Case Note & Summary
The case involved Canara Bank as the appellant against P. Selathal and others, concerning the rejection of plaints in two civil suits filed against the bank. The bank had sanctioned a term loan to a partnership firm, secured by a mortgage from the guarantor, M.C. Kallikutty. After the borrower defaulted, the bank obtained a decree from the Debt Recovery Tribunal (DRT) and issued a recovery certificate. The guarantor later filed a writ petition denying the guarantee and alleging fraud, leading to criminal proceedings against the bank's officer. Subsequently, the plaintiffs, claiming to be bona fide purchasers of the mortgaged property, filed suits to declare the DRT decree as void. The bank sought to reject the plaints under Order 7 Rule 11 of the CPC, arguing that the civil court lacked jurisdiction due to the provisions of the RDDBFI Act. The trial court dismissed the bank's applications, which was upheld by the High Court. The bank appealed to the Supreme Court, which found that the allegations of fraud were illusory and that the suits were filed after an unreasonable delay. The court emphasized that the plaintiffs should have pursued their remedies under the RDDBFI Act instead of filing civil suits. Ultimately, the Supreme Court allowed the bank's appeal, quashing the High Court's order and rejecting the plaints in both suits.
Headnote
A) Civil Procedure - Rejection of Plaint - Vexatious and Frivolous Suits - Order 7 Rule 11, Code of Civil Procedure, 1908 - The court held that the suits challenging the decree passed by the DRT were vexatious and filed with mala fide intention, thus liable to be rejected under Order 7 Rule 11(d) CPC. The plaintiffs failed to provide specific allegations of fraud regarding the mortgage created by the Guarantor, and the suits were deemed an abuse of process of law (Paras 10-12).
Issue of Consideration
Whether the suits filed by the plaintiffs were liable to be rejected in exercise of powers under Order 7 Rule 11(d) of the CPC.
Final Decision
The Supreme Court allowed the appeals, quashed the High Court's order, and rejected the plaints in O.S. No. 1269/2010 and O.S. No. 233/2011, holding that the suits were vexatious and filed with mala fide intention.
Law Points
- Order 7 Rule 11 CPC
- RDDBFI Act
- 1993
- Sections 18
- 19
- 20
- jurisdiction of civil court
- fraud allegations
- vexatious suits
