Gujarat High Court
M/S Goga Enterprise vs Ahmedabad Municipal Corporation on 4 July, 2023
Author: N.V.Anjaria
Bench: N.V.Anjaria
NEUTRAL CITATION
C/FA/2509/2023 ORDER DATED: 04/07/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 2509 of 2023
With
CIVIL APPLICATION (FOR STAY) NO. 1 of 2023
In R/FIRST APPEAL NO. 2509 of 2023
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M/S GOGA ENTERPRISE
Versus
AHMEDABAD MUNICIPAL CORPORATION
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Appearance:
MR AM PAREKH(562) for the Appellant(s) No. 1
for the Defendant(s) No. 1,2,3
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CORAM:HONOURABLE MR. JUSTICE N.V.ANJARIA
and
HONOURABLE MR. JUSTICE J. C. DOSHI
Date : 04/07/2023
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE J. C. DOSHI)
1. This Appeal takes exception to the order passed below Exh.18 in Commercial Civil Suit No.432 of 2022 dated 06.05.2023 by which the Commercial Court in exercise of jurisdiction under Order 7 Rule 11(d) of Code of Civil Procedure, 1908 (in short 'CPC') rejected the plaint.
1.1. As pure question of law arises in the context of impugned order, the appeal could be taken up at this stage.
2. The facts which are gathered from pleadings are briefly stated as :-
2.1. The plaintiff who is appellant herein has instituted suit for recovery of Rs.14,55,496/- along with 12 % interest till date of Page 1 of 13 Downloaded on : Sat Sep 16 20:53:30 IST 2023 NEUTRAL CITATION C/FA/2509/2023 ORDER DATED: 04/07/2023 undefined realization against defendant nos.2 - M/s. Toilet and Toilet Pvt.
Ltd. and defendant no.3 - Shri Kumud Ranjan Kumar jointly and severally. The plaintiff initially filed Summary Suit No.777 of 2020 before the City Civil Court, Ahmedabad, but during hearing learned Aux. Chamber Judge found that alleged transaction averred in the plaint constitute commercial dispute and as such nature of relationship between the parties also constitute commercial nature, hence, passed order below Exh.25 and ordered to transfer the suit to Commercial Court. Learned Principal Judge, City Civil Court, Ahmedabad taking note of the said order on 11.05.2022 transferred the suit Summary Suit to the Commercial Court, Ahmedabad and as such suit was considered as Commercial Civil Suit and numbered as Commercial Civil Suit No.432 of 2022.
2.2. In above background of the case, according to the plaintiff an agreement was entered by and between the plaintiff and defendant nos. 2 and 3 for construction of toilet in different areas of Ahmedabad City. Pursuant to said contract in the year 2015, appellant - plaintiff constructed toilets in different areas of Ahmedabad City and generated invoices to the original defendant nos.2 and 3, in total Rs.41,92,576/-, out of which Rs.31,56,080/- was paid by defendants. Work of constructing toilet was completed in the year 2016, but the remaining amount was not paid by defendant nos.2 and 3 and they were served with legal notice dated 06.02.2016. Notice was replied on 29.02.2016 denying claim of recovery of amount.
2.3. According to the appellant - plaintiff since defendant nos.2 and 3 did not pay the amount as it was outstanding, it would Page 2 of 13 Downloaded on : Sat Sep 16 20:53:30 IST 2023 NEUTRAL CITATION C/FA/2509/2023 ORDER DATED: 04/07/2023 undefined amount to criminal breach of trust and forgery and therefore, Criminal Case was filed under sections 406 and 420 of IPC before the learned Additional Chief Judicial Magistrate, Agra (UP) vide Criminal Case No.40 of 2016. Process was issued against defendant nos.2 and 3 by the Court concerned. Issuance of process was challenged under section 482 by defendant nos.2 before the Allahabad High Court by way of Misc. Criminal Application No.40716 of 2017. Allahabad High Court found substance in the application under section 482 of the Cr.P.C. and vide order dated 13.05.2019 having observed that dispute between the parties are of civil nature allowed the quashing petition and quashed the criminal case.
2.4. The plaintiff again issued notice on 28.05.2019 to defendant nos.2 and 3 for recovery of amount. The notice was not replied.
2.5. In background of above facts, the plaintiff claiming issuance of notice dated 28.05.2019 as cause of action for filing suit, preferred Summary Suit No.777 of 2022 and as stated herein above, Summary suit was converted into Commercial Suit.
3. Inter-alia on the ground that suit being barred by law of limitation defendants came out with application at Exh.18 to reject the plaint under Order 7 Rule 11(d) of CPC. Learned Commercial Court Court having given audience to learned advocate for both the sides believed and hold that suit of the plaintiff is hopelessly barred by law of limitation, as to recover the amount due after suit is filed beyond prescribed limitation of Page 3 of 13 Downloaded on : Sat Sep 16 20:53:30 IST 2023 NEUTRAL CITATION C/FA/2509/2023 ORDER DATED: 04/07/2023 undefined 3 years and upon such premises proceeded to reject the plaint. Above order has given reason to unsuccessful plaintiff to file appeal. Hence, this Appeal.
4. Learned advocate Mr. A.M.Parekh for appellant relying on judgment in the case of Shakti Bhog Food Industries Ltd. v/s. The Central Bank of India and Anr.. [2020 (17) SCC 260] would submit that learned Commercial Court has erred in rejecting suit under Order 7 Rule 11 of CPC principally relying upon defence raised by the defendants. He would further submit that when the Court is called for deciding the issue of the plaint under Order 7 Rule 11 of CPC, as per settled principle of law, averments made in the written statement or in the application seeking rejection of plaint cannot be looked into. The Commercial Court was duty bound to scrutinize the averments or plea made in the plaint only and on plain reading, the Court has to find out whether the plaint is barred by provision of law. He would submit that in the present case, Commercial Court has failed to adhere to this principle and relying upon averments made in the written statement as well as in the application seeking rejection of plaint, rejected the plaint and as such committed error. He would further submit that looking to para 12 of the plaint, plaintiff has clearly averred about right to sue and slated cause of action for filing suit. He would further submit that veracity of these averments can be decided only after leading evidence, but the learned Commercial Court erred in deciding the veracity of cause of action at threshold. Learned advocate Mr.A.M.Parekh would further submit that plaintiff has filed criminal case against defendant no.2 within time period for the very cause of action, which indicates that plaintiff has exercised his right to Page 4 of 13 Downloaded on : Sat Sep 16 20:53:30 IST 2023 NEUTRAL CITATION C/FA/2509/2023 ORDER DATED: 04/07/2023 undefined sue, however, in wrong forum. Therefore, in view of section 14 of the Limitation Act, 1963 time period passed in pursuing remedy in wrong forum would be excluded from limitation period to be computed for institution of civil suit. Learned Commercial Court Court has wrongly assessed this aspect without referring and considering the provision of law. Learned advocate for the appellant would further submit that even otherwise issue of limitation is mixed question of law and facts and it cannot be adjudicated on plain reading of plaint. He would submit that learned Commercial Court Court having overlooked all this aspect committed error in rejecting suit under Order 7 Rule 11(d) of CPC. Upon such submissions, learned advocate Mr.A.M.Parekh submits to issue notice in this appeal.
5. At the outset let refer view decisions of the Hon'ble Supreme Court governing the subject matter.
6. In the case of T.Arivandandam v/s. T.V.Satyapal [1977 (4) SCC 467], the Hon'ble Supreme Court has observed as under :-
"5. We have not the slightest hesitation in condemning the petitioner for the gross abuse of the process of the court repeatedly and unrepentantly 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, Page 19 of 26 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 therein is fulfilled. And, if clever drafting has created the illusion of a cause of action, nip it Page 5 of 13 Downloaded on : Sat Sep 16 20:53:30 IST 2023 NEUTRAL CITATION C/FA/2509/2023 ORDER DATED: 04/07/2023 undefined 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."
7. In the case of Sopan Sukhdeo Sable v/s. Charity Commissioner [(2004) 3 SCC 137], the Hon'ble Supreme Court has observed under : -
"11. In ITC Ltd. v. Debts Recovery Appellate Tribunal [ITC Ltd. v. Debts Recovery Appellate Tribunal, (1998) 2 SCC 70] it was held that the basic question to be decided while dealing with an application filed under Order 7 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 7 Rule 11 of the Code.
12. The trial court must remember that if on a meaningful and not formal reading of the plaint it is manifestly vexatious and meritless in the sense of not disclosing a clear right to sue, it should exercise the power under Order 7 Rule 11 of the Code taking care to see that the ground mentioned therein is fulfilled. If clever drafting has created the illusion of a cause of action, it has to be nipped in the bud at the first hearing by examining the party searchingly under Order 10 of the Code. (See T. Arivandandam v. T.V. Satyapal [(1977) 4 SCC 467].)"
8. In the case of Madanuri Sri Rama Chandra Murty v/s. Syed Jalal [(2017) 13 SCC 174], the Hon'ble Supreme Court has observed under :-
"7. The plaint can be rejected under Order 7 Rule 11 if conditions enumerated in the said provision are fulfilled. It is needless to observe that the power under Order 7 Rule 11 CPC can be exercised by the court at any stage of the suit. The relevant facts which need to be looked into for deciding the application are the averments of the plaint only. If on an entire and meaningful reading of the plaint, Page 6 of 13 Downloaded on : Sat Sep 16 20:53:30 IST 2023 NEUTRAL CITATION C/FA/2509/2023 ORDER DATED: 04/07/2023 undefined it is found that the suit is manifestly vexatious and meritless in the sense of not disclosing any right to sue, the court should exercise power under Order 7 Rule 11 CPC. Since the power conferred on the court to terminate civil action at the threshold is drastic, the conditions enumerated under Order 7 Rule 11 CPC to the exercise of power of rejection of plaint have to be strictly adhered to. 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 7 Rule 11 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."
9. In the case of Ram Singh v/s. Gram Panchayat Mehal Kalan [(1986) 4 SCC 364], the Hon'ble Supreme Court has observed under : -
"when the suit is barred by any law, the plaintiff cannot be allowed to circumvent that provision by Page 22 of 26 means of clever drafting so as to avoid mention of those circumstances, by which the suit is barred by law of limitation. Similar view has been expressed by this Court in the case of Raj Narain Sarin (supra)"
10. In the case Ramisetty Venkatanna v/s. Nasyam Jamal Saheb [2023-JT-4-530], the Hon'ble Supreme Court after Page 7 of 13 Downloaded on : Sat Sep 16 20:53:30 IST 2023 NEUTRAL CITATION C/FA/2509/2023 ORDER DATED: 04/07/2023 undefined visiting above judgments has held following :-
"6. Applying the law laid down by this Court in the aforesaid decisions on the applicability of Order VII Rule XI to the facts of the case on hand, we are of the opinion that the plaint ought to have been rejected in exercise of powers under Order VII Rule XI(a) and (d) of CPC being vexatious, illusory cause of action and barred by limitation. By clever drafting and not asking any relief with respect to partition deed dated 11.03.1953, the plaintiffs have tried to circumvent the provision of limitation act and have tried to maintain the suit which is nothing but abuse of process of court and the law."
11. Yet in another judgment in the case of C.S.Ramaswamy v/s. V.K.Senthil and Ors. [AIR 2022 SC 4727], Hon'ble Supreme Court has again reiterated the principle and held as under :-
"7.9 Applying the law laid down by this Court in the aforesaid decisions on exercise of powers under Order VII Rule 11 CPC to the facts of the case on hand and the averments in the plaints, we are of the opinion that both the Courts below have materially erred in not rejecting the plaints in exercise of powers under Order VII Rule 11(d) CPC. The respective suits have been filed after a period of 10 years from the date of execution of the registered sale deeds. It is to be noted that one suit was filed by the minor, which was filed in the year 2006, in which some of the plaintiffs herein were also party to the said suit and in the said suit, there was a specific reference to the Sale Deed dated 19.09.2005 and the said suit came to be dismissed in the year 2014 and immediately thereafter the present suits have been filed. Thus, from the averments in the plaint and the bundle of facts stated in the plaint, we are of the opinion that by clever drafting, the plaintiffs have tried to bring the suits within the period of limitation, which otherwise are barred by limitation. Therefore, considering the decisions of this Court in the case of T. Arivandandam (supra) and other decision of Raghwendra Sharan Singh (supra), and as the respective suits are Page 8 of 13 Downloaded on : Sat Sep 16 20:53:30 IST 2023 NEUTRAL CITATION C/FA/2509/2023 ORDER DATED: 04/07/2023 undefined barred by the law of limitation, the respective plaints are required to be rejected in exercise of powers under Order VII Rule 11 CPC."
12. Applying aforesaid provision of law to the facts of the case, on plain reading of the plaint, some dates are material to mention. According to the plaint, plaintiff has issued notice dated 06.02.2016 for recovery of outstanding amount (para 9 and 12) which is claimed as relief in the plaint. The suit was filed on 17.09.2020 precisely after 4 and 1/2 years from the date of cause of action arose or right to sue accrued.
13. In view of provisions of Limitation Act, 1963 suit for recovery of outstanding amount is required to be filed within 3 years from the date when cause of action accrued, which in the present case accrued on 06.02.2016 and it is reflected from plain reading of the plaint itself. To come out from this situation, learned advocate Mr. Parekh for the appellant tried to take shelter that plaintiff had filed Criminal Case No.40 of 2016 before Court of Additional Chief Judicial Magistrate, Agra for the very cause of action. Time is passed in pursuing remedy in wrong forum. Thus, in view of section 14 of the Limitation Act, said time period which has passed in pursuing remedy before wrong forum is required to be excluded. It was further submitted that Allahabad High Court while quashing the criminal case had given liberty to take recourse of civil remedy which would give fresh cause of action to plaintiff to file suit. Both the submissions are misconceived. The plaintiff has preferred criminal complaint under section 406 and 420 of IPC before the Criminal Court alleging that by not paying amount due and outstanding, the defendant has criminally breached trust and Page 9 of 13 Downloaded on : Sat Sep 16 20:53:30 IST 2023 NEUTRAL CITATION C/FA/2509/2023 ORDER DATED: 04/07/2023 undefined committed forgery. Seeking recovery of outstanding amount before the Civil Court and seeking action against criminal breach of trust both are different and distinct action. Action under criminal law cannot be construed as remedy sought in wrong forum for seeking exclusion of limitation period in filing civil suit.
14. In view of section 14 of the Limitation Act, 1963, exclusion in computing period of limitation for any suit is available or can be claimed after time period is passed in another civil proceedings which plaintiff has been prosecuting with due diligence and bona fidely. Provision of law indicates that if plaintiff seeks exclusion of time under section 14 of the Limitation Act, he has to establish that he was prosecuting in another civil proceedings and that too bona fidely and under due diligence. This submission of seeking exclusion under section 14 of the Limitation Act is not available to the appellant - plaintiff. Worth it to note that plaintiff with open eyes and clear mind set started criminal action against the defendants, but since he has failed in criminal proceedings, he came to civil proceedings seeking recovery of amount. As held herein above, by no means action taken before the Criminal Court can be considered as proceedings before wrong forum. Thus, section 14 of the Limitation Act has no applicability on the facts of the case. Learned Commercial Court has rightly interpreted provision of section 14 of the Limitation Act.
15. Next submission of learned advocate Mr. A.M.Parekh that Allahabad High Court in proceedings under section 482 of Code of Criminal Procedure has permitted the appellant - plaintiff to file civil suit. This submission is also contrary to record. The Page 10 of 13 Downloaded on : Sat Sep 16 20:53:30 IST 2023 NEUTRAL CITATION C/FA/2509/2023 ORDER DATED: 04/07/2023 undefined order of Allahabad High Court is on record at Annexure B, which does not give license to the plaintiff to file civil suit for recovery. Even otherwise, no order can extend limitation for filing civil suit.
16. Section 3 of the Limitation Act, 1963 is clear. In a suit subject to provisions in section 4 to 24 of the Limitation Act, if filed beyond prescribed period, it shall be dismissed, although limitation has not been set up as a defence. Cause of action by filing plaint would be as per provisions of the Limitation Act, it cannot be extended. It is the case of the plaintiff that amount is due on work done and defendant nos.2 and 3 are not paying price of work done. Article 18 of Schedule 1 of the Limitation Act is covering provision for limitation, which read as under :-
Description of suit Period of Time from which period limitation begins to run For the price of work done Three When the work is done. by the plaintiff for the years.
defendant at his request, where no time has been fixed for payment.
17. Period of limitation is for 3 years which indicates from the above provision which commences from the date when the work is done. In the present case, the plaint itself indicates that the plaintiff has completed the construction work on 15.10.2015 and invoices for said construction work was generated. According to the pleadings, defendant nos.2 and 3 have last paid on 03.02.2006. It is the case of the plaintiff that balance payment of Rs.14,65,496/- has not been paid and it is due. The plaintiff Page 11 of 13 Downloaded on : Sat Sep 16 20:53:30 IST 2023 NEUTRAL CITATION C/FA/2509/2023 ORDER DATED: 04/07/2023 undefined therefore, issued notice on 06.02.2016 to the defendants and called them to pay the amount claimed to be outstanding. The defendants replied on 29.02.2016 and denied their liability to pay outstanding amount. Thus by stretching the facts, cause of action for filing the suit was started or commenced on 29.02.2016 and in view of Article 18 of the Limitation Act, it expired on 29.02.2019. Suit admittedly was filed on 07.09.2020. So suit was filed after 4 and 1/2 years. In that way, the suit was hopelessly beyond limitation.
18. It was lastly submitted that since cause of action being bundle of facts starts from issuance of 2 nd notice for claiming cause of action. The question of limitation ought not have been decided at threshold by the learned Commercial Court, but was to be decided during trial as question of limitation is wrapped with facts and it is not pure question of law. This submission is totally misplaced. The dates which are mentioned herein above having no other explanation on the aspect clearly indicates that on the face, suit was time barred.
19. Reading section 3 of the Limitation Act would indicate that even if no defence of limitation is set up, it is duty of the Court to check whether suit is within limitation and if it found from reading of the plaint that suit is time barred beyond prescribed time limit, suit is required to be rejected. Learned advocate Mr. A.M.Parekh tried to submit that cause of action to file suit started on issuance of notice dated 05.02.2020. 2 nd notice can never said to be setting up of cause of action. Article 18 of the Limitation Act is very clear and unambiguous. Time from which period began to run is when work is done and time period is of 3 Page 12 of 13 Downloaded on : Sat Sep 16 20:53:30 IST 2023 NEUTRAL CITATION C/FA/2509/2023 ORDER DATED: 04/07/2023 undefined years. As stated above, issuance of 2 nd notice will not set cause of action afresh. At the most setting fresh cause of action based upon date of 2nd notice would be construed as cleaver drafting to prove suit within period of limitation which otherwise is barred by limitation. Learned Commercial Court has believed and held that issue of limitation is definable from reading the plaint, as it is pure question of law and decision thereto does not require trial. In the facts of the case, learned Commercial Court is right in taking such view. Impugned order reflects that learned Commercial Court has rightly exercised power under Order 7 Rule 11 of CPC to reject the plaint. No interference is warranted. This appeal is meritless.
20. So far as judgment of Shakti Bhog Food Industries Ltd. (supra), upon which reliance has been placed by learned advocate Mr. A.M.Parekh is concerned, background of case is altogether different and that judgment would not render any assistance to case of the plaintiff.
21. For the foregoing reasons, the appeal sans merits. Accordingly, the appeal is summarily dismissed. Civil Application would not survive and accordingly, Civil Application stands disposed of.
(N.V.ANJARIA, J) (J. C. DOSHI,J) SATISH Page 13 of 13 Downloaded on : Sat Sep 16 20:53:30 IST 2023