Case Note & Summary
The appeal arose from a civil revision petition challenging the High Court's dismissal of an application under Order VII Rule 11 CPC seeking rejection of a plaint. The appellant, R.B.A.N.M.S. Educational Institution, a public charitable trust established in 1873, had been in possession of disputed property since 1905. The respondents filed a suit for permanent injunction in 2018, claiming rights based on an agreement to sell dated April 10, 2018, executed with third parties (not made parties to the suit) for consideration of Rs. 9 crore, with Rs. 75 lakh paid as advance. The appellant filed an application under Order VII Rule 11(a) and (d) CPC, arguing the plaint was barred by law and disclosed no cause of action. The trial court initially rejected the application on June 3, 2020, but the High Court in revision remanded it for reconsideration. Upon reconsideration, the trial court again rejected it on June 11, 2021, and the High Court dismissed the revision petition on June 2, 2022, leading to this appeal. The core legal issue was whether the plaint, based solely on an agreement to sell, was maintainable for permanent injunction against a third party not privy to the agreement. The appellant contended that an agreement to sell creates no interest in property under Section 54 of the Transfer of Property Act, 1882, and cited precedents to argue that injunction suits without declaration of title are not maintainable when title is disputed. The respondents argued that at the Order VII Rule 11 stage, only plaint averments should be considered, and the agreement conferred sufficient interest to maintain the suit. The Supreme Court analyzed the scope of Order VII Rule 11, noting that while courts generally confine themselves to plaint averments, they can examine if the suit is barred by law based on admitted facts. The court held that under Section 54 of the Transfer of Property Act, an agreement to sell does not create any interest in property, as established in Rambhau Namdeo Gajre and Suraj Lamp cases. It further held that when title is disputed, a suit for injunction without declaration is not maintainable, per Jharkhand State Housing Board and Premji Ratansey Shah, and Section 41(h) and (j) of the Specific Relief Act, 1963 bars such injunction. The court also noted that agreement holders lack locus standi to challenge third-party rights, as per K. Basavarajappa. The court found the plaint vexatious and meritless, applying T. Arivandandam, and allowed the appeal, setting aside the High Court's order and rejecting the plaint under Order VII Rule 11 CPC.
Headnote
A) Civil Procedure - Rejection of Plaint - Order VII Rule 11 CPC - Scope and Purpose - Code of Civil Procedure, 1908, Order VII Rule 11 - The Supreme Court examined the scope of Order VII Rule 11 CPC for rejection of plaint, noting that while the court must generally confine itself to plaint averments, it can consider whether the suit is barred by law based on admitted facts and legal principles. The court referred to Dahiben v. Arvindbhai Kalyanji Bhanusali to explain the applicable law for deciding such applications. Held that the plaint was barred by law as it was based on an agreement to sell which does not create any interest in property. (Paras 14-15) B) Property Law - Transfer of Property - Agreement to Sell Creates No Interest - Section 54 Transfer of Property Act, 1882 - The court considered whether an agreement to sell creates any interest in the property. Relying on Rambhau Namdeo Gajre v. Narayan Bapuji Dhotra and Suraj Lamp & Industries (P) Ltd. v. State of Haryana, the court held that a mere agreement to sell does not create any interest in the property under Section 54 of the Transfer of Property Act, 1882. The agreement merely confers a limited right under Section 53-A, which does not give the agreement holder a right to sue for injunction against third parties. (Paras 10, 16) C) Civil Procedure - Injunction Suits - Maintainability When Title Disputed - Specific Relief Act, 1963, Section 41(h) and (j) - The court examined whether a suit for permanent injunction without seeking declaration of title is maintainable when title is disputed. Citing Jharkhand State Housing Board v. Didar Singh and Premji Ratansey Shah v. Union of India, the court held that when there is a cloud over title, a suit merely for injunction without seeking declaration of title is not maintainable. Section 41(h) and (j) of the Specific Relief Act, 1963 bars grant of injunction when equally efficacious relief is available through other means and when the plaintiffs have no personal interest in the property. (Paras 10.2, 17) D) Civil Procedure - Locus Standi - Agreement Holders Cannot Challenge Third-Party Rights - Transfer of Property Act, 1882 - The court considered whether agreement holders have locus standi to challenge third-party rights. Following K. Basavarajappa v. Tax Recovery Commissioner, Bangalore, the court held that a proposed vendee with an agreement to sell lacks locus standi to challenge third-party rights. The respondents, being mere agreement holders, could not maintain a suit for injunction against the appellant who was not a party to the agreement. (Paras 10, 18)
Issue of Consideration
Whether the plaint filed by the respondents seeking permanent injunction based on an agreement to sell is barred by law and liable to be rejected under Order VII Rule 11(a) and (d) of the Code of Civil Procedure, 1908
Final Decision
The Supreme Court allowed the appeal, set aside the impugned order of the High Court dated 02.06.2022, and rejected the plaint in O.S. No. 25968 of 2018 under Order VII Rule 11 CPC
Law Points
- A mere agreement to sell does not create any interest in the property under Section 54 of the Transfer of Property Act
- 1882
- A suit for permanent injunction without seeking declaration of title is not maintainable when title is disputed
- Order VII Rule 11 CPC allows rejection of plaint if it is barred by law or does not disclose a cause of action
- The court at the stage of Order VII Rule 11 must examine the plaint to see if it discloses a cause of action
- but can also consider whether the suit is barred by law based on admitted facts and legal principles
