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by sayum
07 July 2026 3:12 PM
“It cannot be said that there is absolutely no cause of action. The respondent has alleged misrepresentation and fraud in execution of the gift deed. Whether he ultimately succeeds or not is irrelevant at this stage” — observed Justice Shailesh P. Brahme of the Bombay High Court, reaffirming that mere non-challenge of a registered gift deed is not fatal when allegations of fraud and misrepresentation exist in the pleadings.
Bombay High Court dismissing an appeal against the decision of the lower appellate court which had reversed the trial court’s rejection of a plaint under Order VII Rule 11(a) of the Code of Civil Procedure, 1908. The suit in question pertained to a claim for partition and possession over a jointly purchased house property, despite it having been subsequently transferred by a registered gift deed.
“Fraud Vitiates All — Gift Deed Alleged to Be Void Ab Initio; Declaratory Relief Not Mandatory at Threshold Stage”
In a dispute between two real brothers over ownership of a jointly purchased house, the plaintiff (Ramavtar) alleged that the defendant (Deelipkumar) had fraudulently obtained a gift deed under the pretext of securing a bank loan and later reneged on assurances of re-transfer. Though the plaintiff did not formally seek a declaration to annul the gift deed, he based his claim on allegations of fraud, misrepresentation, and a Memorandum of Understanding (MOU) dated 10.11.2017. The trial court rejected the plaint under Order VII Rule 11(a) for lack of cause of action. However, the lower appellate court reversed that finding, remanding the suit for trial.
The High Court upheld the appellate court’s view, emphasizing that when specific averments of fraud are made, and there exists supporting documentation (like the MOU), the plaint cannot be rejected at the preliminary stage — even if the gift deed is not explicitly challenged.
Registered Gift Deed Followed by Alleged Assurance of Re-transfer
The plaintiff and defendant, brothers by relation, jointly purchased a residential property in Aurangabad via sale deed dated 10.06.2008. Subsequently, on 02.12.2014, the property was transferred to the appellant (Deelipkumar) via a registered gift deed, followed by a correction deed dated 05.08.2015. The plaintiff alleged that this transfer was made on the defendant’s false representation that it was required for raising a bank loan and was to be purely nominal.
Later, when the plaintiff realized that no loan was taken, and the appellant was attempting to claim exclusive ownership, he alleged fraud and breach of trust, and pointed to a Memorandum of Understanding dated 10.11.2017 where the appellant had promised to return the property. The defendant denied these allegations and argued that the plaintiff's suit was not maintainable without seeking declaration to set aside the registered gift deed and was also barred by limitation.
The Court framed and answered the following substantial question of law:
"Whether there was any cause of action to seek partition of the suit property when admittedly the registered gift deed executed in favour of the defendant is not challenged?"
The Court held: “Meaningful reading of the plaint discloses that there was a cause of action. The respondent may or may not succeed in the suit… but that cannot be a parameter to reject the plaint.”
Fraud, Misrepresentation & Voidability:
While acknowledging that the plaintiff had not sought declaratory relief, the Court clarified that:
“It has been categorically averred in the plaint that there was a foul play on the part of the appellant, a fraud was practised and the property was got transferred by the respondent. It would require objective scrutiny.” [Para 15]
Further, the MOU dated 10.11.2017, wherein the appellant allegedly assured to return the property, lent credence to the plaintiff’s case:
“These peculiar pleadings, if proved during trial, would vitiate the transaction… and the instrument dated 02.12.2014.” [Para 16]
Citing Section 121 of the Transfer of Property Act, the Court accepted the argument that if the transaction is void ab initio, no declaratory relief may be necessary upfront, especially when the fraud is integral to the cause of action.
Limitation Is a Mixed Question of Law and Fact
The defendant also argued that the suit was barred by limitation, having been filed in April 2019, more than four years after the gift deed was executed.
However, the Court held that limitation under Article 59 of the Limitation Act, 1963 would not commence from the date of execution of the deed if fraud is pleaded and the plaintiff allegedly became aware of it only later.
“Limitation cannot be decided under Order VII Rule 11(d) where the plaintiff avers that he was unaware of the nature of the document and discovered fraud subsequently.” [Para 18]
The MOU of 2017 supported the plaintiff’s timeline, suggesting that parties were still negotiating at that point, and the assurance to return the property extended the reasonable period for filing suit.
An earlier coordinate bench ruling in Civil Revision Application No. 45/2020, between the same parties, had upheld a trial court's decision to proceed with a similar suit. The Supreme Court dismissed the appeal without assigning reasons.
Justice Brahme clarified that dismissal of SLP without reasons does not amount to a binding precedent, and hence the current case was examined afresh in light of crystallized legal principles.
Trial Is Necessary – Partition Suit Must Proceed
The High Court ultimately upheld the lower appellate court’s decision and dismissed the appeal. It ruled that rejection of plaint under Order VII Rule 11 was not warranted as:
A cause of action was disclosed through detailed pleadings alleging fraud and misrepresentation.
The issue of limitation was factual and could not be determined at the preliminary stage.
The plaintiff’s failure to seek declaratory relief did not, in itself, render the suit non-maintainable given the allegations of the transaction being void ab initio.
“The respondent will have to discharge the burden at trial… but at this juncture, it cannot be said that there is absolutely no cause of action.” [Para 15]
“Appeal from Order is dismissed. Pending civil application also stands disposed.”
Date of Decision: October 4, 2025
