M/S FROST INTERNATIONAL LIMITED VS M/S MILAN DEVELOPERS AND BUILDERS (P) LIMITED & ANR.

M/S FROST INTERNATIONAL LIMITED VS M/S MILAN DEVELOPERS AND  BUILDERS (P) LIMITED & ANR.

Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले



REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.1689 OF 2022
M/S FROST INTERNATIONAL LIMITED    APPELLANT(S)
VERSUS
M/S MILAN DEVELOPERS AND 
BUILDERS (P) LIMITED & ANR.  RESPONDENT(S)
J U D G M E N T
NAGARATHNA J. 
1. This appeal is preferred by defendant no.1 in C.S. No.1065
of 2009 filed before the Court of Civil Judge (Senior Division)
Bhubaneswar,   by   assailing   order   dated   19th  January,   2016
passed by the High Court of Orissa at Cuttack in WP(C) No.7059
of 2013. By the said order, the application filed by the appellant
herein/defendant no.1 under Order VII Rule 11 of the Code of
Civil Procedure 1908 (for short, the ‘CPC’) has been ordered to be
reconsidered   by   the   District   Court   at   Khurda,   Bhubaneswar
(revisional court) by restoring C.R.P. No.5 of 2012 filed by the
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defendant no.1 herein. The said revision was filed by defendant
no.1 being aggrieved by the dismissal of the said application
being C.S. No.1065 of 2009 by the trial court, namely, the Court
of   Civil   Judge   (Senior   Division),   Bhubaneswar,   praying   for
rejection of the plaint under Order VII Rule 11 of the CPC.   
2. For the sake of convenience, the parties herein shall be
referred to in terms of their rank and status before the trial
court.
3. Briefly stated, the facts of the case are that, respondent
no.1   herein/plaintiff   had   filed   a   suit   against   the   appellant
herein/defendant no.1 and respondent no.2 herein/defendant
no.2 seeking the following reliefs: 
“(i)   Let   it   be   declared   that   the   plaintiff   had
handed over the cheque to Sri Dilip Das,
Advocate as a security;
(ii) Let it be declared that the said cheque has
been illegally handed over by the defendant
no.2 to the defendant no.1 by violating term
and   condition   of   the   memorandum   of
understanding dated 17.01.2009;
(iii) Let it be declared that the plaintiff is not
liable to give delivery of 3876 MT of iron ore
fines to the defendant no.1 nor the cheque
amount since the defendant no.1 has failed
to save the plaintiff’s plot from cancellation;
(iv) Let the cost of the suit be decreed in favour
of the plaintiff and against the defendants;
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(v) Let any other decree/decrees be passed in
favour of the plaintiff to which the plaintiff
is entitled to under law and equity.”
4. According   to   the   plaintiff,   which   is   a   Private   Limited
Company, incorporated under the provisions of the Companies
Act, 1956, it is engaged in the business of export of iron ore from
Paradeep   Port   while   defendant   no.1   is   also   a   Company
incorporated under the provisions of the Companies Act, 1956,
having its registered office at Kanpur, Uttar Pradesh, and also
having its Branch at Kolkata in West Bengal. Defendant no.1
carries on business at Paradeep Port, Orissa in supplying and
exporting iron ore from the said Port to various destinations
overseas.   That   plaintiff   had   a   plot   namely   Plot   No.RS­4   on
licence from Paradeep Port Trust Authority for the purpose of its
export business in iron ore. That defendant no.1 and the plaintiff
had entered into a Cooperation Agreement on 24th  December,
2007 but according to the plaintiff, the same was not given effect
to. That defendant no.1, through its Managing Director Sunil
Banna,   tried   to   blackmail   the   plaintiff   in   various   ways   and
threatened   him   that   he   would   intimate   Paradeep   Port   Trust
Authority that the plaintiff had sub­let his licence in respect of
Plot   No.RS­4   to   defendant   no.1   by   violating   the   terms   and
conditions of licence. 
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According to the plaintiff, defendant no.1 in January 2009
stated that plaintiff had illegally exported stock of 4000 MT of
iron ore and when the plaintiff through its Managing Director
refuted the claim of defendant no.1, a complaint was lodged at
Paradeep Police Station on 8th January, 2009 and thereafter, on
10th  January,   2009   alleging   theft  of   4000   MT   iron   ore   fines
belonging to defendant no.1. 
According to the plaintiff, defendant no.1 lodged another
false complaint with the Paradeep Port Trust Authority to the
effect that the plaintiff was violating the terms and conditions of
his licence in respect of Plot No.RS­4 which had been sub­let to
defendant no.1 and a copy of the Cooperation Agreement dated
24th December, 2007 which was in fact not acted upon was also
filed   along   with   complaint.   Acting   on   the   said   complaint,
Paradeep Port Trust Authority had issued show cause notice to
the plaintiff on 20th January, 2009 and thereafter, cancelled the
licence of the plaintiff vis­à­vis Plot No.RS­4 by letter dated 18th
February, 2009. 
5. Being apprehensive of the cancellation of the licence to Plot
No.RS­4, the Managing Director of the plaintiff Company agreed
to   the   proposal   of   the   representative   of   defendant   no.1  viz.,
Rabindra Banthia, that in case plaintiff agreed to supply 3876
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MT of iron ore fines to defendant no.1, they would manage to
withdraw their complaint and would save the licence of the plot
from cancellation. 
6. That in January, 2009, plaintiff had outstanding dues of
Rs.21.50   lakhs   against  defendant   no.1   and   at   the   behest  of
defendant  no.2,  a  Memorandum  of  Understanding  (for short,
‘MoU’) was arrived at on 17th  January, 2009 on certain terms
and conditions that defendant no.1 would take steps to protect
the licence of the plot given to the plaintiff from cancellation in
seven days’ time and it was further agreed that defendant no.1
would give a cheque of Rs.21.50 lakhs to the plaintiff towards
the   outstanding   dues   to   the   plaintiff.   Similarly,   the   plaintiff
would issue a cheque for Rs.56 lakhs in favour of defendant no.1
and the same would remain in the custody of Sri Dilip Das,
Advocate ­ defendant no.2 as security, which is equivalent to the
cost of 3876 MT of iron ore. The plaintiff would supply 3786 MT
of iron ore fines to defendant no.1 if defendant no.1 succeeded in
protecting the licence of the said plot of the plaintiff from being
cancelled. Accordingly, plaintiff furnished a cheque for Rs.56
lakhs in favour of defendant no.1 and handed over the same to
Sri Dilip Das, Advocate ­ defendant no.2 in the suit, as security.
Defendant no.2 wrote a letter to the Managing Director of the
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plaintiff   on   20th  January,   2009   intimating   therein   that   both
cheques would be in his custody and the cheque drawn by the
plaintiff amounting to Rs.56 lakhs would not be handed over to
defendant no.1 unless defendant no.1 fulfilled its undertaking as
per the MoU dated 17th  January, 2009. Further, the cheque
would be handed over to defendant no.1 only when the plot
licence of the plaintiff was saved from cancellation by defendant
no.1 and if the plaintiff failed to supply the iron ore to defendant
no.1. 
7. According to the plaintiff, defendant no.1 did not take any
step   to   save   the   licence   of   the   plot   of   the   plaintiff   from
cancellation and the licence was cancelled on the complaint of
defendant   no.1   by   letter   dated   18th  February,   2009   by   the
Paradeep Port Trust Authority. According to the plaintiff, the
question   of   handing   over   the   cheque   to   defendant   no.1   by
defendant no.2 did not arise at all. Plaintiff had approached the
High Court in a writ petition  vis­à­vis  the cancellation of the
licence   in   respect   of   the   plot   and   an   order   of   stay   on   the
cancellation was granted. 
It is the further case of the plaintiff that when the matter
stood thus, defendants no.1 and 2 colluded with each other and
defendant   no.2   committed   breach   of   trust   and   betrayed   the
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plaintiff   as   the   cheque   for  Rs.56   lakhs   was   handed   over  by
defendant no.2 to defendant no.1. On receipt of the cheque,
defendant no.1 pressurized the plaintiff to either supply 3876
MT   iron   ore   fines   or   they   would   present   the   cheque   for
encashment. Since the plaintiff did not agree to supply iron ore,
defendant no.1 presented the cheque for encashment but the
same was dishonoured as the plaintiff had issued stop payment
instructions to the Bank on coming to know about the collusion
between   defendant   no.1   and   defendant   no.2.   Thereafter,
defendant no.1 issued notice under Section 138 of the Negotiable
Instruments Act, 1881 (for short, the ‘N.I. Act’) through their
advocate   on   10th  June,   2009   to   the   plaintiff   through   its
Managing Director, to which a reply was sent on 23rd  June,
2009. It was, inter alia, stated in the reply that the defendants
were   trying   to   harass   the   plaintiff   and   having   no   other
alternative, the plaintiff filed the suit seeking a declaration that
the cheque which was dishonoured was handed over by the
plaintiff to defendant no.2 as a security and that defendant no.1
had not acquired any right over the said cheque as the plaintiff
had no liability to discharge  vis­à­vis  defendant no.1. It was
averred in the plaint that defendant no.1 was liable to pay a sum
of Rs.21.50 lakhs to the plaintiff towards its outstanding dues
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for which a cheque was issued on 17th January, 2009 which was
also   kept   with   defendant   no.2   and   in   respect   of   which   the
plaintiff reserved its right to initiate appropriate proceeding for
recovery of the said amount from defendant no.1. There were
further correspondences between the parties and ultimately the
aforementioned   suit   was   filed   by   the   plaintiff   against   the
defendants. 
8. On   receipt   of   the   summons   sent   by   the   trial   court,
defendant no.1 appeared and filed an application under Order
VII Rule 11 of CPC seeking rejection of the plaint on the ground
that   the   suit   was   not   maintainable   being   barred   under   the
provisions of the Specific Relief Act, 1963 (for short, the ‘SR Act’)
and   secondly,   the   suit   was   frivolous   and   instituted   as   a
subterfuge   to   defeat   the   legitimate   claim   of   defendant   no.1
without having any right to sue. Objection was filed to the said
application by the plaintiff. The said application was considered
by the trial court and dismissed by refusing to reject the plaint. 
9. Being aggrieved, defendant no.1 preferred C.R.P. No.5 of
2012 before the Court of District Judge, Khurda at Bhubaneswar
under Section 115 of the CPC. By order dated 20th March, 2013,
the revisional court allowed the said revision petition, set aside
the order of the trial court refusing to reject the plaint, and
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rejected the plaint. Being aggrieved, the plaintiff filed W.P.(C)
No.7059 of 2013 before the High Court of Orissa at Cuttack
which set aside the order of the revisional court and remanded
the matter to the said court for fresh consideration by holding
that the revisional court had exceeded its jurisdiction in rejecting
the plaint. Being dissatisfied with the order of the High Court
defendant no.1 has preferred this appeal. 
10. We have heard Mrs. Rajdipa Behura, learned counsel for
the appellant and Sri Anirudh Sanganeria, learned counsel for
the respondents and perused the material on record. 
11. Learned counsel for the appellant submitted that the High
Court was not right in setting aside the order passed by the
revisional court and remanding the matter to the said court for
reconsideration of the application filed by the appellant under
Order VII Rule 11 of CPC on the premise that revisional court
had   exceeded   its   jurisdiction.   It   was   contended   that   the
application under Order VII Rule 11 of the CPC was filed by the
appellant/defendant   no.1   in   the   suit   filed   by   respondent
no.1/plaintiff seeking rejection of the plaint on the ground that
the prayers sought in the suit could not have been granted and
the suit as such was not maintainable and was barred under the
provision of Section 41 of the SR Act. Further there was no
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cause   of   action   for   the   plaintiff   to   file   the   suit   against   the
defendants. The trial court did not appreciate the reasons as to
why an application was filed by defendant no.1 seeking rejection
of   the   plaint   and   dismissed   the   same.   Being   aggrieved   the
appellant/defendant no.1 filed revision petition in C.R.P. No.5 of
2012 before the District Court having regard to Section 115 of
the CPC and particularly proviso thereto as, if the application
filed by defendant no.1 under Order VII Rule 11 of CPC was to be
allowed by the revisional court, then, the proceedings before the
trial   court   would   conclude.   The   revisional   court   rightly
appreciated the case of appellant herein and rejected the plaint.
However, the High Court on a writ petition filed by the plaintiff
held   that   the   revisional   court   while   exercising   its   power   of
revision   had   exceeded   its   jurisdiction   by   rejecting   the   plaint
instead of remanding the matter to the trial court to do so. While
adverting to Section 115 of the CPC [vide Orissa Act 26 of 1991,
Section 2 (w.e.f. 7th  November, 1991)], learned counsel for the
appellant contended that when the trial court failed to exercise
jurisdiction   vested   in   it   and   refused   to   reject   the   plaint   by
allowing the application filed under Order VII Rule 11 of the CPC
by the appellant herein, the revisional court rightly allowed the
said revision and rejected the plaint which finally disposed of the
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suit in terms of the second proviso to the said Section. It was
contended that the High Court has not taken into consideration
the Orissa amendment and has further misconstrued the object
and import of Section 115 of the CPC vis­à­vis the provisions of
the revisional court and has erroneously set aside the order of
the   revisional   court   rejecting   the   plaint   and   remanding   the
matter to the revisional court for fresh consideration. 
12. Drawing our attention to the order of the High Court, it
was contended that the said order is contrary to Section 115 of
CPC (Orissa amendment) and hence the impugned order may be
set   aside   and   the   order   of   the   revisional   authority   may   be
restored. It was contended by learned counsel for the appellant
that as against the order of the revisional authority rejecting the
plaint, respondent no.1 herein/plaintiff could not have filed a
writ petition. 
13. Per contra, learned counsel for respondent no.1/plaintiff
supported the impugned order passed by the High Court and
contended   that   when   a   plaint   is   rejected   by   allowing   an
application filed under Order VII Rule 11 of CPC, it results in a
decree being passed within the meaning of Section 2(2) of the
CPC and hence the High Court directed the revisional court to
consider   the   matter   afresh   and   if   necessary,   to   remand   the
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matter to the trial court for considering the aspect regarding
rejection of plaint. Learned counsel for respondent no.1/plaintiff
contended that there is no merit in this appeal and the same
may be dismissed. 
14. Having heard learned counsel for the respective parties the
following points would arise for our consideration: 
(a) 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?
(b) What order?
The reliefs sought by the plaintiff in the suit have been
extracted above. 
15. Having regard to the averments in the plaint summarised
above   and   the   reliefs   sought   in   the   plaint,   defendant
no.1/appellant herein filed an application under Order VII and
Rule 11 of CPC seeking rejection of the plaint. The rejection of
the plaint was sought for three reasons :­ firstly, the suit was
barred under the provisions of the SR Act; secondly, the suit was
frivolous and was filed as a subterfuge to defeat the legitimate
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claim   of   defendant   no.1;   and   thirdly,   the   suit   has   been
deliberately   undervalued.   Objections   were   filed   to   the   said
application of defendant no.1. By order dated 19th  May, 2012,
the trial court dismissed the said application. Being aggrieved,
defendant   no.1   filed   C.R.P.   No.5   of   2012   under  Section   115
(Orissa amendment). 
16. 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. 
17. In order to consider the correctness of the impugned order
passed by the High Court, it would be useful to refer to Section
115 of the CPC as well as the Orissa Amendment. For immediate
reference, the same are extracted as under: 
“115. Revision — (1) The High Court may call
for   the   record   of   any   case   which   has   been
decided by any Court subordinate to such High
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Court and in which no appeal lies thereto, and if
such subordinate Court appears— 
(a) to have exercised a jurisdiction not vested in
it by law, or
(b) to have failed to exercise a jurisdiction so
vested, or 
(c) to have acted in the exercise of its jurisdiction
illegally or with material irregularity, the High
Court may make such order in the case as it
thinks fit: 
Provided that the High Court shall not, under
this Section, vary or reverse any order made, or
any order deciding an issue, in the course of a
suit or other proceeding, except where the order,
if   it   had   been   made   in   favour   of   the   party
applying for revision would have finally disposed
of the suit or other proceedings.
(2) The High Court shall not, under this Section,
vary   or   reverse   any   decree   or   order   against
which an appeal lies either to the High Court or
to any Court subordinate thereto. 
(3) A revision shall not operate as a stay of suit
or   other   proceeding   before   the   Court   except
where such suit or other proceeding is stayed by
the High Court.
Explanation.—In   this   Section,   the   expression
“any case which has been decided” includes any
order made, or any order deciding an issue in
the course of a suit or other proceeding.”
ORISSA AMENDMENT
“115.   Revision ­   The   High   Court,   in   cases
arising out of original suits or other proceedings
of the value exceeding one lakh rupees, and the
District   Court,   in   any   other   case   including   a
case   arising   out   of   an   original   suit   or   other
proceedings   instituted   before   the
commencement of the Code of Civil Procedure
(Orissa Amendment) Act, 1991 may call for the
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record of any case which has been decided by
any Court subordinate to the High Court or the
District Court, as the case may be, and in which
no appeal lies thereto, and if such Subordinate
Court appears ­
(a) to have exercised a jurisdiction not vested in
it by law; or
(b) to have failed to exercise a jurisdiction so
vested; or
(c) to have acted in the exercise of its jurisdiction
illegally or with material irregularity;
the High Court or the District Court, as the case
may be, may make such order in the case as it
thinks fit;
Provided that in respect of cases arising out of
original   suits   or   other   proceedings   of   any
valuation decided by the District Court, the High
Court   alone   shall   be   competent   to   make   an
order under this Section;
Provided   further   that   the   High   Court   or   the
District Court shall not, under this Section, vary
or reverse any order, including an order deciding
an issue, made in the course of a suit or other
proceedings, except where ­
(i) the order, if so varied or reversed
would finally dispose of the suit or
other proceedings; or
(ii)   the   order,   if   allowed   to   stand,
would occasion a failure of justice or
cause irreparable injury to the party
against whom it was made.
Explanation ­   In   this   Section,   the   expression
'any case which has been decided' includes any
order deciding an issue in the course of a suit or
other proceeding".”
18. On a perusal of the same it is noted that the Orissa
amendment differs from the main Section 115 of CPC in the
following ways:
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(i) Firstly, the main Section 115 deals with revisional powers
of   the   High   Court   only,   whereas,   Section   115   of   CPC
(Orissa amendment) confers the power of revision not only
on the High Court but also on the District Court which
may call for the record of any case which has been decided
by any court subordinate to the High Court or the District
Court, as the case may be, and in which no appeal lies
thereto, if such subordinate court appears ­ (a) to have
exercised a jurisdiction not vested in it by law; or (b) to
have failed to exercise a jurisdiction, so vested; or (c) to
have acted in the exercise of its jurisdiction illegally or with
material irregularity. In such a case, the High Court or the
District Court, as the case may be, may make such order
in the case as it thinks fit. 
(ii) Secondly,   sub­section   (2)   of   Section   115   of   the   main
provision, states that the High Court shall not, under the
said Section, vary or reverse any decree or order against
which an appeal lies either to the High Court or to any
Court subordinate thereto. But under the second proviso to
Section 115 of CPC (Orissa amendment), the High Court or
the District Court shall not under the said Section, vary or
reverse any order, including an order deciding an issue,
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made in the course of a suit or other proceeding, except
where – (i) the order, if so varied or reversed would finally
dispose of the suit or other proceedings; or 
(ii) the order, if allowed to stand, would occasion a failure
of justice or cause irreparable injury to the party against
whom it was made. 
Thus, the first proviso to main Section 115 of CPC restricts
the revisional power of the High Court inasmuch as a revision is
maintainable only if it is filed by a party who is aggrieved by an
order passed by the court subordinate to the High Court on an
order deciding an issue which, had it been made in favour of the
party applying for revision, would have finally disposed of the
suit   or   other   proceeding.   But   as   per   the   second   proviso   to
Section 115 of CPC (Orissa amendment), the High Court or the
District Court, as the case may be, under the said Section can
vary or reverse any order including an order deciding an issue,
made in the course of a suit or other proceeding only if the order
if so varied or reversed would finally dispose of the suit or other
proceeding or the order if allowed to stand would occasion a
failure of justice or cause irreparable injury to the party against
whom it was made. In other words, under Orissa amendment to
Section 115 of CPC, an express power is conferred on the High
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Court   or   the   District   Court,   as   the   case   may   be,   being   the
revisional   courts,   to   vary   or   reverse   an   order   of   the   court
subordinate thereto only when it would finally dispose of the suit
or other proceedings or if the impugned order is allowed to stand
would occasion a failure of justice or cause irreparable injury to
the party against whom it was made. 
19.  It would also be pertinent to mention that the instant suit
was filed in the year 2009 and therefore the Orissa amendment
to Section 115 CPC vide Orissa Act 26 of 1991, Section 2, would
be applicable.  However, by Orissa Act 14 of 2010, Sub­Section
2,   Section   115   was   amended   by   the   Orissa   Legislature   and
second  proviso  to  Section   115 has  been  amended  and  SubSection 2 of Section 115 has been added which states that the
High Court or District Court, as the case may be, shall not
under this Section, vary or reverse any order including an order
deciding   an   issue,   made   in   the   course   of   a   suit   or   other
proceeding, except where the order, if it has been made in favour
of the party applying for revision, would finally dispose the suit
or other proceeding. 
20.  Further, clause 1 of the second proviso of Section 115 has
been omitted by the amendment made in the year 2010 and
Sub­Section   3   has   been   added.   This   provision   states   that   a
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revision shall not operate as a stay of suit or other proceeding
before the Court except where such suit or other proceeding is
stayed by the High Court or District Court, as the case may be.
Sub­Section 1 of Section 115 is in pari materia with the Orissa
Amendment   of   1991   except   its   reference   to   the   Orissa
Amendment Act of 2010. For immediate reference, Section 115
of   the   CPC   as   per   the   2010   amendment   made   (Orissa
Amendment) is extracted as under:
“Amendment of Section 115. ­  In the Code of
Civil Procedure, 1908 (5 of 1908), for Section
115, the following Section shall be substituted,
namely:­­
115.   Revision.­­(1)   The   High   Court,   in   cases
arising out of original suits or other proceedings
of the value exceeding five lakhs rupees and the
District Court, in any other cases, including a
case   arising   out   of   an   original   suit   or   other
proceedings   instituted   before   the
commencement of the Code of Civil Procedure
( Orissa Amendment) Act, 2010, may call for the
record of any case which has been decided by
any Court subordinate to the High Court or the
District Court, as the case may be, and in which
no appeal lies thereto, and if such subordinate
Court appears­­
(a) to have exercised a jurisdiction not vested in
it by law; or
(b) to have failed to exercise a jurisdiction so
vested; or
(c) to have acted in the exercise of its jurisdiction
illegally or with material irregularity,
the High Court or the District Court, as the case
may be, may make such order in the case as it
thinks fit:
20
Provided that in respect of cases arising out of
original   suits   or   other   proceedings   of   any
valuation decided by the District Court, the High
Court   alone   shall   be   competent   to   make   an
order under this Section
(2) The High Court or the District Court, as the
case may be, shall not under this Section, vary
or reverse any order, including an order deciding
an issue, made in the course of a suit or other
proceedings, except where the order, if it had
been   made   in  favor   of   the   party  applying   for
revision, would have finally disposed of the suit
or other proceedings.
(3) A revision shall not operate as a stay of suit
or   other   proceeding   before   the   Court   except
where such suit or other proceeding is stayed by
the High Court or District Court, as the case
may be.
Explanation­­In   this   Section,   the   expression,
"any case which has been decided" includes any
order deciding an issue in the course of a suit or
other proceeding.".
[Vide the Orissa Act 14 of 2010, s. 2]”
21. Therefore, we hold that 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. That is exactly what has been done by the
21
revisional court being the District Court in the petition being
C.R.P. No.5 of 2012. 
22. Hence, we find that 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. In fact, we
would observe that exercise of jurisdiction by the revisional court
in   the   instant   case   is   in   accordance   with   second   proviso   to
Section 115 of CPC (Orissa amendment). 
In this regard, we could also usefully refer to the following
decisions: ­ 
(a) Gajendragadkar, CJ., in a judgment passed by the  five
Judges   Bench   of   this   Court   in  Pandurang   Dhondi
Chougule   and   Others   vs.   Maruti   Hari   Jadhav   and
Others   –  [AIR  1966  SC  153]  dealt with the question of
jurisdiction under Section 115 CPC, as follows:­
“10. The provisions of Section 115 of the Code
have   been   examined   by   judicial   decisions   on
several   occasions.   While   exercising   its
jurisdiction   under   Section   115,   it   is   not
competent to the High Court to correct errors of
fact however gross they may, or even errors of
law, unless the said errors have relation to the
jurisdiction of the court to try the dispute itself.
As   clauses   (a),   (b)   and   (e)   of   Section   115
22
indicate,   it   is   only   in   cases   where   the
subordinate court has exercised a jurisdiction
not vested in it by law, or has failed to exercise a
jurisdiction   so   vested,   or   has   acted   in   the
exercise   of   its   jurisdiction   illegally   or   with
material   irregularity   that   the   revisional
jurisdiction of the High Court can be properly
invoked. It is conceivable that points of law may
arise   in   proceedings   instituted   before
subordinate   courts   which   are   related   to
questions of jurisdiction. It is well settled that a
plea of limitation or a plea of res judicata is a
plea of law which concerns the jurisdiction of
the court which tries the proceedings. A finding
on   these   pleas   in   favour   of   the   party   raising
them would oust the jurisdiction of the court,
and so, an erroneous decision on these pleas
can be said to be concerned with questions of
jurisdiction   which   fall   within   the   purview   of
Section   115   of   the   Code.   But   an   erroneous
decision on a question of law reached by the
subordinate   court   which   has   no   relation   to
questions of jurisdiction of that court, cannot be
corrected by the High Court under Section 115.”
(b) Nariman, J. while discussing Section 115 CPC and proviso
thereto held that revision petitions filed under Section 115
CPC are not maintainable against interlocutory orders in
the case of Tek Singh vs. Shashi Verma and Another –
[(2019)   16   SCC   678].  The   following   observations   were
made in the said case:­ 
“6. Even   otherwise,   it   is   well   settled   that   the
revisional jurisdiction under Section 115 CPC is
to be exercised to correct jurisdictional errors
only.   This   is   well   settled.   In DLF   Housing   &
Construction   Co.   (P)   Ltd. v. Sarup   Singh [DLF
Housing   &   Construction   Co.   (P)   Ltd. v. Sarup
Singh, (1969) 3 SCC 807 : (1970) 2 SCR 368]
this Court held: (SCC pp. 811­12, para 5)
23
“5. The position thus seems to be
firmly   established   that   while
exercising   the   jurisdiction   under
Section 115, it is not competent to
the High Court to correct errors of
fact however gross or even errors of
law   unless   the   said   errors   have
relation   to   the   jurisdiction   of   the
court   to   try   the   dispute   itself.
Clauses (a) and (b) of this section on
their plain reading quite clearly do
not cover the present case. It was
not contended, as indeed it was not
possible to contend, that the learned
Additional District Judge had either
exercised a jurisdiction not vested in
him by law or had failed to exercise
a jurisdiction so vested in him, in
recording   the   order   that   the
proceedings   under   reference   be
stayed till the decision of the appeal
by   the   High   Court   in   the
proceedings for specific performance
of the agreement in question. Clause
(c) also does not seem to apply to
the   case   in   hand.   The   words
“illegally”   and   “with   material
irregularity” as used in this clause
do not cover either errors of fact or
of   law;   they   do   not   refer   to   the
decision arrived at but merely to the
manner in which it is reached. The
errors contemplated by this clause
may,   in   our   view,   relate   either   to
breach of some provision of law or to
material   defects   of   procedure
affecting the ultimate decision, and
not to errors either of fact or of law,
after the prescribed formalities have
been complied with.” 
Therefore, in the instant case the High Court was not right
in holding that the revisional court had no jurisdiction to reject
the plaint filed under Order VII Rule 11 of CPC. The reasoning of
24
the High Court is contrary to the express proviso of Section 115
(Orissa Amendment).
23. No   doubt   rejection   of   a   plaint   is   a   decree   within   the
meaning of Section 2(2) of CPC and an appeal lies from every
decree passed by any court exercising original jurisdiction to the
Court authorised to hear appeals from a decision of such court.
However, it must be borne in mind that when a revisional court
rejects a plaint, in substance, an application filed under Order
VII Rule 11 is being allowed. Under such circumstances, the
remedy   by   way   of   a   writ   petition   under   Article   227   of   the
Constitution could be availed and respondent no.1/plaintiff has
resorted to the said remedy in the instant case; although if the
plaint had been rejected by the trial court i.e. court of original
jurisdiction, it would have resulted in a right of appeal under
Section 96 of CPC.
24. Having regard to the second proviso to Section 115 of CPC
(Orissa   amendment),   a   revisional   court   while   allowing   the
application   filed   under   Order   VII   Rule   11   of   CPC   would   in
substance   reject   the   plaint   but   since   the   said   decree   is   not
passed by  the court of original  jurisdiction, namely the trial
court, the remedy by way of writ petition under Article 227 of the
25
Constitution   would   be   available   to   the   aggrieved   party   and
respondent no.1 has availed the said remedy. 
25. Having   held   as   above,   we   now   proceed   to   consider,
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. Before proceeding further, it would be useful to refer
to the following judgments of this Court in respect with Order VII
Rule 11 CPC:
a) In T. Arivandandam vs. T.V. Satyapal & Anr. – [(1977)
4 SCC 467],  this Court observed, in the following words,
that while considering an application under Order VII Rule
11 CPC what is required to be decided is whether the plaint
discloses   a   real   cause   of   action,   or   something   purely
illusory:­ 
“5.   We   have   not   the   slightest   hesitation   in
condemning the petitioner for the gross abuse of
the   process   of   the   court   repeatedly   and
unrepentently resorted to. From the statement of
the   facts   found   in   the   judgment   of   the   High
Court,   it   is   perfectly   plain   that   the   suit   now
pending   before   the   First   Munsif's   Court,
Bangalore, is a flagrant misuse of the mercies of
the law in receiving plaints. The learned Munsif
must remember that if on a meaningful — not
formal — reading of the plaint it is manifestly
vexatious,   and   meritless,   in   the   sense   of   not
disclosing   a   clear   right   to   sue,   he   should
exercise his power under Order 7, Rule 11 CPC
taking care to see that the ground mentioned
26
therein is fulfilled. And, if clever drafting has
created the illusion of a cause of action, nip it in
the bud at the first hearing by examining the
party   searchingly   under   Order   10,   CPC.   An
activist Judge is the answer to irresponsible law
suits. The trial courts would insist imperatively
on examining the party at the first hearing so
that bogus litigation can be shot down at the
earliest stage. The Penal Code is also resourceful
enough to meet such men, (Cr. XI) and must be
triggered against them. In this case, the learned
Judge to his cost realised what George Bernard
Shaw   remarked   on   the   assassination   of
Mahatma   Gandhi:   “It   is   dangerous   to   be   too
good.”
b) In Azhar Hussain vs. Rajiv Gandhi – [1986 Supp SCC
315],  this Court discussed the very purpose of the power
conferred under Order VII Rule 11 CPC by observing thus:
­
“12. The whole purpose of conferment of such
power   is   to   ensure   that   a   litigation   which   is
meaningless,   and   bound   to   prove   abortive
should not be permitted to occupy the time of
the   Court,   and   exercise   the   mind   of   the
respondent. The sword of Damocles need not be
kept   hanging   over   his   head   unnecessarily
without point or purpose. Even if an ordinary
civil litigation, the Court  readily exercises  the
power to reject a plaint, if it does not disclose
any cause of action.”
c) In  Sopan   Sukhdeo   Sable   and   Ors.   vs.   Assistant
Charity Commissioner and Others ­ [(2004) 3 SCC 137],
it   was   held   that   Rule   11   of   Order   VII   lays   down   an
independent remedy made available to the defendant to
27
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. Elaborating on the aspect of
cause of action by quoting I.T.C Ltd. vs. Debts Recovery
Appellate Tribunal and Ors. – [(1998) 2 SCC 70], it was
held that the basic question to be decided while dealing
with an application filed under Order VII Rule 11 of the
Code is whether a real cause of action has been set out in
the plaint or something purely illusory has been stated
with a view to get out of Order VII Rule 11 of the Code.
d) This Court in Liverpool & London S.P. & I Assn. Ltd. vs.
M.V. Sea Success I & Anr. ­ [(2004) 9 SCC 512] held that
a   plaint   must   be   construed   as   it   stands   without   any
amendments. The same is extracted herein as follows­ 
28
“139.   Whether   a   plaint   discloses   a   cause   of
action or not is essentially a question of fact.
But whether it does or does not, must be found
out from reading the plaint itself. For the said
purpose the averments made in the plaint  in
their entirety must be held to be correct. The
test is as to whether if the averments made in
the plaint are taken to be correct in its entirety,
a decree would be passed.” 
e) We   could   allude   to   the   exposition   of   this   Court   in
Madanuri Sri Rama Chandra Murthy vs. Syed Jalal –
[(2017) 13 SCC 174], wherein it was held as under:­
“7. …..The averments of the plaint have to be
read   as   a   whole   to   find   out   whether   the
averments disclose a cause of action or whether
the suit is barred by any law. It is needless to
observe that the question as to whether the suit
is barred by any law, would always depend upon
the facts and circumstances of each case. The
averments in the written statement as well as
the   contentions   of   the   defendant   are   wholly
immaterial while considering the prayer of the
defendant for rejection of the plaint. Even when,
the allegations made in the plaint are taken to
be correct as a whole on their face value, if they
show that the suit is barred by any law, or do
not disclose cause of action, the application for
rejection of plaint can be entertained and the
power under Order VII Rule 11 of CPC can be
exercised.   If   clever   drafting   of   the   plaint   has
created   the   illusion   of   a   cause   of   action,   the
court will nip it in the bud at the earliest so that
bogus litigation will end at the earlier stage.”
f) In  Dahiben vs. Arvindbhai Kalyanji Bhanusali (Gajra)
Dead   through   Legal   Representatives   and   Others   –
[(2020) 7 SCC 366], Indu Malhotra, J., while dealing with
an appeal against an order allowing rejection of a suit at
29
the   threshold,   had   an   occasion   to   consider   various
precedents discussing the intent and purpose of Order VII
Rule 11 CPC while setting out principles in relation to the
same. It was held that the provision of Order VII Rule 11 is
mandatory in nature and that the plaint “shall” be rejected
if any of the grounds specified in clause (a) to (e) is 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. The relevant
portion of the judgment is extracted as below:­
“23.1 X X X X X
23.2 The remedy under Order 7 Rule 11 CPC is
an independent and special remedy wherein the
court is empowered to summarily dismiss a suit
at the threshold, without proceedings to record
evidence, and conducting a trial, on the basis of
the evidence adduced, if it is satisfied that the
action   should   be   terminated   on   any   of   the
grounds contained in this provision.
23.3 The underlying object of Order VII Rule 11
(a) is that if in a suit, no cause of action is
disclosed,   or   the   suit   is   barred   by   limitation
under Rule 11 (d), the Court would not permit
the   plaintiff   to   unnecessarily   protract   the
proceedings in the suit. In such a case, it would
be   necessary   to   put   an   end   to   the   sham
litigation,   so   that   further   judicial   time   is   not
wasted. 
23.4 In  Azhar  Hussain   v.   Rajiv   Gandhi,  this
Court held that the whole purpose of conferment
of powers under this provision is to ensure that
a litigation which is meaningless, and bound to
30
prove abortive, should not be permitted to waste
judicial time of the court.
23.5   The   power   conferred   on   the   court   to
terminate a civil action is, however, a drastic
one, and the conditions enumerated in Order VII
Rule 11 are required to be strictly adhered to.
23.6 Under Order VII Rule 11, a duty is cast on
the   Court   to   determine   whether   the   plaint
discloses a cause of action by scrutinizing the
averments   in   the   plaint,   read   in   conjunction
with the documents relied upon, or whether the
suit is barred by any law.
23.7 X X X X X
23.8   Having   regard   to   Order   7   Rule   14,   the
documents filed with the plaint, are required to
be   taken   into   consideration   for   deciding   the
application under Order 7 Rule 11(a). When a
document referred to in the plaint, forms the
basis of the plaint, it should be treated as a part
of the plaint. 
23.9 In exercise of power under this provision,
the   Court   would   determine   if   the   assertions
made in the plaint are contrary to statutory law,
or judicial dicta, for deciding whether a case for
rejecting the plaint at the threshold is made out.
23.10   At   this   stage,   the   pleas   taken   by   the
defendant   in   the   written   statement   and
application   for   rejection   of   the   plaint   on   the
merits,   would   be   irrelevant,   and   cannot   be
adverted to, or taken into consideration.”
g) In a recent judgment of Rajendra Bajoria and Others vs.
Hemant Kumar Jalan and Others ­ [2021 SCC Online
SC  764], this Court while elucidating on the underlying
object of Order VII Rule 11 CPC and considering various
precedents of this Court, held as under : ­
31
“20. It could thus be seen that this Court has
held that the power conferred on the court to
terminate a civil action is a drastic one, and the
conditions enumerated under Order VII Rule 11
of CPC are required to be strictly adhered to.
However, under Order VII Rule 11 of CPC, the
duty   is   cast   upon   the   court   to   determine
whether the plaint discloses a cause of action,
by scrutinizing the averments in the plaint, read
in conjunction with the documents relied upon,
or whether the suit is barred by any law. This
Court   has   held   that   the   underlying   object   of
Order VII Rule 11 of CPC is that when a plaint
does not disclose a cause of action, the court
would not permit the plaintiff to unnecessarily
protract the proceedings. It has been held that
in such a case, it will be necessary to put an end
to the sham litigation so that further judicial
time is not wasted.”
26.  Relying on the case of Hardesh Ores (P.) Ltd. vs. Hede &
Co. – [(2007) 5 SCC 614], it was held that it is not permissible to
cull out a sentence or a passage, and to read it in isolation. It is
the substance, and not merely the form, which has to be looked
into.   The   plaint   has   to   be   construed   as   it   stands,   without
addition or subtraction of words.  Further delving upon the ratio
in D. Ramachandran vs. R.V. Janakiraman – [(1999) 3 SCC
367], it was held that if the allegations in the plaint prima facie
show   a   cause   of   action,   the   court   cannot   embark   upon   an
enquiry whether the allegations are true in fact.
27.  It was further held that if on a meaningful reading of the
plaint,   it   is   found   that   the   suit   is   manifestly   vexatious   and
without any merit, and does not disclose a right to sue, the court
32
would be justified in exercising the power under Order VII Rule
11   CPC.   Placing   reliance   on  Saleem   Bhai   vs.   State   of
Maharashtra – [(2003) 1 SCC 557], it was held that 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.
28.  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 Rs. 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. According
33
to the plaintiff, defendant no.1 did not take any step to save
licence of the plaintiff from cancellation and it was cancelled on
the basis of the complaint made by defendant no.1  vide  letter
dated 18th February, 2009, by the Paradeep Port Trust Authority.
Hence, the question of defendant no.2 handing over the cheque
for   Rs.   56   lakhs   to   defendant   no.1   did   not   arise.   Further,
plaintiff was pressurized to either supply 3876 MT of iron ore
fines to defendant no.1 or else defendant no.1 would present the
cheque for encashment. Since plaintiff did not agree to the illegal
demand of defendant no.1, the cheque for Rs.56 lakhs which
had been handed over by defendant no.2 to defendant no.1, was
presented by defendant no.1 and it was dishonoured. According
to the Plaintiff, defendant no.2 and defendant no.1 colluded with
each other to make an illegal gain and defendant no.2 could not
have handed over the cheque to defendant no.1. Hence, a letter
was written to the Bank directing them to stop the payment of
the cheque and the same was conveyed to the defendants. The
said   cheque   was   dishonoured.   Defendant   no.1   issued   notice
under   Section   138   of   NI   Act   dated   10th  June,   2009,   to   the
plaintiff through its Managing Director, to which a reply was
given on 23rd June, 2009. According to the plaintiff, defendant
no.1 owes the plaintiff Rs. 21.50 lakhs but the plaintiff does not
34
have to pay anything to defendant no.1. Hence, 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 Rs. 56 lakhs since
defendant no.1 had failed to save the licence of plaintiff’s plot
from cancellation by the Paradeep Port Trust Authority.
29.  At   the   outset,   we   hold   that   on   perusal   of   the   plaint
averments, the plaintiff has indeed made out a cause of action
for filing the suit. In fact, in para 2 of the application filed under
Order VII Rule 11 CPC, defendant no.1 has also encapsulated
the averments made in the plaint. Therefore, on that score the
plaint cannot be rejected. 
30.  The other contention of defendant no.1 is that from the
pleadings and averments in the plaint and the prayers sought
therein, it appears that only certain declaratory reliefs have been
35
sought and further, consequential reliefs have been omitted to
be prayed. Hence, the suit is barred under the provisions of the
SR Act and is liable to be dismissed and the plaint is liable to be
rejected under Order VII Rule 11 CPC. 
31.  In the objections filed to the application under order VII
Rule 11 CPC, it has been averred that the plaint averments
would clearly show a cause of action for filing the suit and
further that the suit is not barred by any law. Further, the
declaratory reliefs have been valued properly and appropriate
court fee has been paid. Hence, the application is liable to be
rejected. 
Thus, the main thrust of the application seeking rejection
of the plaint is that apart from the fact that the plaint does not
disclose   a   cause   of   action   which   has   been   negated   by   the
revisional   court   and   rightly   so,   plaintiff   has   sought   only
declaratory reliefs and has not sought further or consequential
reliefs.   In   the   circumstances,   the   suit   is   barred   under   the
provisions of the SR Act. 
Section 34 of the SR Act reads as under:
“34.   Discretion   of   court   as   to   declaration   of
status or right.—Any person entitled to any legal
character, or to any right as to any property,
may institute a suit against any person denying,
36
or interested to deny, his title to such character
or   right,   and   the   court   may   in   its   discretion
make therein a declaration that he is so entitled,
and the plaintiff need not in such suit ask for
any further relief: 
Provided that no court shall make any such
declaration   where   the   plaintiff,   being   able   to
seek further relief than a mere declaration of
title, omits to do so. 
Explanation.—A trustee of property is a “person
interested to deny” a title adverse to the title of
some one who is not in existence, and whom, if
in existence, he would be a trustee.”
The proviso to Section 34 states that no court can make
any declaration where the plaintiff, being able to seek further
relief than mere declaration of title, omits to do so. The said
question   will   have   to   be   considered   at   the   time   of   final
adjudication of the suit as the question of granting further relief
or consequential relief would arise only if the court grants a
declaration. If the plaintiff is unsuccessful in seeking the main
relief of declaration, then, the question of granting any further
relief would not arise at all. Therefore, omission on the part of
the plaintiff in praying for further consequential relief, would
become relevant only at the time of final adjudication of the suit.
Hence, in view of the above, the plaint cannot be rejected at this
stage by holding that the plaintiff has only sought declaratory
reliefs and no further consequential reliefs. 
37
32.  The other reason cited for rejection of the plaint is that the
suit   is   an   attempt   on   the   part   of   the   plaintiff   to   deprive
defendant   no.1   of   its   legitimate   dues.   In   other   words,   the
plaintiff is seeking a declaration that the cheque for Rs. 56 lakhs
issued   in   the   name   of   defendant   no.1   and   handed   over   to
defendant no.2 in turn to be handed over to defendant no.1 at
the appropriate time was only as a security. According to the
plaintiff it was not liable to pay the cheque amount to defendant
no.1 since defendant no.1 had not fulfilled its obligations under
the terms of the MoU. The declaratory reliefs sought are worded
as under: 
“(i)   Let   it   be   declared   that   the   plaintiff   had
handed over the cheque to Sri Dilip Das,
Advocate as a security;
(ii)  Let it be declared that the said cheque has
been illegally handed over by the defendant
no.2 to the defendant no.1 by violating term
and   condition   of   the   memorandum   of
understanding dated 17.01.2009;
(iii)  Let it be declared that the plaintiff is not
liable to give delivery of 3876 MT of iron ore
fines to the defendant no.1 nor the cheque
amount since the defendant no.1 has failed
to   save   the   plaintiff’s   plot   from
cancellation;”
Hence, it is contended by defendant no.1 that the suit filed
by the plaintiff is an attempt to frustrate the possibility of the
defendant no.1 initiating action under the provisions of the N.I.
38
Act for the dishonour of cheque. In this regard, reference could
be made to Sections 118 (a) and 138 of N.I. Act, which reads as
under:
“118.   Presumptions   as   to   negotiable
instruments. —Until the contrary is proved, the
following presumptions shall be made:—
(a) of   consideration   —that   every   negotiable
instrument   was   made   or   drawn   for
consideration, and that every such instrument,
when it has been accepted, indorsed, negotiated
or   transferred,   was   accepted,   indorsed,
negotiated or transferred for consideration;
XXX  XXX  XXX
138. Dishonour of cheque for insufficiency, etc.,
of   funds   in   the   account.—Where   any   cheque
drawn by a person on an account maintained by
him with a banker for payment of any amount of
money   to   another   person   from   out   of   that
account for the discharge, in whole or in part, of
any debt or other liability, is returned by the
bank unpaid, either because of the amount of
money standing to the credit of that account is
insufficient   to   honour   the   cheque   or   that   it
exceeds the amount arranged to be paid from
that account by an agreement made with that
bank,   such   person   shall   be   deemed   to   have
committed   an   offence   and   shall,   without
prejudice to any other provision of this Act, be
punished with imprisonment for [a term which
may   be   extended   to   two   years’],   or   with   fine
which may extend to twice the amount of the
cheque, or with both: 
Provided   that   nothing   contained   in   this
section shall apply unless— 
(a) the cheque has been presented to the bank
within a period of six months from the date on
which  it  is drawn  or  within the period of its
validity, whichever is earlier; 
39
(b) the payee or the holder in due course of the
cheque, as the case may be, makes a demand
for the payment of the said amount of money by
giving a notice; in writing, to the drawer of the
cheque,   [within   thirty   days]   of   the   receipt   of
information by him from the bank regarding the
return of the cheque as unpaid; and 
(c) the drawer of such cheque fails to make the
payment of the said amount of money to the
payee or, as the case may be, to the holder in
due course of the cheque, within fifteen days of
the receipt of the said notice. 
Explanation.—For the purposes of this section,
“debt   of   other   liability”   means   a   legally
enforceable debt or other liability.”
33. On   a   reading   of   the   same,   it   is   clear   that   there   is   a
rebuttable   presumption   that   every   negotiable   instrument
including a cheque was made or drawn for a consideration and
every   such   instrument   when   it   has   been   accepted   is   for   a
consideration. 
34.  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
40
sum of Rs. 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. 
35.  On a holistic reading of the plaint and on consideration of
the reliefs sought by the plaintiff, we find that the said reliefs are
barred by law inasmuch as no plaintiff can be permitted to seek
relief   in   a   suit   which   would   frustrate   the   defendants   from
initiating a prosecution against plaintiff or seeking any other
remedy   available   in   law.   In   fact,   the   attempt   made   by   the
plaintiff to seek such a declaratory relief is, in substance, to seek
a   relief   of   injunction   against   the   defendants,   particularly
defendant no.1, but framed it in the nature of a declaratory
relief. In other words, the plaintiff has sought an injunction
against defendant no.1 from seeking remedies in law on account
of the cheque issued by the plaintiff for a sum of Rs. 56 lakhs
being dishonoured. 
41
36.  We may refer to Sections 41 (b) and (d) of SR Act which are
extracted as under: ­ 
“41. Injunction when refused. ­ xxx
(b)    to   restrain   any   person   from
instituting   or   prosecuting   any
proceeding   in   a   Court   not
subordinate to that from which the
injunction is sought;
xxx xxx xxx
(d)  to   restrain   any   person   from
instituting   or   prosecuting   any
proceeding in a criminal matter;”
In the above context, following decisions are useful to
be referred to:­ 
(a) In the case of Cotton Corporation of India Limited
vs.   United   Industrial   Bank   Limited   and   Ors. ­
[(1983)   4   SCC   625],   this   Court   highlighted   the
equitable   principle   underlying   Section   41   (b)   of   the
Specific Relief Act, 1963 as under: ­ 
“8. It   is,   therefore,   necessary   to   unravel   the
underlying   intendment   of   the   provision
contained in Section 41(6). It must at once be
conceded that Section 41 deals with perpetual
injunction and it may as well be conceded that it
has   nothing   to   do   with   interim   or   temporary
injunction which as provided by Section 37 are
dealt with by the Code of Civil Procedure. To
begin   with,   it   can   be   said   without   fear   of
contradiction that anyone having a right that is
a   legally   protected   interest   complains   of   its
42
infringement   and   seeks   relief   through   court
must have an unhindered, uninterrupted access
to law courts. The expression ‘court’ here is used
in   its   widest   amplitude   comprehending   every
forum   where   relief   can   be   obtained   in
accordance with law. Access to justice must not
be   hampered   even   at   the   hands   of   judiciary.
Power   to   grant   injunction   vests   in   the   court
unless the legislature confers specifically such
power on some other forum. Now access to court
in search of justice according to law is the right
of a person who complains of infringement of his
legally protected interest and a fortiori therefore,
no other court can by its action impede access
to justice. This principle is deducible from the
Constitution   which   seeks   to   set   up   a   society
governed by ride of law. As a corollary, it must
yield to another principle that the superior court
can injunct a person by restraining him from
instituting or prosecuting a proceeding before a
subordinate court. Save this specific carving out
of   the   area   where   access   to   justice   may   be
impeded   by   an   injunction   of   the   court,   the
legislature   desired   that   the   courts   ordinarily
should   not   impede   access   to   justice   through
court. This appears to us to be the equitable
principle underlying Section 41(b). Accordingly,
it   must   receive   such   interpretation   as   would
advance   the   intendment,   and   thwart   the
mischief it was enacted to suppress, and to keep
the   path   of   access   to   justice   through   court
unobstructed.”
(b)  In the case of  Ratna  Commercial  Enterprises  Ltd.  vs.
Vasutech Ltd. – [AIR 2008 Del 99], it was held: ­
“29. The   other   issue   concerns   the
maintainability of the suit itself in terms of the
Section   41(d)   of   the   Specific   Relief   Act,   1963
(‘SRA’) which reads as under:
“41. An injunction cannot be granted
….   (d)   to   restrain   any   person   from
instituting   or   prosecuting   any
proceeding in a criminal matter.”
43
The   law   concerning   the   interpretation   of
Section 41(d) of the SRA is fairly well settled. It
has been held In Re N.P. Essappa Chettiar AIR
1942   Mad.   756   and   in Gauri
Shanker v. District   Board AIR   1947   All.   81
that a suit to restrain criminal proceedings being
initiated is not maintainable. In Aristo Printers
Pvt.   Ltd. v. Purbanchal   Trade   Centre AIR
1992 Gau. 81 a Division Bench of the Gauhati
High   Court   was   dealing   with   a   case   where
cheques issued by the plaintiff to the defendant
had   been   dishonoured   and   notice   had   been
issued to the defendant under Section 138 NI
Act. The plaintiff then filed a suit to restrain the
defendant   from   instituting   proceedings   under
the NI Act. The Court referred to a judgment of
the   Hon'ble   Supreme   Court   in State   of
Orissa v. Madan  Gopal  Rungta AIR  1952  SC
12  and Cotton   Corporation   of   India
Ltd. v. United Industrial Bank Ltd. AIR 1983
SC 1272 and held that “an order of injunction
of   the   nature   issued   in   this   case   cannot   be
granted   and   the   hands   of   the   criminal   court
cannot be fettered by the civil court.”
30. The decision of this Court in Atul   Kumar
Singh v. Jalveen Rosha AIR 2000 Del 38 was
in a case where the plaintiff had issued four
cheques issued in favour for the defendant for a
value   of   Rs.   7   lakhs.   The   cheques   when
presented   were   dishonoured.   After   service   of
notice under Section 138 NI Act, the plaintiff
filed a suit for a declaration that “the defendant
is   not   entitled   to   any   benefit   on   account   of
holding   the   cheques”   and   to   injunct   the
defendant “from using or claiming any benefit by
virtue   of   possessing   the   instruments.”   This
Court, while allowing the defendant's application
for rejecting the plaint, held that (AIR, p.40):
“The reliefs claimed in this suit are
in   substance   for   an   injunction
restraining   the   defendant   from
prosecuting   the   criminal   case
instituted   against   the   plaintiff.
Section 41(b) of the SRA denies to
44
the Court the jurisdiction to grant
an injunction restraining any person
from prosecuting any proceedings in
a   Court.   Consequently,   the
injunction   sought   by   the   plaintiff
cannot   be   granted   since   it   would
have   the   effect   of   preventing   the
defendant   from   prosecuting   the
criminal case against the plaintiff.”
Further,   the   nature   of   the   declaratory   reliefs   sought
already arises out of the MoU dated 17th January, 2009, between
the plaintiff and defendant no.1 in respect of which the plaintiff
could seek appropriate remedies, if there is a breach of the said
MoU by defendant no.1, but the plaintiff cannot seek declaratory
reliefs to the effect that the plaintiff was not liable to carry out
his obligation under the terms of the MoU. If the plaintiff has
failed to do so then the defendant no.1 would have a cause of
action against the plaintiff, but there cannot be a frustration of
the   right   to   seek   a   remedy   in   law   by   means   of   seeking
declaration under a contract or MoU as in the instant case. 
37.  Moreover,   the   right   of   defendant   no.1   to   prosecute   the
plaintiff owing to the dishonour of the cheque issued by the
plaintiff   for  a   sum  of   Rs.  56   lakhs   cannot  be  frustrated   by
seeking a declaration that the said cheque was handed over as a
security. Such a declaration cannot be  ex facie  granted as it
would   be   contrary   to   the   provisions   of   the   N.I.   Act   and
45
particularly Section 118(a) thereof. If the plaintiff is aggrieved on
account   of   breach   of   the   terms   and   conditions   of   the   MoU
committed by defendant no.1 then it could seek  appropriate
reliefs in accordance with law. Whether the plaintiff was not
liable to issue the cheque for Rs. 56 lakhs to defendant no.1
under   the   terms   of   the   MoU   is   a   matter   which   has   to   be
considered   in   an   appropriate   proceeding   to   be   initiated   by
defendants on account of dishonour of the said cheque under
Section 138 of the N.I. Act. The plaintiff can always prove that it
had no legal liability or debt to be discharged vis­a­vis defendant
no.1 under the terms of the MoU, if any proceeding is to be
initiated by defendant no.1 on account of the dishonour of the
said cheque. Further, if defendant no.1 is to seek any relief for
the non­supply of 3876 MT of iron ore fines by the plaintiff
under the very same MoU then the plaintiff is entitled to take
appropriate defences as are available in law. If the plaintiff has a
grievance   against   the   defendants   and   particularly   defendant
no.1, arising from the MoU, such prayers have not been sought
by the plaintiff. Such reliefs could have been sought by the
plaintiff inasmuch as there is no prayer seeking recovery of Rs.
21.50 lakhs from defendant no.1 which according to the plaintiff
is due to it. 
46
38.  In the circumstances, we hold that 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.   In   our   view,   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. 
39.  In the result, the impugned Order of the High Court is set
aside and the Order of the revisional court passed in C.R.P. No.5
of 2012 dated 23.02.2013 is restored. The plaint in C.S. No.
1065 of 2009 is rejected. This appeal is accordingly allowed. 
40.  However, it is clarified that the rejection of the plaint would
not   come   in   the   way   of   the   plaintiff   filing   a   suit   against
defendant no.1 for seeking appropriate reliefs in accordance with
law, if so advised. 
47
Parties to bear their respective costs.
…..………..…………………..J.
[M.R. SHAH]
…………………………………J.
[B.V. NAGARATHNA]
NEW DELHI;
April 01, 2022. 

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