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Uttarakhand High Court · body

2020 DIGILAW 80 (UTT)

BANSI AUTOMOBILE v. BARNAWA AGRO INDUSTRIES

2020-02-10

LOK PAL SINGH

body2020
JUDGMENT Hon'ble Lok Pal Singh, J. (Oral) First appeal is directed against the judgment and decree dated 27.01.2015, passed by Civil Judge (Senior Division), Laksar, Haridwar, in Original Suit no. 31 of 2012, M/s Bansi Automobile Tyre Pvt. Ltd. and others Vs Barnawa Agro Industries Ltd. and others, whereby the trial court has allowed the applications of the defendants/ respondents filed under Order 7 Rule 11 of the Code of Civil Procedure, 1908 and rejected the suit of the plaintiffs/appellants. 2. Heard learned counsel for the parties and perused the material available on record. 3. Facts leading to filing of present appeal are that the plaintiffs /appellants instituted the said suit with the averments that plaintiff no. 1 is a Private Limited Company, plaintiff nos. 2, 3 and 4 are its Directors. Defendant nos. 1 is a Ltd. company, defendant no. 2 is its Chairman and defendant nos. 2 to 6 are the Directors of the company. Defendant no. 1 Barnawa Agro Industries Ltd. is having the land measuring 75 Acres in Village Prahladpur, Tehsil Laksar, District Haridwar. Plaintiff no. 1 company agreed to take over the assets of defendant no. 1 company and defendant no. 2 agreed to transfer 60 Acres land of Village Prahladpur to the plaintiff no. 1. A MOU to this effect was executed between the parties. The plaintiff no. 1 company paid Rs.5,00,000/- and it was decided that the defendant no. 1 company, as per the terms and conditions of the MOU, shall transfer the land to the plaintiff no. 1 company and the Directors and shareholders shall resign and the plaintiff and his representatives will be inducted as shareholders, Directors in the Company. Plaintiff no. 1 company has to pay Rs.10,00,11,000/-, as per the terms and conditions of MOU, in respect of share purchase amount, and defendants shall provide 60 Acre land and will construct boundary wall on 800 Bigha land along with wire fencing on it. It was also agreed that both the parties shall fulfill their liability by 28.02.2012. As per MOU, the total cost per share of defendant no. 1 company was fixed at Rs.12.50 and, as such, the total shares of defendant no. 1 company are 21,60,988/- and its value comes to Rs.2,70,12,350/- in additional to Rs.1,15,00,000/- as share application amount. It was stipulated in condition no. 1 of the MOU that defendant no. As per MOU, the total cost per share of defendant no. 1 company was fixed at Rs.12.50 and, as such, the total shares of defendant no. 1 company are 21,60,988/- and its value comes to Rs.2,70,12,350/- in additional to Rs.1,15,00,000/- as share application amount. It was stipulated in condition no. 1 of the MOU that defendant no. 1 company shall transfer all its assets and the land in its personal capacity to the plaintiffs and the liabilities in regard to earlier loan etc. will be of the defendants. As per condition no. 2 of MOU, defendant no. 2 shall transfer the 60 Acre of land to the plaintiffs. Condition nos. 3, 4 and 5 deals with the method and time period for said purpose. As per condition no. 8, in compliance of MOU, first of all the three Directors of defendant no. 1 company shall tender their resignation and in their place two Directors of the plaintiff company will be inducted. It was also agreed that 50% shares of defendant No. 1 company shall be transferred to the plaintiffs and Director of plaintiff No. 1 company shall be inducted in the Bank account operation of defendant No. 1 company. Condition No. 6 of MOU provides that, in case, defendents are able to complete the work on their part prior to 28.02.2012, then the balance amount shall be paid by the plaintiffs to the defendants prior to 28.02.2012. It is alleged that plaintiffs made the final payment prior to 18.01.2012, but defendant nos. 1 and 2 neither constructed the boundary wall nor defendant no. 2 handed over the land and sale deed was executed in respect of only 5 Acre of land, amounting to Rs.9,50,000/-. 4. Since the defendants did not comply with the conditions of MOU, the plaintiffs were constrained to institute the aforesaid suit seeking following reliefs: (a) A decree of mandatory injunction be passed in favour of the plaintiffs against the defendants directing the defendants to transfer the total shares in favour of the plaintiff no. 1 company and its representatives in compliance of the MOU dated 23.08.2018 within the time stipulated by the court. Also, defendant no. 1 company after taking the resignation of its Directors shall ensure that the Directors of the plaintiffs be inducted. 1 company and its representatives in compliance of the MOU dated 23.08.2018 within the time stipulated by the court. Also, defendant no. 1 company after taking the resignation of its Directors shall ensure that the Directors of the plaintiffs be inducted. Further relief has been sought that the defendants be directed to construct a four feet high boundary wall along with fencing and transfer the possession of the said property to the plaintiffs for its management. (b) A decree of mandatory injunction be passed in favour of the plaintiffs against the defendant nos. 2 and 3 directing them to pay an amount of Rs.3,78,00,550/- after deducting an amount of Rs.9,50,000/-, i.e., Rs.3,68,50,550/- which were taken in lieu of 60 Acre land to the plaintiffs or to execute the sale deed of the remaining land in favour of the plaintiffs with the time stipulated by the Court. 5. In view of the fact that the decree of mandatory injunction is sought by the plaintiffs they had paid a court fee of Rs. 1000/- on the reliefs sought by them. 6. Defendants/respondents put their in appearance in the suit, filed their written statement and denied the plaint averments. In the meantime, the defendants moved an application (paper no. 21C) under Order 7 Rule 11 of the Code of Civil Procedure, 1908 (hereinafter referred to as the ‘Code') with a prayer that the plaintiffs have filed the said suit on the basis of alleged MOU dated 23.08.2011, which is forged and in fact the relief of specific performance has been sought by the plaintiffs, in the guise of relief of mandatory injunction, whereupon the plaintiffs have paid a court fee of Rs.1,000/-. It was stated that the plaintiffs are under obligation to pay ad valorem court fee on the amount they claimed by means of decree of mandatory injunction and as the plaintiffs have not paid the sufficient court fee, the suit is barred by the provisions of Order 7 Rule 11 of the Code and is liable to be dismissed. 7. Plaintiffs filed their objection to the said application, stating therein, that the suit for mandatory injunction has been filed and they are not obliged to pay the ad valorem court fee as stated by the defendants. Another application (paper no. 7. Plaintiffs filed their objection to the said application, stating therein, that the suit for mandatory injunction has been filed and they are not obliged to pay the ad valorem court fee as stated by the defendants. Another application (paper no. 29C) was filed by the defendants under Order 7 Rule 11 of the Code stating therein that the suit for mandatory injunction has been filed by the plaintiffs which is not maintainable and the same is barred by Section 41 of Specific Relief Act and is liable to be dismissed under Order 7 Rule 11 of the Code. It is alleged that the MOU is dated 20.08.2011 whereof the seal of the Stamp Vendor affixed on the same is dated 23.08.2011 and it does not bear the signature of the defendant Karanveer Singh. It is also alleged that the court fee paid by the plaintiff is insufficient. Since the MOU is not registered, the same is not admissible in evidence under Section 17 of the Indian Registration Act, but when the previous application was filed by their previous counsel, the correct facts were not mentioned in the application filed under Order 7 Rule 11 of the Code. 8. The trial court vide impugned order dated 27.01.2015 has allowed the applications (paper nos. 21C and 29C) and dismissed the suit. The trial court has recorded its findings on three points. Firstly that by means of relief (a) decree of mandatory injunction is sought to transfer the shares in favour of the plaintiff company and the second relief of mandatory injunction is sought for recovery of amount of Rs.3,68,50,550/-. The copy of MOU (paper no. 12C) has been filed. The date, details of payment of the stamp paper are not mentioned on the back of the stamp paper. The stamp paper is said to be executed on 20.08.2011, whereof the seal of the Treasury on the stamp is mentioned 23.08.2011. Term no. 15 of the MOU stipulates that in case of any dispute there shall be a jurisdiction to Meerut court. Despite this the plaintiffs neither filed the copy of khasra khatauni nor they filed any documents in original. 9. ‘Caveat emptor' is a known principle of law. Since the MOU (paper no. 12C) is not stamped, the same is not admissible under Section 35 of the Stamp Act. Despite this the plaintiffs neither filed the copy of khasra khatauni nor they filed any documents in original. 9. ‘Caveat emptor' is a known principle of law. Since the MOU (paper no. 12C) is not stamped, the same is not admissible under Section 35 of the Stamp Act. The trial court has considered the following judgments, without mentioning the titles of the same: (i) 2012 (93) ALR 915 (ii) AIR 2005 Uttaranchal 34 10. So far as the judgment of 2012 [Church of Christ Charitable Trust and Educational Charitable Society Vs M/s Ponniamman Educational Trust, 2012 (93) ALR 915] is concerned, the trial court has not discussed the facts and ratio of the judgment (supra). Even the cause title of the judgment (supra) is not mentioned while referring the same in the judgment. Similarly, while discussing the judgment reported in AIR 2005 Uttaranchal 34 (Chief Engineer, Central Zone Telecommunication Civil, Lucknow and others Vs M/s Dayal Construction Co. AIR 2005 Uttaranchal 34), neither the cause title nor the facts of the case were discussed in the judgment. The trial court observed that if the plaintiffs are permitted to deposit the additional court fee the other litigants shall follow the same principle and it will create unnecessary litigation and it will become a precedent, as such, the judgments (supra) are applicable in the matter. The trial court has emphasized its decision that in view of the provisions contained in Section 53A of the Transfer of Property Act, the MOU is not admissible in evidence. It was also observed by the trial court that the suit is barred by the provisions contained in Section 35 of the Stamp Act, Section 17 of Registration Act and Section 41 of the Specific Relief Act and the same does not disclose any cause of action, as such, the plaintiffs have no cause of action to institute the suit. 11. The sole controversy for consideration before this Court is - whether the trial court committed illegality in allowing the applications filed by the respondents / defendants under Order 7 Rule 11 of the Code without giving any opportunity to the appellants / plaintiffs to pay the deficient amount of court fee and without determining the actual court fee payable on the reliefs claimed by the appellants? 12. It would be apt to reproduce Order 7 Rule 11 of the Code of Civil Procedure, 1908. 12. It would be apt to reproduce Order 7 Rule 11 of the Code of Civil Procedure, 1908. Order 7 Rule 11 of the Code stipulates as under: “11. Rejection of plaint— The plaint shall be rejected in the following cases:— (a) where it does not disclose a cause of action; (b) where the relief claimed is undervalued, and the plaintiff, on being required by the Court to correct the valuation within a time to be fixed by the Court, fails to do so; (c) where the relief claimed is properly valued, but the plaint is returned upon paper insufficiently stamped, and the plaintiff, on being required by the Court to supply the requisite stamp-paper within a time to be fixed by the Court, fails to do so; (d) where the suit appears from the statement in the plaint to be barred by any law; (e) where it is not filed in duplicate; (f) Where the plaintiff fails to comply with the provisions of Rule 9; Provided that the time fixed by the Court for the correction of the valuation or supplying of the requisite stamp-paper shall not be extended unless the Court, for reasons to be recorded, is satisfied that the plaintiff was prevented by any cause of an exceptional nature form correcting the valuation or supplying the requisite stamp-paper, as the case may be, within the time fixed by the Court and that refusal to extend such time would cause grave injustice to the plaintiff." 13. Learned counsel for the appellants invited attention of this Court towards the fact that the provisions of Order 7 Rule 11 of the Code can be invoked at any stage, but if the trial court was of the view that sufficient court fee has not been paid by the plaintiffs then the trial court was under obligation to afford an opportunity to the plaintiffs to pay the deficient court fee, but the trial court failed to discharge its duty to decide the matter in view of the provisions contained in Sub-Rule (c) of Rule 11 of Order 7 of the Code. 14. Indisputably, the trial court has not afforded an opportunity of hearing to the plaintiffs that they have to pay certain amount of deficient court fee. A perusal of the impugned order would reveal that the trial court has not ascertained the deficient court fee. 14. Indisputably, the trial court has not afforded an opportunity of hearing to the plaintiffs that they have to pay certain amount of deficient court fee. A perusal of the impugned order would reveal that the trial court has not ascertained the deficient court fee. Firstly the deficiency of court fee has not been determined; secondly opportunity to deposit the appropriate court fee has not been afforded to the plaintiffs. 15. It is settled position in law that in exercise of its jurisdiction under Order 7 rule 11 of the Code, the trial court has to consider the reliefs and cause of action. Applications (paper no. 21C and 29C) were filed by the plaintiffs with the allegation that proper court fee has not been paid by the plaintiffs. Instead of adverting its finding on the plea raised by the respondents/defendants in their applications, the trial court has misdirected itself in dealing with the cause of action part without looking to the plaint averments in view of settled proposition of law that a suit is to be dismissed if it does not disclose any cause of action under Order 7 Rule 11(a) of the Code. 16. A perusal of the plaint would reveal that in paragraph 33 of the plaint, the plaintiffs have specifically stated that the defendants had executed the MOU on 23.08.2018 and received the money in lieu of the MOU, but subsequently they did not honour the terms and conditions of the MOU, then the plaintiffs were constrained to institute the said suit against the defendants. 17. Prayer made by the defendants in their applications is that proper court fee has not been paid by the plaintiffs, but the trial court has deviated from the issue raised by the defendants in their applications. For unseen reason, the trial court has advert its findings on irrelevant issues i.e. MOU is not properly signed; the document is unregistered and inadmissible in evidence. At the stage of deciding the application under Order 7 Rule 11 of the Code, admissibility of a document cannot be considered. So far as jurisdiction is concerned, as this issue was not raised by the defendants and the immovable property situates in the territorial jurisdiction of the trial court, the trial judge should not have recorded its finding that MOU stipulates the jurisdiction of Meerut court. 18. So far as jurisdiction is concerned, as this issue was not raised by the defendants and the immovable property situates in the territorial jurisdiction of the trial court, the trial judge should not have recorded its finding that MOU stipulates the jurisdiction of Meerut court. 18. Section 16 of the Code would be relevant to reproduced hereunder: “16. Suits to be instituted where subjectmatter situate. –Subject to the pecuniary or other limitations prescribed by any law, suits – (a) for the recovery of immovable property with or without rent or profits, (b) for the partition of immovable property, (c) for foreclosure, sale or redemption in the case of a mortgage of or charge upon immovable property, (d) for the determination of any other right to or interest in immovable property, (e) for compensation for wrong to immovable property, (f) for the recovery of movable property actually under distraint or attachment, shall be instituted in the Court within the local limits of whose jurisdiction the property is situate; Provided that a suit to obtain relief respecting, or compensation for wrong to, immovable property held by or on behalf of the defendant may, where the relief sought can be entirely obtained through his personal obedience, be instituted either in the Court within the local limits of whose jurisdiction the property is situate, or in the Court within the local limits of whose jurisdiction the defendant actually ad voluntarily resides, or carries on business, or personally works for gain. Explanation. –In this section “property" means property situate in India." 19. Section 16 of the Code stipulates that a suit is to be instituted in the court in whose jurisdiction the immovable property is situate. The parties cannot confer the jurisdiction upon the court which has no inherent jurisdiction. Therefore, the trial court has misdirected itself in recording such unnecessary findings in the impugned order. The admissibility of MOU is also irrelevant factor at this stage. As soon as the defendants raised their contention that proper court fee has not been paid by the plaintiffs, the trial court should have considered the relief in its real sense that the plaintiff is seeking a decree of accounts / recovery of money) in the guise of mandatory injunction and in view of the provisions contained in Section 7(1) of the Court Fee Act, the plaintiffs were obliged to pay the ad valorem court fee. So far as second relief is concerned which has also been sought in the nature of mandatory injunction, in fact, is a relief of Specific Performance of the land in dispute and the plaintiffs are obliged to pay the ad valorem court fee. 20. It would also be apt to reproduce Section 7 of the Court Fees Act, 1870. The same reads as under: “7. Computation of fees payable in certain suits.—The amount of fee payable under this Act in the suits next hereinafter mentioned shall be computed as follows:— (i) for money.— In suits for money (including suits for damages or compensation, or arrears of maintenance, of annuities, or of other sums payable periodically—according to the amount claimed; (ii) for maintenance and annuities.— In suits for maintenance and annuities or other sums payable periodically—according to the value of the subject matter of the suit, and such value shall be deemed to be ten times the amount claimed to be payable for one year; (iii) for other movable property having a market value.— In suits for movable property other than money, where the subject-matter has a market-value – according to such value at the date of presenting the plaint; (iv) In suits – (a) for movable property of no market-value.— for moveable property where the subject-matter has no market-value, as, for instance, in the case of documents relating to title, (b) to enforce a right to share in joint family property —to enforce the right to share in any property on the ground that it is joint family property, (c) for a declaratory decree and consequential relief – to obtain a declaratory decree or order, where consequential relief is prayed, (d) for an injunction. – to obtain an injunction, (e) for easements.— for a right to some benefit (not herein otherwise provided for) to arise out of land, and (f) for accounts—for accounts— according to the amount at which the relief sought is valued in the plaint or memorandum of appeal, In all such suits the plaintiff shall state the amount at which he values the relief sought (v) ………. (vi) ………. (vii) ………. (viii) ………. (ix) ………. (x) for specific performance . (vi) ………. (vii) ………. (viii) ………. (ix) ………. (x) for specific performance . –In suits for specific performance – (a) of a contract of sale according to the amount of consideration; (b) or a contract of mortgage –according to the amount agreed to be secured; (c) of a contract of lease –according to the aggregate amount of the fine or premium (if any) and of the rent agreed to be paid during the first year of the term; (d) of an award –according to the amount or value of the property in dispute; between landlord and tenant – (xi) ………." 21. A perusal of the findings recorded by the trial court would reveal that the trial court has misdirected itself in allowing the applications on irrelevant ground whereof the case does not fall in any of the grounds laid in Order 7 Rule 11 of the Code. 22. Since the core issue before the trial court was as to whether proper court fee has been paid or not by the plaintiff, the trial court should have restrained itself to consider the applications of the defendants and if the trial court was of the view that proper court fee on relief (a) and (b) has not been paid by the plaintiffs, then the trial court should have recorded its finding after framing the relevant issues in this regard that the plaintiffs are seeking a relief of recovery of money and specific performance in the guise of relief of mandatory injunction and should have adjudicated the amount of court fee payable for the relief of recovery of money and specific performance having considered the nature of the relief claimed. 23. As per the contention of the respondents/defendants their applications falls under Order 7 Rule 11 of the Code. The trial court has misdirected itself in treating the applications of the defendants under Order 7 Rule 11(a) of the Code on the ground of jurisdiction, whereof the jurisdiction of the Court was never raised. 24. This Court has considered the ratio of the judgment rendered in U.P. State Electricity Board and others Vs Maharaja Manvendra Shah and others 2009 (1) UD 95 , cited by learned counsel for the respondents. Relevant paragraph no. 24. This Court has considered the ratio of the judgment rendered in U.P. State Electricity Board and others Vs Maharaja Manvendra Shah and others 2009 (1) UD 95 , cited by learned counsel for the respondents. Relevant paragraph no. 8 of the judgment is extracted hereunder: “Learned counsel for the appellants pointed out that in Para 3 and 4 of the plaint it has been clearly pleaded by the plaintiff that defendants no. 1 to 4 are raising the constructions through defendant no. 5 after encroaching upon the land, as such, the plaintiff should have sought relief of possession and they cannot get possession under the garb of mandatory injunction which can only be granted to prevent the breach of an obligation that too when it is necessary to compel the performance of certain acts as provided under Section 39 of the Specific Relief Act, 1963. I do agree with the learned counsel for the appellants that it is unhealthy practice to seek the relief of possession under the garb of relief of injunction and thereby causing loss to the public exchequer by not paying the court fee for the relief of possession which is higher to the one payable for the relief of injunction. Having considered the facts and circumstances of the case, after going through the evidence on record, this Court is of the view that in the interest of justice the plaintiff can be directed to pay the court fee for the relief of possession before the decree is sought to be executed." 25. The facts of the judgment (supra) are entirely different. The ratio of the judgment (supra) is not applicable on the facts of the case in hand as in the judgment (supra) the defendant's second appeal was dismissed with the observation that the plaintiff was under obligation to pay the court fee for the relief of possession before the decree is sought to be executed as in the guise of relief of mandatory injunction, a decree of possession in respect of suit property was sought. The Court further observed that on this ground of non-payment of court fee by the plaintiff the decree cannot be set aside. However, the Court observed that the plaintiff shall pay the court fee at the time of execution of the decree passed in his favour. 26. The facts are entirely different in the case in hand. The Court further observed that on this ground of non-payment of court fee by the plaintiff the decree cannot be set aside. However, the Court observed that the plaintiff shall pay the court fee at the time of execution of the decree passed in his favour. 26. The facts are entirely different in the case in hand. Though the written statement has been filed but neither the issues were framed, nor has the trial court ascertained the amount of deficient court fee. Thus, the ratio of the judgment (supra) is not applicable to the facts of the present case. The trial court has misinterpreted the ratio of the judgments (supra). 27. Learned counsel for the respondents would submit that apparently by way of mandatory injunction the appellants / plaintiffs are seeking a decree of money recovery against the defendants and for that the plaintiffs ought to have paid advalorem court fee. The submission of learned counsel for the respondents is misconceived. 28. The trial court has committed illegality in allowing the applications (paper no. 21C and 29C) filed under Order 7 Rule 11 of the Code and in dismissing the suit solely for the reason that there is no cause of action in the suit. Perusal of plaint would reveal that the plaint discloses the cause of action in filing the suit. Further the defendants have not pleaded that plaint does not disclose the cause of action. Respondents have filed an application (paper no. 21C) under Order & Rule 11 of the Code. The said application was not disposed of by the trial court. In the meantime, respondents filed another application (paper no. 29C) under the same provisions that some facts could not be narrated in the previous application (paper no. 21C). Since the application (paper no. 21C) was not disposed of by the court below, the successive application (paper no. 29C) for the same relief was not maintainable, but the court below did not consider this aspect of the matter and committed illegality in deciding both the applications by impugned order. It is settled position in law that for same relief successive applications are not maintainable. If the respondents were of the view that they have not narrated the correct facts in application (paper no. 21C) they should have withdrew the said application with permission to file afresh, but, the subsequent application was not maintainable in any manner. 29. It is settled position in law that for same relief successive applications are not maintainable. If the respondents were of the view that they have not narrated the correct facts in application (paper no. 21C) they should have withdrew the said application with permission to file afresh, but, the subsequent application was not maintainable in any manner. 29. Perusal of the decision taken by the trial court on applications (paper no. 21C and 29C) would reveal that the trial court has committed illegality in allowing the applications and in dismissing the suit without satisfying itself that proper court fee was not paid. The averments made in both the application do not fall in any of the category as enumerated in Order 7 Rule 11 of the Code. The trial court failed to consider the provisions contained in Order 7 Rule 11 of the Code and without affording opportunity to the appellants / plaintiffs to pay the deficient court fee, if any, has dismissed the suit. Therefore, the impugned judgment and decree is unsustainable in the eyes of law and is liable to be set aside. The same is hereby set aside. 30. The first appeal stands allowed. Matter is remanded back to the trial court to decide the applications (paper no. 21C and 29C) filed by the defendants afresh, in accordance with law, keeping in mind the spirit contained in proviso to Order 7 Rule 11(b) of the Code, as also to consider the maintainability aspect of the subsequent application (paper no. 29C). Lower court record be sent back. 31. No order as to costs.