Delhi High Court
Vasu Tech Ltd. vs Ratna Commercial Enterprises Ltd. And ... on 30 April, 2008
Equivalent citations: AIR 2008 DELHI 122, 2008 (5) ALL LJ NOC 995, 2008 A I H C (NOC) 616 (DEL), (2009) 160 DLT 591, (2008) 3 BANKCLR 766
Author: Hima Kohli
Bench: Hima Kohli
JUDGMENT Hima Kohli, J.
1. The present applications have been filed on behalf of the defendant. While I.A. No. 3979/2007 is filed under Order VII Rule 11 read with Section 151 of the CPC seeking rejection of the plaint on the ground that the same is barred by law, I.A. No. 3681/2008 is filed under Section 151 of the CPC for rejection of the plaint on the ground that in view of certain subsequent events that have occurred during the pendency of the present suit, the suit has been rendered infructuous.
2. Before proceeding to deal with the respective contentions of the parties, it is relevant to note certain facts of the case. The suit in hand has been instituted by the plaintiff praying inter alia for the following reliefs:
a) Pass a decree of prohibitory injunction in favor of the plaintiff and against the Defendants prohibiting Defendants, their agents/ representatives/ employees/ assignees, etc. from presenting the 16 (sixteen) cheques for Rs. 61,63,66,140/- (Rupees Sixty One Crores sixty three lacs sixty thousand one hundred forty) on 1st April, 2007 or on any date thereafter within the validity period of these cheques and in any manner dealing with the said sixteen cheques; and
b) Pass a decree of Mandatory injunction in favor of the Plaintiff and against the Defendants directing them to deposit the said cheques in this Hon'ble Court until the shares are transferred in lieu thereof;
c) Pass a decree of mandatory injunction cancelling the said cheques on the transfer of shares by the Plaintiff to the Defendant(s).
d) Pass/make such further or other order(s)/ direction(s) as this Hon'ble Court may deem fit and proper in the facts and circumstances of the case in favor of the Plaintiff and against the Defendants.
3. On an application filed by the plaintiff under Order 39 Rule 1 and 2 CPC, being IA No. 3582/2007, an ex-parte order dated 28.3.2007 was passed, restraining the defendants from presenting for encashment, the cheques, as detailed in para 42 of the plaint. After entering appearance, the defendants moved an application under Order 39 Rule 4 CPC for vacation of the aforesaid ex-parte injunction order passed against it, but when the said application was not decided for a period of three months, the defendants filed an appeal, being FAO(OS) No. 206/2007. The Division Bench allowed the appeal of the defendants vide judgment dated 15.6.2007 and set aside the order dated 28.3.2007, with costs of Rs. 10,000/- imposed on the plaintiff. As against the aforesaid order of the Division Bench, the plaintiffs preferred a Special Leave Petition before the Supreme Court. By its order dated 2.7.2007, the Supreme Court stayed the order of the Division Bench, while directing that the proceedings before the Single Judge would continue. However, vide its order dated 4.2.2008, the SLP of the plaintiff was dismissed as being devoid of merits.
4. Learned Senior counsel appearing on behalf of the defendants argued that the instant suit filed by the plaintiff is legally untenable and is hit by the provisions of Order VII R 11 CPC since by way of prayer (a), the plaintiff has sought a decree of permanent injunction prohibiting the defendants from presenting the cheques issued in their favor, which it is stated is ex-facie not maintainable, being barred by the provisions of Section 41(b) and (d) of the Specific Relief Act, 1963 (hereinafter referred to as 'the Act').
5. Heavy reliance was placed on the aforementioned judgment dated 15.6.2007, passed by the Division Bench and the attention of the Court was particularly drawn to para 29 of the said judgment wherein, after discussing the provisions of Section 41(b) and (d) of the Act and the relevant case law, it was observed that the suit filed by the plaintiff would be prima facie barred in terms of Section 41(d) of the Act. It was further observed that where the maintainability of the main suit itself was in doubt, the Court cannot grant a temporary injunction of the same nature. It was urged on behalf of the defendants that allowing the prayers sought by the plaintiff would amount to defeating a legal right of the defendants, and to render them remediless in law, for which reason, the plaint deserves to be rejected. In this context, reliance was placed on the following judgments:
(i) Cotton Corporation of India Ltd. v. United Industrial Bank Limited and Ors. ;
(ii)Anant Raj Industries Ltd. v. Industrial Finance Corporation of India Ltd. and Ors. (2000) 100 Company Cases 494 (Del).
6. Reliance was also placed on paras 26 and 27 of the aforesaid judgment, wherein the Division Bench expressed its view that there was suppression of material facts by the plaintiff inasmuch as no reference was made to the covering letters sent with the 16 cheques, in respect of which the suit is filed. The Division Bench observed that there was a high probability that had the Single Judge been shown the said letters, the unconditional ex parte injunction may not have been granted in favor of the plaintiff, and that the very basis of the plaintiff's claim that the said cheques were not intended for repayment of loan, but were only to serve as collaterals, would have been in doubt. Accordingly, it was held that withholding of the said letters should result in drawing an adverse inference against the plaintiff. Drawing strength from the aforesaid observations of the Division Bench, learned Senior counsel for the defendants submitted that the suit also deserves to be dismissed on the ground of suppression of material facts and fraud played on Court, as the plaintiff has not come to the Court with clean hands. Reliance in this regard was placed on the judgment of the Supreme Court in the case of S.P. Chengalvaraya Naidu v. Jagannath and Ors. reported at .
7. With respect to the application filed under Section 151 of CPC, it was submitted on behalf of the defendants that after passing of the aforesaid judgment by the Division Bench on 15.6.2007 by which the exparte ad interim injunction order dated 28.3.2007 passed on IA No. 3582/2007 was vacated, the defendants presented the cheques, subject matter of the suit, for clearance. Upon presentation, the said cheques were returned dishonoured by the drawee bank with the remarks "payment stopped by drawer", as a result of which the defendant No. 1 sent a statutory legal notice to the plaintiff and initiated proceedings against it under Section 138 of the Negotiable Instruments Act, which are pending. It was therefore submitted that in view of the subsequent developments as stated above, during the pendency of the present proceedings, the prayers made in the suit have been rendered infructuous, and that it is imperative in the interest of justice that the suit of the plaintiff be dismissed as infructuous.
8. Countering the arguments advanced on behalf of the defendants, counsel for the non-applicant/plaintiff stated at the very outset that for the purposes of Order VII Rule 11 CPC, only the averments made in the plaint are to be examined, and reliance ought not to be placed on anything that is extrinsic to the plaint. He stated that the application filed by the defendants under Order VII Rule 11 CPC ought not to be decided in the light of the observations made by the Division Bench in the aforesaid judgment, but should be examined in the light of the averments made in the plaint itself. Counsel for the plaintiff relied on the following judgments in support of his contentions:
(i) Ramesh B. Desai and Ors. v. Bipin Vadilal Mehta and Ors. ;
(ii) Hardesh Ores (P) Ltd. v. Hide and Company .
9. Counsel for the plaintiff also emphasized the fact that the observations made by the Division Bench does not have any binding force in deciding the present applications, since the observations made therein were in the nature of 'prima facie' findings, and were made only to the extent of, and in the context of, deciding the appeal against the ex parte ad interim injunction order passed by the single judge, and not for the purposes of deciding the maintainability of the suit itself. In this regard, reliance was placed on the following judgments rendered by the Supreme Court:
(i) Jaikishan Jagwani and Ors. v. Britomatocs Enterprises Pvt. Ltd. and Ors. 1987(Supp) SCC 72;
(ii) P. Govindswamy and Anr. v. S. Narayanan and Ors. 1987 (Suppl.) SCC 58.
10. It was further submitted that assuming, but not conceding that the first prayer, i.e., prayer (a) is barred by Sections 41(b) and (d) of the Act, still the remaining two reliefs, i.e., prayers (b) and (c) of the prayer clause would survive, as the provisions of Section 41(b) and (d) of the Act are inapplicable to the said reliefs. Hence he contended that the plaint cannot be rejected as a whole. A similar stand was taken on behalf of the plaintiff while opposing the application filed by the defendants under Section 151 of CPC.
11. In his rejoinder, Senior counsel for the defendants submitted that since the original cheques are no longer in the possession of the defendants, but have been filed in the criminal court in the proceedings initiated by them against the plaintiff under Section 138 of the Negotiable Instruments Act, the relief of mandatory injunction sought by the plaintiff against the defendants directing them to deposit the said cheques in this Hon'ble Court, as prayed for in prayer (b) is rendered infructuous. With regard to prayer (c) wherein the plaintiff has sought a decree of mandatory injunction cancelling the said cheques on the transfer of shares by the plaintiff to the defendant(s), it was contended that once the said cheques were presented for clearance and were dishonoured, they had exhausted themselves, and because a period of 6 months had already expired from the date of their issue, the cheques were no longer valid. It was emphasized on behalf of the defendants that, contrary to the plaintiff's contention that prayer (b) and (c) were not hit by the bar under the provisions of Section 41(b) and (d) of the Act, the relief sought by way of the said prayers was consequential in nature, to the relief sought under prayer (a) and if allowed, in effect, would amount to restraining the defendants from instituting or prosecuting any civil proceedings or any criminal proceedings against the plaintiff, and for the said reason also, the plaint is liable to be rejected as a whole.
12. I have heard the counsels for both the parties and have carefully considered the documents placed on record. In I.A. No. 3979/2007 filed by the defendants under Order 7 Rule 11 of CPC, reliance is placed on the provisions of Section 41(b) and (d) of the Act to state that the plaint is liable to be rejected. Section 41(b) & (d) of the Act is reproduced hereinbelow:
41. Injunction when refused - An injunction cannot be granted-
(a) xxxxx
(b) to restrain any person from instituting or prosecuting any proceeding in a court not subordinate to that from which the injunction is sought;
(c) xxxxx
(d) to restrain any person from instituting or prosecuting any proceeding in a criminal matter.
13. The prayer (a) in the plaint, when examined in the light of Section 41 (b) & (d) of the Act bears out the contention of the counsel for the defendant that the relief, as sought in the said prayer, cannot be granted in favor of the plaintiff as the same will amount to restraining the defendant from instituting civil or criminal proceedings against the plaintiff, which would amount to hampering access to justice. In the case of Cotton Corporation of India Ltd. (supra), while dealing with the provisions of Section 41 (b) & (d) of the Act, the Supreme Court observed as below:
8. It is, therefore, necessary to unravel the underlying intendment of the provision contained in Section 41(b). 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 CPC. 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 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 rule 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.
14. In the present case, any attempt to prohibit the defendants from presenting 16 cheques issued by the plaintiff in favor of the defendant, shall amount to placing fetters on a legal right of the defendant No. 1 to approach the court of law for seeking relief on account of non-encashment of the cheques. The provisions of Section 41 of the Act prohibit such a relief being granted which restrains any person from instituting or prosecuting any proceedings in a court of law for infringement of his legally protected interests. Thus, the defendants are justified in saying that the first relief as sought by the plaintiff in prayer (a) of the plaint is barred by law, being directly hit by the provisions of Section 41(b) & (d) of the Act. The inevitable conclusion is that the said relief cannot be granted to the plaintiff. It is also relevant to note that the application filed by the defendants under Order 7 Rule 11 of the CPC insofar as the prayer for rejection of the plaint in respect of prayer (a) is concerned, was not seriously opposed by the plaintiff, more so in the light of subsequent events which have been narrated above, as a result of which an ex parte ad interim injunction granted in favor of the plaintiff was vacated by the Division Bench pursuant to which the cheques in question issued by the plaintiff were presented by the defendant for encashment.
15. Insofar as the reliefs prayed for in prayers (b) & (d) of the plaint are concerned, it was vehemently urged by the counsel for the defendants that both the reliefs being consequential in nature to the relief sought in prayer (a), had also been rendered infructuous in view of the fact that after the stay was vacated, the cheques had already been presented and upon being dishonoured, proceedings under Section 138 of the Negotiable Instruments Act were initiated by the defendants which are pending before the competent court. It was thus contended that the suit itself had been rendered infructuous as there was no question of directing the defendants to deposit the cheques in the Court, the same being on the record in the proceedings pending before the Metropolitan Magistrate. Similarly, there was no question of cancelling the cheques which had in any case become invalid during the pendency of the present proceedings. In the subsequent application filed by the defendants, emphasis has been laid on this facet of the case to state that the entire suit instituted by the plaintiff has itself been rendered infructuous as none of the reliefs prayed for in the plaint could be granted in favor of the plaintiff.
16. For the purposes of rejecting a suit, the provisions of Order 7 Rule 11 of CPC are clear. It is only if a case is made out under any one of the Sub-clauses (a) to (f) of Rule 11 of Order 7 CPC, that a plaint can be rejected. While examining the spectrum of Order 7 Rule 11 CPC in the legal ambit, the Supreme Court held in the case of Saleem Bhai and Ors. v. State of Maharastra and Ors. reported at that the relevant facts which need to be looked into for deciding an application under Order 7 Rule 11 CPC are the averments made in the plaint and that the Court can exercise the powers at any stage of the suit. In the case of Popat and Kotecha Property v. State Bank of India Staff Association reported at 2005 (7) SCC 510, the Supreme Court observed as below:
19. There cannot be any campartmentalisation, dissection, segregation and inversions of the language of various paragraphs in the plaint. If such a course is adopted it would run counter to the cardinal canon of interpretation according to which a pleading has to be read as a whole to ascertain its true import. It is not permissible to cull out a sentence or a passage and to read it out of the context in isolation. Although it is the substance and not merely the form that has to be looked into, the pleading has to be construed as it stands without addition or substraction of words or change of its apparent grammatical sense. The intention of the party concerned is to be gathered primarily from the tenor and terms of his pleadings taken as a whole. At the same time, it should be borne in mind that no pedantic approach should be adopted to defeat justice on hair-splitting technicalities.
17. When the averments in the plaint are considered in the backdrop of the principles set out by the Supreme Court while dealing with the application filed under Order 7 Rule 11 CPC, the plea of the defendants that the entire suit is rendered infructuous and is, therefore, liable to be rejected on the basis of an application filed by the defendants, may not be permissible. Hence, the case in hand cannot be stated to be one where the suit from the statement in the plaint can be said to be barred by law insofar as the reliefs prayed for in Sub-clauses (b) & (c) are concerned. The statement in the plaint, without any addition or subtraction must show that it is barred by any law so as to attract the principles of Order 7 Rule 11 CPC. Undoubtedly, this can be stated with respect to prayer (a), but the same cannot be stated insofar as prayers (b) & (c) are concerned. Thus, while accepting the plea of the defendants in IA No. 3979/2007 that the relief sought in prayer (a) is barred by law, the entitlement of the plaintiff to the subsequent two reliefs sought for in prayers (b) & (c) of the plaint shall have to be examined independently, but in the light of the subsequent developments that have taken place during the pendency of the present proceedings.
18. In these circumstances, while allowing the application of the defendants under Order 7 Rule 11 CPC limited to the relief sought by the plaintiff in prayer (a) in the plaint, I.A. No. 3681/2008 whereby the defendant claims that the entire suit be dismissed as infructuous, is disposed of with the direction that the following preliminary issues be framed in the suit for arguments:
1. Whether the relief sought by the plaintiff in prayer (b) can be granted against the defendant in view of the fact that the 16 cheques issued by the plaintiff in favor of the defendant No. 1, subject matter of the suit, are no longer in the custody of the defendants, having been placed on the records of the criminal proceedings initiated by the defendants against the plaintiff under Section 138 of the Negotiable Instruments Act.
2. Whether the relief prayed for by the plaintiff in prayer (c) of the plaint is rendered infructuous in view of the fact that all the 16 cheques issued by the plaintiff in favor of the defendant No. 1 are no longer valid instruments