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REPORTABLE IN THE SUPREME COURT OF INDIA CIIVL APPELLATE JURISDICTION CIVIL APPEAL NO. 10802 OF 2017

(Arising out of S.L.P.(C) No. 5862 of 2017) SEJAL GLASS LTD.                                 Appellant(s)                                 VERSUS NAVILAN MERCHANTS PVT. LTD.            Respondent(s)

WITH CIVIL APPEAL NO. 10803 OF 2017

(Arising out of S.L.P.(C) No. 21930 of 2017) @ S.L.P.(C)...CC No. 7790/2017  

J U D G M E N T R.F. NARIMAN, J. 1) Delay condoned. 2) Leave granted. 3) The respondent filed a Civil Suit being CS (Comm) No. 330 of 2016 in April, 2016 praying for the following reliefs:

“a) Pass a Money Decree in a sum of Rs.1,44,01,365/- with further interest both future and pendente lite @ 18%  p.a.  in  favour  of  the  Plaintiff  &  against  the defendants,  jointly  &  severally,  till  its  complete realization along with cost of the present proceedings; b) Direct the Defendants to furnish TDS Certificates for the deduction made by them or pay further amounts towards  non-payment  of  TDS  from  31/03/14  which  they were  liable  to  pay  to  the  concerned  authority  along with further interest & penalty towards non-payment of TDS”

4) An  application  dated  08.07.2016  was  filed  by  the Defendant(s) under Order VII Rule 11 stating that the plaint disclosed no cause of action.  By the impugned judgment dated 07.09.2016,  it  has  been  held  that  the  plaint  is  to  be bifurcated  -  it  discloses  no  cause  of  action  against  the

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Directors  i.e.  Defendant  Nos.  2  to  4  but  the  suit  is  to continue against the Defendant No.1-Company.  It has further been held that the defendant, in any case, is barred from filing  a  written  statement  in  the  suit  as  he  has  taken inordinate time to do so.  5) In our view, the impugned judgment is wrong on principle. Order VII Rule 11 of the Code of Civil Procedure, 1908 which reads as follows:

“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 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 for 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.”

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What is important to remember is that the provision refers to the “plaint” which necessarily means the plaint as a whole. It is only where the plaint as a whole does not disclose a cause of action that Order VII Rule 11 springs into being and interdicts a suit from proceeding.   6) It is settled law that the plaint as a whole alone can be rejected under Order VII Rule 11.  In Maqsud Ahmad v. Mathra Datt & Co., A.I.R. 1936 Lahore 1021 at 1022, the High Court held that a note recorded by the trial Court did not amount to a rejection of the plaint as a whole, as contemplated by the CPC,  and,  therefore,  rejected  a  revision  petition  in  the following terms:-

“There is no provision in the Civil Procedure Code for the rejection of a plaint in part, and the note recorded  by  the  trial  Court  does  not,  therefore, amount  to  the  rejection  of  the  plaint  as contemplated in the Civil Procedure Code.”

7) Similarly,  in  Bansi  Lal v.  Som  Parkash,  A.I.R.  1952 Punjab 38 at 39, the High Court held:-

“But the real question which arises in this appeal is whether there can be a partial rejection of the plaint. Mr. Chiranjiva Lal Aggarwala submits that a plaint can either be rejected as a whole or not at all, and he has relied on a statement of the law given in Mulla’s Civil Procedure Code at page 612 where it is stated: “This rule (Order 7, Rule 11) does  not  justify  the  rejection  of  any  particular portion of a plaint.” In support of this statement the learned author has relied on ‘Raghubans Puri v. Jyotis Swarupa’, 29 All 325, ‘Appa Rao v. Secretary of State’, 54 Mad 416, and ‘Maqsud Ahmad v. Mathra Datt & Co.’, AIR 1936 Lah 1021. In reply to this argument Mr. Puri has submitted that it is really five suits which had all been combined in one and therefore in this particular case the rejection of a part  was  nothing  more  than  rejection  of  three plaints. But the suit was brought on one plaint and not five suits were brought. The law does not change

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merely because the plaintiff chooses in one suit to combine  several  causes  of  action  against  several defendants  which  the  law  allows  him.  It  still remains one plaint and therefore rejection of the plaint must be as a whole and not as to a part. I am therefore  of  the  opinion  that  the  learned  Senior Subordinate  Judge  was  in  error  in  upholding  the rejection  as  to  a  part  and  setting  aside  the rejection in regard to the other part. This appeal which I am treating as a petition for revision must therefore be allowed and the rule made absolute, and I order accordingly.”

8) In  (Sree Rajah) Venkata Rangiah Appa Rao Bahadur and another v. Secretary of State and others, A.I.R. 1931 Madras 175 at 176, the Madras High Court held:-

“Referring to S. 54 of the old Civil Procedure Code, the  learned  Judge  states  that  that  section  only provides for the rejection of a plaint in the event of any matters specified in that section not being complied with and it does not justify the rejection of any particular portion of a plaint. S. 54 now corresponds to O. 7, R. 11, Civil Procedure Code. The plain meaning of that rule seems to be that if any  of  the  defects  mentioned  therein  is  found  to exist in any case, the plaint shall be rejected as a whole.  It  does  not  imply  any  reservation  in  the matter  of  the  rejection  of  the  plaint. Non-compliance with the requisites of S. 80, Civil Procedure Code, was taken to be a ground covered by Cl. (d) of R. 11, above referred to. Even if it should be taken that that clause does not strictly apply  to  the  present  case,  I  must  hold  that  the suits  are  liable  to  dismissal  on  account  of non-compliance with S. 80, Civil Procedure Code.”

It was further found that if the suit was dismissed for want of notice against the Government under Section 80 CPC, it cannot be allowed to proceed against the other defendants for the reason that the Government’s right to resume inam lands, on the facts of that case, stands unaffected, and that being so, the plaintiff’s claim to recover possession of such lands from other defendants would also fall to the ground for the

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simple reason that they have no right then to resume those inams.  It was, therefore, held on the peculiar facts of that case that for the reasons given the suit would fail as a whole.  9) However, in  Kalepu Pala Subrahmanyan v.  Tiguti Venkata Peddiraju and others, A.I.R. 1971 A.P. 313, a single Judge referred to AIR 1931 Madras 175, and then held that the suit was  barred  by  time  in  respect  of  only  certain  items  of property and not in respect of others.  Despite this, it was held  that  since  the  plaint  as  a  whole  should  have  been rejected, the baby was thrown out with the bathwater, and the entirety of the plaint and not merely the properties against which  the  suit  could  not  proceed  (as  it  was  barred  by limitation), was rejected.  10) We are afraid that this is a misreading of the Madras High Court judgment.  It was only on the peculiar facts of that case that want of Section 80 CPC against one defendant led to the rejection of the plaint as a whole, as no cause of action would remain against the other defendants. This cannot elevate itself into a rule of law, that once a part of a plaint cannot proceed, the other part also cannot proceed, and the plaint as a whole must be rejected under Order VII Rule 11.  In all such cases, if the plaint survives against certain defendants and/or properties, Order VII Rule 11 will have no application at all, and the suit as a whole must then proceed to trial.

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11) If only a portion of the plaint, as opposed to the plaint as a whole is to be struck out, Order VI Rule 16 of the CPC would apply.  Order VI Rule 16 states as follows:-

“16. Striking out pleadings.- The Court may at any stage of the proceedings order to be struck out or amended any matter in any pleading- a) which may be unnecessary, scandalous, frivolous or vexatious, or  b) which may tend to prejudice, embarrass or delay the fair trial of the suit, or c)  which is otherwise an abuse of the process of the Court.”

It is clear that Order VI Rule 16 would not apply in the facts of the present case.  There is no plea or averment to the effect that, as against the Directors, pleadings should be struck  out  on  the  ground  that  they  are  unnecessary, scandalous, frivolous, vexatious or that they may otherwise tend to prejudice, embarrass or delay the fair trial of the suit or that it is otherwise an abuse of the process of the Court.  12) In contrast to the above provisions, which apply on a demurrer, the provisions of Order XIV Rule 2, read as follows;

“2. Court to pronounce judgment on all issues.-(1) Notwithstanding that a case may be disposed of on a preliminary issue, the Court shall, subject to the provisions of  sub-rule (2),  pronounce judgment  on all issues. (2) Where issues both of law and of fact arise in the same suit, and the Court is of opinion that the case or any part thereof may be disposed of on an issue of law only, it may try that issue first if that issue relates to- (a) the jurisdiction of the Court, or

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(b) a bar to the suit created by any law for the time being in force, and for that purpose may, if it thinks  fit,  postpone  the  settlement  of  the  other issues until after that issue has been determined, and may deal with the suit in accordance with the decision on that issue.”

13) The Court is vested with a discretion under this order to deal with an issue of law, which it may try as a preliminary issue if it relates to the jurisdiction of the Court, or is a bar  to  the  suit  created  for  the  time  being  in  force. Obviously, this provision would apply after issues are struck i.e. after a written statement is filed. This provision again cannot  come  to  the  rescue  of  learned  counsel  for  the respondent.  14) This being the case, we set aside the impugned judgment and grant the defendants in the suit a period of eight weeks from today within which to file their written statement after which the suit will proceed to be tried. 15) The appeals are disposed of accordingly. 16) The question of law, insofar as the Commercial Courts Act is concerned, has not been touched by us and is consequently left open.

  .......................... J.    (ROHINTON FALI NARIMAN)

  .......................... J.              (SANJAY KISHAN KAUL)

New Delhi; August 21, 2017.