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HIGH COURT OF DELHI
KARAN PAL SINGH ..... Plaintiff
Through: Mr. Sudhir Nandrajog, Sr.
Advocate with Mr. Preet Pal Singh, Mr. Aaryan Sharma, Mr. Madhav Goel and Mr. Shivam Sachdeva, Advocates
Through: Mr. Sanjeev Sindhwani, Sr.
Advocate with Mr. Vikas Arora and Ms. Radhika Arora, Advocates
JUDGMENT
1. The instant application has been filed under Order VII Rule 11 of the Code of Civil Procedure, 1908 (hereinafter referred to as “CPC”) on behalf of the applicant/defendant seeking the following reliefs: “In the circumstance, it is most humbly and respectfully prayed that the present suit of the plaintiff may kindly be dismissed under the provisions of order 7 rule 11 CPC for inter alia being barred by limitation as well as for lack of cause of action. Any further order or direction as this Hon’ble court may deem fit and proper may kindly also be passed in the facts and circumstances of the case.”
FACTUAL MATRIX
2. The plaintiff has filed the captioned suit for recovery of an amount of Rs. 7,48,14,740/- (Rupees Seven Crores Forty Eight Lakhs Fourteen Thousand Seven Hundred and Forty only).
3. The plaintiff is engaged in the business of development, purchase and selling of real estate and the defendant company incorporated on 8th March, 1978 is engaged in the business of promoting, building, constructing, etc. having its registered office at 131, Ground Floor, World Trade Centre, Babar Road, New Delhi – 110001.
4. The genesis of the dispute between the parties stems from transaction carried out with respect property on the ground floor of the “Tower of Arc”. SUBMISISONS (On behalf of the applicant/defendant)
5. Mr. Sanjeev Sindhwani, learned senior counsel appearing on behalf of the applicant/defendant submitted that the captioned suit filed on behalf of the plaintiff must be rejected at the threshold since, the same is hopelessly time barred. Moreover, it is argued that the transaction between the parties dates back to 2014-2015 and the plaintiff/nonapplicant has opted to file after an inordinate delay of more than three years, as required under the statute.
6. It is submitted that according to contentions made by the plaintiff, the applicant herein allegedly refused to complete the sale documentation in compliance of the purported oral agreement to sell executed in the year
2015. Thus, cause of action, if any, arose in the year 2015. Therefore, the limitation to institute the captioned suit as provided under the Limitation Act, 1963 (hereinafter “Limitation Act”) expired way back in the year
2018. In light of the said averment, it has been submitted that the captioned suit filed by the plaintiff is time barred and filed in gross abuse of process of law. It is further submitted that in order to circumvent the obstacle created by the Limitation Act, the plaintiff fraudulently asserted that the defendant has shown the money received from the plaintiff as a liability/advance in his Books of Account. However, acknowledgement, as provided under Section 18 of the Limitation Act, for extension of limitation, should be explicit and unambiguous. The learned senior counsel to this effect submitted that there is no record of any such document that demonstrates any admission/acknowledgement of obligation to pay any outstanding amount to the plaintiff, thereby, such false and malicious assertions cannot come to the rescue of the nonapplicant/plaintiff.
7. It is submitted that the entire case of the plaintiff rests on the fact that he made payments through banking channels and that there are some amounts appearing in the defendant's Books of Account, as a result, it is alleged that the defendant has admitted liability to the plaintiff in the amount of Rs. 4.22 Crores in its Books of Accounts. Reliance placed upon by the plaintiff on the balance sheets and books of accounts of the defendants for various fiscal years is misplaced and fallacious. Moreover, the said documents do not substantiate the claims made in the plaint.
8. It is submitted on behalf of the applicant/defendant that in view of the established law, the plaintiff bears the burden of proof in establishing his case. Moreover, it is argued that the plaintiff has failed to produce any document that would even slightly establish that the property of defendant i.e., the „Tower of Arc‟ property was discussed for sale or acquisition. It is further submitted that the captioned suit has been brought on the basis of fabricated grounds.
9. It is submitted on behalf of the applicant/defendant that the captioned suit filed by the plaintiff is meritless and has been filed for the sole purpose of harassing the defendant. Furthermore, the plaintiff has failed to adduce any evidence to substantiate the contentions/allegations.
10. Learned senior counsel appearing on behalf of the applicant/defendant submitted that the plaintiff is guilty of concealing the actual true facts and distorting such facts in order to deceive this Court. Hence, this Court must not exercise its equitable jurisdiction in favour of a party that has come before it with tainted hands and concealed crucial facts and accordingly, reject the deficient plaint. (On behalf of the non-applicant/plaintiff)
11. Per contra, Mr. Sudhir Nandrajog, learned senior counsel appearing on behalf of the non-applicant/plaintiff submitted that the present application has been filed on behalf of the applicant/defendant in gross abuse of process of law.
12. It is submitted that the plaintiff was compelled to file the captioned suit due to the defendant's avarice and malafide purpose to defraud the plaintiff and usurp the lawful sum of Rs. 4,22,68,215/- (Four Crore Twenty Two Lakhs Sixty Eight Thousand Two Hundred Fifteen only) due and payable to the plaintiff. It is further submitted that since the defendant has unlawfully withheld and misappropriated the plaintiff's money. Therefore, the defendant is obligated to pay interest at the rate of 12% per annum from 1st April, 2015 until the actual date of realisation.
13. It is submitted on behalf of the non-applicant/plaintiff that the former directors of the defendant company, Mr. Rajesh Arora and Mr. Kanwarjit Arora, approached the plaintiff with the intent to sell the property located on the ground floor of the „Tower of Arc‟ and for ulterior motives, induced the plaintiff to enter into an oral agreement for the sale/purchase of area in the „Tower of Arc‟.
14. It is submitted that Mr. Rajesh Arora and Mr. Kanwarjit Arora, portraying themselves as the authorised representative of the defendant herein, offered to sell 15,000 sq. ft. area on the ground floor of the „Tower of Arc‟ @ Rs. 5,000/- per sq. ft. Subsequent to due negotiations, the sale/purchase transaction for the same was agreed for a total consideration of Rs. 7,50,00,000/- (Seven Crore Fifty Lakhs only).
15. It is submitted that Mr. Rajesh Arora and his family members, acting for and on behalf of the defendant company, fraudulently induced the plaintiff for the sale/purchase of the area in „Tower of Arc‟. The plaintiff deposited Rs. 4,72,68,215/- in the account of the defendant company as partial sale consideration over a period of time, using multiple cheques.
16. It is submitted that all of the aforementioned cheques were drawn on the account of plaintiff at the IndusInd Bank, Kailash Colony Branch and all of the cheques were honored upon presentation. It is further alleged that the defendant refunded Rs. 50,00,000/- (Rupees Fifty Lacs only) vide cheque bearing No. 098002 received from Federal Bank on 22nd September, 2014 and Rs. 4,22,68,215/- is due to be refunded to the plaintiff, despite the fact that the defendant has admitted and acknowledged the liability/debt in its Books of Accounts. It is submitted that despite receiving significant payments, the defendant refused to sign any documents. Furthermore, upon investigation, it was discovered that neither Mr. Rajesh Arora nor Mr. Kanwarjit Arora continued to be the directors of the defendant company herein and they had resigned from their positions as directors of the defendant company on 28th April, 2015, i.e., shortly after the payments were made.
17. It is submitted that due to defendant‟s unpaid debt and illegal retention of funds due to the plaintiff, the principle amount payable by the defendant to the plaintiff amounts to the tune of Rs. 4,22,68,215/alongwith an interest of 12% per annum, commencing on 1st April, 2015, until the actual realization of the said amount.
18. Learned senior counsel submitted that the non-applicant/plaintiff has expressly pleaded in the plaint that he has given an amount towards consideration to the defendant for sale/purchase of the ground floor situated at „Tower of Arc‟ and the same has been acknowledged by the defendant every year in his balance sheet.
19. In response to the arguments advanced on behalf of the applicant/defendant that the present suit is barred by law of limitation, it is submitted by the learned senior counsel appearing on behalf of the nonapplicant/plaintiff that it is the case of the plaintiff in the plaint that since the applicant/defendant in its annual balance sheet maintained from the year 2014-2020 has duly acknowledged the receipt of money under the head of “Other Long Term Liabilities”.
20. Therefore, in light of the submissions made above it has been contended by the learned senior counsel that acknowledgement of debt by the applicant/defendant for the preceding years up till 2019-2020 will enure to the benefit of the non-applicant/plaintiff and each acknowledgement shall give rise to a fresh period of limitation that shall be computed from the date of such acknowledgement/admission.
21. It is submitted on behalf of the non-applicant/plaintiff that according to established legal precedent, a balance sheet entry counts as an acceptance of debt for the purposes of Section 18 of the Limitation Act, extending the period of limitation prescribed under the Limitation Act. In order to support the said contention, reliance is placed upon the judgment passed by the Hon‟ble Supreme Court in Asset Reconstruction Co. (India) Ltd. v. Bishal Jaiswal reported as (2021) 6 SCC 366, whereby it has been held that if the borrowed amount is reflected in the balance sheet, then it may amount to acknowledgement and fresh period of limitation shall commence from the date of such acknowledgment, provided that such balance sheets are duly authorised or attested by the authorised representative of the company. Furthermore, such documents shall not oust the purview of Section 18 of the Limitation Act. Therefore, it would not be appropriate to state that the intent of the balance sheet is merely to set out the claims made on the company and not acknowledging any kind of liability.
22. In addition thereto, it is submitted on behalf of the nonapplicant/plaintiff that the contention of the applicant with respect to suit being barred by limitation cannot come to its rescue, since, the said principle has been settled in catena of judgments passed by the Hon‟ble Supreme Court and this Court that limitation is a mixed question of law and facts and cannot be adjudicated at a preliminary stage under Order VII Rule 11 of CPC without a proper trial.
23. Reliance is placed upon the judgment passed by the Hon‟ble Supreme Court in Narne Rama Murthy v. Ravula Somasundaram reported as (2005) 6 SCC 614, whereby it was held that when the law of limitation is a pure question of law, it is necessary for the court to decide the limitation at threshold. However, if the suit does not appear to be prima facie barred by virtue of Limitation Act, then the averments made in the facts are necessary to be pleaded in order to be adjudicated by the Court of law. The relevant para of the said judgment is reproduced hereunder:
24. Reliance is further placed upon the judgment titled as Ramesh B. Desai v. Bipin Vadilal Mehta reported as (2006) 5 SCC 638, the relevant portion of which reads as follows:
25. In light of the foregoing submissions, learned senior counsel appearing on behalf of the non-applicant/plaintiff stated that the present application being devoid of any merit is liable to be dismissed at threshold.
ANALYSIS
26. Heard the learned senior counsel appearing on behalf of the parties and perused the record.
27. In order to adjudicate upon the instant application, this Court finds it imperative to peruse Order VII Rule 11 of the CPC, which reads as follows:
28. Order VII Rule 11 of the CPC provides the grounds for rejection of plaint. One of them being creating an illusion of cause of action. Moreover, while adjudicating upon an application under the said provision only the averments/contentions made in a plaint are to be adjudicated. The written statement filed by the defendant is immateriale while deciding an application under Order VII Rule 11 of CPC.
29. Furthermore, while deciding an application under Order VII Rule 11 of CPC the Courts are essentially to scrutinize the plaint thoroughly and determine whether the same shall be allowed or not. The following grounds are enlisted therein: i. The suit is undervalued. ii. There is an illusion of cause of action. iii. The plaint barred by law. iv. There is a failure to file plaint in duplicate.
30. The learned senior counsel appearing on behalf of the applicant/defendant premised his arguments on two of the four mentioned grounds one of them being, the plaintiff by way of clever drafting has created an illusion of cause of action being arisen and secondly, the instant suit filed by the plaintiff/non-applicant herein is barred by law.
31. The provisions of the CPC make reference to the cause of action. It is a collection of claims or events that compensate for the reasons for filing a plaint. Furthermore, in order to maintain a suit, the cause must be cited unambiguously in the plaint. However, if the plaint fails to disclose the same, the Courts may, at any point of time reject the plaint.
32. The party instituting a lawsuit before the Court of law is required to illustrate specific necessities; firstly, existence of an obligation or a duty, secondly, in case of a breach or violation of commitment, thirdly, reason for such breach and fourthly, damages incurred by the party. However, if the plaint fails to affirm the facts necessary to aid the cause of the aggrieved party, the Court may reject the plaint, citing the explanation and grounds for such rejection.
33. The Hon‟ble Supreme Court in its judgment titled as Dahiben v. Arvindbhai Kalyanji Bhanusali reported as (2020) 7 SCC 366 held that the Court must determine whether or not a plaint discloses a cause of action or the same merely is filed with an illusion of cause of action created by way of deft drafting with an intent to harass the defendant(s). The Courts must be vigilant against concealment or suppression and if a claim is deemed to be vexatious and an abuse of the process of Court, it shall reject the plaint under Order VII Rule 11 of CPC.
34. Furthermore, a plaint cannot be rejected on the basis of claims made by defendant in his written statement. The Courts must examine the plaint in its entirety in order to determine whether or not it discloses a cause of action or not. If the plaint discloses a cause of action, it cannot be rejected under Order VII Rule 11(a) of CPC. Furthermore, whether a plaint reveals a cause of action is an issue of fact that must be determined by adjudicating the averments in the plaint. Therefore, if the plaint discloses the cause of action, the mere fact that the plaintiff may not prevail in court cannot constitute grounds for rejection of the plaint. The same has been settled by the Hon‟ble Supreme Court in its judgment namely Kuldeep Singh Pathania v. Bikram Singh Jaryal reported as
35. In view of the foregoing paragraphs and the documents appended by the plaintiff, this Court is of view that transaction in fact did take place between the parties, thereby giving rise to a cause of action. However, whether or not the cause of action is defective fails to fall within the ambit of Order VII Rule 11 of CPC for rejection of plaint. Non-disclosure of cause of action is distinct from a defective cause of action, the former falls within the purview of Order VII Rule 11 of CPC whereas, the latter does not. The same has been settled in judgment passed by the Hon‟ble Supreme Court in Jogeshwari Devi v. Shtrughan Ram reported as (2007) 15 SCC 52.
36. On the second ground raised on behalf of the applicant/defendant, it is observed that when the averments made in the plaint indicate that a suit is barred by law, it is liable to rejected. This also includes a bar created by way of limitation. However, if the issue with respect to limitation pertains to the merits of the case, it has to be considered alongwith facts. Importantly, where the suit is barred by law the same does not provide the plaintiff a right to file the lawsuit and may be rejected.
37. The Hon‟ble Supreme Court in its judgment titled as Vishnu Dutt Sharma v. Daya Sapra reported as (2009) 13 SCC 729 held that everyone has the right to access the Court of law. Section 9 of the CPC permits a party to institute a civil suit, excluding those for which jurisdiction is expressly or necessarily precluded. Order VII Rule 11(d) of CPC is one of these provisions that allows for the rejection of a plaint, if it is prohibited by law. As one of the exclusions, Order VII Rule 11(d) CPC must be strictly interpreted. The enjoining restriction on the maintainability of a suit must be clear from the averments made in the plaint.
38. The language of Order VII Rule 11 of CPC is quite clear and unambiguous. The plaint may be rejected on the ground of limitation if the averments made in the plaint unequivocally provides that the suit is forbidden by any applicable law. The term “Law” in accordance with Order VII Rule 11(d) of the CPC includes the law of limitation as well. However, the concept of limitation is a mixed question of fact and law. The same has been settled by the Hon‟ble Supreme Court in its judgment titled as Shakti Bhog Food Industries Ltd. v. Central Bank of India and Anr. reported as (2020) 17 SCC 260. The relevant extract from the said judgment is reproduced hereunder:
39. In the instant matter, there is nothing on record or that has been averred on behalf of the applicant/defendant which shows that the plaint filed on behalf of the plaintiff is deficient, defective or liable to be rejected. The grounds taken by the applicant/defendant have not been substantiated as per the requirement laid down under Order VII Rule 11 of the CPC.
40. In view of the foregoing discussions, this Court finds force in the arguments advanced by the learned senior counsel appearing on behalf of the non-applicant/plaintiff that the law of limitation is a mixed question of fact and law. Moreover, in light of the judgement relied upon by the non-applicant/plaintiff titled as Asset Reconstruction Co. (India) Ltd. (supra) this Court is of view that at this stage, law of limitation cannot be a cogent ground for rejection of the instant application.
41. With the aforesaid observations, the present application being devoid of any merit is accordingly dismissed.
JUDGE APRIL 18, 2023 Dy/Ug