Case Note & Summary
The present judgment arises from two Civil Revision Applications filed by the Regional Manager and Assistant General Manager of Union Bank of India (original defendants) against the common order dated 30/09/2020 passed by the learned Civil Judge, Senior Division, Nagpur, rejecting their applications under Order 7 Rule 11 of the Code of Civil Procedure, 1908 (CPC) in two separate suits. The respondents in CRA 05/2021 are M/s Punya Coal Road Lines, a proprietorship concern, and its proprietor Yugpradhan Mehta and his wife Smt. Ramila Mehta, along with M/s Nifty Chemicals Pvt. Ltd. In CRA 04/2021, the respondents are M/s Ashul Impex Pvt. Ltd., Yugpradhan Mehta, Smt. Ramila Mehta, and M/s Nifty Chemicals Pvt. Ltd. The suits were filed by the respondents (original plaintiffs) seeking recovery of amounts due under bank guarantees issued by the defendant bank. The plaintiffs alleged that the bank failed to honour the guarantees upon invocation. The defendants filed applications under Order 7 Rule 11 CPC seeking rejection of the plaints on the grounds that the suits were barred by limitation and did not disclose a cause of action. The trial court rejected these applications, holding that the plaints disclosed a cause of action and were not barred by law. The defendants challenged this order in the present revisions. The High Court heard both matters together as they involved common issues. The court examined the plaint averments and found that the plaintiffs had clearly stated the dates of invocation of the bank guarantees and the bank's refusal to pay. The court held that the cause of action arose on the date of invocation and the suits were filed within the period of limitation. The court also noted that the suits were filed as summary suits under Order 37 CPC and the defendants had already obtained leave to defend, which indicated that the suits were maintainable. The court further observed that the applications under Order 7 Rule 11 CPC were not maintainable as the suits were already proceeding with leave to defend. The court upheld the trial court's order and dismissed both revision applications, directing the trial court to expedite the disposal of the suits.
Headnote
A) Civil Procedure - Rejection of Plaint - Order 7 Rule 11 CPC - Cause of Action - The court considered whether the plaint discloses a cause of action and is barred by any law. Held that the plaint clearly discloses a cause of action based on invocation of bank guarantees and the suit is not barred by limitation or any other law. The trial court's order rejecting the application was upheld. (Paras 4-10) B) Civil Procedure - Summary Suit - Order 37 CPC - Leave to Defend - The court noted that the suit was filed as a summary suit under Order 37 CPC and the defendants had already obtained leave to defend. Held that the application under Order 7 Rule 11 CPC was not maintainable as the suit was already proceeding with leave to defend. (Paras 5-6) C) Limitation - Bank Guarantee - Cause of Action - The court examined whether the suit was barred by limitation. Held that the cause of action arose on the date of invocation of the bank guarantee and the suit was filed within three years from that date, hence within limitation. (Paras 7-8)
Issue of Consideration
Whether the trial court erred in rejecting the application under Order 7 Rule 11 of the Code of Civil Procedure, 1908 for rejection of plaint on the ground that the suit is barred by law and does not disclose a cause of action.
Final Decision
Both Civil Revision Applications are dismissed. The order dated 30/09/2020 passed by the learned Civil Judge, Senior Division, Nagpur rejecting the applications under Order 7 Rule 11 CPC is upheld. The trial court is directed to expedite the disposal of the suits.
Law Points
- Order 7 Rule 11 CPC
- cause of action
- plaint rejection
- summary suit
- Order 37 CPC
- limitation
- bank guarantee
- recovery suit
