M/S. FROST INTERNATIONAL LTD. vs. M/S. MILAN DEVELOPERS AND BUILDERS (P) LTD.

Case Type: Civil Appeal

Date of Judgment: 01-04-2022

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Full Judgment Text

1 REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.1689 OF 2022 M/S FROST INTERNATIONAL LIMITED    APPELLANT(S) VERSUS M/S MILAN DEVELOPERS AND  BUILDERS (P) LIMITED & ANR.  RESPONDENT(S) J U D G M E N T NAGARATHNA J.  1. This appeal is preferred by defendant no.1 in C.S. No.1065 of 2009 filed before the Court of Civil Judge (Senior Division) th Bhubaneswar,   by   assailing   order   dated   19   January,   2016 passed by the High Court of Orissa at Cuttack in WP(C) No.7059 of 2013. By the said order, the application filed by the appellant herein/defendant no.1 under Order VII Rule 11 of the Code of Civil Procedure 1908 (for short, the ‘CPC’) has been ordered to be Signature Not Verified Digitally signed by R Natarajan Date: 2022.04.01 16:49:42 IST Reason: reconsidered   by   the   District   Court   at   Khurda,   Bhubaneswar (revisional court) by restoring C.R.P. No.5 of 2012 filed by the 2 defendant no.1 herein. The said revision was filed by defendant no.1 being aggrieved by the dismissal of the said application being C.S. No.1065 of 2009 by the trial court, namely, the Court of   Civil   Judge   (Senior   Division),   Bhubaneswar,   praying   for rejection of the plaint under Order VII Rule 11 of the CPC.    2. For the sake of convenience, the parties herein shall be referred to in terms of their rank and status before the trial court. 3. Briefly stated, the facts of the case are that, respondent no.1   herein/plaintiff   had   filed   a   suit   against   the   appellant herein/defendant no.1  and respondent  no.2 herein/defendant no.2 seeking the following reliefs:  “(i)   Let   it   be   declared   that   the   plaintiff   had handed over the cheque to Sri Dilip Das, Advocate as a security;   (ii) Let it be declared that the said cheque has been illegally handed over by the defendant no.2 to the defendant no.1 by violating term and   condition   of   the   memorandum   of understanding dated 17.01.2009;   (iii) Let it be declared that the plaintiff is not liable to give delivery of 3876 MT of iron ore fines to the defendant no.1 nor the cheque amount since the defendant no.1 has failed to save the plaintiff’s plot from cancellation; (iv) Let the cost of the suit be decreed in favour of the plaintiff and against the defendants; 3 (v) Let any other decree/decrees be passed in favour of the plaintiff to which the plaintiff is entitled to under law and equity.” 4. According   to   the   plaintiff,   which   is   a   Private   Limited Company, incorporated under the provisions of the Companies Act, 1956, it is engaged in the business of export of iron ore from Paradeep   Port   while   defendant   no.1   is   also   a   Company incorporated under the provisions of the Companies Act, 1956, having its registered office at Kanpur, Uttar Pradesh, and also having its Branch at Kolkata in West Bengal. Defendant no.1 carries on business at Paradeep Port, Orissa in supplying and exporting  iron ore from  the said Port  to  various destinations overseas.   That   plaintiff   had   a   plot   namely   Plot   No.RS­4   on licence from Paradeep Port Trust Authority for the purpose of its export business in iron ore. That defendant no.1 and the plaintiff th had entered into a Cooperation Agreement on 24   December, 2007 but according to the plaintiff, the same was not given effect to. That defendant no.1, through its Managing Director Sunil Banna,   tried   to   blackmail   the   plaintiff   in   various   ways   and threatened   him   that   he   would   intimate   Paradeep   Port   Trust Authority that the plaintiff had sub­let his licence in respect of Plot   No.RS­4   to   defendant   no.1   by   violating   the   terms   and conditions of licence.  4 According to the plaintiff, defendant no.1 in January 2009 stated that plaintiff had illegally exported stock of 4000 MT of iron ore and when the plaintiff through its Managing Director refuted the claim of defendant no.1, a complaint was lodged at th Paradeep Police Station on 8  January, 2009 and thereafter, on th 10   January,   2009   alleging   theft   of   4000   MT   iron   ore   fines belonging to defendant no.1.  According to the plaintiff, defendant no.1 lodged another false complaint with the Paradeep Port Trust Authority to the effect that the plaintiff was violating the terms and conditions of his licence in respect of Plot No.RS­4 which had been sub­let to defendant no.1 and a copy of the Cooperation Agreement dated th 24  December, 2007 which was in fact not acted upon was also filed   along   with   complaint.   Acting   on   the   said   complaint, Paradeep Port Trust Authority had issued show cause notice to th the plaintiff on 20  January, 2009 and thereafter, cancelled the th licence of the plaintiff  vis­à­vis  Plot No.RS­4 by letter dated 18 February, 2009.  5. Being apprehensive of the cancellation of the licence to Plot No.RS­4, the Managing Director of the plaintiff Company agreed to   the   proposal   of   the   representative   of   defendant   no.1   viz. , Rabindra Banthia, that in case plaintiff agreed to supply 3876 5 MT of iron ore fines to defendant no.1, they would manage to withdraw their complaint and would save the licence of the plot from cancellation.  6. That in January, 2009, plaintiff had outstanding dues of Rs.21.50   lakhs   against   defendant   no.1   and   at   the   behest   of defendant   no.2,   a   Memorandum   of   Understanding   (for   short, th ‘MoU’) was arrived at on 17   January, 2009 on certain terms and conditions that defendant no.1 would take steps to protect the licence of the plot given to the plaintiff from cancellation in seven days’ time and it was further agreed that defendant no.1 would give a cheque of Rs.21.50 lakhs to the plaintiff towards the   outstanding   dues   to   the   plaintiff.   Similarly,   the   plaintiff would issue a cheque for Rs.56 lakhs in favour of defendant no.1 and the same would remain in the custody of Sri Dilip Das, Advocate ­ defendant no.2 as security, which is equivalent to the cost of 3876 MT of iron ore. The plaintiff would supply 3786 MT of iron ore fines to defendant no.1 if defendant no.1 succeeded in protecting the licence of the said plot of the plaintiff from being cancelled.   Accordingly,  plaintiff  furnished  a  cheque  for  Rs.56 lakhs in favour of defendant no.1 and handed over the same to Sri Dilip Das, Advocate ­ defendant no.2 in the suit, as security. Defendant no.2 wrote a letter to the Managing Director of the 6 th plaintiff   on   20   January,   2009   intimating   therein   that   both cheques would be in his custody and the cheque drawn by the plaintiff amounting to Rs.56 lakhs would not be handed over to defendant no.1 unless defendant no.1 fulfilled its undertaking as th per  the   MoU  dated  17   January,  2009.   Further,   the  cheque would be handed over to defendant no.1 only when the plot licence of the plaintiff was saved from cancellation by defendant no.1 and if the plaintiff failed to supply the iron ore to defendant no.1.  7. According to the plaintiff, defendant no.1 did not take any step   to   save   the   licence   of   the   plot   of   the   plaintiff   from cancellation and the licence was cancelled on the complaint of th defendant   no.1   by   letter   dated   18   February,   2009   by   the Paradeep Port Trust Authority. According to the plaintiff, the question   of   handing   over   the   cheque   to   defendant   no.1   by defendant no.2 did not arise at all. Plaintiff had approached the High Court in a writ petition   vis­à­vis   the cancellation of the licence   in   respect   of   the   plot   and   an   order   of   stay   on   the cancellation was granted.  It is the   further case of the plaintiff that when the matter stood thus, defendants no.1 and 2 colluded with each other and defendant   no.2   committed   breach   of   trust   and   betrayed   the 7 plaintiff   as   the   cheque   for   Rs.56   lakhs   was   handed   over   by defendant no.2  to  defendant   no.1.  On  receipt  of the  cheque, defendant no.1 pressurized the plaintiff to either supply 3876 MT   iron   ore   fines   or   they   would   present   the   cheque   for encashment. Since the plaintiff did not agree to supply iron ore, defendant no.1 presented the cheque for encashment but the same was dishonoured as the plaintiff had issued stop payment instructions to the Bank on coming to know about the collusion between   defendant   no.1   and   defendant   no.2.   Thereafter, defendant no.1 issued notice under Section 138 of the Negotiable Instruments Act, 1881 (for short, the ‘N.I. Act’) through their th advocate   on   10   June,   2009   to   the   plaintiff   through   its rd Managing  Director, to  which a  reply was sent  on  23   June, 2009. It was,  inter alia,  stated in the reply that the defendants were   trying   to   harass   the   plaintiff   and   having   no   other alternative, the plaintiff filed the suit seeking a declaration that the   cheque   which   was   dishonoured   was   handed  over   by  the plaintiff to defendant no.2 as a security and that defendant no.1 had not acquired any right over the said cheque as the plaintiff had   no   liability  to   discharge   vis­à­vis   defendant   no.1.   It   was averred in the plaint that defendant no.1 was liable to pay a sum of Rs.21.50 lakhs to the plaintiff towards its outstanding dues 8 th for which a cheque was issued on 17  January, 2009 which was also   kept   with   defendant   no.2   and   in   respect   of   which   the plaintiff reserved its right to initiate appropriate proceeding for recovery of the said amount from defendant no.1. There were further correspondences between the parties and ultimately the aforementioned   suit   was   filed   by   the   plaintiff   against   the defendants.  8. On   receipt   of   the   summons   sent   by   the   trial   court, defendant no.1 appeared and filed an application under Order VII Rule 11 of CPC seeking rejection of the plaint on the ground that   the   suit   was   not   maintainable   being   barred   under   the provisions of the Specific Relief Act, 1963 (for short, the ‘SR Act’) and   secondly,   the   suit   was   frivolous   and   instituted   as   a subterfuge   to   defeat   the   legitimate   claim   of   defendant   no.1 without having any right to sue. Objection was filed to the said application by the plaintiff. The said application was considered by the trial court and dismissed by refusing to reject the plaint.  9. Being aggrieved, defendant no.1 preferred C.R.P. No.5 of 2012 before the Court of District Judge, Khurda at Bhubaneswar th under Section 115 of the CPC. By order dated 20  March, 2013, the revisional court allowed the said revision petition, set aside the order of the trial court refusing to reject the plaint, and 9 rejected the plaint. Being aggrieved, the plaintiff filed W.P.(C) No.7059 of 2013 before the High Court of Orissa at Cuttack which set aside the order of the revisional court and remanded the matter to the said court for fresh consideration by holding that the revisional court had exceeded its jurisdiction in rejecting the plaint. Being dissatisfied with the order of the High Court defendant no.1 has preferred this appeal.  10. We have heard Mrs. Rajdipa Behura, learned counsel for the appellant and Sri Anirudh Sanganeria, learned counsel for the respondents and perused the material on record.  11. Learned counsel for the appellant submitted that the High Court was not right in setting aside the order passed by the revisional court and remanding the matter to the said court for reconsideration of the application filed by the appellant under Order VII Rule 11 of CPC on the premise that revisional court had   exceeded   its   jurisdiction.   It   was   contended   that   the application under Order VII Rule 11 of the CPC was filed by the appellant/defendant   no.1   in   the   suit   filed   by   respondent no.1/plaintiff seeking rejection of the plaint on the ground that the prayers sought in the suit could not have been granted and the suit as such was not maintainable and was barred under the provision of Section 41 of the SR Act. Further there was no 10 cause   of   action   for   the   plaintiff   to   file   the   suit   against   the defendants. The trial court did not appreciate the reasons as to why an application was filed by defendant no.1 seeking rejection of   the   plaint   and   dismissed   the   same.   Being   aggrieved   the appellant/defendant no.1 filed revision petition in C.R.P. No.5 of 2012 before the District Court having regard to Section 115 of the CPC and particularly proviso thereto as, if the application filed by defendant no.1 under Order VII Rule 11 of CPC was to be allowed by the revisional court, then, the proceedings before the trial   court   would   conclude.   The   revisional   court   rightly appreciated the case of appellant herein and rejected the plaint. However, the High Court on a writ petition filed by the plaintiff held   that   the   revisional   court   while   exercising   its   power   of revision   had   exceeded   its   jurisdiction   by   rejecting   the   plaint instead of remanding the matter to the trial court to do so. While adverting to Section 115 of the CPC [ vide  Orissa Act 26 of 1991, th Section 2 (w.e.f. 7   November, 1991)], learned counsel for the appellant contended that when the trial court failed to exercise jurisdiction   vested   in   it   and   refused   to   reject   the   plaint   by allowing the application filed under Order VII Rule 11 of the CPC by the appellant herein, the revisional court rightly allowed the said revision and rejected the plaint which finally disposed of the 11 suit in terms of the second proviso to the said Section. It was contended that the High Court has not taken into consideration the Orissa amendment and has further misconstrued the object and import of Section 115 of the CPC  vis­à­vis  the provisions of the revisional court and has erroneously set aside the order of the   revisional   court   rejecting   the   plaint   and   remanding   the matter to the revisional court for fresh consideration.  12. Drawing our attention to the order of the High Court, it was contended that the said order is contrary to Section 115 of CPC (Orissa amendment) and hence the impugned order may be set   aside   and   the   order   of   the   revisional   authority   may   be restored. It was contended by learned counsel for the appellant that as against the order of the revisional authority rejecting the plaint, respondent no.1 herein/plaintiff could not have filed a writ petition.  13. Per contra, learned counsel for respondent no.1/plaintiff supported the impugned order passed by the High Court and contended   that   when   a   plaint   is   rejected   by   allowing   an application filed under Order VII Rule 11 of CPC, it results in a decree being passed within the meaning of Section 2(2) of the CPC and hence the High Court directed the revisional court to consider   the   matter   afresh   and   if   necessary,   to   remand   the 12 matter to the trial court for considering the aspect regarding rejection of plaint. Learned counsel for respondent no.1/plaintiff contended that there is no merit in this appeal and the same may be dismissed.  14. Having heard learned counsel for the respective parties the following points would arise for our consideration:  (a) Whether the High Court was justified in setting aside the order passed by the revisional court in C.R.P. No.5 of 2012 and thereby remanding the matter to the said court for reconsideration on the premise that the revisional court had exceeded its jurisdiction in rejecting the plaint? (b) What order? The reliefs sought by the plaintiff in the suit have been extracted above.  15. Having regard to the averments in the plaint summarised above   and   the   reliefs   sought   in   the   plaint,   defendant no.1/appellant herein filed an application under Order VII and Rule 11 of CPC seeking rejection of the plaint. The rejection of the plaint was sought for three reasons :­ firstly, the suit was barred under the provisions of the SR Act; secondly, the suit was frivolous and was filed as a subterfuge to defeat the legitimate 13 claim   of   defendant   no.1;   and   thirdly,   the   suit   has   been deliberately   undervalued.   Objections   were   filed   to   the   said th application of defendant no.1. By order dated 19   May, 2012, the trial court dismissed the said application. Being aggrieved, defendant   no.1   filed   C.R.P.   No.5   of   2012   under   Section   115 (Orissa amendment).  16. The revisional court considered the revision and allowed the application filed under Order VII Rule 11 of CPC which had the effect of finally disposing of the suit. It is against the said order that the plaintiff filed the writ petition before the High Court which was allowed and the matter was remanded to the revisional court for fresh consideration with an observation that the revisional court may, in turn, remand the matter to the trial court if necessary. This was on the premise that the revisional court had exceeded the jurisdiction vested in it by acting illegally in allowing the application filed under Order VII Rule 11 of CPC.  17. In order to consider the correctness of the impugned order passed by the High Court, it would be useful to refer to Section 115 of the CPC as well as the Orissa Amendment. For immediate reference, the same are extracted as under:  “115. Revision  — (1) The High Court may call for   the   record   of   any   case   which   has   been decided by any Court subordinate to such High 14 Court and in which no appeal lies thereto, and if such subordinate Court appears—  (a) to have exercised a jurisdiction not vested in it by law, or (b) to have failed to exercise a jurisdiction so vested, or  (c) to have acted in the exercise of its jurisdiction illegally or with material irregularity, the High Court may make such order in the case as it thinks fit:  Provided that the High Court shall not, under this Section, vary or reverse any order made, or any order deciding an issue, in the course of a suit or other proceeding, except where the order, if   it   had   been   made   in   favour   of   the   party applying for revision would have finally disposed of the suit or other proceedings. (2) The High Court shall not, under this Section, vary   or   reverse   any   decree   or   order   against which an appeal lies either to the High Court or to any Court subordinate thereto.  (3) A revision shall not operate as a stay of suit or   other   proceeding   before   the   Court   except where such suit or other proceeding is stayed by the High Court. Explanation.—In   this   Section,   the   expression “any case which has been decided” includes any order made, or any order deciding an issue in the course of a suit or other proceeding.” ORISSA AMENDMENT “115.   Revision  ­   The   High   Court,   in   cases arising out of original suits or other proceedings of the value exceeding one lakh rupees, and the District   Court,   in   any   other   case   including   a case   arising   out   of   an   original   suit   or   other proceedings   instituted   before   the commencement of the Code of Civil Procedure (Orissa Amendment) Act, 1991 may call for the 15
record of any case which has been decided by<br>any Court subordinate to the High Court or the<br>District Court, as the case may be, and in which<br>no appeal lies thereto, and if such Subordinate<br>Court appears ­
(a) to have exercised a jurisdiction not vested in<br>it by law; or
(b) to have failed to exercise a jurisdiction so<br>vested; or
(c) to have acted in the exercise of its jurisdiction<br>illegally or with material irregularity;
the High Court or the District Court, as the case<br>may be, may make such order in the case as it<br>thinks fit;
Provided that in respect of cases arising out of<br>original suits or other proceedings of any<br>valuation decided by the District Court, the High<br>Court alone shall be competent to make an<br>order under this Section;
Provided further that the High Court or the<br>District Court shall not, under this Section, vary<br>or reverse any order, including an order deciding<br>an issue, made in the course of a suit or other<br>proceedings, except where ­
(i) the order, if so varied or reversed<br>would finally dispose of the suit or<br>other proceedings; or
(ii) the order, if allowed to stand,<br>would occasion a failure of justice or<br>cause irreparable injury to the party<br>against whom it was made.
Explanation ­ In this Section, the expression<br>'any case which has been decided' includes any<br>order deciding an issue in the course of a suit or<br>other proceeding".”
18. On a perusal of the same it is noted that the Orissa amendment differs from the main Section 115 of CPC in the following ways: 16 (i) Firstly, the main Section 115 deals with revisional powers of   the   High   Court   only,   whereas,   Section   115   of   CPC (Orissa amendment) confers the power of revision not only on the High Court but also on the District Court which may call for the record of any case which has been decided by any court subordinate to the High Court or the District Court, as the case may be, and in which no appeal lies thereto, if such subordinate court appears ­ (a) to have exercised a jurisdiction not vested in it by law; or (b) to have failed to exercise a jurisdiction, so vested; or (c) to have acted in the exercise of its jurisdiction illegally or with material irregularity. In such a case, the High Court or the District Court, as the case may be, may make such order in the case as it thinks fit.  (ii) Secondly,   sub­section   (2)   of   Section   115   of   the   main provision, states that the High Court shall not, under the said Section, vary or reverse any decree or order against which an appeal lies either to the High Court or to any Court subordinate thereto. But under the second proviso to Section 115 of CPC (Orissa amendment), the High Court or the District Court shall not under the said Section, vary or reverse any order, including an order deciding an issue, 17 made in the course of a suit or other proceeding, except where – (i) the order, if so varied or reversed would finally dispose of the suit or other proceedings; or  (ii) the order, if allowed to stand, would occasion a failure of justice or cause irreparable injury to the party against whom it was made.  Thus, the first proviso to main Section 115 of CPC restricts the revisional power of the High Court inasmuch as a revision is maintainable only if it is filed by a party who is aggrieved by an order passed by the court subordinate to the High Court on an order deciding an issue which, had it been made in favour of the party applying for revision, would have finally disposed of the suit   or   other   proceeding.   But   as   per   the   second   proviso   to Section 115 of CPC (Orissa amendment), the High Court or the District Court, as the case may be, under the said Section can vary or reverse any order including an order deciding an issue, made in the course of a suit or other proceeding only if the order if so varied or reversed would finally dispose of the suit or other proceeding or the order if allowed to stand would occasion a failure of justice or cause irreparable injury to the party against whom it was made. In other words, under Orissa amendment to Section 115 of CPC, an express power is conferred on the High 18 Court   or   the   District   Court,   as   the   case   may   be,   being   the revisional   courts,   to   vary   or   reverse   an   order   of   the   court subordinate thereto only when it would finally dispose of the suit or other proceedings or if the impugned order is allowed to stand would occasion a failure of justice or cause irreparable injury to the party against whom it was made.  19.  It would also be pertinent to mention that the instant suit was filed in the year 2009 and therefore the Orissa amendment to Section 115 CPC   Orissa Act 26 of 1991, Section 2, would vide be applicable.  However, by Orissa Act 14 of 2010, Sub­Section 2,   Section   115   was   amended   by   the   Orissa   Legislature   and second   proviso   to   Section   115   has   been   amended   and   Sub­ Section 2 of Section 115 has been added which states that the High Court or District Court, as the case may be, shall not under this Section, vary or reverse any order including an order deciding   an   issue,   made   in   the   course   of   a   suit   or   other proceeding, except where the order, if it has been made in favour of the party applying for revision, would finally dispose the suit or other proceeding.  20.  Further, clause 1 of the second proviso of Section 115 has been omitted by the amendment made in the year 2010 and Sub­Section   3   has   been   added.   This   provision   states   that   a 19 revision shall not operate as a stay of suit or other proceeding before the Court except where such suit or other proceeding is stayed by the High Court or District Court, as the case may be. Sub­Section 1 of Section 115 is in  pari materia  with the Orissa Amendment   of   1991   except   its   reference   to   the   Orissa Amendment Act of 2010. For immediate reference, Section 115 of   the   CPC   as   per   the   2010   amendment   made   (Orissa Amendment) is extracted as under:
“Amendment of Section 115. ­In the Code of
Civil Procedure, 1908 (5 of 1908), for Section
115, the following Section shall be substituted,
namely:­­
115. Revision.­­(1) The High Court, in cases
arising out of original suits or other proceedings
of the value exceeding five lakhs rupees and the
District Court, in any other cases, including a
case arising out of an original suit or other
proceedings instituted before the
commencement of the Code of Civil Procedure
( Orissa Amendment) Act, 2010, may call for the
record of any case which has been decided by
any Court subordinate to the High Court or the
District Court, as the case may be, and in which
no appeal lies thereto, and if such subordinate
Court appears­­
(a) to have exercised a jurisdiction not vested in
it by law; or
(b) to have failed to exercise a jurisdiction so
vested; or
(c) to have acted in the exercise of its jurisdiction
illegally or with material irregularity,
the High Court or the District Court, as the case
may be, may make such order in the case as it
thinks fit:
20
Provided that in respect of cases arising out of
original suits or other proceedings of any
valuation decided by the District Court, the High
Court alone shall be competent to make an
order under this Section
(2) The High Court or the District Court, as the
case may be, shall not under this Section, vary
or reverse any order, including an order deciding
an issue, made in the course of a suit or other
proceedings, except where the order, if it had
been made in favor of the party applying for
revision, would have finally disposed of the suit
or other proceedings.
(3) A revision shall not operate as a stay of suit
or other proceeding before the Court except
where such suit or other proceeding is stayed by
the High Court or District Court, as the case
may be.
Explanation­­In this Section, the expression,
"any case which has been decided" includes any
order deciding an issue in the course of a suit or
other proceeding.".
[Videthe Orissa Act 14 of 2010, s. 2]”
21. Therefore, we hold that the High Court was not right in observing that the revisional court had exceeded its jurisdiction and it could not have allowed the application filed under Order VII Rule 11 of CPC and thereby reversed the order of the trial court and finally disposed of the suit. In fact, the High Court has failed to appreciate the second proviso to Section 115 of CPC (Orissa amendment) in its true perspective. The revisional court, being the High Court or the District Court, as the case may be, can reverse an order which would finally dispose of the suit or other proceeding. That is exactly what has been done by the 21 revisional court being the District Court in the petition being C.R.P. No.5 of 2012.  22. Hence, we find that the High Court was not justified in setting aside the said order and remanding the matter to the revisional   court   (District   Court)   to   consider   afresh,   the application filed by defendant no.1/appellant herein under Order VII Rule 11 of CPC seeking rejection of the plaint. In fact, we would observe that exercise of jurisdiction by the revisional court in   the   instant   case   is   in   accordance   with   second   proviso   to Section 115 of CPC (Orissa amendment).  In this regard, we could also usefully refer to the following decisions: ­  (a) Gajendragadkar,   CJ.,   in   a   judgment   passed   by   the   five Judges   Bench   of   this   Court   in   Pandurang   Dhondi Chougule   and   Others   vs.   Maruti   Hari   Jadhav   and Others – [AIR 1966 SC 153]   dealt with the question of jurisdiction under Section 115 CPC, as follows:­
10.The provisions of Section 115 of the Code
have been examined by judicial decisions on
several occasions. While exercising its
jurisdiction under Section 115, it is not
competent to the High Court to correct errors of
fact however gross they may, or even errors of
law, unless the said errors have relation to the
jurisdiction of the court to try the dispute itself.
As clauses (a), (b) and (e) of Section 115
22
indicate, it is only in cases where the
subordinate court has exercised a jurisdiction
not vested in it by law, or has failed to exercise a
jurisdiction so vested, or has acted in the
exercise of its jurisdiction illegally or with
material irregularity that the revisional
jurisdiction of the High Court can be properly
invoked. It is conceivable that points of law may
arise in proceedings instituted before
subordinate courts which are related to
questions of jurisdiction. It is well settled that a
plea of limitation or a plea of res judicata is a
plea of law which concerns the jurisdiction of
the court which tries the proceedings. A finding
on these pleas in favour of the party raising
them would oust the jurisdiction of the court,
and so, an erroneous decision on these pleas
can be said to be concerned with questions of
jurisdiction which fall within the purview of
Section 115 of the Code. But an erroneous
decision on a question of law reached by the
subordinate court which has no relation to
questions of jurisdiction of that court, cannot be
corrected by the High Court under Section 115.”
(b) Nariman, J. while discussing Section 115 CPC and proviso thereto held that revision petitions filed under Section 115 CPC are not maintainable against interlocutory orders in the case of  Tek Singh vs. Shashi Verma and Another – [(2019)   16   SCC   678].   The   following   observations   were made in the said case:­  “6. Even   otherwise,   it   is   well   settled   that   the revisional jurisdiction under Section 115 CPC is to be  exercised to  correct  jurisdictional errors only.   This   is   well   settled.   In  DLF   Housing   & Construction   Co.   (P)   Ltd.  v.  Sarup   Singh  [ DLF Housing   &   Construction   Co.   (P)   Ltd.  v.  Sarup , (1969) 3 SCC 807 : (1970) 2 SCR 368] Singh this Court held: (SCC pp. 811­12, para 5) 23 “ 5 . The position thus seems to be firmly   established   that   while exercising   the   jurisdiction   under Section 115, it is not competent to the High Court to correct errors of fact however gross or even errors of law   unless   the   said   errors   have relation   to   the   jurisdiction   of   the court   to   try   the   dispute   itself. Clauses ( a ) and ( b ) of this section on their plain reading quite clearly do not cover the present case. It was not contended, as indeed it was not possible to contend, that the learned Additional District Judge had either exercised a jurisdiction not vested in him by law or had failed to exercise a jurisdiction so vested in him, in recording   the   order   that   the proceedings   under   reference   be stayed till the decision of the appeal by   the   High   Court   in   the proceedings for specific performance of the agreement in question. Clause ( c ) also does not seem to apply to the   case   in   hand.   The   words “illegally”   and   “with   material irregularity” as used in this clause do not cover either errors of fact or of   law;   they   do   not   refer   to   the decision arrived at but merely to the manner in which it is reached. The errors contemplated by this clause may,   in   our   view,   relate   either   to breach of some provision of law or to material   defects   of   procedure affecting the ultimate decision, and not to errors either of fact or of law, after the prescribed formalities have been complied with.”  Therefore, in the instant case the High Court was not right in holding that the revisional court had no jurisdiction to reject the plaint filed under Order VII Rule 11 of CPC. The reasoning of 24 the High Court is contrary to the express proviso of Section 115 (Orissa Amendment). 23. No   doubt   rejection   of   a   plaint   is   a   decree   within   the meaning of Section 2(2) of CPC and an appeal lies from every decree passed by any court exercising original jurisdiction to the Court authorised to hear appeals from a decision of such court. However, it must be borne in mind that when a revisional court rejects a plaint, in substance, an application filed under Order VII Rule 11 is being allowed. Under such circumstances, the remedy   by   way   of   a   writ   petition   under   Article   227   of   the Constitution could be availed and respondent no.1/plaintiff has resorted to the said remedy in the instant case; although if the plaint had been rejected by the trial court i.e. court of original jurisdiction, it would have resulted in a right of appeal under Section 96 of CPC. 24. Having regard to the second proviso to Section 115 of CPC (Orissa   amendment),   a   revisional   court   while   allowing   the application   filed   under   Order   VII   Rule   11   of   CPC   would   in substance   reject   the   plaint   but   since   the   said   decree   is   not passed   by   the   court   of   original   jurisdiction,   namely   the   trial court, the remedy by way of writ petition under Article 227 of the 25 Constitution   would   be   available   to   the   aggrieved   party   and respondent no.1 has availed the said remedy.  25. Having   held   as   above,   we   now   proceed   to   consider, whether,  the  revisional   court  (District   Court)   was  justified  in allowing the application filed under Order VII Rule 11 of CPC and thereby rejecting the plaint filed by the plaintiff/respondent no.1 herein. Before proceeding further, it would be useful to refer to the following judgments of this Court in respect with Order VII Rule 11 CPC: a) In T. Arivandandam vs. T.V. Satyapal & Anr. – [(1977) this Court observed, in the following words, 4 SCC 467],   that while considering an application under Order VII Rule 11 CPC what is required to be decided is whether the plaint discloses   a   real   cause   of   action,   or   something   purely illusory:­  “5.   We   have   not   the   slightest   hesitation   in condemning the petitioner for the gross abuse of the   process   of   the   court   repeatedly   and unrepentently resorted to. From the statement of the   facts   found   in   the   judgment   of   the   High Court,   it   is   perfectly   plain   that   the   suit   now pending   before   the   First   Munsif's   Court, Bangalore, is a flagrant misuse of the mercies of the law in receiving plaints. The learned Munsif must remember that if on a meaningful — not formal — reading of the plaint it is manifestly vexatious,   and   meritless,   in   the   sense   of   not disclosing   a   clear   right   to   sue,   he   should exercise his power under Order 7, Rule 11 CPC taking care to see that the ground mentioned 26 therein   is   fulfilled.   And,   if   clever   drafting   has created the illusion of a cause of action, nip it in the bud at the first hearing by examining the party   searchingly   under   Order   10,   CPC.   An activist Judge is the answer to irresponsible law suits. The trial courts would insist imperatively on examining the party at the first hearing so that bogus litigation can be shot down at the earliest stage. The Penal Code is also resourceful enough to meet such men, (Cr. XI) and must be triggered against them. In this case, the learned Judge to his cost realised what George Bernard Shaw   remarked   on   the   assassination   of Mahatma   Gandhi:   “It   is   dangerous   to   be   too good.” b) In Azhar Hussain vs. Rajiv Gandhi – [1986 Supp SCC this Court discussed the very purpose of the power 315],  conferred under Order VII Rule 11 CPC by observing thus: ­ “12. The whole purpose of conferment of such power   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 if an ordinary civil   litigation,   the   Court   readily   exercises   the power to reject a plaint, if it does not disclose any cause of action.” c) In   Sopan   Sukhdeo   Sable   and   Ors.   vs.   Assistant Charity Commissioner and Others ­ [(2004) 3 SCC 137] , it   was   held   that   Rule   11   of   Order   VII   lays   down   an independent remedy made available to the defendant to 27 challenge the maintainability of the suit itself, irrespective of   his   right   to   contest   the   same   on   merits.   The   law ostensibly   does   not   contemplate   any   stage   when   the objections can be raised, and also does not say in express terms about the filing of a written statement. It was held that the word ‘shall’ is used to clearly imply that a duty is cast on the Court to perform its obligations in rejecting the plaint   when   the   same   is   hit   by   any   of   the   infirmities provided   in   the   four   clauses   of   Rule   11,   even   without intervention of the defendant. Elaborating on the aspect of cause of action by quoting  I.T.C Ltd. vs. Debts Recovery Appellate Tribunal and Ors. – [(1998) 2 SCC 70] , it was held that the basic question to be decided while dealing with an application filed under Order VII Rule 11 of the Code is whether a real cause of action has been set out in the plaint or something purely illusory has been stated with a view to get out of Order VII Rule 11 of the Code. d) This Court in  Liverpool & London S.P. & I Assn. Ltd. vs.  held that M.V. Sea Success I & Anr. ­ [(2004) 9 SCC 512] a   plaint   must   be   construed   as   it   stands   without   any amendments. The same is extracted herein as follows­  28 “ 139.   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 its entirety, a decree would be passed.”  e) We   could   allude   to   the   exposition   of   this   Court   in Madanuri Sri Rama Chandra Murthy vs. Syed Jalal – , wherein it was held as under:­ [(2017) 13 SCC 174] “7. …..The averments of the plaint have to be read   as   a   whole   to   find   out   whether   the averments disclose a cause of action or whether the suit is barred by any law. It is needless to observe that the question as to whether the suit is barred by any law, would always depend upon the facts and circumstances of each case. The averments in the written statement as well as the   contentions   of   the   defendant   are   wholly immaterial while considering the prayer of the defendant for rejection of the plaint. Even when, the allegations made in the plaint are taken to be correct as a whole on their face value, if they show that the suit is barred by any law, or do not disclose cause of action, the application for rejection of plaint can be entertained and the power under Order VII Rule 11 of CPC can be exercised.   If   clever   drafting   of   the   plaint   has created   the   illusion   of   a   cause   of   action,   the court will nip it in the bud at the earliest so that bogus litigation will end at the earlier stage. ” f) In   Dahiben vs. Arvindbhai Kalyanji Bhanusali (Gajra) Dead   through   Legal   Representatives   and   Others   – , Indu Malhotra, J., while dealing with [(2020) 7 SCC 366] an appeal against an order allowing rejection of a suit at 29 the   threshold,   had   an   occasion   to   consider   various precedents discussing the intent and purpose of Order VII Rule 11 CPC while setting out principles in relation to the same. It was held that the provision of Order VII Rule 11 is mandatory in nature and that the plaint “shall” be rejected if any of the grounds specified in clause (a) to (e) is 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. The relevant portion of the judgment is extracted as below:­ “23.1 X X X X X   23.2 The remedy under Order 7 Rule 11 CPC is an independent and special remedy wherein the court is empowered to summarily dismiss a suit at the threshold, without proceedings 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 VII 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,   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 30 prove abortive, should not be permitted to waste judicial time of the court. 23.5   The   power   conferred   on   the   court   to terminate  a  civil  action  is,  however,  a  drastic one, and the conditions enumerated in Order VII Rule 11 are required to be strictly adhered to. 23.6 Under Order VII Rule 11, a duty is cast on the   Court   to   determine   whether   the   plaint discloses a cause of action by scrutinizing the averments   in   the   plaint,   read   in   conjunction with the documents relied upon, or whether the suit is barred by any law. 23.7 X X X X X 23.8   Having   regard   to   Order   7   Rule   14,   the documents filed with the plaint, are required to be   taken   into   consideration   for   deciding   the application under Order 7 Rule 11(a). When a document  referred  to in  the  plaint,  forms  the basis of the plaint, it should be treated as a part of the plaint.  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.” g) In a recent judgment of  Rajendra Bajoria and Others vs. Hemant Kumar Jalan and Others ­ [2021 SCC Online SC 764] , this Court while elucidating on the underlying object of Order VII Rule 11 CPC and considering various precedents of this Court, held as under : ­ 31 “20. It could thus be seen that this Court has held that the power conferred on the court to terminate a civil action is a drastic one, and the conditions enumerated under Order VII Rule 11 of CPC are required to be strictly adhered to. However, under Order VII Rule 11 of CPC, the duty   is   cast   upon   the   court   to   determine whether the plaint discloses a cause of action, by scrutinizing the averments in the plaint, read in conjunction with the documents relied upon, or whether the suit is barred by any law. This Court   has   held   that   the   underlying   object   of Order VII Rule 11 of CPC is that when a plaint does not disclose a cause of action, the court would not permit the plaintiff to unnecessarily protract the proceedings. It has been held that in such a case, it will be necessary to put an end to  the  sham   litigation  so  that   further   judicial time is not wasted.” 26.  Relying on the case of  Hardesh Ores (P.) Ltd. vs. Hede & Co. – [(2007) 5 SCC 614] , it was 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.  Further delving upon the ratio in  D. Ramachandran vs. R.V. Janakiraman – [(1999) 3 SCC 367] , it was held that 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. 27.  It was further held that 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 32 would be justified in exercising the power under Order VII Rule 11   CPC.   Placing   reliance   on   Saleem   Bhai   vs.   State   of Maharashtra – [(2003) 1 SCC 557],  it was held that the power under Order VII Rule 11 CPC 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. 28.  On a reading of the plaint, in the instant case it is noted that it discloses a cause of action inasmuch as the MoU dated th 17   January,   2009,   entered   into   between   the   plaintiff   and defendant no.1 in the presence of defendant no.2 and the acts done pursuant to the said MoU is the basis for the grievance of the plaintiff. According to the plaintiff, a cheque for Rs. 56 lakhs was issued by him in favour of defendant no.1 and handed over to Sri Dilip Das, Advocate – defendant no.2 as security with an understanding that the said cheque will not be handed over by defendant no.2 to defendant no.1 unless defendant no.1 fulfils its undertaking and carries out the responsibility of saving the licence to plot No. RS­4, issued in favour of the plaintiff by the Paradeep Port Trust Authority, from being cancelled. As a result, the plaintiff would continue to remain as the licensee of the Paradeep Port Trust Authority  vis­a­vis  the said plot. According 33 to the plaintiff, defendant no.1 did not take any step to save licence of the plaintiff from cancellation and it was cancelled on the basis of the complaint made by defendant no.1   vide   letter th dated 18  February, 2009, by the Paradeep Port Trust Authority. Hence, the question of defendant no.2 handing over the cheque for   Rs.   56   lakhs   to   defendant   no.1   did   not   arise.   Further, plaintiff was pressurized to either supply 3876 MT of iron ore fines to defendant no.1 or else defendant no.1 would present the cheque for encashment. Since plaintiff did not agree to the illegal demand of defendant no.1, the cheque for Rs.56 lakhs which had been handed over by defendant no.2 to defendant no.1, was presented by defendant no.1 and it was dishonoured. According to the Plaintiff, defendant no.2 and defendant no.1 colluded with each other to make an illegal gain and defendant no.2 could not have handed over the cheque to defendant no.1. Hence, a letter was written to the Bank directing them to stop the payment of the cheque and the same was conveyed to the defendants. The said   cheque   was   dishonoured.   Defendant   no.1   issued   notice th under   Section   138   of   NI   Act   dated   10   June,   2009,   to   the plaintiff through its Managing Director, to which a reply was rd given on 23   June, 2009. According to the plaintiff, defendant no.1 owes the plaintiff Rs. 21.50 lakhs but the plaintiff does not 34 have to pay anything to defendant no.1. Hence, defendant no.1 is duty bound to return the cheque to the plaintiff but, on the other hand, the defendants are trying to harass the plaintiff by presenting the cheque and hence certain reliefs were sought in the suit. The relief of declaration was sought to the effect that the cheque handed over by the plaintiff to defendant no.2 was as a security; that the cheque had been illegally handed over by defendant no.2 to defendant no.1 in violation of the terms and th conditions of the MoU dated 17   January, 2009 and that the plaintiff is neither liable to deliver 3876 MT of iron ore fines to defendant no.1 nor to pay an amount of Rs. 56 lakhs since defendant no.1 had failed to save the licence of plaintiff’s plot from cancellation by the Paradeep Port Trust Authority. 29.  At   the   outset,   we   hold   that   on   perusal   of   the   plaint averments, the plaintiff has indeed made out a cause of action for filing the suit. In fact, in para 2 of the application filed under Order VII Rule 11 CPC, defendant no.1 has also encapsulated the averments made in the plaint. Therefore, on that score the plaint cannot be rejected.  30.  The other contention of defendant no.1 is that from the pleadings and averments in the plaint and the prayers sought therein, it appears that only certain declaratory reliefs have been 35 sought and further, consequential reliefs have been omitted to be prayed. Hence, the suit is barred under the provisions of the SR Act and is liable to be dismissed and the plaint is liable to be rejected under Order VII Rule 11 CPC.  31.  In the objections filed to the application under order VII Rule 11 CPC, it has been averred that the plaint averments would   clearly   show a  cause   of  action  for  filing   the  suit   and further that the suit is not barred by any  law. Further, the declaratory reliefs have been valued properly and appropriate court fee has been paid. Hence, the application is liable to be rejected.  Thus, the main thrust of the application seeking rejection of the plaint is that apart from the fact that the plaint does not disclose   a   cause   of   action   which   has   been   negated   by   the revisional   court   and   rightly   so,   plaintiff   has   sought   only declaratory reliefs and has not sought further or consequential reliefs.   In   the   circumstances,   the   suit   is   barred   under   the provisions of the SR Act.  Section 34 of the SR Act reads as under: “34.   Discretion   of   court   as   to   declaration   of status or right.—Any person entitled to any legal character, or to any right as to any property, may institute a suit against any person denying, 36
or interested to deny, his title to such character
or right, and the court may in its discretion
make therein a declaration that he is so entitled,
and the plaintiff need not in such suit ask for
any further relief:
Provided that no court shall make any such
declaration where the plaintiff, being able to
seek further relief than a mere declaration of
title, omits to do so.
Explanation.—A trustee of property is a “person
interested to deny” a title adverse to the title of
some one who is not in existence, and whom, if
in existence, he would be a trustee.”
The proviso to Section 34 states that no court can make any declaration where the plaintiff, being able to seek further relief than mere declaration of title, omits to do so. The said question   will   have   to   be   considered   at   the   time   of   final adjudication of the suit as the question of granting further relief or consequential relief would arise only if the court grants a declaration. If the plaintiff is unsuccessful in seeking the main relief of declaration, then, the question of granting any further relief would not arise at all. Therefore, omission on the part of the plaintiff in praying for further consequential relief, would become relevant only at the time of final adjudication of the suit. Hence, in view of the above, the plaint cannot be rejected at this stage by holding that the plaintiff has only sought declaratory reliefs and no further consequential reliefs.  37 32.  The other reason cited for rejection of the plaint is that the suit   is   an   attempt   on   the   part   of   the   plaintiff   to   deprive defendant   no.1   of   its   legitimate   dues.   In   other   words,   the plaintiff is seeking a declaration that the cheque for Rs. 56 lakhs issued   in   the   name   of   defendant   no.1   and   handed   over   to defendant no.2 in turn to be handed over to defendant no.1 at the appropriate time was only as a security. According to the plaintiff it was not liable to pay the cheque amount to defendant no.1 since defendant no.1 had not fulfilled its obligations under the terms of the MoU. The declaratory reliefs sought are worded as under:  “(i)   Let   it   be   declared   that   the   plaintiff   had handed over the cheque to Sri Dilip Das, Advocate as a security; (ii)  Let it be declared that the said cheque has been illegally handed over by the defendant no.2 to the defendant no.1 by violating term and   condition   of   the   memorandum   of understanding dated 17.01.2009; (iii)  Let it be declared that the plaintiff is not liable to give delivery of 3876 MT of iron ore fines to the defendant no.1 nor the cheque amount since the defendant no.1 has failed to   save   the   plaintiff’s   plot   from cancellation;” Hence, it is contended by defendant no.1 that the suit filed by the plaintiff is an attempt to frustrate the possibility of the defendant no.1 initiating action under the provisions of the N.I. 38 Act for the dishonour of cheque. In this regard, reference could be made to Sections 118 (a) and 138 of N.I. Act, which reads as under:
“118. Presumptions as to negotiable
instruments. —Until the contrary is proved, the
following presumptions shall be made:—
(a) of   consideration   —that   every   negotiable instrument   was   made   or   drawn   for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or   transferred,   was   accepted,   indorsed, negotiated or transferred for consideration; XXX  XXX  XXX 138. Dishonour of cheque for insufficiency, etc., of   funds   in   the   account.—Where   any   cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money   to   another   person   from   out   of   that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient   to   honour   the   cheque   or   that   it exceeds the amount arranged to be paid from that account by an agreement made with that bank,   such   person   shall   be   deemed   to   have committed   an   offence   and   shall,   without prejudice to any other provision of this Act, be punished with imprisonment for [a term which may   be   extended   to   two   years’],   or   with   fine which may extend to twice the amount of the cheque, or with both:  Provided   that   nothing   contained   in   this section shall apply unless—  (a) the cheque has been presented to the bank within a period of six months from the date on which   it   is   drawn  or   within   the   period   of   its validity, whichever is earlier;  39 (b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice; in writing, to the drawer of the cheque,   [within   thirty   days]   of   the   receipt   of information by him from the bank regarding the return of the cheque as unpaid; and  (c) the drawer of such cheque fails to make the payment  of the said amount of money  to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.  Explanation.—For the purposes of this section, “debt   of   other   liability”   means   a   legally enforceable debt or other liability.” 33. On   a   reading   of   the   same,   it   is   clear   that   there   is   a rebuttable   presumption   that   every   negotiable   instrument including a cheque was made or drawn for a consideration and every   such   instrument   when   it   has   been   accepted   is   for   a consideration.  34.  In   the   instant   case,   on   a   reading   paragraph   13   of   the plaint, it is evident that cheque issued had been dishonoured and defendant no.1 had issued notice under Section 138 of N.I. th Act on 10  June, 2009, to the plaintiff and its Managing Director rd replied to the same through their advocate on 23  June, 2009. Therefore, it is evident that the plaintiff by seeking the aforesaid reliefs is in substance frustrating the right of defendant no.1 to take  steps  under  the  provisions  of  N.I.  Act  for  releasing   the amount of cheque issued by the plaintiff to defendant no.1 for a 40 sum of Rs. 56 lakhs by filing a civil suit and/or by initiating a criminal   prosecution.   In   other   words,   by   seeking   such   a declaration that the cheque was issued as a security and that the   same   was   illegally   handed   over   by   defendant   no.2   to defendant no.1 in violation of the terms and conditions of the MoU, the plaintiff in substance is making an attempt to frustrate proceedings being initiated under Section 138 of the N.I. Act or for recovery of the amount by filing a civil suit.  35.  On a holistic reading of the plaint and on consideration of the reliefs sought by the plaintiff, we find that the said reliefs are barred by law inasmuch as no plaintiff can be permitted to seek relief   in   a   suit   which   would   frustrate   the   defendants   from initiating a prosecution against plaintiff or seeking any other remedy   available   in   law.   In   fact,   the   attempt   made   by   the plaintiff to seek such a declaratory relief is, in substance, to seek a   relief   of   injunction   against   the   defendants,   particularly defendant no.1, but framed it in the nature of a declaratory relief.  In  other  words,  the  plaintiff   has  sought   an  injunction against defendant no.1 from seeking remedies in law on account of the cheque issued by the plaintiff for a sum of Rs. 56 lakhs being dishonoured.  41 36.  We may refer to Sections 41 (b) and (d) of SR Act which are extracted as under: ­  “41. Injunction when refused. ­ xxx (b)    to   restrain   any   person   from instituting   or   prosecuting   any proceeding   in   a   Court   not subordinate to that from which the injunction is sought;   xxx xxx xxx (d)  to   restrain   any   person   from instituting   or   prosecuting   any proceeding in a criminal matter;” In the above context, following decisions are useful to be referred to:­  (a) In the case of  Cotton Corporation of India Limited vs.   United   Industrial   Bank   Limited   and   Ors.   ­ [(1983)   4   SCC   625] ,   this   Court   highlighted   the equitable   principle   underlying   Section   41   (b)   of   the : ­  Specific Relief Act, 1963 as under
8.It is, therefore, necessary to unravel the
underlying intendment of the provision
contained in Section 41(6). It must at once be
conceded that Section 41 deals with perpetual
injunction and it may as well be conceded that it
has nothing to do with interim or temporary
injunction which as provided by Section 37 are
dealt with by the Code of Civil Procedure. To
begin with, it can be said without fear of
contradiction that anyone having a right that is
a legally protected interest complains of its
42
infringement and seeks relief through court
must have an unhindered, uninterrupted access
to law courts. The expression ‘court’ here is used
in its widest amplitude comprehending every
forum where relief can be obtained in
accordance with law. Access to justice must not
be hampered even at the hands of judiciary.
Power to grant injunction vests in the court
unless the legislature confers specifically such
power on some other forum. Now access to court
in search of justice according to law is the right
of a person who complains of infringement of his
legally protected interest and a fortiori therefore,
no other court can by its action impede access
to justice. This principle is deducible from the
Constitution which seeks to set up a society
governed by ride of law. As a corollary, it must
yield to another principle that the superior court
can injunct a person by restraining him from
instituting or prosecuting a proceeding before a
subordinate court. Save this specific carving out
of the area where access to justice may be
impeded by an injunction of the court, the
legislature desired that the courts ordinarily
should not impede access to justice through
court. This appears to us to be the equitable
principle underlying Section 41(b). Accordingly,
it must receive such interpretation as would
advance the intendment, and thwart the
mischief it was enacted to suppress, and to keep
the path of access to justice through court
unobstructed.”
(b)  In the case of   Ratna Commercial Enterprises Ltd. vs. , it was held: ­   Vasutech Ltd. – [AIR 2008 Del 99]
“29. The other issue concerns the<br>maintainability of the suit itself in terms of the<br>Section 41(d) of the Specific Relief Act, 1963<br>(‘SRA’) which reads as under:
“41. An injunction cannot be granted<br>…. (d) to restrain any person from<br>instituting or prosecuting any<br>proceeding in a criminal matter.”
43
The law concerning the interpretation of<br>Section 41(d) of the SRA is fairly well settled. It<br>has been held In Re N.P. Essappa Chettiar AIR<br>1942 Mad. 756 and in Gauri<br>Shanker v. District Board AIR 1947 All. 81<br>that a suit to restrain criminal proceedings being<br>initiated is not maintainable. In Aristo Printers<br>Pvt. Ltd. v. Purbanchal Trade Centre AIR<br>1992 Gau. 81 a Division Bench of the Gauhati<br>High Court was dealing with a case where<br>cheques issued by the plaintiff to the defendant<br>had been dishonoured and notice had been<br>issued to the defendant under Section 138 NI<br>Act. The plaintiff then filed a suit to restrain the<br>defendant from instituting proceedings under<br>the NI Act. The Court referred to a judgment of<br>the Hon'ble Supreme Court in State of<br>Orissa v. Madan Gopal Rungta AIR 1952 SC<br>12 and Cotton Corporation of India<br>Ltd. v. United Industrial Bank Ltd. AIR 1983<br>SC 1272 and held that “an order of injunction<br>of the nature issued in this case cannot be<br>granted and the hands of the criminal court<br>cannot be fettered by the civil court.”
30. The decision of this Court in Atul Kumar<br>Singh v. Jalveen Rosha AIR 2000 Del 38 was<br>in a case where the plaintiff had issued four<br>cheques issued in favour for the defendant for a<br>value of Rs. 7 lakhs. The cheques when<br>presented were dishonoured. After service of<br>notice under Section 138 NI Act, the plaintiff<br>filed a suit for a declaration that “the defendant<br>is not entitled to any benefit on account of<br>holding the cheques” and to injunct the<br>defendant “from using or claiming any benefit by<br>virtue of possessing the instruments.” This<br>Court, while allowing the defendant's application<br>for rejecting the plaint, held that (AIR, p.40):
“The reliefs claimed in this suit are<br>in substance for an injunction<br>restraining the defendant from<br>prosecuting the criminal case<br>instituted against the plaintiff.<br>Section 41(b) of the SRA denies to
44 the Court the jurisdiction to grant an injunction restraining any person from prosecuting any proceedings in a   Court.   Consequently,   the injunction   sought   by   the   plaintiff cannot   be   granted   since   it   would have   the   effect   of   preventing   the defendant   from   prosecuting   the criminal case against the plaintiff.” Further,   the   nature   of   the   declaratory   reliefs   sought th already arises out of the MoU dated 17  January, 2009, between the plaintiff and defendant no.1 in respect of which the plaintiff could seek appropriate remedies, if there is a breach of the said MoU by defendant no.1, but the plaintiff cannot seek declaratory reliefs to the effect that the plaintiff was not liable to carry out his obligation under the terms of the MoU. If the plaintiff has failed to do so then the defendant no.1 would have a cause of action against the plaintiff, but there cannot be a frustration of the   right   to   seek   a   remedy   in   law   by   means   of   seeking declaration under a contract or MoU as in the instant case.  37.  Moreover,   the   right   of   defendant   no.1   to   prosecute   the plaintiff owing to the dishonour of the cheque issued by the plaintiff   for   a   sum   of   Rs.   56   lakhs   cannot   be   frustrated   by seeking a declaration that the said cheque was handed over as a security. Such a declaration cannot be   ex facie   granted as it would   be   contrary   to   the   provisions   of   the   N.I.   Act   and 45 particularly Section 118(a) thereof. If the plaintiff is aggrieved on account   of   breach   of   the   terms   and   conditions   of   the   MoU committed   by   defendant   no.1   then   it   could   seek  appropriate reliefs in accordance with law. Whether the plaintiff was not liable to issue the cheque for Rs. 56 lakhs to defendant no.1 under   the   terms   of   the   MoU   is   a   matter   which   has   to   be considered   in   an   appropriate   proceeding   to   be   initiated   by defendants on account of dishonour of the said cheque under Section 138 of the N.I. Act. The plaintiff can always prove that it had no legal liability or debt to be discharged  vis­a­vis  defendant no.1 under the terms of the MoU, if any proceeding is to be initiated by defendant no.1 on account of the dishonour of the said cheque. Further, if defendant no.1 is to seek any relief for the non­supply of 3876 MT of iron ore fines by the plaintiff under the very same MoU then the plaintiff is entitled to take appropriate defences as are available in law. If the plaintiff has a grievance   against   the   defendants   and   particularly   defendant no.1, arising from the MoU, such prayers have not been sought by  the  plaintiff.  Such  reliefs  could  have  been  sought  by  the plaintiff inasmuch as there is no prayer seeking recovery of Rs. 21.50 lakhs from defendant no.1 which according to the plaintiff   is due to it.  46 38.  In the circumstances, we hold that while the plaintiff has certain grievances arising from the MoU, against the defendants which may give rise to seek appropriate remedies in law, the aforesaid three declaratory reliefs sought in the plaint are barred by law. Hence, the plaint is liable to be rejected in exercise of jurisdiction   under   Order   VII   Rule   11   CPC.   In   our   view,   the revisional court was justified in rejecting the plaint but the High Court has erroneously set aside the order of the revisional court without appreciating the facts and circumstances of the case and has simply remanded the matter to the revisional court to reconsider the revision afresh on the premise that the revisional court did not have the jurisdiction to reject the plaint under Section 115 of the CPC.  39.  In the result, the impugned Order of the High Court is set aside and the Order of the revisional court passed in C.R.P. No.5 of 2012 dated 23.02.2013 is restored. The plaint in C.S. No. 1065 of 2009 is rejected. This appeal is accordingly allowed.  40.  However, it is clarified that the rejection of the plaint would not   come   in   the   way   of   the   plaintiff   filing   a   suit   against defendant no.1 for seeking appropriate reliefs in accordance with law, if so advised.  47 Parties to bear their respective costs. …..………..…………………..J. [M.R. SHAH] …………………………………J. [B.V. NAGARATHNA] NEW DELHI; April 01, 2022.