Rama Vision Ltd. vs Trilok Singh and Sons and Another

Muzaffar Hassain Attar, J.—These two civil revision petitions have been filed to call in question composite order dated 20.03.07 passed by

Learned Second Additional District Judge, Srinagar in two Civil Suits.

A Civil Original suit came to be instituted by M/s Raja Glass Agency, Jawahar-nagar Srinagar against M/s Ramavision Ltd. 309 Ratanjyoti, 18-

Rajendra Palace New Delhi and two other persons for recovery of an amount of Rs. 7,39,000/- along with interest at the prevailing bank rate. The

case set up by respondent No. 1 (hereinafter referred to plaintiff), is that defendant No. 1 is registered company dealing with manufacturing of

various items including glass tubes, picture tubes, & electric bulbs, having its registered office at Rajendra Palace New Delhi. It is further pleaded

that plaintiff had business relation with the said Company through its authorized agents (defendants 2 and 3) who had a business establishment at

Srinagar and were dealing with the like items. It is further averred that defendant No. 1 initially approached the plaintiff in the year 2000 through its

agents (defendants 2 and 3) at his business establishment at Jawahir-nagar Srinagar, stating that the defendant No. 1 is in need of

distributors/dealers and Agents for its products in the Kashmir Valley and requested the plaintiff to hold the dealership of the company for the

distribution of its items. The plaintiff was informed by the defendant that in order to get the dealership of the company for distribution of its items in

the Valley, the plaintiff shall have to deposit Rs. 7.39 lacs as security. The case of the plaintiff is that after entering into such ""agreement at Srinagar,

the plaintiff accordingly paid an amount of Rs. 7.39 lacs to defendant(s) through Bank draft, through Vijaya Bank, branch office Court road

Srinagar. The details whereof is given at para (4) of the plaint. The plaintiff further pleaded in the plaint that after the amount asked for waa paid in

full, neither dealership of the company was given to the plaintiff nor the amount paid was returned. In para (9) of the plaint the plaintiff has pleaded

that cause of action has accrued to him against the defendants at Srinagar, firstly when the defendants after receiving the amount did not hand over

the dealership to the plaintiff as per agreement and lastly on 03rd March 2006 when the legal notice was served upon the defendants and same

was not replied.

Another suit was filed by M/s Trilok Singh R/o Jawahar Nagar Srinagar for recovery of an amount or Rs. 18,40,000/-(Rs. Eighteen lacs and

forty thousand) along with interest at prevailing bank rate against same defendant(s) on the identical pleas. The plaintiff has stated that at Srinagar

the defendant approached him and requested him to act as Dealer/distributor for its products in the Kashmir Valley. After negotiating the deal it

was agreed that the plaintiff will pay Rs. 18.40 lacs as security in order to get dealership from the company. The plaintiff has further stated in the

plaint that he paid Rs. 18.40 lacs to defendant through Bank draft through Vijaya Bank branch office Court Road Srinagar. Details whereof is

given in para (4) of the plaint. It is further pleaded in the said suit that the defendants did not allot dealership/distributor-ship to the plaintiff nor

returned the amount paid. At para (9) of the plaint the plaintiff has stated that cause of action has accrued to him against defendant(s)in the matter

at Srinagar; firstly when the defendant(s) after receiving the amount did not hand over the dealership to the plaintiff as per the agreement and lastly

on 2.11.2005 when the legal notice was served upon the defendant(s) was not replied. The plaintiff has stated that cause of action still continues.

Plaintiff has accordingly instituted the suit for recovery of aforesaid amount.

In both the cases defendant No. 1 filed an application under Order 7 Rule 10 & 11 seeking rejection of the plaint. In the said application(s) the

defendant No. 1 has sought rejection of the plaint on the ground that the suit has been filed at Srinagar while defendant No. 1 is conducting his

business at Delhi and is also resident of Delhi. It has been further stated in the application that the defendant No. 1 has neither approached the

plaintiff personally nor through any authorized agent. It has been averred that the suit of the plaintiff is not maintainable as the court is lacking

territorial jurisdiction. Objections were invited to both the applications in which the plaintiff(s) reiterated the grounds taken in the plaint and also

submitted that the provisions of Order 7 Rule 10 and 11 CPC are not attracted to the facts of the case and prayed for rejection of the

application(s).

The trial court after hearing the parties passed the order impugned in these petitions wherein and where under the applications filed by defendant

No. 1 under Order 7 Rule 10 & 11 have been rejected and defendants have been directed to submit their written statement by next date of

hearing which was fixed for 30th April 2007.

The defendant No. 1 being aggrieved of the said order has challenged the same by filing these two revision petitions. The revision petitions are

taken up together for their disposal.

Heard Learned Counsel for petitioner and considered the matter. Ld Counsel for the petitioner submits that suit is not maintainable as the

defendants are residents of Delhi and no cause of action has accrued to the plaintiff(s) at Srinagar. The Learned Counsel has also referred to legal

notice served on defendants) seeking recovery of the amount to canvass that no cause of action has accrued to the plaintiff(s) at Srinagar as such

the suit was liable to be rejected under 0.7 Rule 10 & 11 CPC. In support of his contention the ld Counsel has referred to and relied upon case

titled Sreenivas Basudev Vs. Vineet Kumar Kothari, ; Supra Enterprise v. Bygging India Limited 2006 (2) JCC (NI) 140; Globus Agronics

Limited v. Banque National De Paris and Anr. 1999 (50) DRJ; Haryana Milk Foods Ltd. v. Chambel Dairy Products reported in 2002 V AD

(DELHI) 728; Sopan Sukhdeo Sable and Others Vs. Assistant Charity Commissioner and Others, ; Church of North India Vs. Lavajibhai

Ratanjibhai and Others, "".

This Court in C. Rev. No. 118/07 titled M/S Three Star Enterprises v. State and Ors. decided on 22.12.08 has held as under:

Before adverting to the legality or otherwise of the impugned order, it would be appropriate to refer to some of the provisions of CPC which the

trial court appears, has not adverted his attention to. The Court of law where any case is filed has not to act mechanically, but has to consider the

case so filed, suit instituted on the basis of the law occupying the field. It is statutory duty of the court/Judge to satisfy itself about the competence

and maintainability of suit before it orders issuance of notice to the other side. Reference is made to Section 26 and 27 of CPO-

Institution of suit.

Every suit shall be instituted by the presentation of a plaint or in such other manner as may be prescribed.

Summons to defendants.

Where a suit has been duly instituted, a summon may be issued to the defendant to appear and answer the claim and may be served in manner

prescribed.

A conjoint reading of all these provisions make it writ large on the face of the Statute that the court where the suit is instituted is duty bound, at the

time of institution of the suit itself to consider the pleadings made therein, so as to find out as to whether the suit is competent in law and whether

notice requires to be issued to the defendants or the suit is barred by any statute and plaint requires to be rejected. This statutory duty when

complied with by the Learned Judge will ensure at the threshold proceedings, the weeding out of those cases which even at it's final stage will be

dismissed for the same reasons and on the same ground, on which it can be rejected at initial stage. The trial Judge, however is duty bound to hear

the plaintiff before rejecting the plaint for any of the legal limitations/constraints/impediments. While following the statute in it's letter and spirit the

Learned judge will ensure that only those cases which require adjudication occupy the precious time of the court, which otherwise, is public time

and other cases which are barred by same statute or do not disclose any cause of action do not impinge upon the public time and do not waste the

court time as well.

Order 7 Rule 10, 11 of CPC is reproduced as under:

Rule 10. Return of Plaint

(1) Subject to the provisions of Rule 10-A, the plaint shall at any stage of the suit be returned to be presented to the Court in which the suit should

have been instituted.

[Explanation For the removal of doubts, it is hereby declared that a Court of appeal or revision may direct, after setting aside the decree passed in

a suit, the return of the plaint under this Sub-rule].

(2) Procedure on returning plaint. On returning a plaint the judge shall endorse thereon the date of its presentation and return, the name of the party

presenting it, and a brief statement of the reasons for returning it.

Rule 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;

(c) where the relief claimed is properly valued, but the plaint is written upon paper insufficiently stamped, and 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:

The defendant No. 1 filed applications seeking returning of the plaint and/or rejection of the plaint on the ground that defendants being

residents of Delhi suit could not be instituted against them at Srinagar. In order to appreciate this argument of the ld Counsel for the petitioner

Section 20 of the CPC is reproduced as under:

Other suits to be instituted where defendants reside or cause of action arises

Subject to the limitations aforesaid, every suit shall be instituted in a Court within the local limits of whose jurisdiction-

(a) The defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily

resides, or carries on business, or personally works for gain, or

(b) any of the defendants, where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries

on business, or personally works for gain, provided that in such case either the leave of the court is given, or the defendants who do not reside, or

carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or

(c) the cause of action, wholly or part, arises.:

This section provides that subject to limitations as said in the preceding sections of C.P.C. every suit may be instituted in the court within the

local limits of whose jurisdiction the defendant, any of the defendants, where there are more than one, at the time of the commencement of the suit,

actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the court is given

or the defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or the cause of

action, wholly or partly arises.

The settled position of law is that while considering the application under Order 7 Rule 11 what is required to be seen are the pleadings in the

plaint. The Hon'ble Supreme court in Sopan Sukhdeo Sable and ors' case referred to and relied by the petitioner specifically provides that for

deciding the application under Order 7 Rule 11 (a) & (d) the averments in the plaint are germane. It is further held the pleas taken in the written

statement would be wholly irrelevant at that stage. It has been further held in the same judgment that Order 10 is a tool in hands of the courts, is the

real object behind Order 7 Rule 11.

The relevant paras (10, 11, 12, 13, and 14) of the said judgment are reproduced as underlie:

In Saleema Bhai v. State of Maharashtra it was held with reference to Order 7 Rule 11 of the Code that the relevant facts which need to be

looked into for deciding an application thereunder are the averments in the plaint. The trial court can exercise the power at any stage of the suit

before registering the plaint or after issuing summons to the defendant at any time before the conclusion of the trial. For the purposes of deciding an

application under Clauses (a) and (d) of Order 7 Rule 11 of Code, the averments in the plaint are germane: the pleas taken by the defendant in the

written statement would be wholly irrelevant at that stage.

In I.T.C. Ltd. v. Debts Recovery Appellate Tribunal 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.

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 hearine by examining the

party searchingly under Order 10 of the Code (See T. Arvandandam v. T.V. Satyapal)

It is trite law that not any particular plea has to be considered, and the whole plaint has to be read. As was observed by this Court in Roop Lal

Sathi v. Nachhattar Singh Gill only a part of the plaint cannot be rejected and if no cause of action is disclosed, the plaint as a whole must be

rejected.

In Raptakos Bett and Co. Ltd. v. Ganesh Property it was observed the averments in the plaint as a whole have to be seen to find out whether

Clause (d) of Rule 11 of Order 7 was applicable.

The Hon'ble Supreme Court in the said judgment has further delineated the contours of the Rule 11 Order 7 of C.P.C., para (17) in this behalf

is reproduced as under:

Keeping in view the aforesaid principles, the reliefs sought for in the suit as quoted supra have to be considered. The real object of Order 7

Rule 11 of the Code is to keep out of courts irresponsible law suits. Therefore, Order 10 of the Code is a tool in the hands of the courts by

resorting to which and by a searching examination of the party, in case the court is prima facie of the view that the suit is an abuse of the process of

the court, in the sense that it is a bogus and irresponsible litigation, the jurisdiction under Order 7 Rule 11 of the Code can be exercised.

The Hon'ble Supreme Court in the same judgment has high lighted distinction between ""material facts"" and ""particulars"" para (20) of the

judgment is reproduced as under:

There is distinction between ""material facts"" and ""particulars"". The words ""materials facts"" show that the facts necessary to formulate a

complete cause of action must be stated. Omission of a single material fact leads to an incomplete cause of action and the statement or plaint

becomes bad. The distinction which has been made between ""material facts"" and ""particulars"" was brought by Scott. L.J. in Bruce v. Odhmas

Press Ltd. In the following passage. (All ER p. 294)

The cardinal provision in Rule 4 is that the statement of claim must state the material facts. The word 'material' means necessary for the purpose of

formulating a complete cause of action; and if any one 'material' statement is omitted, the statement of claim is bad; it is 'demurrable' in the old

phraseology, and in the new is liable to be 'struck out' under R.S.C. Order 25 Rule 4 (see Philipps v. Philipss); or 'a further and better statement of

claim' may be ordered under Rule 7.

The function of 'particulars' under Rule 6 is quite different. They are not to be used in order to fill material gaps in a demurrable statement of claim

gaps which ought to have been filled by appropriate statements of the various material facts which together constitute the plaintiff's cause of action.

The use of particulars is intended to meet a further and quite separate requirement of pleading/imposed in fairness and justice to the defendant.

Their function is to fill in the picture of the plaintiff's cause of action with information sufficiently detailed to put the defendant on his guard as to the

case he had to meet and to enable him to prepare for trial.

The dictum of Scott. L.J. in Bruce case has been quoted with approval by this Court in Samant N. Balkrishna v. George Fernandez and the

distinction between ""material facts"" and ""particulars"" was brought out in the following terms: (SCC p. 250: para 29)

The word 'material' shows that the facts necessary to formulate a complete cause of action must be stated. Omission of a single material fact leads

to an incomplete cause of action and the statement of claim becomes bad. The function of particulars is to present as full a picture of the cause of

action with such further information in detail as to make the opposite party understand the case he will have to meet.

Rule 11 of Order 7 lays down an independent remedy made available to the defendant to challenge the maintainability of the suit itself, irrespective

of his right to contest the same on merits. The law ostensibly does not contemplate at any stage when the objections can be raised, and also does

no say in express terms about the filing of a written statement. Instead, the word ""shall"" is used, clearly implying thereby that it casts a duty on the

court to perform its obligations in rejecting the plaint when the same is hit by any of the infirmities provided in the four Clauses of Rule 11, even

without intervention of the defendant. In any event, rejection of the plaint under Rule 11 does not preclude the plaintiffs from presenting a fresh

plaint in terms of Rule 13.

Keeping in view the law laid down by Hon'ble Supreme Court the revision petitions deserve dismissal on the ground that a conjoint reading of

pleadings set out in the plaint do confer jurisdiction on the courts at Srinagar as the cause of action has accrued to the plaintiff(s) at Srinagar. The

plaintiff (s) has specifically pleaded that defendant No. 1 approached him at Srinagar along with defendants 2 and 3 and offered him distributorship

dealership of his company for Kashmir Valley and parties reached an agreement and in this behalf plaintiffs) was asked to pay a particular amount

by way of security which was also paid at Srinagar through Bank draft. The cause of action for institution of the suit and seeking decrees from the

court have partly accrued at Srinagar so the courts at Srinagar have jurisdiction to hear and try the suit. The claim of the defendant No. 1 in his

application(s) under Order 7 Rule 10&11 that he has never authorized any person to work as an agent and has not entered into agreement with the

plaintiff(s) at Srinagar cannot be looked into at this stage as this question of fact can be looked into when written statement is filed, issues are

framed, and tried by trial court. Such a plea cannot be considered by way of filing application under Order 7 Rule 10 & 11 of C.P.C. This view is

taken by Hon'ble Supreme Court in Kamala and Others Vs. K.T. Eshwara Sa and Others, . Para (16) is reproduced as under:

For the purpose of invoking Order VII, Rule 11 (d) of the Code, no amount of evidence can be looked into. The issues on merit of the matter

which may arise between the parties would not be within the realm of the court at that stage. All issues shall not be the subject-matter of an order

under the said provisions.

The principles of res judicate, when attracted, would bar another suit in view of Section 12 of the Code. The question involving a mixed question

of law and fact which may require not only examination of the plaint but also other evidence and the order passed in the earlier suit may be taken

up either as a preliminary issue or at the final hearing, but, the said question cannot be determined at that stage.

It is one thing to say that the averments made in the plaint on their face discloses no cause of action, but it is another thing to say that although the

same discloses a cause of action, the same is barred by a law.

The decision rendered by this Court as also by various High Courts are not uniform in this behalf. But, then the broad principle which can be culled

out there from is that the court at that stage would not consider any evidence or enter into a disputed question of fact of law. In the event, the

jurisdiction of the court is found to be barred by any law, meaning thereby, the subject-matter thereof, the application for registration of plaint

should be entertained.

The perusal of the plaint reveals that the plaint is not hit by Order 7 Rule 10 & 11 of C.P.C. The conjoint reading of pleadings in the plaint do

disclose cause of action and the suit from the statement of the plaint does not appear to be barred by any law. The application filed by defendant

No. 1 under 07 R 10&11 of CPC was not maintainable and has been rightly rejected by the trial.court.

In the application(s) seeking rejection of the plaint under Order 7 Rule 11 the only ground taken is that defendant befhg resident of Delhi the

suit is not maintainable at Srinagar as the court lacks territorial jurisdiction. From the statement made in the application filed under Order 7 Rule 10,

11 it appears that same is not maintainable as the grounds on which same could have been rejected have not been pleaded in the application. The

applications for this reason was not maintainable.

Learned Counsel for petitioner has referred to the judgment(s) supra M/s Screenivas Basude's case did not refer to controversy as raised in

Order 7 Rule 10 & 11 but rested on Order 7 Rule 14 and Order 8 Rule 1& 10. The said judgment in these circumstances is not relevant for the

disposal of this case.

In Supra Enterprises's case it was not pleaded that the defendant therein did not carry on business in Delhi, in that case defendant had no office

in Delhi but had registered office in Mumbai. The defendant also did not carry on business at Delhi and no cause of action had arisen in Delhi. In

that case the suit was instituted in Delhi by plaintiff therein on the Clause contained in the bills ""subject to Delhi jurisdiction"" and the court held that

this Clause in the bills would not confer jurisdiction on Delhi Courts. The facts of said case do not help the petitioner(s) in the present case. The

plaintiffs have specifically averred that they were approached at Srinagar, agreement matured at Srinagar and payment was also made at Srinagar,

thus cause of action even though not wholly but partly accrued at Srinagar. In the above said case, it was not also pleaded that the defendant had

approached the plaintiffs at Delhi.

In Globus Agronics Limited's case is covered by different facts. In that case it was agreed that court at place where the amount was payable in

terms of the letter of credit shall have the territorial jurisdiction. The facts of this case also does not help the petitioner in this case as there was no

such agreement between the parties.

In M/s Haryana Milk Foods Ltd's case, it was held that the defendants were carrying on business in MP and it was not pleaded in the plaint

that the defendants carried on business of selling and marketing of goods within the territorial jurisdiction of Delhi Court. While as in the present

case it is pleaded that defendant through their agents were carrying on business at Srinagar and approached the plaintiff at Srinagar.

In Sopan Sukhdeo Sable's case, Bar of jurisdiction was attracted in view of the provisions contained in Bombay Public Trust's Act 1950 the

facts of cases are different.

The Order(s) impugned do not suffer from any illegality or material irregularity and are passed within jurisdiction by the trial court.

For the reasons stated herein above these petitions being devoid of merit are dismissed. Record be send back immediately.