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Madhav Prasad Aggarwal & Anr. v. Axis Bank Ltd. & Anr.

Civil Appeal · 2019 INSC 707Decided 1 Jul 2019
Civil Appeal arising out of SLP (Civil) No. 31579 of 2018
Justice A.M. Khanwilkar · Justice Ajay Rastogi

Background

The appellants had paid crores of rupees to a builder towards flats in a Mumbai residential project ("Orbit Haven") starting from 2009, relying on allotment letters, but no registered sale agreements were ever executed. The builder later mortgaged the project to Axis Bank for a Rs. 150 crore loan around 2013, and the appellants, alleging they were kept in the dark about this mortgage that jeopardized their rights to the flats, filed suits seeking possession, a declaration that the bank's mortgage was invalid against them, and alternative relief of a refund with interest. Axis Bank, as one of several defendants, applied to have the suits dismissed only against itself by invoking Order 7 Rule 11(d) of the Civil Procedure Code (rejection of a plaint that is barred by law), and the Bombay High Court allowed this, dismissing the suits only as against the bank while leaving them alive against the other defendants.

Decision Breakdown

The Supreme Court held that the power under Order 7 Rule 11(d) CPC to reject a plaint is an all-or-nothing power: a plaint as a whole must either proceed or be rejected in its entirety against all defendants; it cannot be partially rejected so as to dismiss the suit only against one out of several defendants while keeping it alive against the others. Since Axis Bank's application sought exactly such a partial rejection confined only to itself, the High Court's exercise of jurisdiction to grant that relief was itself a jurisdictional error, regardless of the merits of the bank's objections (such as any bar arising from Section 34 of the SARFAESI Act), which could instead be pursued through other appropriate remedies like Order 6 Rule 16 CPC. The Court allowed the appeals, set aside the High Court's judgment, and restored the trial court's order dismissing the bank's notice of motion, while leaving all substantive legal questions open to be decided afresh on their own merits.

Lesson Learnt

Order 7 Rule 11 CPC can only be used to throw out an entire plaint, not to selectively dismiss a suit against just one of several defendants: a litigant seeking to be excused on a technical bar specific to themselves must use a different procedural route, not this all-or-nothing provision.

Official source (sci.gov.in)View Judgment (PDF)

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