These two civil revision petitions have been filed to call in question composite order dated
20.03.07passed 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 plain tiff 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 was paid in full, neither
dealership of the company was given to the plaintiff nor was the amount paid 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 defendant(s) 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 O7 Rule 10
&11 CPC. In support of his contention the ld counsel has referred to and relied upon case titled
"M/S Sreenivas Basudew v. Vineet Kumar Kothari reported in AI R 2007 Gauhati 5; Supra
Enterprise plaintiff v. Bygging India Limited respondent reported in 2006(2) JCC (NI) 140;
Globus Agronics Limited plaintiff v. Banque National De Paris and Anr. Defendants reported in
1999 (50) DRJ; M/s Haryana Milk Foods Ltd. V. M/s Chambel Dairy Products reported in 2002 V
AD (DELHI) 728; Sopan Sukhdeo Sable and ors appellants v. Assistant Charity Commissioner
and ors respondents reported in (2004) 3 SCC 137; Church of North India appellant v. Lavajibhai
Ratanjibhai and ors respondents reported in (2005) 10 SCC 760". 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 Code of Civil Procedure 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 otherside. Reference is made to section 26 and 27
of CPC:-
"26. Institution of suit.
Every suit shall be instituted by the presentation of a plaint or in such other manner
as may be prescribed.
27. 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:- "20. 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) (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 CPC 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 under:-
10. " 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.
11. 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.
12. 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 hearing by examining the party searchingly under Order 10 of the Code (See T. Arvandandam v. T.V. Satyapal)
13. 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.
14. In Raptakos Bett & 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 CPC, para (17) in this behalf is reproduced as under: "17.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:-
"20.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 1n 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 plaintiff(s) 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&11of CPC. This view is taken by Hon'ble
Supreme Court in Kamal and ors vs. K. T. Eshwara & ors. Reported in AIR 2008 SC 3174. Para
(16) is reproduced as under:-
"16. 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 CPC. 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.1under O7 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 being 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 were 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 M.P 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.
