Mehta Family’s Claim To 15.9 Lakh Shares: Madras HC Sends Suit-Rejection Pleas Back After Trial Court Gave No Reasons

The plaintiffs sued for a declaration that they were entitled to 56% of the 80% equity shares held by the second defendant in a company, for transfer of 15,90,399 shares, and for a permanent injunction.

The defendants sought rejection of the plaint under Order VII Rule 11 CPC, contending that the suit disclosed no cause of action, was barred by Order II Rule 2 CPC and limitation, and lacked territorial jurisdiction.

The trial court dismissed those applications. The defendants challenged that order in revision.

During the revisions, the first respondent died and his legal representatives were brought on record.

Order VII Rule 11 CPC permits rejection of a plaint on specified grounds, including where the plaint does not disclose a cause of action or appears from its statements to be barred by law.

In deciding such an application, the court must examine the plaint and the documents filed with it, rather than require the applicant to prove the asserted grounds through evidence.

A court deciding such an application must address the grounds raised and give reasons.

The revisions, though filed under Article 227 of the Constitution, were treated as proceedings under Section 115 CPC.

The trial court’s order set out the parties’ contentions but concluded generally that the defendants had not “proved” the absence of a cause of action or the limitation bar.

The High Court held that this approach was inadequate: at the Order VII Rule 11 stage, the court must assess the plaint and its accompanying documents, not require proof of the defendants’ objections.

Because the trial court had not given reasoned findings on the grounds raised, the High Court set aside its order but left those grounds for the trial court to determine on remand.

The trial court was directed to pass a reasoned order within six weeks of receiving the High Court’s order. No costs were awarded.