Case Study: Shri Mukund Bhavan Trust and Ors v. Shrimant Chhatrapati Udayan Raje Pratapsinh Maharaj Bhonsle and Anr.

“Courts should confidently grant relief under Order VII Rule 11(d) of the CPC when the plaint's averments clearly indicate that the suit is unquestionably barred by limitation.”

Citation: Civil Appeal No. 14807 of 2024 (Arising out of SLP (C) No. 18977 of 2016)

Date of Judgment: 20^th December, 2024

Court: Supreme Court of India

Bench: JB Pardiwala (J), R. Mahadevan (J)

Facts

Decision of the trial court

On 12th October 2009 the appellants filed an application under Order VII Rule 11(d) of the Civil Procedure Code (CPC), seeking rejection of the plaint. Their argument was that the reliefs sought in the suit were barred by limitation under Articles 58 and 59 of the Limitation Act, 1963. The appellants contended that the disputed properties had been lawfully acquired by them through a court auction in 1938 and a registered sale deed in 1952, and that neither the plaintiff nor his predecessors had taken timely legal action to challenge these transactions.

The trial court rejected the application, ruling that the issue of limitation was a mixed question of fact and law. It concluded that the matter required evidence to ascertain whether the plaintiff had acted within the prescribed limitation period and whether his claim had legal merit. The court decided that the limitation issue could not be resolved solely on the basis of the plaint and accompanying documents.

On 29th April 2014, following the remand of the case by the High Court, the trial court reexamined the appellants’ application under Order VII Rule 11(d). The appellants once again emphasized that the transactions in question dated back several decades, making the suit clearly barred by limitation.

The trial court, however, reiterated its earlier decision. It maintained that determining the issue of limitation required a detailed examination of the facts, including evidence to establish the timeline of events. The court ruled that the question of whether the plaintiff's claim was time-barred could only be decided during the trial and not at the preliminary stage.

Decision of the High Court

On 26th April 2016, High Court dismissed the appellants’ Civil Revision Application, which had challenged the trial court’s rejection of their plea under Order VII Rule 11(d) of CPC.

The High Court agreed with the trial court’s view that limitation was a mixed question of fact and law. It held that a conclusive determination on whether the suit was time-barred required examining the evidence presented by both parties.

The High Court also noted that the plaintiff had specifically pleaded in the plaint that he became aware of the alleged misrepresentation and unauthorized transactions in 2007. It accepted the plaintiff’s contention that his cause of action arose only after this discovery, thus justifying the need for a trial to ascertain the facts.

Decision of the Supreme Court

On 20th December 2024, Supreme Court overturned the decisions of the trial court and High Court and allowed the appellants’ application under Order VII Rule 11(d) of CPC, rejecting the plaint as barred by limitation. Key observations and findings by the Supreme Court include:

1. Bar of Limitation Clear from the Plaint

• The Court emphasized that when deciding an application under Order VII Rule 11(d), only the averments in the plaint and the accompanying documents are relevant. The court cannot rely on the defendant’s written statement or other extraneous materials at this stage.
• A meaningful reading of the plaint revealed that the plaintiff’s claim was hopelessly time-barred. The disputed properties were sold in 1938 and 1952, and the plaintiff’s predecessors had not taken any legal action to challenge these transactions for decades.

2. Fictional Cause of Action

• The plaintiff claimed that his cause of action arose in 2007 when he allegedly discovered the unauthorized transactions. However, the Court found this assertion to be a fictional and fabricated date, created solely to circumvent the bar of limitation.
• The Court observed that the plaintiff’s predecessors had constructive notice of the sales due to the registration of the sale deeds. Registered documents carry a presumption of validity under the law, and the limitation period to challenge them begins from the date of registration.

3. Purpose of Order VII Rule 11(d)

• The Court reiterated the principle that courts must not hesitate to reject plaints at the threshold if they are ex facie barred by limitation or other legal grounds. Allowing such cases to proceed to trial would result in unnecessary harassment of the defendants and waste of judicial resources.
• It criticized the lower courts for deferring the limitation issue to trial, stating that this approach contravened the spirit of Order VII Rule 11(d).

4. Constructive Notice and Limitation Act

• The Court emphasized that the plaintiff and his predecessors were deemed to have knowledge of the transactions from the date of registration of the sale deeds (1938 and 1952). Under Articles 58 and 59 of the Limitation Act, the limitation period to seek a declaration or cancellation of these transactions was three years from the date of knowledge.
• The Court rejected the argument that the plaintiff had only recently discovered the transactions, as this claim was unsupported by specific and credible evidence.

5. Clever Drafting and Abuse of Process

• The Court noted that the plaintiff’s attempt to rely on vague and unsubstantiated averments to create a cause of action amounted to clever drafting, designed to mislead the courts.
• Such tactics were deemed an abuse of the judicial process, and the Court held that allowing the suit to proceed would set a dangerous precedent.

6. Final Ruling

• The Supreme Court concluded that the suit was not only barred by limitation but also lacked any substantive basis. It directed the rejection of the plaint under Order VII Rule 11(d) of CPC, effectively dismissing the plaintiff’s claims.

Key legal issues discussed

1. Can a plaint be rejected under Order VII Rule 11(d) of CPC if it is barred by limitation?

Yes

The Supreme Court emphasized the mandatory nature of Order VII Rule 11(d) of CPC, which allows for the rejection of a plaint when it is evident from the plaint and accompanying documents that the suit is barred by any law, including the Limitation Act, 1963. The Court explained that the purpose of this provision is to prevent vexatious litigation and protect defendants from the unnecessary ordeal of undergoing a trial. Courts should not hesitate to dismiss cases at the outset when the limitation bar is clear on the face of the plaint.

In this case, the Court found that the suit was filed decades after the disputed transactions (1938 and 1952) and was thus hopelessly barred by limitation. The Court criticized the lower courts for deferring the issue to trial, stating that such an approach undermines the legislative intent behind Order VII Rule 11(d).

This principle was also highlighted in Unni v. Kunchi Amma[1], where it was held that limitation laws are meant to ensure diligence by parties and to avoid unnecessary burden on courts. Similarly, the Supreme Court here stressed that courts must reject suits barred by limitation to maintain the efficiency of the judicial process.

In paragraph 22 the court highlighted the Unni case in Prem Singh case and held that “Article 59 of Limitation Act would be attracted when coercion, undue influence, misappropriation or fraud which the plaintiff asserts is required to be proved. Article 59 would apply to the case of such instruments. It would, therefore, apply where a document is prima 32 facie valid. It would not apply only to instruments which are presumptively invalid”

Importantly, the Court cited previous decisions like Prem Singh v. Birbal[2] where it was held that the rejection of a plaint is warranted when the limitation bar is discernible without the need for additional evidence.

Court in paragraph 22 held that “It will also be useful to refer to the judgment of this Court in Prem Singh v. Birbal, where the scope of the Limitation Act, 1963 and Article 59 was discussed and held as under: “11. Limitation is a statute of repose. It ordinarily bars a remedy, but does not extinguish a right. The only exception to the said rule is to be found in Section 27 of the Limitation Act, 1963 which provides that at the determination of the period prescribed thereby, limited to any person for instituting a suit for possession of any property, his right to such property shall be extinguished.

2. Does the date of registration of a sale deed create constructive notice for limitation purposes?

Yes

The Court held that the registration of a sale deed provides constructive notice under Section 3 of the Transfer of Property Act, 1882. Constructive notice implies that once a document is registered, its contents are presumed to be known to everyone, including the plaintiff and their predecessors. Court in paragraph number 16, also referred to R.K. Mohd. Ubaidullah v. Hajee C. Abdul Wahab[3]

“Notice is defined in Section 3 of the Transfer of Property Act. It may be actual where the party has actual knowledge of the fact or constructive. “A person is said to have notice” of a fact when he actually knows that fact, or when, but for wilful abstention from an inquiry or search which he ought to have made, or gross negligence, he would have known it. Explanation II of said Section 3 reads: “Explanation II. —Any person acquiring any immovable property or any share or interest in any such property shall be deemed to have notice of the title, if any, of any person who is for the time being in actual possession thereof.” Section 3 was amended by the Amendment Act of 1929 in relation to the definition of “notice”. The definition has been amended and supplemented by three explanations, which settle the law in several matters of great importance. For the immediate purpose Explanation II is relevant. It states that actual possession is notice of the title of the person in possession. Prior to the amendment there had been some uncertainty because of divergent views expressed by various High Courts in relation to the actual possession as notice of title. A person may enter the property in capacity and having a kind of interest. But subsequently while continuing in possession of the property his capacity or interest may change. A person entering the property as tenant later may become usufructuary mortgagee or may be agreement holder to purchase the same property or may be some other interest is created in his favour subsequently. Hence with reference to subsequent purchasers it is essential that he should make an inquiry as to the title or interest of the person in actual possession as on the date when the sale transaction was made in his favour. The actual possession of a person itself is deemed or constructive notice of the title if any, of a person who is for the time being in actual possession thereof. A subsequent purchaser has to make inquiry as to further interest, nature of possession and title under which the person was continuing in possession on the date of purchase of the property. In the case on hand Defendants 2 to 4 contended that they were already aware of the nature of possession of the plaintiff over the suit property as a tenant and as such there was no need to make any inquiry. At one stage they also contended that they purchased the property after contacting the plaintiff, of course, which contention was negatived by the learned trial court as well as the High Court. Even otherwise the said contention is self-contradictory. In view of Section 19(b) of the Specific Relief Act and definition of “notice” given in Section 3 of the Transfer of Property Act read along with Explanation II, it is rightly held by the trial court as well as by the High Court that Defendants 2 to 5 were not bona fide purchasers in good faith for value without notice of the original contract.”

 In this case, the disputed properties were sold through registered transactions in 1938 and 1952. The predecessors of the plaintiff had ample opportunity to challenge these transactions within the limitation period but failed to do so. The plaintiff’s claim that he only became aware of the transactions in 2007 was rejected as baseless.

This reasoning aligns with Dilboo v. Dhanraji[4] case mentioned in paragraph 20 of judgment, where it was held that registration is a public act, intended to notify the world at large of a transaction. The Supreme Court here reinforced that the limitation period for challenging registered transactions begins on the date of registration, not when the plaintiff chooses to claim awareness.

“20…… Whenever a document is registered the date of registration becomes the date of deemed knowledge. In other cases where a fact could be discovered by due diligence then deemed knowledge would be attributed to the plaintiff because a party cannot be allowed to extend the period of limitation by merely claiming that he had no knowledge”

3. Is a claim based on a fictional cause of action sustainable in law?

No

The Supreme Court condemned the use of clever drafting to fabricate a cause of action, describing it as an abuse of the judicial process. It reiterated that courts must reject such plaints at the threshold under Order VII Rule 11(d) of CPC to prevent unnecessary harassment of defendants.

In this case, the plaintiff claimed that his cause of action arose in 2007 when he allegedly discovered the unauthorized transactions. However, the Court noted that this claim lacked specific evidence and was contradicted by the plaintiff's own acknowledgment of prior transactions. It held that such fictional causes of action undermine the intent of limitation laws. Further in paragraph 19 the court highlighted Ningawwa v. Byrappa Shiddappa Hireknrabar[5] and in the same case many other cases were also mentioned for better understanding.

“Wherein it was held as under: “5. The legal position will be different if there is a fraudulent misrepresentation not merely as to the contents of the document but as to its character. The authorities make a clear distinction between fraudulent misrepresentation as to the character of the document and fraudulent misrepresentation as to the contents thereof. With reference to the former, it has been held that the transaction is void, while in the case of the latter, it is merely voidable. In Foster v. Mackinon [(1869) 4 CP 704] the action was by the endorsee of a bill of exchange. The defendant pleaded that he endorsed the bill on a fraudulent representation by the acceptor that he was signing a guarantee. In holding that such a plea was admissible, the Court observed: “It (signature) is invalid not merely on the ground of fraud, where fraud exists, but on the ground that the mind of the signer did not accompany the signature; in other words, that he never intended to sign, and therefore in contemplation of law never did sign, the contract to which his name is appended…. The defendant never intended to sign that contract or any such contract. He never intended to put his name to any instrument that then was or thereafter might become negotiable. He was deceived, not merely as to the legal effect, but as to the ‘actual contents’ of the instrument.” This decision has been followed by the Indian courts Sanni Bibi v. Siddik Hossain [AIR 1919 Cal 728], and Brindaban v. Dhurba Charan [AIR 1929 Cal 606]. It is not the contention of the appellant in the present case that there was any fraudulent misrepresentation as to the character of the gift deed but Shiddappa fraudulently included in the gift deed plots 91 and 92 of Lingadahalli village without her knowledge. We are accordingly of the opinion that the transaction of gift was voidable and not void and the suit must be brought within the time prescribed under Article 95 of the Limitation Act.”

Additionally, court in paragraph number 24.2. referred T. Arivanandam v. T.V. Satyapal[6] where court held that while considering an application under Order VII Rule 11 CPC what is required to be decided is whether the plaint discloses a real cause of action, or something purely illusory, in the following words.

4. Can the issue of limitation always be deferred to trial as a mixed question of law and fact?

No

The Supreme Court in paragraph 26 of the judgment clarified that while limitation is generally a mixed question of law and fact, it can still be decided at the preliminary stage if the plaint itself reveals that the suit is time-barred by limitation.

In this case, the Court in paragraph 11 relied on Dahiben v. Arvindbhai Kalyanji and rejected the lower courts’ view that limitation required evidence. It emphasized that the power under Order VII Rule 11(d) is mandatory and must be exercised if the plaint appears ex facie barred.[7]

[1] ILR (1891) 14 Mad 26

[2] (2006) 5 SCC 353,

[3] (2000) 6 SCC 402: 2000 SCC OnLine SC 995 at page 410

[4] (2000) 7 SCC 702

[5] 1968 SCC OnLine SC 206 : (1968) 2 SCR 797 : (1968) 2 SCJ 555 : AIR 1968 SC 956

[6] SCC p. 470, para 5 of (1977) 4 SCC 467.

[7] (2020) 7 SCC 366. 

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