MANU/SC/1288/2023

Equivalent/Neutral Citation: 2024(253)AIC 77, 2024 (162) ALR 675, 2024(1)BLJ99, 2024(1)C ivilC C (S.C .), 2024(1)IC C 541, 2023 INSC 1043,
2023(16)SC ALE64

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 7891 of 2023 (Special Leave Petition (C) No. 19465 of 2021)
Decided On: 30.11.2023
Eldeco Housing and Industries Limited Vs. Ashok Vidyarthi and Ors.
Hon'ble Judges/Coram:
Vikram Nath and Rajesh Bindal, JJ.
Counsels:
For Appellant/Petitioner/Plaintiff: Shyam Divan, Sr. Adv., Kanika Agnihotri, Adv. and
Niharika Ahluwalia, AOR
For Respondents/Defendant: Kumud Lata Das, AOR, Harsh Ajay Singh and Pooja
Rathore, Advs.
Case Note:
Contract - Specific performance - Maintainability of suit - Order 2 Rule 2 and
Order 7 Rule 11 of Code of Civil Procedure, 1908 - Memorandum of
Understanding was entered into between Appellant and Respondent No. 1
regarding sale of property in question - It was specifically mentioned in MoU
that there was litigation pending between family members of Respondent No.
1 and sale deed would be got registered immediately after litigation was over
and right of vendor was determined - As Appellant came to know that
Respondent No. 1 was trying to sell property to third parties, it filed suit for
injunction which was dismissed - When it came to notice of Appellant that
Respondent No. 1 was again trying to dispose of property, as litigation
between family members had been finally resolved by this Court in Shreya
Vidyarthi v. Ashok Vidyarthi and Ors, suit for specific performance was filed
seeking enforcement of MoU - It was in said suit that application was filed by
Respondent No. 1 Under Order 7 Rule 11(d) of Code for rejection of plaint on
ground that in terms of Order 2 Rule 2 of Code, suit was barred by law -
Relief, as claimed in suit, was available to Appellant when suit for injunction
was filed by it and fresh suit was not maintainable - Trial Court rejected
application and revision filed against said order was dismissed by High Court -
Respondent No. 1 filed Review Application, which was allowed by High Court
and application filed under Order 7 Rule 11(d) of Code was allowed and suit
filed by Appellant was rejected - Hence, present appeal - Whether relief of
specific performance, as claimed in subsequent suit, was available to
Appellant when suit for injunction was filed by it and fresh suit was not
maintainable.
Facts:
A Memorandum of Understanding was entered into between the Appellant and
Respondent No. 1 regarding sale of the property in question. It was
specifically mentioned in the MoU that there was a litigation pending between
the family members of the Respondent No. 1. The sale deed would be got
registered immediately after the litigation was over and the right of the
vendor was determined. The Respondent No. 1 shall inform the Appellant
when the rights of the parties are finalised. As the Appellant came to know
that the Respondent No. 1 was trying to sell the property to third parties, it
filed a suit for injunction. The prayer made in the suit was that the Defendant
(Respondent No. 1) be restrained from transferring, selling or alienating the
suit property in favour of anyone else except the Plaintiff (Appellant). The
suit was accordingly dismissed. The Petitioner having come to know that
Respondent No. 1 was again intending to sell the property in question issued
two public notices to inform the public at large from not entering into any
agreement in respect of the property in question. When it came to the notice
of the Appellant that Respondent No. 1 was again trying to dispose of the
property, as the litigation between the family members had been finally
resolved by this Court in Shreya Vidyarthi v. Ashok Vidyarthi and Ors, a suit
for specific performance was filed seeking enforcement of MoU. It was in the
aforesaid suit that application was filed by Respondent No. 1 Under Order 7
Rule 11(d) Code of Civil Procedure for rejection of the plaint on the ground
that in terms of Order 2 Rule 2 Code of Civil Procedure, the suit was barred by
law. The relief, as claimed in the suit, was available to the Appellant when
the suit for injunction was filed by it and a fresh suit was not maintainable.
The Trial Court, rejected the application. The revision filed against the
aforesaid order was dismissed by the High Court. However, there being no
error apparent on the record of the order, which was a detailed and speaking
one, the Respondent No. 1 filed Review Application, which was allowed by the
High Court and consequently the application filed Under Order 7 Rule 11(d)
Code of Civil Procedure was allowed and the suit filed by the Appellant was
rejected.
Held, while allowing the appeal:
(i) The order passed by the High Court in review application could not be
legally sustained. The suit for specific performance was filed by the Appellant
on the basis of MoU. In terms of the clauses in the agreement, it was pleaded
that there was dispute pending amongst the family members of the vendor.
After the same was decided and right of the vendor was crystallized, he would
get the sale deed registered. The rights of the vendor were finally crystallized
when the issue was decided by this Court in Shreya Vidyarthi's case. Suit for
specific performance was filed stating that the Appellant-Plaintiff came to
know about the disposal of the litigation amongst the family members just
before filing the suit. Earlier suit for injunction was filed pleading that the
Appellant-vendee came to know that the vendor was trying to create third
party rights in the property while agreeing to sell the same to same to some
other parties. At that stage cause of act to file suit for specific performance
had not arisen. [23]
(ii) The application for rejection of the plaint was filed by the Respondent
claiming that prior to MoU, the MoU was entered into between the parties and
subsequent to the aforesaid MoUs, an agreement was executed. In the
agreement, it was clearly mentioned that in case the litigation of the vendor
regarding the property in question was not decided after one year, the vendee
would have the right to get his earnest money back along with interest. In
fact, the vendee had issued a notice seeking refund of the earnest money. In
the light of the said facts, the suit for specific performance filed after
dismissal of the suit for injunction was barred under Order 2 Rule 2 Code of
Civil Procedure and deserved to be rejected. [25]
JUDGMENT
Rajesh Bindal, J.
1. Leave granted.
2 . Aggrieved against the order1 passed by the High Court2 in Review Application3 in
Civil Revision4, the Plaintiff is in appeal before this Court. Vide aforesaid order, the
application filed by Respondent No. 1- Defendant before the Trial Court5 Under Order
VII Rule 11(d) Code of Civil Procedure was allowed and the suit filed by the Appellant
was dismissed.
3 . Briefly stating, the facts available on record are that a Memorandum of
Understanding6 was entered into between the Appellant and Respondent No. 1 on
31.08.1998, regarding sale of the property in question. It was specifically mentioned in
the MoU that there is a litigation pending between the family members of the
Respondent No. 1. The sale deed will be got registered immediately after the litigation
is over and the right of the vendor is determined. The Respondent No. 1 shall inform
the Appellant when the rights of the parties are finalised. As the Appellant came to
know that the Respondent No. 1 is trying to sell the property to third parties, it filed a
suit for injunction7. The prayer made in the suit was that the Defendant (Respondent
No. 1 herein) be restrained from transferring, selling or alienating the suit property in
favour of anyone else except the Plaintiff (Appellant herein). It was also prayed that he
be restrained from creating any encumbrance on the property. In the written statement
filed in the aforesaid suit, the stand taken by Respondent No. 1 was that he was not
selling the property or creating any third-party rights therein. The suit was accordingly
dismissed.
4 . The Appellant was never updated by Respondent No. 1 about the status of the
litigation between the family members. The Petitioner having come to know that
Respondent No. 1 was again intending to sell the property in question issued two public
notices to inform the public at large from not entering into any agreement in respect of
the property in question. When it came to the notice of the Appellant that Respondent
No. 1 was again trying to dispose of the property, as the litigation between the family
members had been finally resolved by this Court in Shreya Vidyarthi v. Ashok Vidyarthi
and Ors. MANU/SC/1465/2015 : 2015:INSC:934 : (2015) 16 SCC 46, a suit 8 for
specific performance was filed seeking enforcement of MoU dated 31.08.1998. It is in
the aforesaid suit that application was filed by Respondent No. 1 Under Order VII Rule
11(d) Code of Civil Procedure for rejection of the plaint on the ground that in terms of
Order II Rule 2 Code of Civil Procedure, the suit was barred by law. The relief, as
claimed in the suit, was available to the Appellant when the suit for injunction was filed
by it and a fresh suit was not maintainable. The Trial Court, vide order dated
12.02.2020 rejected the application. The revision filed against the aforesaid order was
dismissed by the High Court vide order dated 14.07.2021. However, there being no
error apparent on the record of the order, which was a detailed and speaking one, the
Respondent No. 1 filed Review Application, which was allowed by the High Court and
consequently the application filed Under Order VII Rule 11(d) Code of Civil Procedure
was allowed and the suit filed by the Appellant was rejected.
5. The argument raised is that for consideration of an application Under Order VII Rule
11 Code of Civil Procedure, it is only the pleadings in the suit which are to be
considered and no other material. A plain reading of the plaint shows that there was a
cause of action to file the suit which was not time barred. The MoU entered into
between the parties clearly mentioned that there was litigation pending between the
family members; as and when the rights are finally determined by the Court, the
Appellant will be informed and subsequent thereto the sale deed will be registered.
Respondent No. 1 failed to apprise the Appellant about the status of the litigation. In
the year 2009, when the Appellant came to know that Respondent No. 1 was trying to
create third party rights in the property by selling the same to some other person,
immediately a suit for injunction was filed against Respondent No. 1. A second
injunction suit was also filed impleading Ms. Shreya Vidyarthi from creating any third-
party rights qua the property in question. The apprehension was that the Respondent
No. 1 along with Ms. Shreya Vidyarthi was trying to transfer the property to a third
party.
6. The stand taken by Respondent No. 1 in the written statement was that no third-party
rights were being created. The suit was disposed of on 06.10.2010. As was the
responsibility of Respondent No. 1 to update the Appellant about the progress of
litigation amongst the family members of Respondent No. 1, despite the fact that this
Court had disposed of the litigation on 16.12.2015 in Shreya Vidyarthi's case (supra),
the Appellant was not informed about the same. When this came to its notice, suit for
specific performance was filed in August 2017. Nothing was withheld from the Court.
Filing of the earlier suit for injunction was specifically pleaded and so was the cause of
action.
7. It was argued that when the earlier suit for injunction was filed, the cause of action
for claiming the relief of specific performance was not ripe as at that stage, the
litigation between the family members of Respondent No. 1, was still pending. It was
merely a suit for injunction filed to protect the rights of the Appellant. As Respondent
No. 1 was trying to create third party rights in the property in question, regarding which
MoU had been entered between the Appellant and the sale deed was to be executed only
after the dispute amongst the family members of Respondent No. 1 was resolved.
8. On a plain reading of the plaint, by no stretch of imagination, it could be said that
suit for specific performance filed by the Appellant was not maintainable under law, but
still the application filed by Respondent No. 1 for rejection of the plaint was allowed by
the High Court in the review application, even though earlier the same was rejected by
the Trial Court and even the revision petition was also dismissed. It is settled position
of law that no material except the plaint or the documents annexed with the plaint could
be considered at the stage of consideration of application Under Order VII Rule 11 Code
of Civil Procedure. None of the documents including the earlier suit for injunction or any
communication or agreement was on record, hence the High Court had committed error
in allowing the review application and consequently the application Under Order VII
Rule 11(d) Code of Civil Procedure, rejecting the plaint. In support of the arguments,
reliance was placed upon Gurbux Singh v. Bhooralal MANU/SC/0241/1964 : (1964)7
SCR 831, Sidramappa v. Rajashetty and Ors. MANU/SC/0396/1969 : (1970) SCC 186,
and Inbasegaran and Anr. v. S. Natarajan (dead) through legal representatives
MANU/SC/0979/2014 : 2014:INSC:748 : (2015) 11 SCC 12.
9. On the other hand, learned Counsel for Respondent No. 1 submitted that filing of the
suit for specific performance by the Appellant seeking to enforce the MoU entered on
31.08.1998 was highly belated. In fact, the Appellant had not approached the Court
with clean hands. In the aforesaid MoU entered into between the parties, it was
mentioned that a litigation is pending between the family members of Respondent No. 1
in the High Court and the sale deed will be registered in favour of the Appellant in case
Respondent No. 1 succeeds in litigation and absolute title comes in his favour. The
consideration will be mutually agreed at that time. The aforesaid MoU was followed by
an agreement executed between the parties on 02.09.1998 with reference to the same
property, in which all the terms and conditions for sale of property in case it comes to
the share of Respondent No. 1, were reduced in writing. It is specifically mentioned in
Clause (8) of the agreement that pending litigation in the High Court is likely to be
decided in favour of Respondent No. 1, however, in case it is not decided favourably
within one year from the date of first MoU dated 15.04.1998, the second party, namely,
the Appellant will have right to get the earnest money back along with interest @ 18%
per annum. The aforesaid agreement was deliberately concealed by the Appellant while
filing the civil suit. In terms of the agreement dated 02.09.1998, the only right which
was available to the Appellant was to get the refund of earnest money along with
interest for which the limitation expired long back but no action was taken.
10. It was further argued that the Appellant had even issued a notice dated 22.03.2001
for refund of earnest money. Even at the stage of filing suit for injunction, the relief of
specific performance could very well be sought but the Appellant failed to seek the
same. The suit was not prosecuted by the Appellant as the same was dismissed on
06.10.2010 and not disposed of, as claimed by the Appellant. A separate suit on a part
of cause of action which was already available to the Appellant in a suit for injunction,
was barred in terms of Order II Rule 2 Code of Civil Procedure. The application filed by
Respondent No. 1 was rightly allowed by the High Court. The facts, as have been stated
by Respondent No. 1, have not been disputed by the Appellant. He further submitted
that though Respondent No. 1 expected that 3/4th part of the property will come to his
share, however finally he got only 1/10th share on which house is constructed and he is
living there. In support of his plea, reliance was placed upon Jayakantham and Ors. v.
Abaykumar MANU/SC/0193/2017 : 2017:INSC:161 : (2017) 5 SCC 178 and Vurimi
Pullarao v. Vemari Vyankata Radharani MANU/SC/1806/2019 : 2019:INSC:1291 :
(2020) 14 SCC 110.
11. Heard learned Counsel for the parties and perused the relevant referred record.
12. Even from the documents placed on record by the Appellant, it is evident that MoU
was entered into between the parties on 15.04.1998 with reference to House No. 7/89,
Tilak Nagar, Kanpur. It was mentioned therein that the aforesaid property is in dispute
and the Respondent No. 1 has 3/4th share in the property. Though the Trial Court had
decided against Respondent No. 1, however, the appeal is pending in the High Court.
Though sale consideration of ' 4,000/- per square yard was mentioned, however, the
same was to be finally determined after decision of appeal by the High Court. The sale
deed was to be registered only after the litigation is decided in favour of Respondent
No. 1. The earnest money of ' 10,00,000/- was proposed to be paid in instalments. It
was followed by a subsequent MoU signed between the parties on 31.08.1998
(registered on 01.09.1998) pertaining to the same property. This agreement did not
provide for any details except that consideration for transfer of the property shall be
mutually agreed between the parties at the time of registration of the sale deed, if the
litigation is decided in favour of Respondent No. 1. This MoU was followed by a
registered agreement signed between the parties on 02.09.1998. It referred to an earlier
MoU entered between the parties. Clause (4) of the agreement refers to the details of '
10,00,000/- paid by the Appellant to Respondent No. 1. Besides other terms and
conditions, which are not relevant for the decision of the controversy in issue, one of
the Clause in the agreement was that Respondent No. 1 had assured the Appellant that
litigation pending in the High Court is likely to be decided shortly in his favour.
However, in case it is not decided after one year from the date of execution of first MoU
on 15.04.1998, the Appellant will have right to get the earnest money returned along
with interest @ 18% per annum. Even the Appellant had issued notice dated 22.03.2001
to Respondent No. 1 for refund of earnest money.
13. A suit for injunction was filed by the Appellant against Respondent No. 1 in January
2009. In the aforesaid civil suit, the Appellant referred to the MoU entered into between
the parties on 31.08.1998 (as registered on 01.09.1998). No reference was made to the
subsequent agreement dated 02.09.1998. It was pleaded that the Appellant (Plaintiff
therein) came to know that Respondent No. 1 was intending to sell the property to some
other person as the prices of the property had increased manifold during the
interregnum. It was pleaded that Respondent No. 1 had not informed the Appellant
(Plaintiff therein) about the final result of the pending litigation and the Appellant is still
ready and willing to purchase the property at the rate which is mutually settled between
the parties. An application was filed by Respondent No. 1 Under Order VII Rule 11(d)
Code of Civil Procedure for rejection of the plaint.
1 4 . From the paper book it is evident that another suit was filed by the Appellant
praying for permanent injunction with reference to the same property referring to MoU
dated 31.08.1998. The pleadings in the aforesaid suit were replied to by Respondent
No. 1 stating that the earlier suit No. 111 of 2009 pertaining to the same property and
claiming the same relief was already pending between the parties. An application Under
Order VII Rule 11(d) Code of Civil Procedure was also filed pleading the same. It was
further pleaded that the suit was barred by Section 41(h) of the Specific Relief Act,
1963. Vide two orders of even date i.e., 06.10.2009 (in Suit No. 111 of 2009 and Suit
No. 269 of 2009) the cases were dismissed as the counsel for the Plaintiff therein had
failed to appear.
15. The order passed by this Court has been placed on record, in terms of which the
share of family members of Respondent No. 1 in the property in dispute was finally
decided on 16.12.2015. Notice dated 14.09.2016 was issued by the Appellant to
Respondent No. 1 calling upon him to get the sale deed of the property in question
registered in favour of the Appellant. It referred to MoU executed on 15.04.1998,
01.09.1998 and also agreement dated 02.09.1998. This was replied to by Respondent
No. 1 stating that there was no valid registered agreement to sell executed between the
parties. Vide letter dated 22.03.2001, the Appellant had backed out from the deal and
sought refund of the earnest money which Respondent No. 1 was ready and willing to
give. Two suits filed earlier by the Appellant were dismissed. Another notice was issued
by the Appellant to Respondent No. 1 on 27.12.2016 and 10.03.2017 calling upon him
to get the sale deed registered. The Civil Suit was filed in August 2017 by the Appellant
for specific performance on the basis of MoU dated 31.08.1998. It is in the aforesaid
suit that Respondent No. 1 by filing the written statement and also filed his counter
claim. It was specifically pleaded that the Appellant had already withdrawn an earlier
agreement and issued a notice in that regard to Respondent No. 1 on 22.03.2001
seeking refund of the earnest money. The written statement also referred to two suits
filed by the Appellant for injunction. It was claimed that the present suit was barred
Under Order II Rule 2 Code of Civil Procedure Along with the written statement, an
application was filed Under Order VII Rule 11(d) Code of Civil Procedure for rejection of
the plaint. The Trial Court, vide order dated 12.02.2020 dismissed the application. The
High Court in the revision filed by Respondent No. 1, vide order dated 14.07.2021
upheld the order passed by the Trial Court. The review application was filed by
Respondent No. 1 which was allowed vide order dated 29.7.2021.
16. It was not disputed at the time of hearing that pleadings in the earlier suits or
documents which are sought to be referred to by Respondent No. 1, i.e., MoU dated
15.04.1998 and the agreement dated 02.09.1998 are not part of the record before the
Trial Court.
17. In Kamala and Ors. v. K.T. Eshwara Sa and Ors. MANU/SC/7542/2008 : (2008) 12
SCC 661 this Court opined that for invoking Clause (d) of Order VII Rule 11 Code of
Civil Procedure, only the averments in the plaint would be relevant. For this purpose,
there cannot be any addition or subtraction. No amount of evidence can be looked into.
The issue on merits of the matter would not be within the realm of the Court at that
stage. The Court at that stage would not consider any evidence or enter a disputed
question of fact of law. Relevant paragraphs thereof are extracted below:
21. Order 7 Rule 11(d) of the Code has limited application. It must be shown
that the suit is barred under any law. Such a conclusion must be drawn from
the averments made in the plaint. Different clauses in Order 7 Rule 11, in our
opinion, should not be mixed up. Whereas in a given case, an application for
rejection of the plaint may be filed on more than one ground specified in
various sub-clauses thereof, a clear finding to that effect must be arrived at.
What would be relevant for invoking Clause (d) of Order 7 Rule 11 of the Code
are the averments made in the plaint. For that purpose, there cannot be any
addition or subtraction. Absence of jurisdiction on the part of a court can be
invoked at different stages and under different provisions of the Code. Order 7
Rule 11 of the Code is one, Order 14 Rule 2 is another.
22. For the purpose of invoking Order 7 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 provision.
23. The principles of res judicata, 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.
24. 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.
25. The decisions 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
therefrom is that the court at that stage would not consider any evidence or
enter into a disputed question of fact or 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 rejection of plaint should be entertained.
(emphasis supplied)
18. Similar was the view expressed in Shakti Bhog Food Industries Ltd. v. Central Bank
of India and Anr. MANU/SC/0468/2020 : 2020:INSC:413 : (2020) 17 SCC 260 and
Srihari Hanumandas Totala v. Hemant Vithal Kamat and Ors. MANU/SC/0513/2021 :
2021:INSC:387 : (2021) 9 SCC 99.
19. The law applicable for deciding an application Under Order VII Rule 11 Code of
Civil Procedure was summed up by this Court in Dahiben v. Arvindbhai Kalyanji
Bhanusali (Gajra) dead through legal representatives and Ors. MANU/SC/0508/2020 :
2020:INSC:450 : (2020) 7 SCC 366. Relevant parts of paragraph 23 thereof are
extracted below:
23 to 23.1 x x x
23.2. The remedy Under Order 7 Rule 11 is an independent and special
remedy, wherein the court is empowered to summarily dismiss a suit at the
threshold, without proceeding to record evidence, and conducting a trial, on the
basis of the evidence adduced, if it is satisfied that the action should be
terminated on any of the grounds contained in this provision.
23.3. The underlying object of Order 7 Rule 11(a) is that if in a suit, no cause
of action is disclosed, or the suit is barred by limitation Under Rule 11(d), the
court would not permit the Plaintiff to unnecessarily protract the proceedings in
the suit. In such a case, it would be necessary to put an end to the sham
litigation, so that further judicial time is not wasted.
23.4. In Azhar Hussain v. Rajiv Gandhi MANU/SC/0284/1986 : 1986 Supp
SCC 315, this Court held that the whole purpose of conferment of powers under
this provision is to ensure that a litigation which is meaningless, and bound to
prove abortive, should not be permitted to waste judicial time of the court, in
the following words:
12. ... The whole purpose of conferment of such powers is to ensure
that a litigation which is meaningless, and bound to prove abortive
should not be permitted to occupy the time of the court, and exercise
the mind of the Respondent. The sword of Damocles need not be kept
hanging over his head unnecessarily without point or purpose. Even in
an ordinary civil litigation, the court readily exercises the power to
reject a plaint, if it does not disclose any cause of action.
23.5. The power conferred on the court to terminate a civil action is, however,
a drastic one, and the conditions enumerated in Order 7 Rule 11 are required to
be strictly adhered to.
23.6. Under Order 7 Rule 11, a duty is cast on the court to determine whether
the plaint discloses a cause of action by scrutinising the averments in the plaint
[Liverpool & London S.P. & I Assn. Ltd. v. M.V. Sea Success I,
MANU/SC/0951/2003 : (2004) 9 SCC 512], read in conjunction with the
documents relied upon, or whether the suit is barred by any law.
xx xx xx
23.9. In exercise of power under this provision, the court would determine if the
assertions made in the plaint are contrary to statutory law, or judicial dicta, for deciding
whether a case for rejecting the plaint at the threshold is made out.
23.10. At this stage, the pleas taken by the Defendant in the written statement and
application for rejection of the plaint on the merits, would be irrelevant, and cannot be
adverted to, or taken into consideration. [Sopan Sukhdeo Sable v. Charity Commr.,
MANU/SC/0071/2004 : (2004) 3 SCC 137]
23.11. The test for exercising the power Under Order 7 Rule 11 is that if the averments
made in the plaint are taken in entirety, in conjunction with the documents relied upon,
would the same result in a decree being passed. This test was laid down in Liverpool &
London S.P. & I Assn. Ltd. v. M.V. Sea Success I [Liverpool & London S.P. & I Assn.
Ltd. v. M.V. Sea Success I, MANU/SC/0951/2003 : (2004) 9 SCC 512] which reads as:
(SCC p. 562, para 139)
1 3 9 . Whether a plaint discloses a cause of action or not is essentially a
question of fact. But whether it does or does not must be found out from
reading the plaint itself. For the said purpose, the averments made in the plaint
in their entirety must be held to be correct. The test is as to whether if the
averments made in the plaint are taken to be correct in their entirety, a decree
would be passed.
23.12. In Hardesh Ores (P) Ltd. v. Hede & Co. [Hardesh Ores (P) Ltd. v. Hede & Co.,
MANU/SC/7671/2007 : (2007) 5 SCC 614] the Court further held that it is not
permissible to cull out a sentence or a passage, and to read it in isolation. It is the
substance, and not merely the form, which has to be looked into. The plaint has to be
construed as it stands, without addition or subtraction of words. If the allegations in the
plaint prima facie show a cause of action, the court cannot embark upon an enquiry
whether the allegations are true in fact. D. Ramachandran v. R.V. Janakiraman,
MANU/SC/0154/1999 : (1999) 3 SCC 267; See also Vijay Pratap Singh v. Dukh Haran
Nath Singh MANU/SC/0394/1962 : AIR 1962 SC 941].
23.13. If on a meaningful reading of the plaint, it is found that the suit is manifestly
vexatious and without any merit, and does not disclose a right to sue, the court would
be justified in exercising the power Under Order 7 Rule 11 Code of Civil Procedure.
23.14. The power Under Order 7 Rule 11 Code of Civil Procedure may be exercised by
the court at any stage of the suit, either before registering the plaint, or after issuing
summons to the Defendant, or before conclusion of the trial, as held by this Court in the
judgment of Saleem Bhai v. State of Maharashtra, MANU/SC/1185/2002 : (2003) 1
SCC 557. The plea that once issues are framed, the matter must necessarily go to trial
was repelled by this Court in Azhar Hussain v. Rajiv Gandhi, MANU/SC/0284/1986 :
1986 Supp SCC 315. Followed in Manvendrasinhji Ranjitsinhji Jadeja v. Vijaykunverba,
MANU/GJ/0786/1998 : (1998) 2 GLH 823.
23.15. The provision of Order 7 Rule 11 is mandatory in nature. It states that the plaint
"shall" be rejected if any of the grounds specified in Clauses (a) to (e) are made out. If
the court finds that the plaint does not disclose a cause of action, or that the suit is
barred by any law, the court has no option, but to reject the plaint.
2 0 . The same view was reiterated in Kum. Geetha v. Nanjundaswamy and Ors.
MANU/SC/1199/2023 : 2023:INSC:964.
2 1 . The facts in Inbasegaran's case (supra) are similar to the case in hand. In the
above case, initially a suit for injunction was filed by the vendee restraining the vendor
from interfering with the possession and enjoyment of the property. It was pleaded that
in pursuance of the agreement, the vendee was delivered possession of the property.
Subsequently, suit was filed seeking decree for specific performance of agreement to
sell. This Court found that cause of action in both the suits were different, hence the
subsequent suit was not held to be barred in terms of Order II Rule 2 Code of Civil
Procedure.
22. The judgment of this Court in Vurimi Pullarao's case (supra), relied upon by learned
Counsel for the Respondent is distinguishable as in that case the cause of action to pray
for relief of specific performance had arisen at the stage when the suit for injunction
was filed, however, the relief was not claimed. To notice certain dates, agreement to
sell was executed on 26.10.1995; the time for completion of sale deed was upto
25.10.1996; notice for specific performance was issued on 13.10.1996 which was
replied to by the vendor therein on 13.10.1996 denying execution of sale deed; the suit
for injunction was filed on 30.10.1998 pleading that the Plaintiff is going to file a suit
for specific performance of agreement to sell. Hence at the time of filing of the suit for
injunction on 30.10.1996, the cause of action for seeking specific performance of
agreement to sell had arisen. The relief, which was due to the Plaintiff therein, when the
suit for injunction was filed was omitted without leave of the Court, hence, barred
Under Order II Rule 2(3) Code of Civil Procedure was attracted.
23. If the facts of the case are examined in the light of settled position of law, in our
opinion, the order passed by the High Court in review application cannot be legally
sustained. The suit for specific performance was filed by the Appellant on the basis of
MoU dated 31.08.1998. In terms of the clauses in the agreement, it was pleaded that
there was dispute pending amongst the family members of the vendor. After the same is
decided and right of the vendor is crystallized, he will get the sale deed registered. The
rights of the vendor were finally crystallized when the issue was decided by this Court
in Shreya Vidyarthi's case (supra) on 16.12.1995. Suit for specific performance was
filed on 03.08.2017 stating that the Appellant-Plaintiff came to know about the disposal
of the litigation amongst the family members just before filing the suit. Earlier suit for
injunction was filed on 22.01.2009 pleading that the Appellant-vendee came to know
that the vendor was trying to create third party rights in the property while agreeing to
sell the same to same to some other parties. At that stage cause of act to file suit for
specific performance had not arisen.
24. The cause of action as contained in paragraph No. 9 of the plaint in question is
extracted below:
9 . That the cause of action for the present suit arose on 13.1.2009 when the
Plaintiff came to know that the Defendant is intending to sell the property to
others and in this connection, he is negotiating with the interested parties and
on coming to know about the said news, the Plaintiff made contact to the
Defendant and refrained the Defendant from transferring, selling or alienating
the property in suit in favour of any other person except to the Plaintiff as there
is an agreement in between the parties and the parties are bound by the said
agreement and the Plaintiff further said to the Defendant that the Plaintiff was
ever ready and willing to perform their part of contract and is still ready and
willing to perform their part of the contract and the Plaintiff are having money
of sale consideration to pay the same to the Defendant and to meet out the
registry expenses and they are ready to purchase the property at the price and
sale consideration, as may be mutually agreed between the parties but the
Defendant did not pay any heed on the Plaintiff's request and said to the
Plaintiff that he will sell the property to others for a high price and will not sell
the property to the Plaintiff and further given threat to the Plaintiff that he will
 execute the document in favour of others within a day or two and whatever
action the Plaintiff want to take, they are free to take and continues to every
day within the jurisdiction of this learned court and this learned court has got
jurisdiction to try the present suit.
25. The application for rejection of the plaint was filed by the Respondent claiming that
prior to MoU dated 31.8.1995 (registered on 01.09.1998), the MoU was entered into
between the parties on 15.04.1998 and subsequent to the aforesaid MoUs, an
agreement was executed on 02.09.1998. In the aforesaid agreement, it was clearly
mentioned that in case the litigation of the vendor regarding the property in question is
not decided after one year, the vendee will have the right to get his earnest money back
along with interest @ 18% per annum. In fact, the vendee had issued a notice on
22.03.2001 seeking refund of the earnest money. In the light of the aforesaid facts, the
suit for specific performance filed after dismissal of the suit for injunction was barred
under Order II Rule 2 Code of Civil Procedure and deserved to be rejected.
2 6 . However, the fact remains that all the aforesaid documents, referred to by the
Respondent in support of his plea for rejection of the plaint, cannot be considered at
this stage as these are not part of the record with the Court filed along with the plaint.
This is the stand taken by the Respondent-Defendant in the application filed Under
Order VII Rule 11 Code of Civil Procedure As noticed above, no amount of evidence or
merits of the controversy can be examined at the stage of decision of the application
Under Order VII Rule 11 Code of Civil Procedure Hence, in our view, the impugned
order of the High Court passed in the Review Application deserves to be set aside.
Ordered accordingly.
2 7 . The Trial Court shall proceed with the suit. However, if considered appropriate,
after pleadings are complete, the issue regarding maintainability of the suit can be
treated preliminary.
28. The appeal is allowed in the manner indicated above.

1 Order dated 27.09.2021.

2 High Court of Judicature at Allahabad
3 Review Application No. 192 of 2021
4 Civil Revision No. 28 of 2020
5 Civil Judge (Senior Division), Kanpur Nagar
6 Hereinafter referred to as 'MoU'
7 Original Suit No. 111 of 2009
8 Original Suit No. 751 of 2017
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