Code of Civil Procedure, 1908 – Ord.VII r.11 – Rejection of plaint – Appellant Institute in possession of suit property since 1905 – Respondents filed suit seeking permanent injunction restraining appellant from creating any third-party interest over the property based on an alleged agreement to sell executed by respondents with a third party – Respondents paid Rs.75,00,000/- in cash as advance – Appellant filed application u/Ord.VII r.11 seeking rejection of plaint – Both the trial court and the High Court rejected the same – Correctness: Held: Agreement for sale does not confer any right to the purchaser to file a suit against a third party who is either the owner or in possession, or who claims to be the owner and to be in possession – Respondents’ claim suffered from multiple fatal defects – No privity between the respondents and the appellant – Suit at the instance of the respondents not maintainable and only the vendors could have approached the court for a relief of declaration – Respondents had no legal right that could be enforced against the appellant as their claim impliedly barred by virtue of s.54 of TPA – Respondents not in possession and the appellant in settled possession for over a century, suit for bare injunction by proposed transferee not maintainable – Respondents, being mere agreement holders, had no personal interest in the suit schedule property that could be enforced against third parties – No declaratory relief was sought – Respondents sought only relief of permanent injunction restraining the appellant from alienating the property, without a declaration affirming the title of their vendors – Without possession and without seeking a declaration of title, not only the suit is barred but the cause of action also fictitious – High Court without noticing the said defects in the plaint, dismissed the application filed by the appellant – 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 plaintiffs’ case – Furthermore, public interest implications of the instant case are significant consideration – Such institutions must be protected from speculative litigation that can drain their resources and impede their charitable work – Allowing suits like the instant one to proceed to trial, would waste judicial time and resources, and encourage similar speculative and extortionate litigations – Respondents having paid Rs.75,00,000/- by cash, despite the introduction of s.269ST IT Act and the amendment to s.271 DA, not only creates suspicion on the transaction, but also displays violation of law – Ignorance in fact is excusable but not the ignorance in law – Thus, the plaint ought to have been rejected u/Ord. VII r.11(a) and (d) – Orders passed by the High Court as well as trial court rejecting the application filed by the appellant, cannot be sustained in law and is set aside – Transfer of Property Act, 1882 – s.52, 53-A, 54. [Paras 15.1-20]
Code of Civil Procedure, 1908 – Ord.VII r.11 – Rejection of plaint – Scope:
Held: Ord. VII r.11 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 – 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 pleadings disclosing a cause of action, that is surreal – Generally, sub-clauses (a) and (d) are stand alone grounds, that can be raised by the defendant in a suit – However, it cannot be ruled out that under certain circumstances, clauses
(a) and (d) can be mutually inclusive – When clever drafting veils the implied bar to disclose the cause of action; it then becomes the duty of the Court to lift the veil and expose the bar to reject the suit at the threshold – Power to reject a plaint under this provision is not merely procedural but substantive, aimed at preventing abuse of the judicial process and ensuring that court time is not wasted on fictitious claims failing to disclose any cause of action to sustain the suit or barred by law – Merely including a paragraph on cause of action not sufficient but rather, on a meaningful reading of the plaint and the documents, it must disclose cause of action – Plaint should contain such cause of action that discloses all necessary facts required in law to sustain the suit and not mere statements of fact which fail to disclose a legal right of the plaintiff to sue and breach or violation by the defendant(s). [Paras 14-15]
Constitution of India – Art. 141 – Applicability of the ratio laid down by this Court, irrespective of the stage at which it is relied upon:
Held: Ratio laid down by this court, is applicable irrespective of the stage at which it is relied upon – Ratio is relevant and not the stage – 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. [Para 15.2.3]
Income Tax Act, 1961 – s.269ST – Penalty on cash receipt of more than 2 lakh – Purpose and application of s.269ST – Issuance of directions by the Supreme Court:
Held: s.269ST was introduced to curb black money by digitalising the transactions above Rs.2,00,000/- – Most times, such transactions go unnoticed or not brought to the knowledge of the income tax authorities – Ignorance in fact is excusable but not the ignorance in law – Thus, issuance of directions that whenever suit filed with claim that Rs. 2,00,000/- and above is paid by cash towards any transaction, the courts must intimate the same to the jurisdictional Income Tax Department to verify the transaction and the violation of s.269ST, if any’ – Income Tax authority to take appropriate steps if such cases come to their notice – Whenever, a sum of Rs. 2,00,000/- and above is claimed to be paid by cash towards consideration for conveyance of any immovable property in a document presented for registration, the jurisdictional SubRegistrar to intimate the same to the jurisdictional Income Tax Authority – Whenever, it comes to the knowledge of any Income Tax Authority that a sum of Rs. 2,00,000/- or above has been paid by way of consideration in any transaction relating to any immovable property from any other source or during the course of search or assessment proceedings, the failure of the registering authority to be brought to the knowledge of the Chief Secretary of the State/UT for initiating appropriate disciplinary action against such officer who failed to intimate the transactions. [Para 18.1]
As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Nidhi Jain. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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