappa v. Tax Recovery Commissioner, Bangalore & Others (1996) 11 SCC 632, in which, it was held by this Court that a proposed vendee with an agreement to sell lacks locus standi to challenge third-party rights. 10.1. The learned counsel emphasized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plaint's averments must be accepted as true at this stage, and the defendant's objections are immaterial. 11.1. According to the learned counsel, the suit was filed to protect the respondents' legitimate interests over the property in question under the agreement to sell, apprehending alienation of the property by third parties. Further, the learned counsel distinguished the decisions cited by the appellant, particularly that in Rambhau Namdeo Gajre (supra) and contended that it was decided after full trial and examination of evidence, unlike the present case where the cause of action stems from the agreement itself. The learned counsel also sought to differentiate the decision in T. Arivandandam (supra) noting that unlike that case which involved vexatious litigation following lost eviction proceedings, the present matter involved genuine rights under a registered agreement to sell. The learned counsel further submitted that rejection of plaint is a drastic remedy that should be exercised sparingly, only when the plaint is manifestly vexatious and meritless; and that, the proper course would be for the appellant to file a written statement and contest the suit on mer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be rejected in the following cases- (a) where it does not disclose a cause of action; (b) where the relief claimed in undervalued, and the plaintiff, on being required by the Court to correct the valuation within a time to be fixed by the Court, fails to do so; (c) where the relief claimed is properly valued but the plaint is written upon paper insufficiently stamped, and the plaintiff, on being required by the Court to supply the requisite stamp-paper within a time to be fixed by the Court, fails to do so; (d) where the suit appears from the statement in the plaint to be barred by any law; (e) where it is not filed in duplicate; (f) where the plaintiff fails to comply with the provisions of rule 9: Provided that the time fixed by the Court for the correction of the valuation or supplying of the requisite stamp-paper shall not be extended unless the Court, for reasons to be recorded, is satisfied that the plaintiff was prevent by any cause of exceptional nature for correction the valuation or supplying the requisite stamp-paper, as the case may be, within the time fixed by the Court and that refusal to extend such time would cause grave injustice to the plaintiff." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ea Success I, (2004) 9 SCC 512 read in conjunction with the documents relied upon, or whether the suit is barred by any law. 23.7. Order VII Rule 14(1) provides for production of documents, on which the plaintiff places reliance in his suit, which reads as under: "14. Production of document on which plaintiff sues or relies.- (1)Where a plaintiff sues upon a document or relies upon document in his possession or power in support of his claim, he shall enter such documents in a list, and shall produce it in Court when the plaint is presented by him and shall, at the same time deliver the document and a copy thereof, to be filed with the plaint. (2)Where any such document is not in the possession or power of the plaintiff, he shall, wherever possible, state in whose possession or power it is. (3)A document which ought to be produced in Court by the plaintiff when the plaint is presented, or to be entered in the list to be added or annexed to the plaint but is not produced or entered accordingly, shall not, without the leave of the Court, be received in evidence on his behalf at the hearing of the suit. (4) Nothing in this rule shall apply to document produced for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout any merit, and does not disclose a right to sue, the court would be justified in exercising the power under Order VII Rule 11 CPC. 23.14. The power under Order VII Rule 11 CPC may be exercised by the Court at any stage of the suit, either before registering the plaint, or after issuing summons to the defendant, or before conclusion of the trial, as held by this Court in the judgment of Saleem Bhai v. State of Maharashtra (2003) 1 SCC 557. The plea that once issues are framed, the matter must necessarily go to trial was repelled by this Court in Azhar Hussain (supra). 23.15. The provision of Order VII Rule 11 is mandatory in nature. It states that the plaint "shall" be rejected if any of the grounds specified in clause (a) to (e) are made out. If the Court finds that the plaint does not disclose a cause of action, or that the suit is barred by any law, the Court has no option, but to reject the plaint. 24. "Cause of action" means every fact which would be necessary for the plaintiff to prove, if traversed, in order to support his right to judgment. It consists of a bundle of material facts, which are necessary for the plaintiff to prove in order to entitle him to the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determine when the right to sue first accrued to the plaintiff, and whether on the assumed facts, the plaint is within time. The words "right to sue" means the right to seek relief by means of legal proceedings. The right to sue accrues only when the cause of action arises. The suit must be instituted when the right asserted in the suit is infringed, or when there is a clear and unequivocal threat to infringe such right by the defendant against whom the suit is instituted. Order VII Rule 11(d) provides that where a suit appears from the averments in the plaint to be barred by any law, the plaint shall be rejected." 14.1. Thus, it is clear that the above provision viz., Order VII Rule 11 CPC serves as a crucial filter in civil litigation, enabling courts to terminate proceedings at the threshold where the plaintiff's case, even if accepted in its entirety, fails to disclose any cause of action or is barred by law, either express or by implication. The scope of Order VII Rule 11 CPC and the authority of the courts is well settled in law. There is a bounden duty on the Court to discern and identify fictitious suit, which on the face of it would be barred, but for the clever plea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decided at the earliest stage. In the present case, the respondents' claim based on an agreement to sell. The legal effect of such an agreement must be examined in light of Section 54 of the Transfer of Property Act, 1882, which explicitly states that a contract for the sale of immovable property does not, of itself, create any interest in or charge on such property. This principle has been consistently upheld by this Court in the following judgments: (i) Rambhau Namdeo Gajre (supra) "13. The agreement to sell does not create an interest of the proposed vendee in the suit property. As per Section 54 of the Act, the title in immovable property valued at more than Rs 100 can be conveyed only by executing a registered sale deed. Section 54 specifically provides that a contract for sale of immovable property is a contract evidencing the fact that the sale of such property shall take place on the terms settled between the parties, but does not, of itself, create any interest in or charge on such property. It is not disputed before us that the suit land sought to be conveyed is of the value of more than Rs 100. Therefore, unless there was a registered document of sale in favour o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... feror of these lands." ( emphasis supplied ) There was no agreement between the appellant and the respondent in connection with the suit land. The doctrine of part-performance could have been availed of by Pishorrilal against his proposed vendor subject, of course, to the fulfilment of the conditions mentioned above. It could not be availed of by the appellant against the respondent with whom he has no privity of contract. The appellant has been put in possession of the suit land on the basis of an agreement of sale not by the respondent but by Pishorrilal, therefore, the privity of contract is between Pishorrilal and the appellant and not between the appellant and the respondent. The doctrine of part-performance as contemplated in Section 53-A can be availed of by the proposed transferee against his transferor or any person claiming under him and not against a third person with whom he does not have a privity of contract." (ii) Suraj Lamp & Industries (P) Ltd. v. State of Haryana & Another (2012) 1 SCC 656, wherein, this Court comprehensively examined the nature of rights created by an agreement to sell and concluded that such agreements create, at best, a personal right e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould fall short of the requirements of Sections 54 and 55 of the TP Act and will not confer any title nor transfer any interest in an immovable property (except to the limited right granted under Section 53-A of the TP Act). According to the TP Act, an agreement of sale, whether with possession or without possession, is not a conveyance. Section 54 of the TP Act enacts that sale of immovable property can be made only by a registered instrument and an agreement of sale does not create any interest or charge on its subject-matter." (iii) Cosmos Co. Operative Bank Ltd v. Central Bank of India & Ors 2025 SCC OnLine SC 352 "25. The observations made by this Court in Suraj Lamp (supra) in paras 16 and 19 are also relevant. ..... 26. Suraj Lamp (supra) later came to be referred to and relied upon by this Court in Shakeel Ahmed v. Syed Akhlaq Hussain, 2023 SCC OnLine SC 1526 wherein the Court after referring to its earlier judgment held that the person relying upon the customary documents cannot claim to be the owner of the immovable property and consequently not maintain any claims against a third-party. The relevant paras read as under:- "10. Having considered the submission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the two enactments. Earlier judgments of this Court have taken the same view." 15.1. Undoubtedly, a sale deed, which amounts to conveyance, has to be a registered document, as mandated under Section 17 of the Registration Act, 1908. On the other hand, an agreement for sale, which also requires to be registered, does not amount to a conveyance as it is merely a contractual document, by which one party, namely the vendor, agrees or assures or promises to convey the property described in the schedule of such agreement to the other party, namely the purchaser, upon the latter performing his part of the obligation under the agreement fully and in time. Section 54 of the Transfer of Property Act, 1882 explicitly lays down that a contract for sale will not confer any right or interest. Section 53-A of the Transfer of Property Act, 1882 offers protection only to a proposed transferee who has part performed his part of the promise and has been put into possession, against the actions of transferor, acting against the interest of the transferee. For the proposed transferee to seek any protection against the transferor, he must have either performed his part of obligation in full or in par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sary action to protect his interest in the property. According to the respondents, the property belongs to the vendors and according to the appellant, the property vests in them. Since the respondents are not divested any right by virtue of the agreement, they cannot sustain the suit as they would not have any locus. Consequently, they also cannot seek any declaration in respect of the title of the vendors. But when the title is under a cloud, it is necessary that a declaration be sought as laid down by this Court in the judgment in Anathula Sudhakar v. P. Buchi Reddy (Dead) by LRs and others AIR 2008 SC 2033 : MANU/SC/7376/2008. Therefore, the suit at the instance of the respondents/plaintiffs is not maintainable and only the vendors could have approached the court for a relief of declaration. In the present case, strangely, the vendors are not arrayed as parties to even support any semblance of right sought by the respondents/plaintiffs, which we found not to be in existence. Further, the respondents/plaintiffs claim to have paid the entire consideration of Rs.75,00,000/- in cash, despite the introduction of Section 269ST to the Income Tax Act in 2017 and the corresponding amendm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticle 141 of the Constitution of India. Once a ratio is laid down, the courts have to apply the ratio, considering the facts of the case and once, found to be applicable, irrespective of the stage, the same has to be applied, to throw out frivolous suits. There is no gainsaying in contending that the other party must be put to undergo the ordeal of entire trial, when the plaintiff's claim is either barred by law or the plaint fails to disclose a cause of action, as it would amount to abuse of process of law, wasting the precious time of the courts. On the other hand, the judgments relied upon by the respondents do not come into their aid as the judgments referred to by them also lay down the proposition that the plaint can be rejected if on a meaningful reading of it, fails to disclose a cause of action or is barred by law. In the present case, from the facts, we also find this to be a case of champertous litigation, between the plaintiffs and the vendors, who are not parties to the suit. Though champertous litigations have been recognized in our country to some extent by way of amendment to CPC by certain states, considering the facts of the present case and the averments in the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entitlement of the plaintiffs to the possession rests on the title of their vendors and it is not an independent right. Without possession and without seeking a declaration of title, not only is the suit barred but the cause of action is also fictitious. 16. The High Court without noticing the above defects in the plaint, dismissed the application filed by the appellant under Order VII Rule 11 CPC by observing that the cause of action is a mixed question of fact and law and that the matter requires trial. When the defects go to the root of the case, barred by law with fictitious allegations and are incurable, no amount of evidence can salvage the plaintiffs' case. Though an agreement to sell creates certain rights, these rights are purely personal between the parties to the agreement and can only be enforced against the vendors or, in limited circumstances, under Section 53A of the Transfer of Property Act, 1882, against a subsequent transferee with notice, as held by us above. They cannot be enforced against third parties who claim independent title and possession. Therefore, the High Court's observation that an agreement to sell creates an "enforceable right" cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same time, the respondents are hereby cautioned that any future misuse of the judicial process lacking in bonafides may invite strict action including imposition of exemplary costs. 18.1. Further, through the averments made in the plaint and in the agreement, the respondents/plaintiffs have claimed to have paid huge sum towards consideration by cash. It is pertinent to recall that Section 269ST of the Income Tax Act, was introduced to curb black money by digitalising the transactions above Rs.2,00,000/- and contemplating equal amount of penalty under Section 271DA of the Act. As per the said provisions, action is to be taken on the recipient. However, there is also an onus on the plaintiffs to disclose their source for such huge cash. The Central Government thought it fit to cap the cash transactions and move forwards towards digital economy to curb the dark economy which has a drastic effect on the economy of the country. It will be useful to refer to the Budget Speech during the introduction of the Finance Bill, 2017 and the extract of the memo presented with the Finance Bill, 2017, which lay down the object: Budget Speech: "VII. DIGITAL ECONOMY 111. Promotion of a digital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of the proposed section 269ST. The penalty is proposed to be a sum equal to the amount of such receipt. The said penalty shall however not be levied if the person proves that there were good and sufficient reasons for such contravention. It is also proposed that any such penalty shall be levied by the Joint Commissioner. It is also proposed to consequentially amend the provisions of section 206C to omit the provision relating to tax collection at source at the rate of one per cent. of sale consideration on cash sale of jewellery exceeding five lakh rupees. These amendments will take effect from 1st April 2017." However, when the Bill was passed, the permissible limit was capped under Rupees Two Lakhs, instead of the proposed Rupees Three Lakhs. When a suit is filed claiming Rs.75,00,000/- paid by cash, not only does is create a suspicion on the transaction, but also displays, a violation of law. Though the amendment has come into effect from 01.04.2017, we find from the present litigation that the same has not brought the desired change. When there is a law in place, the same has to be enforced. Most times, such transactions go unnoticed or not brought to the knowledge of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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