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Kalpeshbhai Danachandbhai Shah v/s Ashvinbhai Lalchand Shah

    R/First Appeal No. 1032 of 2021
    Decided On, 09 August 2021
    At, High Court of Gujarat At Ahmedabad
    By, THE HONORABLE JUSTICE: J.B. PARDIWALA & THE HONORABLE JUSTICE: VAIBHAVI D. NANAVATI
    By, JJ.
    For Petitioner: H.J. Karathiya And For Respondents: Harshadray A. Dave


Judgment Text

1. This first appeal is at the instance of the original plaintiff and is directed against the order passed by the learned 10th Additional Senior Civil Judge, Surat, below Exh.1 dated 04.02.2021 in the Special Civil Suit No. 21 of 2021 by which the Court below rejected the plaint under the provisions of Order 7 Rule 11(d) of the Civil Procedure Code even before issuing summons to the defendants.

2. The facts giving rise to this first appeal may be summarized as under:

2.1. The appellant herein-original plaintiff instituted the Special Civil Suit No. 21 of 2021 in the Court of the Principal Senior Civil Judge, Surat seeking the following reliefs:

"1. Your Honour may please be declare all the Cheques as void as the cheques are void and illegal because we, the plaintiff/s has/have given cheque No. 000082, 000083, 000084 and 000085 of HDFC Bank Ltd. Piplod Branch, Surat towards the security against the amount borrowed from the opponent/s and though the opponents has bound to return the cheques, which were received from the plaintiff/s towards security against the amount borrowed from the opponent/s, the opponent/s is/are misusing the cheques received on account of security amount.

2. Your Honour may please be grant to perpetuate injunction against the opponent/s as his associates, servants, agents restraining them to negotiate or clear his cheques as they are not entitled for the same and also restraining them from initiated any criminal proceedings against the plaintiff/s.

3. To award the costs of this petition from the opponent/s.

4. As any other relief may be granted deem fit by the Hon'ble Court."

2.2. It appears from the averments made in the plaint as also the prayers in the plaint that there is some financial transaction between the plaintiff and the defendants. It is not in dispute as admitted in the plaint itself that the plaintiff had issued cheques in favour of the defendants drawn on the HDFC Bank Ltd., Piplod Branch, Surat for a particular amount. These cheques were issued sometime in the year 2016-17. On none of the cheques any date was written. It is the case of the plaintiff that such cheques were issued by him to the defendants by way of security. However, the requisite amount later came to be paid to the defendants and the defendants were expected to return those cheques issued by way of security.

2.3. It is the case of the plaintiff that such cheques are now being misused by the defendants and prosecution has also been instituted for the dishonour of those cheques by filing complaints under Section 138 of the Negotiable Instruments Act. The plaintiff wants to seek a declaration that the cheques-in-question were drawn by him in favour of the defendants by way of security and such instruments be declared as void or voidable or without any lawful consideration etc. The plaintiff also seeks relief to the extent that the defendants shall not take any action against the plaintiff by filing any criminal complaint etc.

2.4. Upon institution of the suit, the Court below rejected the plaint holding as under:

"1. The present matter was kept for hearing on admission stage to decide question of maintainability of the present suit filed by the plaintiff against the defendants. This is a suit for declaration and perpetual injunction. Brief facts of the case as per plaintiff are that the plaintiff took a loan of Rs. 25,00,000/-from the defendants in the year 2016-17 and gave four blank signed cheque bearing no. 000082, 000083, 000084 and 00008 drawn on HDFC Bank Ltd., Piplod Branch, Surat. It is alleged by the plaintiff that after repayment of the said loan of Rs. 25,00,000/- plaintiff demanded the cheques from the defendants but they refused to return the same. As such, the plaintiff had allegedly given notice to the defendants and got the payment of cheques in question stopped so that it may not be misused. It is averred that the defendants later on misused the cheques in question and presented the said cheques to bank which were dishonoured with the remarks "payment stopped by drawer".

Therefore, the defendants gave notice u/s. 138 of the Negotiable Instrument Act, 1881 (hereinafter as 'NI Act'). It is stated by the plaintiff that the defendants may institute cases under section 138 of NI Act and thus present suit is filed by the plaintiff against defendants seeking following reliefs:

(a) To pass a decree of declaration declaring the cheques in question as null and void.

(b) To pass a decree of perpetual injunction to direct the defendants to not to initiate any proceedings under section 138 of NI Act against the plaintiff.

2. Now, taking the pleading of plaintiff into consideration, it appears from documents produced vide exhibit 3 that the defendants had given notice to the plaintiff and his son under NI Act which were given in either december 2020 or January 2021. It is pertinent to note that the plaintiff has admitted the execution of cheques in question in favour of the defendants. The only question raised by the plaintiff vide present suit is that the said cheques in question were fabricated and misappropriated by the defendants or defendants may misuse the same to incur mental harassment upon plaintiff. As it is crystal clear that statutory notice under NI Act is given by the defendants to the plaintiff, the relief of declaration sought by plaintiff to declare the cheques in question (which is suit property in criminal proceedings as per statutory notice under NI Act) as null & void, is highly ill conceived and is liable to be dismissed.

3. Also, as the plaintiff had prayed for perpetual injunction against the defendants, it seems important to mention Section 41(d) of the Specific Relief Act, 1963. It is a settled position of law by way of Section 41(d) of the Specific Relief Act, 1963 that an injunction cannot be granted to restrain any person from instituting or prosecuting any proceeding in criminal matter. In the present case, the plaintiff had prayed for perpetual injunction against the defendants so that they may not file any criminal proceedings against the plaintiff, which is not good in law. It has been held in the case of Shipping Corporation of India Ltd. vs. Machado Brothers & Others reported in AIR 2004 SC 2093, that continuation of a suit which has become infructuous by disappearance of the cause of action would amount to an abuse of the process of the court and interest of justice requires such suit to be disposed of as having become infructuous. The present suit is thus liable to be dismissed on the ground of being infructuous as well.

4. Keeping in view the aforesaid observations, it is held that the present suit is not maintainable in its present form. As such, the same stands disposed of as dismissed at admission stage."

2.5. Being dissatisfied with the aforesaid order passed by the Court below rejecting the plaint, the original plaintiff is here before this Court with the present appeal.

3. Mr. H.J. Karathiya, the learned counsel appearing for the plaintiff vehemently submitted that the Court below committed a serious error in passing the impugned order rejecting the plaint. Mr. Karathiya would submit that the plaint has been rejected relying upon Section 41(d) of the Specific Relief Act, 1963 whereas the Court below failed to take into consideration the main relief of declaration sought for in the plaint. According to Mr. Karathiya, the first relief i.e. the declaration with respect to the legality and validity of the instrument would fall within the ambit of Section 31 of the Act, 1963. He would argue that even if the second part of the relief as prayed for is barred by Section 41(d) of the Act, 1963, the plaint could not have been rejected as a whole. He would argue that Order 7 Rule 11 of the Civil Procedure Code enables the Court to reject the plaint in certain cases. However, what is contemplated by the provisions of Order 7 Rule 11 is that the plaint as a whole is open to rejection. Even if one of the reliefs sought by the plaintiff cannot be rejected under the provisions of Order 7 Rule 11, the plaint as such cannot be rejected. In such circumstances referred to above, Mr. Karathiya, prays that there being merit in his appeal, the same may be allowed and the impugned order be quashed and set aside.

3.1. Mr. Karthiya submits that the necessary corollary of a declaration that may ultimately be granted by the Civil Court in terms of the prayer 14(1) made in the Suit, would be that the defendants would be dis-entitled from relying upon the said cheques to maintain any legal proceedings against the plaintiff.

4. On the other hand, this appeal has been vehemently opposed by Mr. Harshadray Dave, the learned counsel appearing for the original defendants. Mr. Dave would submit that no error not to speak of any error of law could be said to have been committed by the Court below in passing the impugned order. According to Mr. Dave, the suit is nothing but gross abuse of the process of law. Mr. Dave would submit that all the cheques which the plaintiff is talking about came to be dishonored because of stop payment instructions issued by the drawer i.e. the plaintiff and complaints have been filed under Section 138 of the Negotiable Instruments Act for the dishonour of the cheques. Mr. Dave invited the attention of this Court to Section 4 of the Specific Relief Act, 1963. Section 4 provides that the specific relief can be granted only for enforcing individual civil rights and not for enforcing penal laws. According to Mr. Dave, none of the civil rights could be said to have been infringed in the present case so as to make the suit maintainable in the law. Mr. Dave also invited the attention of this Court to Section 41(d) of the Act, 1963. Section 41 stipulates when injunction should not be granted. Sub clause (d) to Section 41 says that injunction cannot be granted to restrain any person from instituting or prosecuting any proceeding in a criminal matter. In such circumstances referred to above, Mr. Dave prays that there being no merit in the present appeal, the same be dismissed.

ANALYSIS:-

5. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is whether the Court below committed any error in rejecting the plaint.

6. Before adverting to the rival submissions canvassed on either side, we should look into few provisions of the Act, 1963.

6.1. Section 4 reads thus:

"4. Specific relief to be granted only for enforcing individual civil rights and not for enforcing penal laws. -- Specific relief can be granted only for the purpose of enforcing individual civil rights and not for the mere purpose of enforcing a penal law."

6.2. Section 31 reads thus:

31. When cancellation may be ordered. -(1) Any person against whom a written instrument is void or voidable, and who has reasonable apprehension that such instrument, if left outstanding may cause him serious injury, may sue to have it adjudged void or voidable; and the court may, in its discretion, so adjudge it and order it to be delivered up and cancelled.

(2) If the instrument has been registered under the Indian Registration Act, 1908 (16 of 1908), the court shall also send a copy of its decree to the officer in whose office the instrument has been so registered; and such officer shall note on the copy of the instrument contained in his books the fact of its cancellation."

6.3. Section 41(d) reads thus:

"41(d) to restrain any person from instituting or prosecuting any proceeding in a criminal matter."

7. It goes without saying that so far as the relief as prayed for in terms of para 14(2) in the plaint is concerned, the same is barred by law i.e. by virtue of Section 41(d) of the Act, 1963. The question is whether the main relief of declaration i.e. in terms of para 14(1) could also be said to be barred by law?

8. In the aforesaid context, we may only say that the main relief of declaration as prayed for and referred to above, could be said to be maintainable under Section 31 of the Act, 1963. The plaintiff is in-fact seeking to have the cheques adjudged void or voidable and is further seeking the declaration of its being delivered up and cancelled. In such circumstances, it could be said that the plaintiff is not seeking the declaration of his legal character qua the defendants nor is the plaintiff seeking a declaration of a right as to any property. It cannot, therefore, be said that the relief in terms of 14(1) fall within the scope of Section 34 of the Specific Relief Act.

9. The relief as to the cancellation of instrument is founded upon the administration of the protective justice for fear that the instrument may be vexatiously or injuriously used by the defendants against the plaintiff when evidence to impeach it may be lost or that it may throw a cloud or suspicion over his title or interest. Section 31 is based upon the same principle.

9.1. The provisions of Section 39 of the Old Act corresponding to the Section 31 of the Act, 1963 make it clear that three conditions are requisite for the exercise of the jurisdiction to cancel an instrument.

(1) the instrument is void or voidable against the plaintiff;

(2) the plaintiff may reasonably apprehends serious injury by the instrument being left outstanding;

(3) in the circumstances of the case, the Court considers it proper to grant this relief of preventive justice.

9.2. As the principle is one of potential mischief, by the instrument remaining outstanding, it stands to reason that the executant of the instrument should be either the plaintiff or a person who can in certain circumstances bind him.

10. Section 31 of the Act, 1963, has been interpreted in few judgments. We may give reference of those judgments as under:

10.1. AIR 1939 Madras 894, Vellayya Konar (Died) And Anr. vs. Ramaswami Konar And Anr.,

10.2. In this judgment, his Lordship Wadsworth, J. has distinguished between the cancellation of an instrument and a declaration that the instrument is not binding on the plaintiff. The ratio of this judgment is that a Suit for cancellation of an instrument can only be filed by the parties who are a part of such transaction and such a Suit can be held maintainable for cancellation at the discretion of the Court. If a third party who shall concern regarding a transaction/instrument i.e. if such third party feels that he/she is being unfairly treated because of the performance of the obligations of such an instrument by the parties to it, then such third party cannot file a Suit for the cancellation of the instrument. The Court said that in such a case, the concern third party have to sue for declaration and not for cancellation of an instrument.

10.3. In the aforesaid context, we may refer to a recent pronouncement of the Supreme Court in the case of Deccan Paper Mills Co. Ltd. v. Regency Mahavir Properties, wherein explaining the meaning of the expression "any person against whom a written instrument is void or voidable....." under Section 31(1), the Supreme Court said that the expression "any person" would not include a third party, but is restricted to a party to the written instrument or any person who can bind such party.

10.4. A Division Bench of the Bombay High Court in the case of Jeka Dula vs. Bai Jivi reported in 1938 AIR (Bom) 37, had observed:

"4. Although, there was no prayer in the plaint specifically for cancelling these three deeds, the plaintiff's case really was that he was entitled to a declaration that they were void or voidable and were not binding on him, and it is on that footing that the case has been argued before us on behalf of the appellant. The learned Counsel who argued on behalf of the appellant contended that the case fell under Section 39 of the Specific Relief Act as regards the relief by way of cancellation of these deeds and under Section 42 of that Act as regards the declaratory relief sought.

5. Now the relief as to cancellation of an instrument is, as pointed out by Story, founded upon the administration of the protective justice for fear that the instrument may be vexatiously or injuriously used by the defendant against the plaintiff when the evidence to impeach it may be lost or that it may throw a cloud or suspicion over his title or interest. Section 39 of the Specific Relief Act is based upon 1 the same principle, and under that section three points have to be borne in mind: (1) The written instrument in question is either void or voidable as against the plaintiff (2) who may reasonably apprehend serious injury from the instrument being left outstanding (3) in view of all the circumstances of the case the Court considers it reasonable and proper to administer the protective and preventive justice asked for. The relief the Court can grant is of a limited character. The reliefs are (1) adjudge that the instrument is void or voidable (2) order it to be delivered up and cancelled."

10.5. The ratio of the above referred Bombay High Court judgment is that if an instrument is being used unfairly by any of the parties to a transaction which is causing harm or is intended to cause harm to the aggrieved party who has approached the Court then such instrument may be cancelled at the discretion of the Court for the purpose of serving justice. The cancellation of an instrument is a protective measure under the Act, 1963 for the protection of such parties who are at a fear of being harmed by the other party through the performance of an instrument of which they are a part of.

11. Mr. Karathiya, the learned counsel appearing for the plaintiff is right in his submission that although Order 7 Rule 11 of the Civil Procedure Code enables the Court to reject the plaint in certain cases yet what is contemplated by this provision is that the plaint as a whole is open to rejection. Mr. Karathiya is right in his submission that even if one of the reliefs sought by the plaintiff cannot be rejected under this provision, the plaint as such cannot be rejected.

12. We may refer to and rely upon a decision of the Supreme Court in case of D. Ramachandran Vs. R.V. Janakiraman and Ors., reported in AIR 1999 SC 1128. We quote the relevant observations:

"10. On the other hand, Rule 11 of Order 7 enjoins the Court to reject the plaint where it does not disclose a cause of action. There is no question of striking out any portion of the pleading under this rule. The application filed by the first respondent in O.A. No. 36/97 is on the footing that the averments in the election petition did not contain the material facts giving rise to a triable issue or disclosing a cause of action. Laying stress upon the provisions of Order 7, Rule 11(a), learned senior counsel for the first respondent took us through the entire election petition and submitted that the averments therein do not disclose a cause of action. On a reading of the petition, we do not find it possible to agree with him. The election petition as such does disclose a cause of action which if unrebutted could void the election and the provisions of Order 7, Rule 11(a) C.P.C. can not therefore be invoked in this case. There is no merit in the contention that some of the allegations are bereft of material facts and as such do not disclose a cause of action. It is elementary that under Order 7 Rule 11(a) C.P.C., the Court can not dissect the pleading into several parts and consider whether each one of them discloses a cause of action. Under the rule, there can not be a partial rejection of the plaint or petition. See Roop Lal Sathi Versus Nachhattar Singh Gill (1982) 3 S.C.C. 487. We are satisfied that the election petition in this case could not have been rejected in limine without a trial."

12.1. Thus, from the aforesaid the Principle of law discernible is that under Order 7 Rule 11(d) the Civil Procedure Code, the Court cannot dissect the pleading into several parts and consider whether each one of them discloses a cause of action. Under the Rule, there cannot be a partial rejection of the plaint.

13. We may also refer to a decision of the Punjab and Haryana High Court in the case of ABN AMRO Bank Vs. the Punjab urban Planning and Development Authority, reported in AIR 2000 P & H 44, wherein Honourable Mr. Justice Swatanter Kumar (as his lordship then was) observed as under:

"21. The right of the plaintiff bank, thus, to recover the amount to the above limited extent, even if it is assumed that the letter dated 7th July, 1993, is valid and proper cannot be frustrated, the amount being less than the amount claimed in the plaint. Thus, in any case the plaint to the limited extent discloses cause of action in favour of the plaintiff bank and against the defendant. What will be the merit of this claim is again a question to be gone into by the Court at the appropriate stage and upon conclusion of evidence. Partial rejection of a plaint is against not permissible. The provisions of Order 7, Rule 11 of the Code of Civil Procedure are intended to finally determine the rights of the parties at earlier stage on the limited grounds stated in that rule. A Bench of this Court in the case of Bansi Lal v. Som Prakash, held as under:--

This rule (Order 7, Rule 11) does not justify the rejection of any particular portion of a plaint." In support of this statement the learned author has relied on Raghubans Puri v. Jyoti Swarupa, ILR 1907 All 325, Appa Rao v. Secretary of State, and Maqsud Ahmad v. Mathura Datt and Co., AIR 1936 Lah 1021.

"I am therefore of the opinion that the learned Senior Subordinate Judge was in error in upholding the rejection as to a part and setting aside the rejection in regard to the other part. This appeal which I am treating as a petition for revision must therefore, be allowed and the rule made absolute, and I order accordingly."

22. The concept of partial rejection is apparently inapplicable to the provisions of Order 7, Rule 11 of the Code of Civil Procedure, it would have its limited application in regard to the provisions of Order 6, Rule 16 of the Code. There could be partial striking out of pleadings but not rejection of plaint. Partial acceptance or rejection or even admission of appeals in absence of a specific rule to that effect was described by the Hon'ble Supreme Court of India not a proper exercise of jurisdiction. In this regard, reference can be made to the case of Ramji Bhagala v. Krishnarao Karirao Bagre, AIR 1982 SC 1223. This is not even the main controversy between the parties in the present case. Thus, I see no reason to discuss this contention in any further elucidation.

23. To bring out the cause of action, a plaint must state necessary conditions to maintain a suit. The merit of those conditions and/or terms is inconsequential at th

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e stage, for consideration of such application. What evidence the plaintiff would lead to prove his case or what probable defence the defendant would raise is not the concern of Court at that initial stage of proceedings. Cause is the proper generic term. Its construction must and has to be decided keeping in mind the facts and circumstances of each case. The steps taken in the suits are proper in law and on facts of the case, they call for no need to retrace the order passed by the learned trial Court." 13.1. Thus, the Court in no uncertain terms has held that there could be partial striking out of pleadings but not rejection of the plaint. To bring out the cause of action, a plaint must state the necessary conditions to maintain a suit. The merits of those conditions and/or terms is inconsequential at the stage for consideration of any application at the instance of the defendants for rejection of the plaint. What evidence the plaintiff would lead to prove his case or what probable defense the defendants would raised is not the concern of the Court at that initial stage of the proceedings. 14. In such circumstances referred to above, we have no hesitation in coming to the conclusion that the Court below committed an error in rejecting the plaint at the very threshold i.e. even before issuing the summons. We do not say for a moment that plaint cannot be rejected without issuing summons to the defendants. Plaint can be rejected at the threshold even before the summons is issued to the defendants. However, in the case on hand, the Court below seems to have overlooked Section 31 of the Act, 1963 and seems to have got confused with Section 41(d) of the Act. The Court below seems to have rejected the entire plaint or to put it in other words, thought fit to take the view that both the reliefs prayed for are barred by virtue of Section 41(d) of the Act, 1963. 15. In the result, this appeal succeed and is hereby allowed. The impugned order passed by the learned 10th Additional Senior Civil Judge, Surat dated 04.02.2021 below Exh.1 in the Special Civil Suit No. 21 of 2021 is hereby quashed and set aside. The Suit is ordered to be restored to its original file. The Court shall now proceed to issue summons to the defendants and thereafter proceed in accordance with law. We clarify that this order shall not come in the way of the defendants so far as the criminal prosecution which they have instituted for the dishonour of the cheques. The criminal complaints shall proceed further in accordance with law on their own merits.
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