Case Note & Summary
The Civil Revision Petition was filed by the Defendant-Bank, City Union Bank Ltd., challenging the order dated March 19, 2020 passed by the XVIII Assistant Judge, City Civil Court, Chennai, dismissing I.A. No.3 of 2019 in O.S. No.3556 of 2018. The Plaintiff, M/s. Aptus Drums and Containers, had filed the suit seeking a permanent injunction against the Bank. The Plaintiff alleged that it had borrowed two loans totaling Rs.67,00,000/- from the Bank in 2012 and had repaid substantial amounts. However, the Bank transferred the entire loan liability to M/s. Reliance Asset Reconstruction Company Limited for Rs.64,78,427/- vide letter dated May 20, 2014. Despite the assignment, the Bank's agents continued to demand recovery and attempted to sell the Plaintiff's property. The Plaintiff sought an injunction restraining the Bank from interfering with its property. The Bank filed an application under Order VII Rule 11 CPC to reject the plaint on the ground that no cause of action survived against it after the assignment. The Trial Court dismissed the application, holding that the plaint disclosed a cause of action. The High Court allowed the revision, setting aside the Trial Court's order and rejecting the plaint. The Court held that once the debt was assigned, the Bank ceased to have any interest in the loan or the property, and the plaint disclosed no cause of action against the Bank. Continuing the suit would be an abuse of process. The Court also noted that the Plaintiff's remedy, if any, lies against the assignee, not the Bank.
Headnote
A) Civil Procedure Code, 1908 - Order VII Rule 11 - Rejection of Plaint - Cause of Action - Assignment of Debt - The plaint sought permanent injunction against the Bank after the Bank had assigned the loan liability to an Asset Reconstruction Company. The Court held that once the debt is assigned, the assignor ceases to be a necessary party and the plaint discloses no cause of action against the assignor. The Trial Court's dismissal of the application was set aside and the plaint was rejected. (Paras 1-10) B) Civil Procedure Code, 1908 - Order VII Rule 11 - Rejection of Plaint - Abuse of Process - The Court observed that continuing a suit against a party who has no interest in the subject matter amounts to an abuse of the process of court. The plaint was rejected to prevent wastage of judicial time. (Paras 8-10)
Issue of Consideration
Whether the Trial Court erred in dismissing the Defendant-Bank's application under Order VII Rule 11 CPC to reject the plaint on the ground that the plaint disclosed no cause of action against the Bank after the loan liability was assigned to an Asset Reconstruction Company.
Final Decision
The High Court allowed the Civil Revision Petition, set aside the order dated March 19, 2020 passed by the XVIII Assistant Judge, City Civil Court, Chennai in I.A. No.3 of 2019 in O.S. No.3556 of 2018, and rejected the plaint in O.S. No.3556 of 2018. No costs. Consequently, connected miscellaneous petitions were closed.
Law Points
- Order VII Rule 11 CPC
- Cause of Action
- Assignment of Debt
- Necessary Party
- Permanent Injunction
- Abuse of Process of Court
