Trial Court Cannot Reject Plaint Under Order 7 Rule 11 CPC Without First Deciding Pending Amendment Application: Madhya Pradesh HC

"If a sale deed in respect of an immovable property is executed without payment of price and if it does not provide for the payment of price at a future date, it is not a sale at all in the eyes of law. It is of no legal effect." Madhya Pradesh High Court, in a significant ruling, held that a trial court cannot allow an application for rejection of a plaint under Order VII Rule 11 of the Civil Procedure Code (CPC) without first deciding a pending application for amendment of pleadings.

A bench of Justice Pavan Kumar Dwivedi observed that the trial court erred in dismissing a suit for cancellation of a sale deed while completely ignoring the plaintiff's pending application under Order VI Rule 17 of the CPC, and further clarified that a sale deed executed without payment of price is void under Section 54 of the Transfer of Property Act.

The plaintiff, an uneducated villager, filed a civil suit seeking to declare a registered sale deed executed in April 2022 as null and void, alleging that the purchaser had obtained it through fraud and deception. According to the plaintiff, the defendant handed over post-dated cheques for the Rs 1.04 crore consideration, but subsequently took them all back on the false pretext of issuing fresh cheques, which were never provided. The trial court summarily rejected the plaint under Order VII Rule 11 of the CPC, relying on the Supreme Court's ruling in Dahiben v. Arvind Bhai Kalyanji Bhansali, holding that a suit for cancellation solely on the ground of non-payment of consideration is not maintainable.

The primary question before the court was whether a trial court could entertain and allow an application under Order VII Rule 11 of the CPC while an application for amendment of the plaint under Order VI Rule 17 was already pending. The court was also called upon to determine whether a plaint could be rejected at the threshold when the pleadings specifically alleged fraud, deception, and a complete absence of sale consideration, rather than a mere failure to pay an agreed sum.

Order VI Rule 17 Prevails Over Order VII Rule 11

The High Court first examined the procedural irregularity committed by the trial court. The bench noted from the record that the plaintiff had filed an application for amending the plaint on March 21, 2023, while the defendant filed the Order VII Rule 11 application much later, on October 20, 2023. The trial court subsequently took up the rejection application and completely ignored the pending amendment plea.

Amendment Must Be Considered First

Relying on a coordinate bench decision of the High Court in Smt. Suchitra Dubey Vs. Sattar, the bench ruled that the provisions of Order VI Rule 17 are not restricted or controlled by Order VII Rule 11 of the CPC. The court emphasised that when an amendment application intends to remedy defects in the pleadings, such an application needs to be considered first in the interest of justice.

Entirety Of Plaint Must Be Read

Addressing the substantive maintainability of the suit, the High Court scrutinised the trial court's reliance on the Supreme Court's judgment in Dahiben. The bench clarified that the trial court misapplied the precedent because the plaintiff’s case was not merely about non-payment of consideration, but about absolute deception from the very inception. The court reiterated the Supreme Court's stance in Shaukat Hussain Mohammed Patel, observing that for the purposes of Order VII Rule 11, the entirety of the averments in the plaint must be taken into account.

Fraud Vitiates The Execution Of Sale Deed

The High Court perused the specific paragraphs of the plaint which detailed how the defendant posed as a businessman, issued post-dated cheques, and systematically took them back on a false pretext. The bench noted that this amounted to a deliberate ploy to execute a sale deed without any intention of paying for the purchase. The court stated that the real story of the plaint is that the execution of the sale deed itself was based on deception and fraud.

Sale Deed Void Under Section 54 Of TP Act

Rejecting the defendant's argument that Section 55 of the Transfer of Property Act (TP Act) restricts the seller to merely filing a suit for recovery of unpaid money, the High Court cited the Supreme Court’s ruling in Kewal Krishan v. Rajesh Kumar. The bench observed that the payment of price is an essential part of a sale under Section 54 of the TP Act. The court conclusively noted that if a document is executed without consideration, it is void and confers no title.

Trial Essential When Fraud Is Pleaded

The court distinguished the present matter from Dahiben, highlighting that in Dahiben, the suit was filed five years after the sale deed was executed and some cheques had actually been encashed. In the present dispute, the suit was filed promptly within eight months, and there was a complete absence of sale consideration coupled with a plea of fraud. The bench concluded that such assertions of fraud and deception require a full trial and the recording of evidence from all parties, making summary rejection grossly improper.

The High Court allowed the appeal and set aside the trial court's order which had rejected the plaint. Concluding that the suit could not have been dismissed under Order VII Rule 11 of the CPC while the amendment application was pending, and that the pleadings of fraud require a trial, the matter was remitted back and restored to its original number on the file of the trial court for further proceedings.

Date of Decision: 13 July 2024