CANARA BANKversusP. SELATHAL AND ORS. ETC.ETC.

944                      [2020]REPORTS
               SUPREME COURT    2 S.C.R. 944                 [2020] 2 S.C.R.


A                               CANARA BANK
                                         v.
                      P. SELATHAL AND ORS. ETC.ETC.
                      (Civil Appeal Nos. 1863-1864 of 2020)
B                             FEBRUARY 28, 2020
            [UDAY UMESH LALIT, INDIRA BANERJEE AND
                        M. R. SHAH, JJ.]
             Code of Civil Procedure, 1908 – Or.7, r.11 – Rejection of
      Plaint – The appellant-bank sanctioned and granted a term loan to
C
      a partnership firm – The said loan was secured by mortgage of
      immovable property belonging to the said firm and land of a
      Guarantor – The land of the guarantor are subject matter of dispute
      – A Guarantor had signed Guarantee Deed and created a equitable
      mortgage by deposit of title deeds – The original borrower failed to
D     repay the loan amount – The DRT proceeded ex- parte against the
      Guarnator and directed the principal borrower, its partners and
      the Guarantor pay the sum of the term loan with interest – The
      Guarantor filed an I.A. in 2008 against the order of the DRT, for
      setting aside the ex-parte decree dated 27.8.2003, however, the same
      was dismissed – After seven years from the date of the decree dated
E
      27.8.2003 passed by the DRT, the respondents-plaintiffs filed two
      suits to declare the order dated 27.8.2003 as non- est, ultra-vires,
      null and void and not binding on the suit property – In the said
      suits, the bank filed application u/Or. 7, r.11 to reject the respective
      plaints – The bank contended that as per s.20(1) of Recovery of
F     Debts due to Banks and Financial Institutions Act, 1993 the appeal
      is provided to DRAT against the order of DRT and therefore, the
      Civil Court had no jurisdiction to entertain the suits – The
      respondents-plaintiffs opposed the applications stating that they
      have purchased the suit property from the original owner and that
      they are in possession and enjoyment of the suit property – The
G
      applications u/Or.7,r.11(d) were dismissed by the Trial Court – The
      High Court confirmed the orders passed by the Trial Court – On
      appeal, held: The decree passed by the DRT and even the order
      passed by the Recovery Officer are appealable u/s. 20 of the
      RDDBFI Act – The averments in suits, allege fraud with respect to
H     the partnership deed and there are no allegations at all with respect
                                        944
    CANARA BANK v. P. SELATHAL AND ORS. ETC.ETC.                          945


to mortgage created by the guarantor – The suits are vexatious and        A
are filed with malafide intention to get out of the judgment and
decree passed by the DRT – The plaintiffs are claiming right, title
on the basis of the sale deeds executed by the guarantor as power
of attorney holder of the original vendor/original owner – According
to the averments in the plaints that they have purchased the suit
                                                                          B
property from their vendor/original owner is factually incorrect –
Before, the execution of sale deeds, the lands were already put as a
security by way of mortgage – Further, the guarantor had filed I.A.
in 2008 against the judgment and decree by the DRT, he did not
disclose that he had already sold the property in favour of plaintiffs
– Thus, considering the overall facts and circumstances of the case       C
the suits filed by the plaintiffs are vexatious, frivolous and an abuse
of process of law and Court – Therefore, considering the law laid
down by the Supreme Court, the plaints are rejected u/Or. 7, r. 11 –
Both the Courts below, materially erred in not rejecting the plaints
in exercise of powers u/or. 7, r. 11(d) of the CPC.
                                                                          D
      Allowing the appeals, the Court
      HELD:1. The short question which is posed for
consideration of this Court is, 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 or not? [Para 7.1][957 D-E]                 E
      2. Applying the law laid down by this Court on exercise of
powers under Order 7 Rule 11 of the CPC to the facts of the case
on hand and the averments in the plaints, this Court is of the
opinion that both the courts below have materially erred in not
rejecting the plaints in exercise of powers under Order 7 Rule            F
11 of the CPC. As observed, the main prayer in the suits is
challenging the decree passed by the DRT. The decree passed
by the DRT and even the order passed by the Recovery Officer
are appealable under Section 20 of the Recovery of Debts due to
Banks and Financial Institutions Act, 1993. In the case of O.C.
Krishnan and others, this Court has observed and held that in             G
view of the alternate remedy of preferring the appeal before the
DRAT, the petition under Article 227 challenging the order passed
by the DRT shall not be maintainable, without exhaustion of such
remedy. In the case of O.C. Krishnan and others, decree passed
                                                                          H
946            SUPREME COURT REPORTS                      [2020] 2 S.C.R.


A     by the DRT was challenged in a petition under Article 227 of the
      Constitution of India. The High Court allowed the petition. While
      allowing the appeal of the bank – Punjab National Bank, this Court
      has observed that without exhaustion of the remedies under the
      RDDBFI Act, the High Court ought not to have exercised its
      jurisdiction under Article 227. [Para 8][960 D-G]
B
            3. Having considered the pleadings and the averments in
      the suits, more particularly the allegations of fraud, this Court
      finds that the allegations of fraud are with respect to the
      partnership deed and there are no allegations at all with respect
      to mortgage created by the Guarantor and that too with respect
C     to the deed of guarantee executed by the Guarantor. Much
      reliance is placed upon the judgment and order passed by the
      Magistrate holding the partners of the firm guilty. However, it is
      required to be noted that even in the said judgment passed by
      the Magistrate there is no reference to the deed of guarantee
D     and/or the mortgage created by the Guarantor. Even the bank is
      not a party to the said proceedings. It is reported that against the
      judgment and order passed by the learned Magistrate, further
      appeal is pending. Be that as it may, considering the pleadings/
      averments in the suits and the allegations of fraud, this Court is
      of the opinion that the allegations of fraud are illusory and only
E     with a view to get out of the judgment and decree passed by the
      DRT. This Court is of the opinion that therefore the suits are
      vexatious and are filed with a mala fide intention to get out of the
      judgment and decree passed by the DRT. As observed
      hereinabove, the plaintiffs are claiming right, title on the basis of
F     the sale deeds dated 30.01.1996 and 10.03.1997 respectively
      executed by the guarantor as power of attorney holder of the
      original owner. However, according to the averments in the
      plaints, they have purchased the suit property from their vendor
      which is factually incorrect. On a bare reading of the sale deeds,
      it appears that the sale deeds are executed by the guarantor as
G     power of attorney holder of the original vendor. As observed
      hereinabove, even in the year 2008, when the guarantor filed
      interlocutory application before the DRT to quash and set aside
      the ex-parte judgment and decree passed by the DRT, he did not
      disclose that he has already sold the property in favour of the
H
    CANARA BANK v. P. SELATHAL AND ORS. ETC.ETC.                         947


original plaintiffs. As observed, even the sale consideration is         A
alleged to have been paid in cash. Before the execution of the
sale deeds dated 30.01.1996 and 10.03.1997, the lands were
already put as a security by way of mortgage with the appellant-
bank by the guarantor. Thus, considering the overall facts and
circumstances of the case, the suits filed by the original plaintiffs
                                                                         B
are vexatious, frivolous and nothing but an abuse of process of
law and court. Therefore, considering the law laid down by this
Court in the aforesaid decisions, more particularly in the case of
T. Arivandandam, the suits being vexatious and frivolous, the
plaints are required to be rejected in exercise of powers under
Order 7 Rule 11 of the CPC. As pointed out by Krishna Iyer, J. in        C
T. Arivandandam, the ritual of repeating a word or creation of an
illusion in the plaint can certainly be unravelled and exposed by
the court while dealing with an application under Order 7 Rule
11(a). As observed by this Court, such proceedings are required
to be nipped in the bud. Even otherwise as observed hereinabove,
                                                                         D
without exhausting the remedy of appeal provided under the
RDDBFI Act, the suits with the basic relief of challenging the
decree passed by the DRT were liable to be dismissed, as
observed and held by this Court in the case of O.C. Krishnan and
others. [Para 10][961 F-H; 962 A-G]
      4. At this stage, it is also required to be noted that the suits   E
have been filed after a period of 15 years from the date of mortgage
and after a period of 7 years from the date of passing of the decree
by the DRT. In the plaints, it is averred that the plaintiffs came to
know about the mortgage and the judgment and decree passed
by the DRT only six months back. However, the said averments             F
can be said to be too vague. Nothing has been averred when and
how the plaintiffs came to know about the judgment and decree
passed by the DRT and the mortgage of the property. Only with a
view to get out of the law of limitation and only with a view to
bring the suits within the period of limitation, such vague
averments are made. On such vague averments, plaintiffs cannot           G
get out of the law of limitation. There must be specific pleadings
and averments in the plaints on limitation. Thus, on this ground
also, the plaints were liable to be rejected. As observed
hereinabove, the plaints are vexatious, frivolous, meritless and
nothing but an abuse of process of law and court. Therefore, this        H
948           SUPREME COURT REPORTS                      [2020] 2 S.C.R.


A     is a fit case to exercise the powers under Order 7 Rule 11 (d) of
      the CPC. Both the courts below have materially erred in not
      rejecting the plaints in exercise of powers under Order 7 Rule
      11(d) of the CPC. Both the courts below have materially erred in
      not exercising the jurisdiction vested in them. [Para 11][962 G-
      H; 963 A-D]
B
            Sopan Sukhdeo Sable v. Assistant Charity Commissioner
            (2004) 3 SCC 137 : [2004] 1 SCR 1004; T.
            Arivandandam v. T.V. Satyapal (1977) 4 SCC 467 :
            [1978] 1 SCR 742; Church of Christ Charitable Trust
            and Educational Charitable Society v. Ponniamman
C           Educational Trust (2012) 8 SCC 706 : [2012] 6 SCR
            404; Punjab National Bank v. O.C. Krishnan and Ors.
            (2001) 6 SCC 569 : [2001] 1 Suppl. SCR 466 – relied
            on.
            M/s. Cambridge Solutions Limited, Bangalore v. Global
D           software Limited, Chennai 2016-5-L.W. 45; A.B.C.
            Laminart Pvt. Ltd. v. A.P. Agencies (1989) 2 SCC 163;
            Madanuri Sri Rama Chandra Murthy v. Syed Jalal
            (2017) 13 SCC 174 : [2017] 5 SCR 294; Ram Singh v.
            Gram Panchayat Mehal Kalan (1986) 4 SCC 364 –
E           referred to.
                            Case Law Reference
      [2001] 1 Suppl. SCR 466        relied on             Para 4.1
      (1989) 2 SCC 163                referred to          Para 4.3
F     [2017] 5 SCR 294                referred to          Para 4.3
      [1978] 1 SCR 742                relied on            Para 7.3
      [2012] 6 SCR 404                relied on            Para 7.4
      [2004] 1 SCR 1004              relied on             Para 7.6
G     (1986) 4 SCC 364                referred to          Para 7.8
            CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1863-
      1864 of 2020.
           From the Judgment and Order dated 09.11.2017 of the High Court
      of Madras in CRP (PD) Nos. 2586 and 2587 of 2013.
H
     CANARA BANK v. P. SELATHAL AND ORS. ETC.ETC.                              949


      Rajesh Kumar-I, Anant Gautam, Ms. Sakshi Gaur, Sorabh Dahiya,            A
Vibhu Sharma, Nipun Sharma, Ms. Garvita, Anmol Mehta, Advs. for the
Appellant.
      Robin R. David, Febin V. Mathew, Dhiraj A. Philip, Samuel David,
M/s. Dua Associates, Advs. for the Respondents.
      The Judgment of the Court was delivered by                               B

      M. R. SHAH, J.
      1. Leave granted.
       2. Feeling aggrieved and dissatisfied with the impugned common
judgment and order dated 09.11.2017 passed by the High Court of                C
Judicature at Madras in C.R.P.(PD) No. 2586/2013 and C.R.P.(PD)
No. 2587/2013, by which the High Court has dismissed the said revision
applications preferred by the appellant herein – Canara Bank and has
confirmed the orders passed by the learned trial Court dismissing the
applications preferred by the appellant herein to reject the respective        D
plaints in exercise of powers under Order 7 Rule 11 of the CPC, original
defendant no.5 – Canara Bank in O.S. No. 1269/2010, who is original
defendant no.6 in O.S. No.233/2011, has preferred the present appeals.
      3. The facts leading to the present appeals in nutshell are as under:
       That the appellant – bank sanctioned and granted a term loan of         E
Rs.49,50,000/- to M/s Coimbatore Hatcheries, a partnership firm in which
one Shri Ravichandran and G. Suresh Babu were the partners, in the
year 1995. That the said loan was secured by mortgage of immovable
property belonging to the said firm and the land situated at Survey Nos.
472 and 488 of Sanganur Village of one Shri M.C. Kallikutty – Guarantor.
                                                                               F
That the land bearing Survey Nos. 472 and 488 of Sanganur Village of
one Shri M.C. Kallikutty – Guarantor is the subject matter of dispute.
At this stage, it is required to be noted that the said Shri M.C. Kallikutty
stood as a Guarantor. That the said Shri M.C. Kallikutty (hereinafter
referred to as the ‘Guarantor’) signed Guarantee Deed dated 28.09.1995
and created equitable mortgage by deposit of Title Deeds of the disputed       G
lands in question.
       3.1 That as the original borrower failed to repay the loan amount
due to the appellant-bank, the appellant-bank filed O.A. No. 489 of 2001
before the Debt Recovery Tribunal, Chennai in the month of October,
1997 against the principal borrower, its partners as well as against the       H
950            SUPREME COURT REPORTS                           [2020] 2 S.C.R.


A     Guarantor. That on 31.10.2001, DRT, Chennai passed an order in O.A.
      No. 489/2001 to proceed ex-parte against the Guarantor. That O.A. No.
      489/2001 was transferred to DRT, Coimbatore and was re-numbered as
      T.A. No. 822/2002. That T.A. No. 822/2002 (previously O.A. No. 489/
      2001) filed by the appellant-bank came to be decreed by the DRT for
      Rs.57,35,770/- with 18% interest per annum in favour of the appellant-
B
      bank and against the principal borrower as well as Guarantor. That a
      Recovery Certificate dated 16.09.2003 was issued in favour of the
      appellant-bank for a sum of Rs.57,35,770/- with 18% interest per annum.
              3.2 That Recovery Officer, DRT, Coimbatore issued a Demand
      Notice dated 11.11.2003 in R.P. No. 141/2003 to the principal borrower,
C     its partners and the Guarantor directing them to pay the sum of
      Rs.1,55,75,443/- as decreed in T.A. No. 822/2002. That the Guarantor
      filed a writ petition before the High Court of Madras denying his guarantee
      and creation of EMT and sought direction to the Crime Branch-CID to
      register an FIR and investigate into the matter. That on directions of the
D     High Court of Madras, FIR No. 152/2010 came to be registered on
      2.11.2005. The CB-CID, Coimbatore filed a final report under Section
      173(2) of Cr.P.C. for the offences under Sections 120B read with 465,
      466, 467, 468, 471, 420 and 419 of the IPC against the partners of the
      principal borrower and also against one K.V. Roshan Babu, Agricultural
      Extension Officer of the appellant – bank. It appears that thereafter the
E     criminal proceedings against the officer of the bank – Roshan Babu
      came to be quashed by the High Court vide judgment and order dated
      28.06.2011.
             3.3 That in the year 2007 and in pursuance of the Recovery
      Certificate in favour of the appellant-bank, the bank auctioned and sold
F     the properties of the partnership firm and recovered Rs.38 lacs. That
      thereafter after a period of five years from the date of the order passed
      by the DRT dated 27.08.2003, the Guarantor filed I.A. No. 1821 of 2008
      in the year 2008 for setting aside the ex-parte decree dated 27.08.2003
      before the DRT, Coimbatore. That vide order dated 12.06.2009, DRT,
G     Coimbatore dismissed the said I.A filed by the Guarantor and refused to
      condone the delay of 1337 days in challenging the ex-parte decree dated
      27.08.2003 and for condonation of delay of 2392 days in filing the petition
      to set aside the ex-parte order dated 31.10.2001.
           3.4 That thereafter after a period of 15 years from the date of
H     mortgage and after seven years from the date of the decree dated
     CANARA BANK v. P. SELATHAL AND ORS. ETC.ETC.                               951
                    [M. R. SHAH, J.]

27.08.2003 passed by the DRT, the respondents herein filed O.S. No.             A
1269/2010 and O.S. No. 233/2011 respectively in the Court of learned
Second Additional Subordinate Court, Coimbatore against the Guarantor,
principal borrower and its partners and the appellant-bank for a declaration
to declare the order dated 27.08.2003 passed by the DRT in T.A. No.
822/2002 as non-est, ultra vires, null and void and not binding on the suit
                                                                                B
property and also for a consequential permanent injunction restraining
the Recovery Officer from interfering with their peaceful possession
and enjoyment of the suit property by taking any action as against the
suit property by way of attachment, sale or otherwise. That in the aforesaid
two suits, the appellant-bank was joined as defendant no.5 in O.S. No.
1269/2010 and defendant no.6 in O.S. No. 233/2011 and was served                C
with the summons/notices of the suits. That the appellant-bank filed I.A.
No.431/2011 in O.S. No. 1269/2010 and I.A. No. 122/2012 in O.S. No.
233/2011 to reject the respective plaints in exercise of powers under
Order 7 Rule 11(d) of the CPC. It was the case on behalf of the appellant-
bank that in view of the specific bar of jurisdiction under Sections 18 and
                                                                                D
20(1) of the Recovery of Debts due to Banks and Financial Institutions
Act, 1993 (for short ‘RDDBFI Act’), the suits are not maintainable and
the civil court has no jurisdiction. It was the case on behalf of the
appellant-bank that as per Section 20(1) of the RDDBFI Act, the appeal
is provided to Debt Recovery Appellate Tribunal against the order of
DRT and therefore the civil court has no jurisdiction to entertain the          E
suits challenging the decree passed by the DRT.
       3.5 That the said applications were opposed by the original plaintiffs
submitting inter alia that they have purchased the suit property from the
original owner and that they are in possession and enjoyment of the suit
property. It was the case on behalf of the original plaintiffs that the         F
vendor did not create any equitable mortgage in favour of the bank and
the officials of the bank in collusion with the promoters of the principal
borrower created and fabricated equitable mortgage, as though the original
owner, their vendor created a mortgage. It was submitted that on a
complaint given by the Guarantor – Shri M.C. Kallikutty, the original
owner of the suit property, an FIR was registered on 02.11.2005 and a           G
charge sheet dated 18.08.,2007 has been filed which is pending. It was
alleged that the bank and promoters of the principal borrower played
fraud and obtained decree in the DRT. It was submitted that the fraud
played by the bank and others can be proved only by the civil forum and
the same cannot be decided by the DRT. It was also submitted that the           H
952             SUPREME COURT REPORTS                             [2020] 2 S.C.R.


A     plaintiffs are third parties and therefore they cannot approach the DRT
      and the DRAT. Therefore, it was prayed to dismiss the said applications.
            3.6 That the learned trial Court dismissed the said applications
      and refused to reject the respective plaints in exercise of powers under
      Order 7 Rule 11(d) of the CPC.
B            3.7 Feeling aggrieved and dissatisfied with the orders passed by
      the learned trial Court dismissing the aforesaid applications and refusing
      to reject the respective plaints under Order 7 Rule 11(d) of the CPC, the
      appellant-bank preferred two separate revision applications before the
      High Court. By the impugned common judgment and order, the High
C     Court has dismissed the said revision applications and has confirmed the
      orders passed by the learned trial Court rejecting the applications to
      reject the respective plaints in exercise of powers under Order 7 Rule
      11 CPC by observing that the issue of either fraud or impersonation or
      whether mortgage created by the Guarantor, vendor of the original
      plaintiffs, in favour of the bank is legal or not is a matter to be adjudicated
D     in the civil suits and in criminal case.
            3.8 Feeling aggrieved and dissatisfied with the impugned common
      judgment and order passed by the High Court in refusing to reject the
      respective plaints in exercise of powers under Order 7 Rule 11 CPC, the
      appellant-bank – original defendant no. 5 in O.S. No. 1269/2010 and
E     original defendant no.6 in O.S. No. 233/2011 has preferred the present
      appeals.
             4. Shri Rajesh Kumar, learned Advocate appearing on behalf of
      the appellant-bank has vehemently submitted that in the facts and
      circumstances of the case, the High Court has materially erred in rejecting
F     the respective applications and confirming the orders passed by the
      learned trial Court rejecting the applications preferred by the appellant-
      bank and refusing to reject the respective plaints in exercise of powers
      under Order 7 Rule 11(d) of the CPC. It is vehemently submitted by the
      learned Advocate that both, the High Court as well as the learned trial
G     Court have not properly appreciated and/or considered the relevant
      provisions of RDDBFI Act, more particularly Sections 18, 19 and 20 of
      the said Act.
            4.1 It is further submitted by the learned Advocate appearing on
      behalf of the appellant-bank that in substance the original plaintiffs are
      challenging the decree passed by the DRT, Coimbatore dated 27.08.2003
H
     CANARA BANK v. P. SELATHAL AND ORS. ETC.ETC.                               953
                    [M. R. SHAH, J.]

passed in T.A. No. 822/2002. It is submitted that under the RDDBFI              A
Act against the decree passed by the DRT, the remedy of appeal is
available under Section 20 of the said Act before the DRAT. It is submitted
that therefore RDDBFI Act being a Special Act, the procedure provided
under the said Act has to be followed. It is submitted that therefore the
civil suit challenging the decree passed by the DRT shall not be
                                                                                B
maintainable and therefore the case squarely falls within Order 7 Rule
11(d) of the CPC and therefore the learned trial Court as well as the
High Court ought to have rejected the respective plaints in exercise of
powers under Order 7 Rule 11(d) of the CPC. In support of the above
submission, learned Advocate appearing on behalf of the appellant –
bank has heavily relied upon the decision of this Court in the case of          C
Punjab National Bank v. O.C. Krishnan and others, (2001) 6 SCC
569. It is submitted that even in the said decision, as held by this Court,
even the petitions under Articles 226 and 227 of the Constitution of India
are held to be not maintainable.
        4.2 Learned Advocate appearing on behalf of the appellant-bank          D
has also heavily relied upon the decision of the Division Bench of the
Madras High Court in the case of M/s Cambridge Solutions Limited,
Bangalore v. Global Software Limited, Chennai, 2016-5-L.W. 45. It
is submitted that in the said case also the plaintiff filed a suit alleging
fraud while challenging the order passed by the Recovery Officer and
despite the allegation of fraud the suit challenging the order passed by        E
the Recovery Officer is held to be not maintainable. It is submitted that
in the aforesaid decision, the Division Bench of the High Court has found
the allegation of fraud to be illusory. It is submitted that special leave
petition against the said decision has been dismissed by this Court.
        4.3 It is further submitted by the learned Advocate appearing on        F
behalf of the appellant-bank that in the present case also the allegation
of fraud is not with respect to the Guarantee Deed executed by the
Guarantor – Shri M.C. Kallikutty, but with respect to Partnership Deed.
It is submitted that therefore the suits filed by the original plaintiffs are
frivolous and abuse of a process of law and therefore the plaints are           G
liable to be rejected on that ground also and in exercise of powers under
Order 7 Rule 11(d) of the CPC. In support of his above submission,
learned Advocate appearing on behalf of the appellant – bank has heavily
relied upon the decisions of this Court in the cases of T. Arivandandam
v. T.V. Satyapal (1977) 4 SCC 467; A.B.C. Laminart Pvt. Ltd. v. A.P.
                                                                                H
954            SUPREME COURT REPORTS                          [2020] 2 S.C.R.


A     Agencies (1989) 2 SCC 163; Sopan Sukhdeo Sable v. Assistant
      Charity Commissioner (2004) 3 SCC 137 and Madanuri Sri Rama
      Chandra Murthy v. Syed Jalal (2017) 13 SCC 174.
            4.4 Making the above submissions and relying upon the above
      decisions, it is prayed to allow the present appeals.
B            5. The present appeals are vehemently opposed by Shri Robin R.
      David, learned Advocate appearing on behalf of the original plaintiffs. It
      is vehemently submitted that in the facts and circumstances of the case,
      more particularly when there are specific allegations of fraud in the
      respective suits which can be decided only by the civil court, both, the
C     learned trial Court as well as the High Court have rightly refused to
      reject the plaints in exercise of powers under Order 7 Rule 11(d) of the
      CPC.
             5.1 It is further submitted by the learned Advocate appearing on
      behalf of the original plaintiffs that as such they are the bona fide
D     purchasers of the suit properties which were alleged to have been
      mortgaged by their vendor – Shri M.C. Kallikutty. It is submitted that in
      the criminal proceedings initiated by the said Shri Kallikutty, there are
      specific allegations of fraud and in fact charge-sheets have been filed in
      the criminal proceedings initiated by the said Shri M.C. Kallikutty. It is
      submitted that in fact thereafter in the criminal proceedings the trial
E     Court has convicted the partners of the partnership firm – G Suresh
      Babu and Ravi Chandran for the offences under Sections 120B read
      with 465, 466, 468, 471, 419 and 420 of the IPC. It is submitted that the
      learned Magistrate has specifically observed and held that accused
      entered into a criminal conspiracy and created a forged Partition Deed
F     of Shri M.C. Kallikutty by forging the signatures and thumb impressions
      of witnesses and obtained the loan from the bank. It is submitted that the
      learned trial Court as well as the High Court have rightly refused to
      reject the respective plaints under Order 7 Rule 11 (d) of the CPC.
            5.2 Making the above submissions, it is prayed to dismiss the
G     present appeals.
            6. In reply, learned Advocate appearing on behalf of the appellant-
      bank has submitted that so far as the criminal proceedings are concerned,
      the bank is not a party to the said criminal proceedings and therefore
      any observations/finding of the Magistrate shall not bind the bank.
H
     CANARA BANK v. P. SELATHAL AND ORS. ETC.ETC.                               955
                    [M. R. SHAH, J.]

       6.1 It is further submitted by the learned Advocate appearing on         A
behalf of the appellant – bank that even the criminal proceedings were
with respect to the partnership deed and not with respect to the guarantee
deed executed by Shri M.C. Kallikutty – Guarantor. It is submitted that
even the guarantee deed executed by Shri M.C. Kallikutty – Guarantor
was not even before the learned Magistrate. It is submitted that therefore
                                                                                B
the plaintiffs cannot rely upon the said criminal proceedings and/or cannot
take the shelter under the word “fraud” used in the plaints. It is submitted
that therefore the allegations of fraud in the plaints are illusory and the
suits are vexatious and have been filed with mala fide intention and
therefore this is a fit case to exercise powers under Order 7 Rule 11(d)
of the CPC.                                                                     C
       7. We have heard the learned Advocates appearing on behalf of
the respective parties at length.
       7.1 At the outset, it is required to be noted that there is already an
order passed by the DRT against the principal borrower and the Guarantor
and the recovery certificate issued by the Recovery Officer. That the           D
appellant-bank sanctioned the term loan in favour of the principal
borrower – partnership firm and its partners. The partners of the
partnership firm – principal borrower executed a Memorandum of
Agreement for Agricultural Loans, thereby agreeing to abide by the terms
and conditions depicted therein. The Guarantor – Shri M.C. Kallikutty,          E
who was defendant no.4 in the application before the DRT, also signed
the said agreement as co-obligant, making himself jointly and severally
liable to pay the loan amount due to the bank in respect of the said term
loan. The term loan was further secured by the partners of the partnership
firm – principal borrower by mortgaging the lands of the firm and also
by the Guarantor – Shri M.C. Kallikutty by mortgaging the lands owned           F
by him. That the judgment and decree came to be passed by the DRT
as far back as on 27.08.2003 and even the recovery certificate was
issued in favour of the bank on 16.09.2003. That after a period of 5
years the said Shri Kallikutty filed an interlocutory application before the
DRT to set aside the ex-parte decree dated 27.08.2003, which came to            G
be dismissed by the DRT on 12.06.2009. However, in the meantime, the
said Kallikutty initiated the criminal proceedings against the partners of
the partnership firm – principal borrower alleging forgery with respect
to the partnership deed. That thereafter after a period of 15 years from
the date of mortgage and after seven years from the date of decree
                                                                                H
956             SUPREME COURT REPORTS                               [2020] 2 S.C.R.


A     passed by the DRT, the original plaintiffs filed the present suits basically
      challenging the decree passed by the DRT dated 27.08.2003 alleging
      fraud. That in the said suits, it is the case on behalf of the original plaintiffs
      that they have purchased the suit property, which have been mortgaged
      while taking the term loan, from their vendor vide sale deeds dated
      30.01.1996 and 10.03.1997 respectively and as the suit lands purchased
B
      by them vide sale deeds dated 30.01.1996 and 10.03.1997 respectively
      were put to mortgage by fraud by the principal borrower – partners of
      the partnership firm and therefore the decree passed by the DRT shall
      not bind them. In the suits, the original plaintiffs have prayed inter alia
      for the following reliefs:
C            “a) declaring that the alleged order dated 27.8.03 passed by the
             Debt Recovery Tribunal, Coimbatore in T.A. No. 822/2002 is non-
             est, ultra vires, null and void, and not binding on the suit property
             and for a consequential permanent injunction restraining the 6th
             defendant from interfering with the plaintiff peaceful possession
D            and enjoyment of the suit property by taking any action as against
             the suit property by way of attachment or sale or otherwise;
             b) declaring the alleged mortgage said to have been created by
             the first defendant was the 5th defendant in respect of the suit
             property is non est, null and void and binding on the same and for
E            a consequent permanent injunction restraining the 5th defendant
             from interfering with the plaintiff’s possession and enjoyment of
             the suit property by taking any action as against the suit property
             by way of sale or otherwise.”
             Thus, basically the plaintiffs are challenging the decree passed by
F     the DRT being purchasers. At this stage, it is required to be noted that in
      fact the suit property was mortgaged in the month of September, 1995
      and the original plaintiffs have claimed that they have purchased the suit
      property on 30.01.1996 and 10.03.1997 respectively. It is also required
      to be noted at this stage that at no point of time and even when the
      Guarantor – Shri Kallikutty filed an interlocutory application before the
G     learned DRT in the year 2008 for quashing and setting aside the ex-
      parte decree passed by the DRT, he did not disclose that he had already
      sold the suit properties to the plaintiffs. It is also required to be noted at
      this stage that even the sale deeds dated 30.01.1996 and 10.03.1997
      respectively, as per the averments in the sale deeds, were executed by
H     Shri Kallikutty as power of attorney holder of the original owners and
     CANARA BANK v. P. SELATHAL AND ORS. ETC.ETC.                               957
                    [M. R. SHAH, J.]

even the sale consideration was paid in cash. As observed hereinabove           A
and as mentioned in the judgment and decree passed by the learned
DRT dated 27.08.2003, not only Kallikutty – Guarantor signed the
Memorandum of Agreement of Agricultural Loans dated 28.09.1995 by
which the partners of the firm agreed to make themselves jointly and
severally liable to pay the loan and became co-obligant, even the said
                                                                                B
Kallikutty also mortgaged the lands owned by him. On considering the
averments in the plaints there are allegations of fraud with respect to
partnership deed and that too by the partners of the partnership firm –
principal borrower. However, there is no reference at all in the plaints
with respect to properties mortgaged by Shri Kallikutty even after the
period of 15 years from the date of the mortgage and after 7 years from         C
the date of decree passed by the DRT, basically challenging the decree
passed by the DRT. As the suits were filed challenging the decree passed
by the DRT, the appellant-bank – one of the defendants filed applications
to reject the plaints in exercise of powers under Order 7 Rule 11(d) of
the CPC on the ground that considering the provisions of RDDBFI Act,
                                                                                D
more particularly Sections 18, 19 and 20 of the Act, the suits are not
maintainable. Both the applications are dismissed by the learned trial
Court and which are further confirmed by the High Court. Therefore,
the short question which is posed for consideration of this Court is, 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 or not?                              E
       7.2 While considering the aforesaid issue/question, few decisions
of this Court on exercise of powers under Order 7 Rule 11(d) of the
CPC are required to be referred to and considered.
        7.3 In the case of T.Arivandandam(supra),while considering
the very same provision i.e. Order 7 Rule 11 of the CPC and the decree          F
of the trial Court in considering such application, this Court in para 5 has
observed and held as under:
      “5. We have not the slightest hesitation in condemning the petitioner
      for the gross abuse of the process of the court repeatedly and
      unrepentantly resorted to. From the statement of the facts found          G
      in the judgment of the High Court, it is perfectly plain that the suit
      now pending before the First Munsif’s Court, Bangalore, is a
      flagrant misuse of the mercies of the law in receiving plaints.
      The learned Munsif must remember that if on a meaningful – not
      formal – reading of the plaint it is manifestly vexatious, and            H
958           SUPREME COURT REPORTS                            [2020] 2 S.C.R.


A          meritless, in the sense of not disclosing a clear right to sue, he
           should exercise his power under Order 7, Rule 11 CPC taking
           care to see that the ground mentioned therein is fulfilled. And, if
           clever drafting has created the illusion of a cause of action, nip it
           in the bud at the first hearing by examining the party searchingly
           under Order 10, CPC. An activist Judge is the answer to
B
           irresponsible law suits….”
             7.4 In the case of Church of Christ Charitable Trust and
      Educational Charitable Society v. Ponniamman Educational Trust
      (2012) 8 SCC 706, this Court in paras 13 has observed and held as
      under:
C
           “13. While scrutinizing the plaint averments, it is the bounden duty
           of the trial Court to ascertain the materials for cause of action.
           The cause of action is a bundle of facts which taken with the law
           applicable to them gives the plaintiff the right to relief against the
           defendant. Every fact which is necessary for the plaintiff to prove
D          to enable him to get a decree should be set out in clear terms. It is
           worthwhile to find out the meaning of the words “cause of action”.
           A cause of action must include some act done by the Defendant
           since in the absence of such an act no cause of action can possible
           accrue.”
E           7.5 In A.B.C. Laminart Pvt. Ltd. v. A.P. Agencies, Salem
      (supra), this Court explained the meaning of ”cause of action” as
      follows:
           “12.A cause of action means every fact, which if traversed, it
           would be necessary for the plaintiff to prove in order to support
F          his right to a judgment of the court. In other words, it is a bundle
           of facts which taken with the law applicable to them gives the
           plaintiff a right to relief against the defendant. It must include
           some act done by the defendant since in the absence of such an
           act no cause of action can possibly accrue. It is not limited to the
G          actual infringement of the right sued on but includes all the material
           facts on which it is founded. It does not comprise evidence
           necessary to prove such facts, but every fact necessary for the
           plaintiff to prove to enable him to obtain a decree. Everything
           which is not proved would give the defendant a right to immediate
           judgment must be part of the cause of action. But it has no relation
H          whatever to the defence which may be set up by the defendant
    CANARA BANK v. P. SELATHAL AND ORS. ETC.ETC.                               959
                   [M. R. SHAH, J.]

     nor does it depend upon the character of the relief prayed for by         A
     the plaintiff.”
      7.6 In the case of Sopan Sukhdeo Sable (supra) in paras 11
and 12, this Court has observed as under:
     “11. In I.T.C. Ltd. v. Debts Recovery Appellate Tribunal
     [(1998)2SCC70] it was held that the basic question to be decided          B
     while dealing with an application filed under Order 7 Rule 11 of
     the Code is whether a real cause of action has been set out in the
     plaint or something purely illusory has been stated with a view to
     get out of Order 7 Rule 11 of the Code.
     12. The trial Court must remember that if on a meaningful and not         C
     formal reading of the plaint it is manifestly vexatious and meritless
     in the sense of not disclosing a clear right to sue, it should exercise
     the power under Order 7 Rule 11 of the Code taking care to see
     that the ground mentioned therein is fulfilled. If clever drafting
     has created the illusion of a cause of action, it has to be nipped in     D
     the bud at the first hearing by examining the party searchingly
     under Order 10 of the Code. (See T. Arivandandam (supra).”
      7.7 In the case of Madanuri Sri Rama Chandra Murthy (supra),
this Court has observed and held as under:
     “7. The plaint can be rejected under Order 7 Rule 11 if conditions        E
     enumerated in the said provision are fulfilled. It is needless to
     observe that the power under Order 7 Rule 11 CPC can be
     exercised by the Court at any stage of the suit. The relevant facts
     which need to be looked into for deciding the application are the
     averments of the plaint only. If on an entire and meaningful reading      F
     of the plaint, it is found that the suit is manifestly vexatious and
     meritless in the sense of not disclosing any right to sue, the court
     should exercise power under Order 7 Rule 11 CPC. Since the
     power conferred on the court to terminate civil action at the
     threshold is drastic, the conditions enumerated under Order 7 Rule
     11 CPC to the exercise of power of rejection of plaint have to be         G
     strictly adhered to. The averments of the plaint have to be read as
     a whole to find out whether the suit is barred by any law. It is
     needless to observe that the question as to whether the suit is
     barred by any law, would always depend upon the facts and
     circumstances of each case. The averments in the written
                                                                               H
960             SUPREME COURT REPORTS                            [2020] 2 S.C.R.


A           statement as well as the contentions of the defendant are wholly
            immaterial while considering the prayer of the defendant for
            rejection of the plaint. Even when the allegations made in the
            plaint are taken to be correct as a whole on their face value, if
            they show that the suit is barred by any law, or do not disclose
            cause of action, the application for rejection of plaint can be
B
            entertained and the power under Order 7 Rule 11 CPC can be
            exercised. If clever drafting of the plaint has created the illusion
            of a cause of action, the court will nip it in the bud at the earliest
            so that bogus litigation will end at the earlier stage.”
             7.8 In the case of Ram Singh v. Gram Panchayat Mehal Kalan
C     (1986) 4 SCC 364, this Court has observed and held that when the suit
      is barred by any law, the plaintiff cannot be allowed to circumvent that
      provision by means of clever drafting so as to avoid mention of those
      circumstances, by which the suit is barred by law of limitation.
              8. Applying the law laid down by this Court in the aforesaid
D     decisions on exercise of powers under Order 7 Rule 11 of the CPC to
      the facts of the case on hand and the averments in the plaints, we are of
      the opinion that both the courts below have materially erred in not rejecting
      the plaints in exercise of powers under Order 7 Rule 11 of the CPC. As
      observed hereinabove, the main prayer in the suits is challenging the
E     decree passed by the DRT. The decree passed by the learned DRT and
      even the order passed by the Recovery Officer are appealable under
      Section 20 of the RDDBFI Act. In the case of O.C. Krishnan and
      others (supra), this Court has observed and held that in view of the
      alternate remedy of preferring the appeal before the DRAT, the petition
      under Article 227 challenging the order passed by the DRT shall not be
F     maintainable, without exhaustion of such remedy. In the case of O.C.
      Krishnan and others (supra), decree passed by the DRT was challenged
      in a petition under Article 227 of the Constitution of India. The High
      Court allowed the petition. While allowing the appeal of the bank – Punjab
      National Bank, this Court has observed that without exhaustion of the
G     remedies under the RDDBFI Act, the High Court ought not to have
      exercised its jurisdiction under Article 227. While holding so, in paragraph
      6, this Court has observed and held as under:
            “6. The Act has been enacted with a view to provide a special
            procedure for recovery of debts due to the banks and the financial
H           institutions. There is a hierarchy of appeal provided in the Act,
     CANARA BANK v. P. SELATHAL AND ORS. ETC.ETC.                                 961
                    [M. R. SHAH, J.]

       namely, filing of an appeal under Section 20 and this fast-track           A
       procedure cannot be allowed to be derailed either by taking
       recourse to proceedings under Articles 226 and 227 of the
       Constitution or by filing a civil suit, which is expressly barred.
       Even though a provision under an Act cannot expressly oust the
       jurisdiction of the court under Articles 226 and 227 of the
                                                                                  B
       Constitution, nevertheless, when there is an alternative remedy
       available, judicial prudence demands that the Court refrains from
       exercising its jurisdiction under the said constitutional provisions.
       This was a case where the High Court should not have entertained
       the petition under Article 227 of the Constitution and should have
       directed the respondent to take recourse to the appeal mechanism           C
       provided by the Act.”
       9. Relying upon and following the decision of this Court in the
case of O.C. Krishnan and others (supra), thereafter the Division
Bench of the Madras High Court in the case of M/s Cambridge Solutions
Limited (supra), has rejected the plaint in which the order passed by             D
the DRT was challenged, in exercise of powers under Order 7 Rule 11
(d) of the CPC. It is required to be noted that in the said case also there
were allegations of fraud in the plaint and considering the averments in
the plaint, it was found that the allegations of fraud are illusory. It is
observed by the Division Bench in the said decision that specific instances
and acts of fraud with evidence have to be pleaded in the plaint. It is           E
further observed that mere statements are not enough. It is further
observed that it is not sufficient if just fraud is pleaded and there must be
material to show that the fraud is committed.
        10. Having considered the pleadings and the averments in the
suits, more particularly the allegations of fraud, we find that the allegations   F
of fraud are with respect to the partnership deed and there are no
allegations at all with respect to mortgage created by the Guarantor –
Shri Kallikutty and that too with respect to the deed of guarantee executed
by the Guarantor. Much reliance is placed upon the judgment and order
passed by the learned Magistrate holding the partners of the firm guilty.         G
However, it is required to be noted that even in the said judgment passed
by the learned Magistrate there is no reference to the deed of guarantee
and/or the mortgage created by the Guarantor. Even the bank is not a
party to the said proceedings. It is reported that against the judgment
and order passed by the learned Magistrate, further appeal is pending.
                                                                                  H
962             SUPREME COURT REPORTS                             [2020] 2 S.C.R.


A     Be that as it may, considering the pleadings/averments in the suits and
      the allegations of fraud, we are of the opinion that the allegations of
      fraud are illusory and only with a view to get out of the judgment and
      decree passed by the DRT. We are of the opinion that therefore the
      suits are vexatious and are filed with a mala fide intention to get out of
      the judgment and decree passed by the DRT. As observed hereinabove,
B
      the plaintiffs are claiming right, title on the basis of the sale deeds dated
      30.01.1996 and 10.03.1997 respectively executed by Shri Kallikutty as
      power of attorney holder of the original owner. However, according to
      the averments in the plaints, they have purchased the suit property from
      their vendor which is factually incorrect. On a bare reading of the sale
C     deeds, it appears that the sale deeds are executed by Shri Kallikutty as
      power of attorney holder of the original vendor. As observed hereinabove,
      even in the year 2008, when the said Kallikutty filed interlocutory
      application before the DRT to quash and set aside the ex-parte judgment
      and decree passed by the DRT, he did not disclose that he has already
      sold the property in favour of the original plaintiffs. As observed
D
      hereinabove, even the sale consideration is alleged to have been paid in
      cash. Before the execution of the sale deeds dated 30.01.1996 and
      10.03.1997, the lands were already put as a security by way of mortgage
      with the appellant-bank by Shri Kallikutty. Thus, considering the overall
      facts and circumstances of the case, the suits filed by the original plaintiffs
E     are vexatious, frivolous and nothing but an abuse of process of law and
      court. Therefore, considering the law laid down by this Court in the
      aforesaid decisions, more particularly in the case of T. Arivandandam
      (supra), the suits being vexatious and frivolous, the plaints are required
      to be rejected in exercise of powers under Order 7 Rule 11 of the CPC.
      As pointed out by Krishna Iyer, J. in T. Arivandandam (supra), the
F
      ritual of repeating a word or creation of an illusion in the plaint can
      certainly be unravelled and exposed by the court while dealing with an
      application under Order 7 Rule 11(a). As observed by this Court, such
      proceedings are required to be nipped in the bud. Even otherwise as
      observed hereinabove, without exhausting the remedy of appeal provided
G     under the RDDBFI Act, the suits with the basic relief of challenging the
      decree passed by the DRT were liable to be dismissed, as observed and
      held by this Court in the case of O.C. Krishnan and others (supra).
             11. At this stage, it is also required to be noted that the suits have
      been filed after a period of 15 years from the date of mortgage and after
H     a period of 7 years from the date of passing of the decree by the DRT.
     CANARA BANK v. P. SELATHAL AND ORS. ETC.ETC.                                 963
                    [M. R. SHAH, J.]

In the plaints, it is averred that the plaintiffs came to know about the          A
mortgage and the judgment and decree passed by the DRT only six
months back. However, the said averments can be said to be too vague.
Nothing has been averred when and how the plaintiffs came to know
about the judgment and decree passed by the DRT and the mortgage of
the property. Only with a view to get out of the law of limitation and only
                                                                                  B
with a view to bring the suits within the period of limitation, such vague
averments are made. On such vague averments, plaintiffs cannot get
out of the law of limitation. There must be specific pleadings and
averments in the plaints on limitation. Thus, on this ground also, the plaints
were liable to be rejected. As observed hereinabove, the plaints are
vexatious, frivolous, meritless and nothing but an abuse of process of            C
law and court. Therefore, this is a fit case to exercise the powers under
Order 7 Rule 11 (d) of the CPC. Both the courts below have materially
erred in not rejecting the plaints in exercise of powers under Order 7
Rule 11(d) of the CPC. Both the courts below have materially erred in
not exercising the jurisdiction vested in them.
                                                                                  D
       12. In view of the above and for the reasons stated above, both
these appeals succeed. The impugned common judgment and order
passed by the High Court in dismissing the revision applications and the
orders passed by the learned trial Court rejecting the applications preferred
by the appellant-bank to reject the respective plaints in exercise of powers
under Order 7 Rule 11(d) of the CPC are hereby quashed and set aside.             E
Consequently, the plaints filed by the original plaintiffs being O.S. No.
1269/2010 and O.S. No. 233/2011 pending in the Court of Additional
Subordinate Court, Coimbatore are rejected. The instant appeals are
allowed accordingly. No costs.
                                                                                  F

Ankit Gyan                                                     Appeals allowed.




                                                                                  G




                                                                                  H