MADHAV PRASAD AGGARWAL & Anr. v. AXIS BANK LTD & Anr.

Order 7 Rule 11(d) – Rejection of plaint – Relief of rejection of plaint, sought by one of the defendants – Permissibility – Held: In exercise of powers u/Or. 7 r. 11(d) the plaint has to be rejected as a whole or not at all – Such relief cannot be pursued only in respect of one of the defendants – In the present case rejection of plaint only qua respondent No. 1 by the High Court in exercise of powers u/Or. 7 r. 11(d) was replete with jurisdictional error. Allowing the appeals, the Court HELD :

The plaint can and must be rejected in exercise of powers under Order 7 Rule 11(d) of CPC on account of non- compliance of mandatory requirements or being replete with any institutional deficiency at the time of presentation of the plaint, ascribable to clauses (a) to (f) of Rule 11 of Order 7 of CPC. The plaint as presented must proceed as a whole or can be rejected as a whole but not in part. In that sense, the relief claimed by respondent No.1 in the notice of motion(s) which commended to the High Court, is clearly a jurisdictional error. The fact that one or some of the reliefs claimed against respondent No.1 in the concerned suit is barred by Section 34 of 2002 Act or otherwise, such objection can be raised by invoking other remedies including under Order 6 Rule 16 of CPC at the appropriate stage. That can be considered by the Court on its own merits and in accordance with law. Although, the High Court has examined those matters in the impugned judgment the same should stand effaced. [Para 13] [1069-B-E]

A fortiori, the appeals must succeed on the sole ground that the principal relief claimed in the notice of motion filed by 1058 MADHAV PRASAD AGGARWAL v. AXIS BANK LTD. 1059 respondent No.1 to reject the plaint only qua the said respondent and which commended to the High Court, is replete with jurisdictional error. Such a relief “cannot be entertained” in exercise of power under Order 7 Rule 11(d) of CPC. That power is limited to rejection of the plaint as a whole or not at all. [Para 15] [1069-G-H; 1070-A] Sejal Glass Limited v. Navilan Merchants Private Limited (2018) 11 SCC 780 : [2017] 7 SCR 557 – relied on. Mardia Chemicals Ltd. and Ors. v. Union of India and Ors. (2004) 4 SCC 311 : [2004] 3 SCR 982 ; Jagdish Singh v. Heeralal and Ors. (2014) 1 SCC 479 : [2013] 12 SCR 232 ; State Bank of India v. Smt. Jigishaben B. Sanghvi and Ors. 2011 (3) Bom. C. R. 187 ; Arasa Kumar v. Nauammal II (2015) BC 127 ; M.V. “Sea Success I” v.

2. These appeals take exception to the common judgment and order passed by the High Court of Judicature at Bombay (Ordinary Original Civil Jurisdiction) in Appeal Nos.360, 361, 362 and Commercial Appeal No.172 of 2017 dated 26th October, 2018, whereby the notice of motion(s) filed by respondent No.1-Axis Bank Ltd. (one of the defendant in the suits filed by the respective appellant(s)) came to be allowed and as a result of which, the suit filed by the concerned appellant(s) had been dismissed as against respondent No.1-Axis Bank Ltd., by invoking the provisions of Order 7 Rule 11(d) of the Civil Procedure Code (for short “CPC”).

The appellant(s) being the original plaintiff(s) in the respective suit(s) wanted to purchase flats in a project known as ‘Orbit Heaven’ (for short “the project”) being developed by Orbit Corporation Ltd. (In Liq.) (for short “The builder”), at Nepean Sea Road in Mumbai and in furtherance thereof parted with huge amounts of money to the builder ranging in several crores although the construction of the project was under way. The appellant(s) had started paying installments towards the consideration of the concerned flats from 2009. Admittedly, no registered agreement/document for purchase of concerned flats has been executed in favour of respective appellant(s). The appellant(s), however, would rely on the correspondence and including the letter of allotment issued by the builder in respect of concerned flats - to assert that there was an agreement between them and the builder in respect of the earmarked flat(s) mentioned therein and which had statutory protection. MADHAV PRASAD AGGARWAL v. AXIS BANK LTD. [A. M. KHANWILKAR, J.] 1061

The respondent No.1-bank gave loan facility to builder against the project only around year 2013, aggregating to principal sum of Rupees 150 Crores in respect of which a mortgage deed is said to have been executed between the builder and the bank. That transaction came to the notice of the concerned plaintiff(s) only after publication of a public notice on 13th September, 2016 in Economic Times, informing the general public that the said project (Orbit Heaven) has been mortgaged. The sum and substance of the assertion made by the appellant(s) is that the appellant(s) were kept in the dark whilst the mortgage transaction was executed between the builder and the bank whereunder their rights have been unilaterally jeopardised, to receive possession of the concerned flats earmarked in the allotment letter(s) and in respect of which the concerned appellant(s) have paid substantial contribution and the aggregate contribution of all the plaintiff(s) would be much more than the loan amount given by the bank to the builder in terms of the mortgage deed for the entire project. In this backdrop, the concerned appellant(s) had asked for reliefs not only against the builder but also concerned parties joined as defendant(s) in the suit(s) filed by them and including respondent No.1-bank.

The reliefs claimed by the concerned appellant(s) in separate suit(s) filed by them are more or less similar. We may presently refer to the reliefs claimed in suit No.8 of 2017 filed by Padma Ashok Bhatt (appellant in civil appeal arising from SLP (C) No.30900 of 2018), the same read thus: “The Plaintiff therefore prays: (a) That the Defendant No.1 be ordered and decreed to complete the Flat Nos.2302 and 2402 in the Project “Orbit Haven” situate at Darabshaw Lane, Nepean Sea Road, Mumbai-400036 as per the agreement being letter of confirmation dated 16th April 2009 and receipts executed by Defendant No.1 in favour of the Plaintiff and hand over the possession of Flat Nos.2302 and 2402 to the Plaintiff and that the Defendant No.1 and Defendant No.15 be jointly and/or severally be ordered and directed to comply with all the obligations under Maharashtra Ownership Flats Act including, but not limited to, (i) the execution of the Agreement in terms of Section 4 of Maharashtra Ownership Flats Act, (ii) A B C D E F G H 1062 SUPREME COURT REPORTS [2019] 8 S.C.R. A B C D E F G H completing the building as per the sanction plan as sanctioned by Municipal Corporation of Greater Mumbai, (iii) to delivery vacant and peaceful possession of the respective flats, (iv) to form the Society or body of the Corporation as provided under Maharashtra Ownership Flats Act and to convey the land along with the building in favour of the Society or body of Corporation as per Maharashtra Ownership Flats Act.

The respondent No.1-bank (defendant No.15) appeared in the concerned suit and filed a notice of motion for identical relief, as claimed in notice of motion No.1206 of 2017 in suit No.8 of 2017. The relief claimed in the subject notice of motion(s) was limited to reject the plaint qua respondent No.1 herein, in exercise of powers under Order 7 Rule 11(d) of CPC on the ground that the suit(s) against the said respondent would be barred by provisions of Section 34 of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short “2002 Act”). The reliefs claimed in notice of motion No.1206 of 2017 in suit No.8 of 2017, read thus:

(a) That the plaint in suit no.8 of 2017 be rejected qua the applicant/defendant No.15; (b) that pending the hearing and final disposal of the Notice of Motion the suit be stayed; (c) that pending the hearing and final disposal of the notice of motion the status-quo granted vide dated 3rd March, 2017, of this Hon’ble Court be vacated; (d) for ad-interim relief in terms of prayers (b) and (c) above; A B C D E F (e) for such further and other relief as the nature and circumstances of the case may require; and G (f) costs.

(emphasis supplied) H 1066 SUPREME COURT REPORTS [2019] 8 S.C.R. A B C D E F G H As aforementioned, the reliefs claimed in the plaint and the notice of motion in the respective suit(s) which are the subject matter of the present set of appeals are similar, albeit with minor variation. That, however, need not detain us from considering the common question which has arisen for our consideration in the present appeals.

Be that as it may, the notice of motion(s) in the concerned appeals came to be dismissed by the learned Single Judge of the High Court by a common judgment dated 26th July, 2017, on the finding that there was no bar from entertaining civil suit(s) in respect of any other matter which is outside the scope of matters required to be determined by the Debt Recovery Tribunal (for short “DRT”) constituted under 2002 Act. The learned Single Judge held that the facts of the present case clearly indicate that the cause of action and the reliefs claimed by the concerned plaintiff(s) fell within the excepted category and the bar under Section 34 read with Section 17 of 2002 Act would be no impediment in adjudicating the subject matter of the concerned suit. The learned Single Judge referred to decisions of this Court in Mardia Chemicals Ltd. and Ors. Vs. Union of India and Ors.1, Jagdish Singh Vs. Heeralal and Ors.2 and of High Courts in State Bank of India Vs. Smt. Jigishaben B. Sanghvi and Ors.3 and Arasa Kumar Vs. Nauammal4. However, the learned Single Judge rejected the argument/objection raised by the appellant(s) that it is impermissible to reject the plaint only against one of the defendant(s), in exercise of power under Order 7 Rule 11(d) of CPC by relying on the decision of the Division Bench of the same High Court in M.V. “Sea Success I” Vs. Liverpool and London Steamship Protection and Indemnity Association Ltd. and Ors.5 As the notice of motion moved by respondent No.1-bank came to be dismissed, respondent No.1 carried the matter in appeal before the Division Bench by way of separate five appeals in the concerned suit. All these appeals came to be allowed by the Division Bench vide impugned judgment.

The impugned judgment has reversed the opinion of the learned Single Judge that bar under Section 34 will not come in the way of the appellants/plaintiffs. The Division Bench also opined that the averments