Source: Allahabad High Court

Why in News?

Recently, the Allahabad High Court in the matter of Saurabh Kalani v. Stressed Asset Stabilization Fund & Ors. has held that the rejection of application under Order VII Rule 11 of the Code of Civil Procedure, 1908 (CPC) will not operate as res judicata on deciding issue of limitation raised at the time of final hearing.

What was the Background of Saurabh Kalani v. Stressed Asset Stabilization Fund & Ors. Case?

• In this case, the Respondent No.1 - Stressed Asset Stabilization Fund is the assignee of the original Lendor IDBI.
• IDBI granted financial assistance to the tune of Rs. 7.60 crores to Respondent No.2 – Gilt Pack Ltd. Company during the year 1994 -1996.
• In 2016, Respondent No.1 filed an original application before the Debt Recovery Tribunal, Jabalpur seeking payment of Rs. 394,41,00,970/- towards the loan as on 1st July 2016 together with further interest thereon on contractual rates w.e.f. 1St July 2016 from the defendants therein.
• The Petitioner filed an application under Order VII Rule 11 of CPC on grounds that original application was filed after a lapse of 19 years from the date of execution of Deed of Guarantee executed by the petitioner
• This application under Order VII Rule 11 of CPC was rejected.
• Thereafter, a petition has been filed before the Allahabad High Court which was later disposed of by the Court.

What were the Court’s Observations?

• Justice Manish Kumar Nigam observed that the rejection of application under Order VII Rule 11 of the CPC will not operate as res judicata on deciding issue of limitation raised at the time of final hearing.
• The Court held that the issue of limitation being generally a mixed issue of fact and law is subject to the evidence led by the parties. The findings recorded by the Court/Tribunal while deciding the application under Order VII Rule 11 of CPC will not operate as res judicata.
• The Court further restated that in deciding an application under Order VII Rule 11 of CPC, the averments made in the plaint are to be seen. If the averments so made are barred by any law, including the law of limitation, the plaint is liable to be rejected.

What are the Relevant Legal Provisions Involved in it?

Order VII Rule 11 of CPC

About:

• Rule 11 of Order VII deals with the Rejection of Plaint. It states that -
• 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 the 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 the rule.

Case Law

• In K. Akbar Ali v. Umar Khan (2021), the Supreme Court held that the grounds mentioned under Order VII Rule 11 of CPC are not exhaustive i.e., the court can reject the plaint even on other grounds if it thinks fit to do so.

Principle of Res Judicata

About:

• Section 11 of CPC contains the principle of Res Judicata. It states that -
  • No Court shall try any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties, or between parties under whom they or any of them claim, litigating under the same title, in a Court competent to try such subsequent suit or the suit in which such issue has been subsequently raised, and has been heard and finally decided by such Court.
  • Explanation I - The expression former suit shall denote a suit which has been decided prior to a suit in question whether or not it was instituted prior thereto.
  • Explanation II - For the purposes of this section, the competence of a Court shall be determined irrespective of any provisions as to a right of appeal from the decision of such Court.
  • Explanation III - The matter referred to above must in the former suit have been alleged by one party and either denied or admitted, expressly or impliedly, by the other.
  • Explanation IV - Any matter which might and ought to have been made ground of defence or attack in such former suit shall be deemed to have been a matter directly and substantially in issue in such suit.
  • Explanation V - Any relief claimed in the plaint, which is not expressly granted by the decree, shall for the purposes of this section, be deemed to have been refused.
  • Explanation VI - Where persons litigate bona fide in respect of a public right or of a private right claimed in common for themselves and others, all persons interested in such right shall, for the purposes of this section, be deemed to claim under the persons so litigating.
  • Explanation VII - The provisions of this section shall apply to a proceeding for the execution of a decree and references in this section to any suit, issue or former suit shall be construed as references, respectively, to a proceeding for the execution of the decree, question arising in such proceeding and a former proceeding for the execution of that decree.
  • Explanation VIII - An issue heard and finally decided by a Court of limited jurisdiction, competent to decide such issue, shall operate as res judicata in a subsequent suit, notwithstanding that such Court of limited jurisdiction was not competent to try such subsequent suit or the suit in which such issue has been subsequently raised.

Case Laws

• In Mathura Prasad v. Dossabhoi N B Jeejeebhoy (1970), the Supreme Court held that previous proceedings would operate as res judicata only in respect of issues of facts and not on issues of pure questions of law.
• In Srihari Hanumandas Totala v. Hemant Vithal Kamat (2021), the Supreme Court held that res judicata cannot be invoked as a ground for the rejection of a plaint under Order VII Rule 11(d) of CPC.