Case Note & Summary
The dispute arose from a registered agreement to sell executed on 12/06/2015 between the appellants (purchasers) and respondents (sellers) regarding suit property. The appellants filed Special Civil Suit No. 1162 of 2022 seeking specific performance of the agreement, possession, damages as per Clause 15, and alternatively refund of Rs.35,00,000 with interest, damages of Rs.1,50,00,000 and recovery of compound construction expenses. The respondents had issued a notice dated 02/08/2016 and a public notice dated 03/08/2016 purporting to cancel the agreement and power of attorney, stating readiness to refund Rs.13,00,000. The appellants pleaded that after receiving the notice, they met the respondents and were asked to wait because a family partition was to take place. Later, after becoming convinced that no partition was taking place, the appellants sent a notice dated 18/12/2021 demanding execution of sale deed and refund. Respondent No. 1 replied on 18/01/2022 stating readiness to refund Rs.13,00,000 and calling upon appellants to cancel the registered agreement and POA. The trial court rejected the plaint under Order VII Rule 11 (a), (b), (c) and (d) CPC by order dated 10/01/2024, holding that the suit was barred by limitation and disclosed no cause of action. The first appellate court confirmed this order on 09/10/2024 in Regular Civil Appeal No. 14 of 2024. The appellants filed a second appeal before the Bombay High Court. The High Court framed substantial questions of law on 28/01/2025 regarding cause of action, limitation, partial rejection of plaint, and remand. The court noted that the plaint could not be rejected if any one relief survived, following Central Bank of India v. Prabha Jain, (2025) 4 SCC 38. It held that the notice dated 02/08/2016 was not a conclusive refusal of performance because it called upon the appellants to cancel the agreement, and the reply dated 18/01/2022 acknowledged readiness to refund and treated the agreement as subsisting. The court observed that the fact only one defendant acknowledged liability was not sufficient to reject the plaint without evidence. Accordingly, the court found that the lower courts erred in rejecting the plaint on limitation and cause of action grounds. The final operative order was not explicitly captured in the provided excerpt, but the reasoning clearly favoured setting aside the rejection and allowing the suit to proceed on merits.
Headnote
A) Civil Procedure - Rejection of Plaint - Order VII Rule 11(a), (b), (c), (d) of Code of Civil Procedure, 1908 - Plaint cannot be rejected partially under Order VII Rule 11 CPC; if any one relief survives, the plaint must proceed - The appellants argued that even if specific performance was time-barred, alternative reliefs of refund and damages survived; the court referred to Central Bank of India v. Prabha Jain, (2025) 4 SCC 38, and held that there cannot be partial rejection of the plaint under Order VII Rule 11 CPC. Held that rejection of the entire plaint was not permissible if any relief was maintainable. (Paras 6, 14) B) Limitation - Specific Performance and Refund - Article 54 of Limitation Act, 1963 - Notice dated 02/08/2016 did not constitute conclusive refusal of performance - The notice stated that respondents decided to cancel the transaction and refund Rs.13,00,000 but ultimately called upon appellants to cancel the agreement; this indicated the transaction was not finally refused. Held that refusal of performance for limitation purposes was not ex facie established, and the cause of action based on subsequent notice of December 2021 and reply of 18/01/2022 could not be rejected at threshold. (Paras 11, 13) C) Civil Procedure - Cause of Action - Common cause of action for specific performance and alternative refund - Plaint pleaded that after August 2016 notices, appellants were asked to wait due to family partition, and only later suit notice was issued; this was sufficient to show a subsisting cause of action. Held that the cause of action was not illusory or non-existing, and the plaint disclosed a triable issue requiring evidence. (Paras 5.1, 10, 13) D) Evidence - Joint Promisors - Acknowledgement by one defendant not fatal - Respondent No. 1 replied on 18/01/2022 stating readiness to refund Rs.13,00,000 and called upon appellants to cancel the registered agreement and POA; this indicated acknowledgement of liability and subsisting agreement. Held that mere fact that only one of the joint promisors acknowledged liability would not justify rejection of plaint without giving opportunity to lead evidence. (Paras 11, 12) E) Precedent - Application of Supreme Court Judgments - Central Bank of India v. Prabha Jain, (2025) 4 SCC 38; Sejal Glass Limited v. Navilan Merchants Private Limited, (2018) 11 SCC 780 - Distinction from Nikhila Divyang Mehta v. Hitesh P. Sanghvi, SLP (C) No. 13459 of 2024 - The court followed Central Bank that plaint cannot be rejected if any relief survives, distinguishing the Supreme Court judgment relied upon by respondents which dealt with primary relief time-barred. Held that alternative reliefs cannot be summarily rejected on limitation without trial. (Paras 6, 8, 14)
Issue of Consideration
Whether both lower courts erred in rejecting the plaint under Order VII Rule 11 (a), (b), (c) and (d) CPC on grounds of limitation and lack of cause of action, particularly when alternative reliefs were claimed; whether partial rejection of plaint is permissible; whether notice dated 02/08/2016 constituted conclusive refusal of performance for limitation under Article 54 of Limitation Act.
Final Decision
The High Court held that the plaint could not be rejected under Order VII Rule 11 CPC because the notice dated 02/08/2016 did not constitute conclusive refusal of performance and the reply dated 18/01/2022 showed acknowledgement of liability and subsisting agreement. Even if one relief survived, the plaint cannot be rejected partially. The lower courts' rejection was held to be erroneous and the suit deserved trial on merits. The final operative order was not explicitly captured in the provided excerpt, but the reasoning clearly favoured allowing the appeal and restoring the suit.
Law Points
- Plaint cannot be rejected under Order VII Rule 11 CPC if any one relief survives
- partial rejection of plaint is impermissible
- cause of action for specific performance and alternative refund must be assessed together
- limitation under Article 54 of Limitation Act requires clear refusal of performance
- notice calling upon plaintiff to cancel agreement is not conclusive refusal
- subsequent acknowledgement of liability by one joint promisor may extend limitation and requires evidence
