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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.5254 OF 2006

P.V. GURU RAJ REDDY REP. BY GPA LAXMI NARAYAN REDDY & ANR.             ...APPELLANTS

VERSUS

P. NEERADHA REDDY & ORS. ETC.             ...RESPONDENTS

J U D G M E N T

RANJAN GOGOI, J.

1. This  appeal  seeks  to  challenge  two  separate  

though  largely  similar  orders  both  dated  26th June,  2003  

passed by the High Court of Andhra Pradesh at Hyderabad in  

Civil Revision Petition Nos.1398 and 1399 of 2003.  By the  

aforesaid orders, the High Court, in reversal of the order of  

the learned trial judge, has allowed the applications filed by  

the defendants under Order VII rule 11 of the Code of Civil

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Procedure,  1908  (hereinafter  referred  to  as  “the  CPC”).  

Aggrieved, the plaintiffs are before us in this appeal.

2. Original Suit Nos. 71 and 72 of 2002 were filed by  

the plaintiffs (appellants herein) for declaration of title and  

possession.  The case of the plaintiffs in both the suits were  

more or less similar.  According to the plaintiffs as they were  

living abroad they had reposed trust and faith in defendants  

Nos.1 and 2 who are their close relatives (sister and brother-

in-law of plaintiff No.1) to purchase immovable property in  

Hyderabad in the name of the plaintiff No.2. According to the  

plaintiffs, they had made funds available to the defendants  

Nos. 1 and 2 for the said purpose and had entirely relied on  

them.

3. The specific case of the plaintiffs in Original Suit  

No.71 of 2002 is to the effect that the property belonging to  

one Professor N.S. Iyengar was identified for purchase and  

an agreement was drawn up with the said person.  According  

to the plaintiffs, they were informed by the defendants that

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Professor  Iyengar  has  resiled  from  the  agreement  which  

required filing a suit for specific performance. According to  

the  plaintiffs  when  they  visited  Hyderabad  in  

November/December  1999,  they  could  notice  some  

construction  activity  in  the  plot  belonging  to  Professor  

Iyengar.   It  is  at  that  point  of  time  that  they  had  made  

enquiries and could come to know that though the suit for  

specific performance filed by the defendants was decreed,  

the sale deed was executed in the name of the defendant  

No.4 who is the brother-in-law of the defendant No.1.  It is  

thereafter that the suit being Original Suit No.71 of 2002 was  

filed.   

4. Insofar as Original Suit No.72 of 2002 is concerned,  

the  plaintiffs'  case  is  that  the  property  belonging  to  one  

Professor  B.  Ramchander  Rao was identified for  purchase.  

Though the defendant Nos.1 and 2 informed the plaintiffs  

that  the  needful  was  done,  it  transpired  that  the  said  

property was purchased on 31.8.1979 jointly in the name of  

plaintiff  No.2  and  the  defendant  No.3,  who  is  the  son  of

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defendant No.1.  According to the plaintiffs immediately after  

they came to know of the said facts, they had issued a legal  

notice on 20.12.1999 and on receipt of the reply to the said  

notice  which  contained  an  unequivocal  denial  of  the  

plaintiffs' claim, the suit being Original Suit No.72 of 2002  

was filed. Both the suits were filed in July, 2002.   

5. Rejection of the plaint under Order VII rule 11 of  

the  CPC  is  a  drastic  power  conferred  in  the  court  to  

terminate  a  civil  action  at  the  threshold.   The  conditions  

precedent to the exercise of power under Order VII rule 11,  

therefore, are stringent and have been consistently held to  

be so by the Court.  It is the averments in the plaint that has  

to be read as a whole to find out whether it discloses a cause  

of action or whether the suit is barred under any law.  At the  

stage of exercise of power under Order VII rule 11, the stand  

of  the  defendants  in  the  written  statement  or  in  the  

application for rejection of the plaint is wholly immaterial.  It  

is only if the averments in the plaint ex facie do not disclose  

a cause of action or on a reading thereof the suit appears to

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be barred under any law the plaint can be rejected.  In all  

other situations, the claims will have to be adjudicated in the  

course of the trial.  

6. In the present case, reading the plaint as a whole  

and  proceeding  on  the  basis  that  the  averments  made  

therein are correct, which is what the Court is required to do,  

it cannot be said that the said pleadings ex facie discloses  

that the suit is barred by limitation or is barred under any  

other provision of law.  The claim of the plaintiffs with regard  

to  the knowledge of  the essential  facts  giving rise  to  the  

cause  of  action  as  pleaded  will  have  to  be  accepted  as  

correct.   At  the  stage  of  consideration  of  the  application  

under Order VII rule 11 the stand of the defendants in the  

written statement would be altogether irrelevant.

7. In Original Suit No.71 of 2002, the plaintiffs had averred  

that it is only in November/December 1999 when they came to India  

that they could come to know that the property of Professor Iyengar  

was sold to somebody else.  Thereafter, they had issued a legal notice

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on 3.12.1999. The plaintiffs have further averred that it is only from  

the reply of the said notice that they could come to know of the true  

facts and the conduct  of  the defendants  in  conspiring to cheat the  

plaintiffs.  Thereafter,  according  to  the  plaintiffs  after  obtaining  the  

copy of the decree of specific performance passed in O.S. No.24/1985  

and the judgment of the Appeal Court in A.S. 215/87 as well as the  

judgment of the High Court dated 13.1.1995, the suit in question was  

filed, inter alia, for:

“a)  For a declaration that the Plaintiff  has  title  over the schedule property and for  possession of the suit schedule property  from the defendants.

  b)   For  cancellation  of  the  judgment  and  decree passed in O.S. 24/85 on the file of  the  Court  of  the  Principal  Subordinate  Judge,  Ranga  Reddy  District  at  Saroornagar  regarding  the  schedule  property.

  c)   For permanent injunction restraining the  defendants, their men and others on their  behalf  from  further  alienating  the  schedule property in favour of any other  person.

   d)   For costs.”

8. Similarly in Original Suit No.72 of 2002, according to the

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plaintiffs, they could come to know of the sale deed dated 31.8.1979  

executed in favour of the plaintiff No.2 and the defendant No.3 only in  

the year 1999 immediately whereafter they had issued the legal notice  

dated 20.12.1999. According to the plaintiffs it  is  only subsequently  

that they came to know of sale of half of the scheduled property in  

favour of the defendant No.5. Accordingly they had filed the Original  

Suit No.72 of 2002 claiming the following reliefs:

“a) For a declaration that the schedule  property is the property of the 2nd  plaintiff  and for  possession of the  suit  schedule  property  from  the  defendants to the 2nd plaintiff.

b) For cancellation of  the sale deed,  dt.  31.8.1979  jointly  executed  in  the  name of  the  2nd plaintiff  and  the 3rd defendant, so far as the 3rd  defendant is concerned.

c) For cancellation of  the sale deed,  dated 10.02.1999, executed in the  name of the 5th defendant.

d) For  permanent  injunction  restraining  the  defendants,  their  men  and  others  on  their  behalf  from  further  alienating  the  schedule  property  in  favour  of  other persons.

e) For costs.”

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9. Both the suits were filed in July 2002 which is well  

within three years of the date of knowledge, as claimed by  

the  plaintiffs,  of  the  fact  that  the  property  had  not  been  

transferred in the name of plaintiff No.2 by the defendants  

Nos. 1 and 2.   The aforesaid averments made in the plaint  

will  have  to  be  accepted  as  correct  for  the  purposes  of  

consideration of the application under Order VII rule 11 filed  

by the defendants Nos. 1 and 2.  If that be so, the averments  

in the plaint would not disclose that either of  the suits  is  

barred by limitation so as to justify rejection of the plaint  

under Order VII rule 11 of the CPC.

10. There  is  yet  another  issue  framed  by  the  High  

Court as Question No.3 which is in the following terms:

“3.    Whether the claims made in  the  suit,  as  appearing in  the  statement in the plaint, are hit  by  the  provisions  of  the  Benami  Transactions  (Prohibition) Act, 1983?”

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11. While in Civil Revision Petition No.1398 of 2003 the  

said  issue was  decided in  favour  of  the  plaintiffs,  in  Civil  

Revision  Petition  No.1399  of  2003  the  same was  decided  

against the plaintiffs.  The finding of the High Court in this  

regard proceeds on the basis that the plaintiffs had admitted  

in the plaint that the property purchased in the name of the  

defendant  No.3  belonged  to  the  plaintiffs.  Therefore  the  

provisions  of  Benami  Transactions  (Prohibition)  Act,  1988  

would apply.  We fail  to see how the aforesaid view of the  

High Court can be sustained.  The suits in question were not  

filed  for  recovery  of  any  property  held  in  benami  by  the  

defendants. Rather, the suit was for declaration of plaintiffs'  

title and for recovery of possession from the defendants, as  

already noted.

12. For  the aforesaid reasons,  the order  of  the High  

Court  dated  26th June,  2003  has  to  be  reversed.  We,  

accordingly,  do  so  and  allow  this  appeal  and  direct  the  

learned  trial  Court  to  hear  and  decide  both  the  suits  i.e.

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Original Suit No.71 of 2002 and Original Suit No.72 of 2002  

on merits at an early date.  

13. The appeal is disposed of in the above terms.  

……..……......................J.                                           (RANJAN GOGOI)

.……..…….....................J.                                                 (PRAFULLA C. PANT)

NEW DELHI FEBRUARY 13, 2015.