Singaraju Venkata Naga Ramesh v. Majeti Uma Maheswara Rao

HON’BLE SRI JUSTICE A. GOPAL REDDY CIVIL REVISION PETITION No.4432 OF 2009 ORDER: Petitioner-defendant filed this revision under Article 227 of Constitution of India to revise the order of Senior Civil Judge, Machilipatnam dated 26.8.2009 dismissing I.A.No.1035 of 2009 in O.S.No.54 of 2005 filed under Order VII Rule 11-A read with Section 151 C.P.C. to reject the plaint as the findings in I.P.No.71 of 2000 operates as res judicata in the suit. Heard the learned counsel for the petitioner at length and perused the material available on record. Learned counsel for the petitioner argued that the plaintiff- respondent herein earlier filed I.P.No.71 of 2000 before the Senior Civil Judge, Machilipatnam against the petitioner herein for recovery of Rs.9,53,312/- stating that he (petitioner herein) borrowed a sum of Rs.5,00,000/- on 14.1.2002 by executing a promissory note on the same day and failed to repay the same and committed an act of insolvency by transferring the schedule property along with his brother under Exs.A.2 and A.3 marked therein and the said I.P. has been dismissed on 1.5.2008 and therefore, the findings therein operates as res judicata. He contended that the Insolvency Court either expressly or explicitly can decide the relationship of creditor and debtor in the proceedings under Insolvency Act, but cannot relegate the same to the Civil Court. Once the insolvency Court decides the said issue, the same will operate as res judicate as the issue would substantially or collaterally or incidentally falls for consideration of the Insolvency Court. In support of the submissions, reliance is placed on Mundla Gangi Reddi v. Golla Narasimha Reddi[1]; Deorao Raoji v. Ramji Baheraji[2]; and Sajjadanashin Sayed Md. B.E. Edr v. Musa Dadabhai Ummer[3]. It is now well settled that a Court can exercise the jurisdiction for rejection of the plaint under Order 7 Rule 11 C.P.C. at any stage of the suit before the conclusion of trial. A suit which is barred by limitation as per the averments of the plaint or where there is no cause of action for filing the suit, should be thrown out at the threshold. Whether the suit is barred by res judicata as per the findings of the earlier proceedings is a mixed question of law and fact, which has to be established during the course of trial by leading cogent evidence. The simple suit of the plaintiff-respondent herein is that the defendant- petitioner herein borrowed a sum of Rs.5 lakhs on 14.1.2002 for his family expenses agreeing to repay the same with interest at the rate of 24% per annum and executed a pronote on the same day. In spite of several demands, the petitioner herein failed to repay the same and therefore, he laid the suit by enclosing the certified copy of the pronote as the original pronote was filed in I.P.No.71 of 2003. In the written statement, the petitioner herein denied the borrowing of the amount from the respondent herein and the very execution of the promissory note and contended that there was no need for him to borrow any amount from the respondent herein and the suit is filed with a view to harass him and to have a wrongful gain and that the plaintiff- respondent herein is a notorious and chronic litigant and indulging in vexatious litigations and that he brought into existence of several promissory notes worth of lakhs by forging the signatures and filed the suits in various courts against various persons and the present promissory note is one of such forged documents and that the plaintiff has no capacity to lend such amount of Rs.5 lakhs. But however, no plea has been taken with regard to the plaintiff filing of I.P.No.71 of 2003 and there was also no plea to the effect that in view of initiating I.P. proceedings, the suit cannot be proceeded with. The suit was filed in January, 2005, in which the written statement was filed on 4.7.2005. On the said date, no doubt, I.P.No.71 of 2003 was pending and the same was dismissed on 1.5.2008. On dismissal of the I.P., the petitioner herein filed the impugned I.A. to reject the plaint. The issue that fell for consideration before the Insolvency Court was ‘whether the respondent No.1-petitioner herein sold away the property shown in ‘A’ schedule in favour of respondents 2 to 4 therein in hurried manner without sale consideration and if so, whether such acts of petitioner in selling away ‘A’ schedule property attracts the provisions of Sections 7 and 9 of Provincial Insolvency Act and ‘whether the petitioner herein deserves to be adjudged as insolvent as prayed for’. No-doubt, the plaintiff-respondent herein pleaded in the I.P. proceedings about the execution of the suit promissory note by the petitioner herein, but the entire plea centres around was that in order to evade the suit debt with a mala fide intention, the petitioner herein executed two nominal sale deeds in favour of respondents 2 to 4 therein without sale consideration and registered them in their favour and therefore, he should be adjudged as an insolvent. As seen from the findings in I.P.No.71 of 2003, the insolvency Court nowhere gone into the aspect of execution of promissory note by the petitioner herein and his liability to pay the amount, but what all decided in the I.P. was that the petitioner herein sold away ‘A’ schedule property on 26.2.2003 along with his brother by executing Exs.A2 and A.3 sale deeds in favour of respondents 2 to 4 therein after receiving sale consideration of Rs.15 lakhs and odd. It was also observed therein that there was no evidence to show that the petitioner herein borrowed money from Borra Vithal Rao and Jaldu Raja Visala Subba Rao as the plaintiff has not chosen to examine the said two persons as witnesses. The evidence of P.Ws.1 and 2, may at the best, helps the plaintiff to draw a presumption about the money transaction between the petitioner herein and the respondent herein. Even if accept the claim of plaintiff that the petitioner herein borrowed a sum of Rs.5 lakhs on executing a pronote in the presence of P.W.2, the plaintiff ought to have filed a suit in the Court to recover money on the foot of a pronote but he did not do so and holding so, the Insolvency Court granted liberty to the plaintiff herein to recover the said amount by way of a suit. From the said findings, it is crystal clear that the Insolvency Court has not gone into the truthfulness of the execution of the suit pronote nor recorded any finding in that regard. Since the issue has not been directly or substantially in issue in the insolvency proceedings, the petitioner herein cannot contend that the suit is barred by res judicata. In view of the same, no infirmity is discernable with the impugned order passed by the lower Court warranting interference by this Court. The revision fails and the same is accordingly dismissed. No costs. _______________ A. GOPAL REDDY, J. SEPTEMBER 02, 2011 Tsr. [1] (28) AIR 1941 Madras 895 [2] AIR 1953 NAGPUR 189 (Vol.40, C.N.69) [3] AIR 2000 SC 1238