BENCH AT JAIPUR vs Baldev Monga Son Of Shri Chanan Singh Monga, Resident

Judgment

2. Baldev Monga Son Of Shri Chanan Singh Monga, Resident Of Oasis House, Kota-Bundi Road, Ramnagar, Tehsil Ladpura, Kota, District Kota, Rajasthan Guru Mahadev Buildhome Pvt. Ltd., Registered Office At Oasis House, Kota Bundi Road, Ramnagar, Tehsil Ladpura, Kota, District Kota, Rajasthan ----Respondents For Petitioner(s) : Mr. R.K. Agarwal, Sr. Adv. with Mr. Adhiraj Modi For Respondent(s) : Mr. Swadeep Singh Hora Mr. Naresh Kumar Sejvani Mr. Sahajveer Bawesh HON'BLE MR. JUSTICE ASHOK KUMAR JAIN Order 19/03/2025

1. The instant revision petition is preferred by petitioner- defendant No.1 aggrieved from order dated 04.10.2024 in civil suit No.44/2024 in civil suit No.44/2024 passed by learned Additional District Judge, No.5, Kota whereby an application preferred by petitioner-defendant No.1 under Order 7 Rule 11 CPC was dismissed.

Learned Senior Advocate appearing for petitioner-defendant while placing reliance upon grounds raised in the instant revision petition would submit that the respondent No.1-plaintiff has filed a civil suit for declaration, mandatory and permanent injunction on the ground that the defendant No.1 is eldest son of plaintiff and he is a sham director and nominal share holder in defendant No.2- company. He further referred the averment in the plaintiff and [2025:RJ-JP:14943] (2 of 11) [CR-320/2024] submitted that the plaintiff has stated that some of the land mentioned in plaint were transferred in the name of defendant No.1. He further submitted that the plaintiff has claimed that defendant No.1 has not contributed in any manner in subscribing the shares of defendant No.2-company. He also submitted that plaintiff on basis of his advance age to settled the property, has appointed another son as Director in a company, resulted in annoyance of defendant No.1. He also submitted that the matter referred in plaint clearly indicate that the plaintiff has claimed himself to be real owner of the properties, admittedly in the name of either defendant No.2 or defendant No.1, means the properties mentioned in plaint are Benami.

3. He further referred the law of limitation and submitted that from bare perusal of plaint, the suit for declaration is barred by law of limitation, as suit is not filed within three years of knowledge or execution of documents. He also referred Section 4 of the Prohibition of Benami Property Transactions Act, 1988 (for short ‘the Act of 1988’) and submitted that even under Section 4 of the Act of 1988, the suit is not maintainable. He also referred the provision of Section 430 of the Companies Act, 2013 and Section 111 of the Indian Contract Act, 1872 and submitted that for the purpose of shares, only NCLT has the jurisdiction and locus to decide the issue relating to dispute relating to shares between parties (shareholders). He further referred judgment in case of M/S Shanti Conductors (P) Ltd vs Assam State Electricity Board : (2020) 2 SCC 677 and submitted that in case, a suit is instituted after the prescribed period, then same has to be [2025:RJ-JP:14943] (3 of 11) [CR-320/2024] dismissed, unless limitation has been set up as a defence under Order VII Rule 6 of CPC. He submits that here in this case the respondent-plaintiff has failed to mention the details as mandated under the law, to claim exemption from operation of law of limitation. He further referred judgment in case of Kanchan Udyog Limited vs United Spirits Limited: (2017) 8 SCC 237 and submitted that in case of breach of contract the damages is the only relief and the Trial Court was required to examine grounds of waiver and acquiescence from the conduct of the plaintiff and if it is satisfied that no case is made out, then it has to dismiss the civil suit under Order 7 Rule 11 of CPC. He further referred the bar under Section 430 of the Companies Act and submitted that the Civil Court has no jurisdiction to entertain the instant civil suit but the trial court without considering the grounds raised by the petitioner-defendant No.1 has dismissed the application on wrong analogy that the grounds raised by plaintiff is a mixed question of fact and law. At last, he submitted that all grounds raised by him are pure question of law and suit is barred by law.

4. Aforesaid contentions were opposed by learned counsel for the respondent No.1 (plaintiff) on the ground that the plaintiff was a Director and share holder in respondent No.2 – Company and as a majority share holder, he proposed a plan of family settlement to his family members but the petitioner has approached NCLT to restrain plaintiff, which triggered litigation between the parties. He further submitted that the NCLT has rejected the relief claimed by the present petitioner and aggrieved from the decision of NCLT, [2025:RJ-JP:14943] (4 of 11) [CR-320/2024] the petitioner herein has also approached the NCLAT and same has also dismissed the appeal.

4. Learned counsel further referred the provision of law and submitted that based on cause of action, the period of limitation commenced from 17.10.2023, and suit is filed within prescribed time. He further submitted that even the Section 430 of the Companies Act does not bar the jurisdiction of civil court. He further referred definition clause Section 2(9) of the Benami Transactions (Prohibition) Amendment Act, and submitted that the Act is not applicable in the instant case.

5. Learned counsel has further submitted that the plaintiff has no option except to approach Civil Court for declaration and injunction as the same remedy is not within jurisdiction of NCLT. He also submitted that the trial court while considering the provision under Order VII Rule 11 CPC has held that the grounds and objections raised by present petitioner (defendant No.1) are mixed question of fact and law, which requires evidence to decide. At last, he submitted that the suit filed by plaintiff is not a frivolous or vexatious suit, therefore, the provision under Order VII Rule 11 CPC is not attracted to reject the suit filed by respondent No.1-plaintiff.

6. Learned counsel for the respondent placed reliance upon judgments in case of Morgan Securities & Credits (P) Ltd. BPL Ltd. : 2023 SCC OnLine Del 119, Videocon Industries Ltd. Vs. Ram Raj Bhandari, 2022 SCC OnLine Del 4579, Naresh Dayal Vs. Delhi Gymkhana Club Ltd. : 2021 SCC OnLine Del 91, Vijay Chhibber Vs. Delhi Gymkhana Club Ltd., 2019 SCC [2025:RJ-JP:14943] (5 of 11) [CR-320/2024] OnLine Del 9010, Dinesh Gupta Vs. Rajesh Gupta : 2018 SCC OnLine Del 12387, Bakshi Faiz Ahmad Vs. Bakshi Farooq Ahmad, 2018 SCC OnLine J& K 249, Jai Kumar Arya Vs. Chhaya Devi, 2017 SCC OnLine Del 11436, Dhirubhai Vs. Lateben Abuwalla : 2016 SCC OnLine Bom 14089. Shakti Bhog Food Industries Ltd. Vs. CBI (2020) 17 SCC 260, Salim D. Agboatwala Vs. Shamalji Oddhavji Thakkar 2021 SCC OnLine SC 735 and Urvashiben Vs. KrishnaKant Manuprasad : (2019) 13 SCC 372.

7. Heard learned Senior Advocate for the petitioner and learned counsel for the respondent No.1 and perused the material placed on record and also perused the judgments as referred by learned Senior Advocate appearing for the petitioner and learned counsel appearing for respondent No.1 and also perused the written submissions submitted by respondent No.1

8. Facts giving rise to instant revision petition are that respondent No.1-plaintiff has filed a civil suit for declaration and perpetual injunction on 16.04.2024 against his eldest son (defendant No.1/present petitioner) and defendant No.2 (a Company). As per averments in plaint, the plaintiff has narrated several transactions from year 2005 to 2022, and raised a dispute with regard to affairs of management and control of defendant No.2-Company and induction of his younger son Mukul Monga as Director of the Company and further filing of a petition by present petitioner before National Company Law Tribunal (NCLT) wherein NCLT has refused to grant interim relief. The order of dismissal was challenged by defendant No.1 (present petitioner) before [2025:RJ-JP:14943] (6 of 11) [CR-320/2024] NCLAT but same was dismissed. The plaintiff has averred that 4000 equity shares are in the name of defendant No.1 (present petitioner) but actually they were subscribed and owned by plaintiff. The plaintiff filed a suit for declaration and also for injunction about share holding and voting right in the Company.

9. An application under Order VII Rule 11 CPC was filed by petitioner – defendant No.1 on the ground that Section 430 read with Section 59 of Companies Act, 2013 bars the jurisdiction of Civil Court. The defendant No.1 has also raised ground of limitation as suit is required to be filed within a period of three years. The defendant No.1 has also raised issue of cause of action.

10. The plaintiff has filed a reply to the application and contested the grounds raised by defendant No.1.

11. Learned trial court after considering plaint and documents annexed with plaint, opined that the suit of plaintiff cannot be rejected, at this stage under Order VII, Rule 11 CPC. The trial court has further observed that the grounds raised are mixed question of fact and law and same cannot be decided at this stage, without evidence.

12. Instant revision is preferred after dismissal of application under Order VII Rule 11 CPC. The provision of Order VII Rule 11 CPC is reproduced as under:- “11. Rejection of plaint.— The plaint shall be rejected in the following cases:—” (a) where it does not disclose a cause of action; (b) where the relief claimed is undervalued, and the plaintiff, on being required by the Court to correct the valuation within a time to be fixed by the Court, fails to do so; [2025:RJ-JP:14943] (7 of 11) [CR-320/2024] (c) where the relief claimed is properly valued, but the plaint is returned upon paper insufficiently stamped, and the plaintiff, on being required by the Court to supply the requisite stamp-paper within a time to be fixed by the Court, fails to do so; (d) where the suit appears from the statement in the plaint to be barred by any law; [(e) where it is not filed in duplicate;] [(f) where the plaintiff fails to comply with the provisions of rule 9:] [Provided that the time fixed by the Court for the correction of the valuation or supplying of the requisite stamp-paper shall not be extended unless the Court, for reasons to be recorded, is satisfied that the plaintiff was prevented by any cause of an exceptional nature from correcting the valuation or supplying the requisite stamp-paper, as the case may be, within the time fixed by the Court and that refusal to extend such time would cause grave injustice to the plaintiff.]

13. The object behind insertion of Order 7 Rule 11 CPC is to save precious judicial time and employ the same in most efficient manner possible. Bogus and sham litigations are once such menace that not only waste the time of the Court but also it unnecessarily causes damage to the parties. Order 7 Rule 11 of CPC prescribes a short cut remedy on the grounds mentioned under Rule 11 to curb such litigation.

14. In case of Azhar Hussain Vs. Rajiv Gandhi (1986) Supp. SCC 315, Hon’ble Supreme Court has observed that if no cause of action is disclosed in plaint or if suit is barred by limitation or any other law, the Court would not permit protraction of the proceedings. The purpose is to ensure that a litigation, which is meaningless and bound to prove abortive, should not be permitted to occupy the time of the Courts. [2025:RJ-JP:14943] (8 of 11) [CR-320/2024]

15. In case of Sopan Sukhdeo Sable Vs. Asstt. Charity Commissioner, (2004) 3 SCC 137 and further in case of Dahiben vs Arvindbhai Kalyanji Bhanusali : 2020 SCC OnLine SC 562, it was held that while dealing with an application under Order 7 Rule 11 of CPC seeking rejection of a plaint, the Court ought to determine whether the plaint discloses a cause of action on scrutiny on the basis of averment in plaint read in conjunction with documents relied upon. The Court while making such a determination would have to discard the pleas or defence of defendant either in written statement or in application. The Court is duty bound and restrict itself to the averment in plaint and also the documents as referred in plaint while considering application under Rule 11 of Order 7 of CPC.

16. In case of Dahiben vs Arvindbhai Kalyanji Bhanusali (supra) while placing reliance upon judgment in case of Khatri Hotels Pvt. Ltd. Vs. Union of India & Anr. : (2011) 9 SCC 126 reiterated that the period of limitation will begin to run from the date when the first right to sue accrues and if suit is filed much after expiry of three years as provided under Articles 58 and 59 of Limitation Act, then the suit is barred by limitation.

17. In case of Shakti Bhog Food Industries Ltd. Vs. CBI, (supra), a 3 Judges Bench of Hon’ble Supreme Court has compared provision of Order 7 Rule 11 (d) of CPC vis-a-vis law of limitation, and observed that the question as to whether the suit is barred by any law, would always depend on the facts and circumstances of each case. It is duty of the Court to scrutinize averments contained in plaint as a whole on their face value to [2025:RJ-JP:14943] (9 of 11) [CR-320/2024] ascertain bar of limitation and to take decision on the application. If averments show that suit is barred by law of limitation or do not disclose a cause of action, Court can exercise power under Rule 11 of Order 7 CPC to reject the plaint.

18. As per legal position under Order 7 Rule 11 CPC, the trial court was duty bound to consider grounds raised in application on the basis of law laid down by Hon’ble Suprme Court but here in this case, the trial court has not only avoided to discuss the grounds raised by the petitioner-defendant No.1 but also without assigning a reason held that the objections raised by defendant No.1 are a mixed questions of fact and law, requires evidence for adjudication.

19. Learned Senior Advocate appearing on behalf of the petitioner has raised a bar contained under Section 430 of the Companies Act along with Section 59 of the Companies Act. For ready reference, we are reproducing Section 430 of the Companies Act as under:- “430. Civil court not to have jurisdiction.—No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Tribunal or the Appellate Tribunal is empowered to determine by or under this Act or any other law for the time being in force and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or any other law for the time being in force, by the Tribunal or the Appellate Tribunal.

20. Further, he placed reliance upon judgment in case of Shashi Prakash Khemka (D) through LRs. vs NEPC Micon (Now Called NEPC India Ltd.) and Ors. : (2019) 18 SCC 569 wherein Hon’ble Supreme Court has held that the proper remedy [2025:RJ-JP:14943] (10 of 11) [CR-320/2024] is to approach before NCLT under the Companies Act, 2013. A similar order was passed by a Co-ordinate Bench of Calcutta High Court in Vikram Jairath and Anr. Vs. Middleton Hotels Private Limited and Ors. (2019) 0 Supreme (Cal) 89 while placing reliance on judgment of Shashi Prakash Khemka (D) By LRs. vs NEPC Micon (Now Called NEPC India Ltd.) (supra).

21. Similarly, issue of limitation was raised by Senior Advocate for the petitioner but same was hotly contested by learned counsel for the respondent while placing reliance upon judgments in cases of Shakti Bhog Food Industries Ltd. Vs. CBI (supra), Salim D. Agboatwala Vs. Shamalji Oddhavji Thakkar (supra) and Urvashiben Vs. KrishnaKant Manuprasad (supra).

22. Having considered the legal position as raised by learned Senior Advocate appearing for the petitioner and learned counsel for the respondent-plaintiff, I am of considered view that the trial court has not considered the objections or the grounds raised by the petitioner - defendant No.1 while deciding application under Order 7 Rule 11 CPC. The law over the point is well settled that in case a suit is barred by law including law of limitation, then plaint is required to be rejected but in case, limitation found to be mixed question of fact and law then only it is subject matter of evidence. A trial court cannot decide issue of disputed fact while adjudicating application under Order 7 Rule 11 CPC.

23. Here in this case, the grounds of limitation raised by the petitioner was neither discussed nor decided by the Trial Court. Similarly, a bar under Section 430 read with Section 59 of the Companies Act was not discussed by the trial court, in light of [2025:RJ-JP:14943] (11 of 11) [CR-320/2024] legal position. The issue of cause of action was also not considered by the trial court.

24. Basically, the application has to be considered by the trial court and if the trial court has not considered the grounds and dismissed the same in a cryptic manner, then as a revisional court, we have no option except to set aside the impugned order and remand the matter to the trial court.

25. In view of the discussion made herein above, and for sake of brevity, we are not referring the judgments and the contentious issue between the parties on the grounds raised before us. Overall, I am of considered view that after setting aside the impugned order, best way is to remit the matter back to the trial court for decision afresh, on application under Order VII Rule 11 CPC.

26. As a result, the instant revision petition is hereby allowed and the impugned order dated 04.10.2024 in civil suit No.44/2024 is hereby set aside. The application under Order VII Rule 11 CPC is remitted to trial court for decision afresh after affording opportunity of hearing to both the parties.

27. Needless to say that we have not expressed any opinion on the merits of the case and the trial court will not be influenced by any observation made by this Court in this order. The trial court shall dispose of the application within three weeks from the date of receipt of copy of this order.

28. Misc. Application if any also stands disposed of. MR/128 (ASHOK KUMAR JAIN),J