- In the case of M/s Frost International Limited vs M/s Milan Developers and Builders Pvt Ltd. and anr. the Apex Court has held that a relief sought in the plaint with the objective of restraining a prosecution against the plaintiff will be barred by law and can be a ground for allowing an application for rejection of plaint under Order VII Rule 11 of CPC.
- In the instant case, the appellant had issued a notice to the respondent under section 138 of the Negotiable Instruments Act wherein he had alleged the dishonour of certain cheques. The respondent had filed a suit seeking a declaration that the appellants had been given these cheques as security and that they were not entitled to them as they had not held up their end of the bargain.
- The appellant had then filed an application for the rejection of the plaint under Order VII Rule 11 of CPC, which was refused. It was then allowed by the revisional Court and the plaint was rejected. Thereafter, a writ petition was filed before the Orissa HC which had set aside the order of the Court of revision, observing that it had exceeded its jurisdiction, and the matter was then remanded for fresh consideration. Aggrieved, the matter was appealed in the Hon’ble Apex Court.
- The Apex Court observed that section 115 of CPC provides that the revisional Court was conferred with the powers to reverse an order which would finally dispose of the suit. Thus, by allowing an application seeking the rejection of plaint, the Court had not exceeded its jurisdiction. In arriving at this conclusion, the Court referred to a plethora of judgements, including Pandurang Dhondi Chougule and ors vs Maruti Hari Jadhav and ors AIR 1966 SC and Tek Singh vs Shashi Verma and anr (2019) SCC.
- Referring to the cases of T. Arivandandam vs TV Satyapal and anr (1977) SCC and ITC Ltd vs. Debts Recovery Appellate Tribunal and ors. (1998) SCC the Court held that the basic question that needs to be decided while dealing with an application filed under order VII rule 11 is whether a real cause of action has been set out in the plaint or something purely illusory has been stated solely to get out of Order VII Rule 11 of the Code.
- The Court also observed that the argument that the plaint was barred by Section 34 of the Specific Relief Act is devoid of merit as an omission on the part of the plaintiff to pray for consequential relief is relevant only at the time of final adjudication of the suit and not at the preliminary stage.
- Another reason that was cited for seeking rejection of the plaint was that respondent 1 had prayed for a declaration that the cheque issued in the name of the appellant was only a security and not liable to be encashed. It was argued by the appellant that, in essence, the respondent had frustrated his right to move against him under the Negotiable Instruments Act. Section 118 of the NI Act states that unless the contrary is proved, it shall be presumed that every negotiable instrument was made or drawn for consideration.
- It was held that the reliefs sought in the plaint frustrated the rights of the applicants to take steps under the NI Act for dishonour of cheque. The Court referred to the case of Cotton Corporation of India Ltd. vs United Industrial Bank Limited and ors. (1983) SCC and Ratna Commercial Enterprises Ltd vs Vasutech Ltd. AIR 2008 Del. and held that the reliefs sought are barred by law because no plaintiff can be allowed to claim a relief in a suit which would frustrate the defendants from initiating prosecution against the plaintiff or seeking any other remedy which is barred by law.
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