Holding

A plaint based solely on an agreement to sell, without a registered sale deed or privity, does not disclose a cause of action and must be rejected under Order VII Rule 11(a) and (d) CPC.

Summary

The R.B.A.N.M.S. Educational Institution, a charitable trust in possession of a Bangalore property since 1905, was sued by respondents who claimed a right to prevent the institution from alienating the land based on an alleged 2018 agreement to sell and an advance cash payment of Rs.75 lakh. The institution filed an application under Order VII Rule 11(a) and (d) CPC seeking rejection of the plaint, arguing that an agreement to sell confers no enforceable interest against third parties and that the respondents lacked privity and a legal right to sue. Both the trial court and the Karnataka High Court rejected the application, prompting the institution to appeal to the Supreme Court. The Supreme Court held that the agreement to sell did not create any enforceable right, the respondents had no locus standi, and the plaint was barred and fictitious, warranting rejection under Order VII Rule 11. Consequently, the Supreme Court set aside the lower courts' orders, allowed the appeal, and dismissed the plaint, also issuing directions regarding cash transactions under the Income Tax Act.

Issues considered

The applicability of Order VII Rule 11(a) and (d) CPC to reject a plaint alleging a right based solely on an agreement to sell.
Whether an agreement to sell confers any enforceable interest or right to sue against a third party in possession of the property.
The existence of privity of contract between the respondents and the appellant and the locus standi of the respondents.
Whether the plaint discloses a cause of action or is barred by Section 54 of the Transfer of Property Act, 1882.
The relevance of cash payment of Rs.75 lakh under Section 269ST of the Income Tax Act and the need for judicial notice.

Legislation cited

Code of Civil Procedure, 1908
Income Tax Act, 1961s. 269ST, s. 271DA
Registration Act, 1908s. 17, s. 49
Specific Relief Act, 1963s. 34, s. 41(j)
Transfer of Property Act, 1882s. 52, s. 53, s. 53-A, s. 54

Headnote

Issue for Consideration Issue arose as regards the correctness of the order passed by the High Court and the trial court rejecting the application filed by the appellant u/Ord.VII r.11(a) and (d) CPC for the rejection of plaint. Headnotes† Code of Civil Procedure, 1908 – Rejection of plaint – Appellant Institute in possession of suit property since 1905 – Respondents filed suit seeking permanent injunction restraining appellant from creating any third-party interest over the property based on an alleged agreement to sell executed by respondents with a

Subjects

Agreement to sell immovable propertyConsideration in cashRejection of plaintSuspicious circumstances surrounding the agreementTitleFictitious suitAbuse of judicial processPrivity between partiesRelief of declarationVendors not parties to suitPersonal interestRight to sueIncurable defects in caseFictitious cause of actionPublic interest implicationsImpeding charitable workCurbing black moneyDigital economyBudget speech 2017Dark economyFinance Bill 2017Cap on cash transactionsIgnorance in law

Judgment

[2025] 5 S.C.R. 94 : 2025 INSC 490

The Correspondence, RBANMS Educational Institution
v.
B. Gunashekar & Another
(Civil Appeal No. 5200 of 2025)
16 April 2025
[J.B. Pardiwala and R. Mahadevan,* JJ.]

Issue for Consideration
Issue arose as regards the correctness of the order passed by the
High Court and the trial court rejecting the application filed by the
appellant u/Ord.VII r.11(a) and (d) CPC for the rejection of plaint.

Headnotes†
Code of Civil Procedure, 1908 – Ord.VII r.11 – Rejection of
plaint – Appellant Institute in possession of suit property since
1905 – Respondents filed suit seeking permanent injunction
restraining appellant from creating any third-party interest
over the property based on an alleged agreement to sell
executed by respondents with a third party – Respondents paid
Rs.75,00,000/- in cash as advance – Appellant filed application
u/Ord.VII r.11 seeking rejection of plaint – Both the trial court
and the High Court rejected the same – Correctness:
Held: Agreement for sale does not confer any right to the purchaser
to file a suit against a third party who is either the owner or in
possession, or who claims to be the owner and to be in possession –
Respondents’ claim suffered from multiple fatal defects – No privity
between the respondents and the appellant – Suit at the instance
of the respondents not maintainable and only the vendors could
have approached the court for a relief of declaration – Respondents
had no legal right that could be enforced against the appellant as
their claim impliedly barred by virtue of s.54 of TPA – Respondents
not in possession and the appellant in settled possession for over
a century, suit for bare injunction by proposed transferee not
maintainable – Respondents, being mere agreement holders, had
no personal interest in the suit schedule property that could be
enforced against third parties – No declaratory relief was sought –
Respondents sought only relief of permanent injunction restraining

* Author
[2025] 5 S.C.R. 95

The Correspondence, RBANMS Educational Institution v.
B. Gunashekar & Another

the appellant from alienating the property, without a declaration
affirming the title of their vendors – Without possession and without
seeking a declaration of title, not only the suit is barred but the
cause of action also fictitious – High Court without noticing the
said defects in the plaint, dismissed the application filed by the
appellant – When the defects go to the root of the case, barred
by law with fictitious allegations and are incurable, no amount of
evidence can salvage plaintiffs’ case – Furthermore, public interest
implications of the instant case are significant consideration – Such
institutions must be protected from speculative litigation that can
drain their resources and impede their charitable work – Allowing
suits like the instant one to proceed to trial, would waste judicial time
and resources, and encourage similar speculative and extortionate
litigations – Respondents having paid Rs.75,00,000/- by cash,
despite the introduction of s.269ST IT Act and the amendment to
s.271 DA, not only creates suspicion on the transaction, but also
displays violation of law – Ignorance in fact is excusable but not
the ignorance in law – Thus, the plaint ought to have been rejected
u/Ord. VII r.11(a) and (d) – Orders passed by the High Court as
well as trial court rejecting the application filed by the appellant,
cannot be sustained in law and is set aside – Transfer of Property
Act, 1882 – s.52, 53-A, 54. [Paras 15.1-20]

Code of Civil Procedure, 1908 – Ord.VII r.11 – Rejection of
plaint – Scope:
Held: Ord. VII r.11 serves as a crucial filter in civil litigation,
enabling courts to terminate proceedings at the threshold where
the plaintiff’s case, even if accepted in its entirety, fails to disclose
any cause of action or is barred by law, either express or by
implication – There is a bounden duty on the Court to discern
and identify fictitious suit, which on the face of it would be barred,
but for the clever pleadings disclosing a cause of action, that
is surreal – Generally, sub-clauses (a) and (d) are stand alone
grounds, that can be raised by the defendant in a suit – However,
it cannot be ruled out that under certain circumstances, clauses
(a) and (d) can be mutually inclusive – When clever drafting veils
the implied bar to disclose the cause of action; it then becomes
the duty of the Court to lift the veil and expose the bar to reject
the suit at the threshold – Power to reject a plaint under this
provision is not merely procedural but substantive, aimed at
preventing abuse of the judicial process and ensuring that court
96 [2025] 5 S.C.R.

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time is not wasted on fictitious claims failing to disclose any cause
of action to sustain the suit or barred by law – Merely including
a paragraph on cause of action not sufficient but rather, on a
meaningful reading of the plaint and the documents, it must
disclose cause of action – Plaint should contain such cause of
action that discloses all necessary facts required in law to sustain
the suit and not mere statements of fact which fail to disclose a
legal right of the plaintiff to sue and breach or violation by the
defendant(s). [Paras 14-15]

Constitution of India – Art. 141 – Applicability of the ratio laid
down by this Court, irrespective of the stage at which it is
relied upon:
Held: Ratio laid down by this court, is applicable irrespective of
the stage at which it is relied upon – Ratio is relevant and not
the stage – Once a ratio is laid down, the courts have to apply
the ratio, considering the facts of the case and once, found to be
applicable, irrespective of the stage, the same has to be applied,
to throw out frivolous suits. [Para 15.2.3]

Income Tax Act, 1961 – s.269ST – Penalty on cash receipt
of more than 2 lakh – Purpose and application of s.269ST –
Issuance of directions by the Supreme Court:
Held: s.269ST was introduced to curb black money by digitalising
the transactions above Rs.2,00,000/- – Most times, such
transactions go unnoticed or not brought to the knowledge of the
income tax authorities – Ignorance in fact is excusable but not
the ignorance in law – Thus, issuance of directions that whenever
suit filed with claim that Rs. 2,00,000/- and above is paid by cash
towards any transaction, the courts must intimate the same to
the jurisdictional Income Tax Department to verify the transaction
and the violation of s.269ST, if any’ – Income Tax authority to take
appropriate steps if such cases come to their notice – Whenever,
a sum of Rs. 2,00,000/- and above is claimed to be paid by cash
towards consideration for conveyance of any immovable property
in a document presented for registration, the jurisdictional Sub-
Registrar to intimate the same to the jurisdictional Income Tax
Authority – Whenever, it comes to the knowledge of any Income Tax
Authority that a sum of Rs. 2,00,000/- or above has been paid by
way of consideration in any transaction relating to any immovable
property from any other source or during the course of search or
[2025] 5 S.C.R. 97

The Correspondence, RBANMS Educational Institution v.
B. Gunashekar & Another

assessment proceedings, the failure of the registering authority to
be brought to the knowledge of the Chief Secretary of the State/
UT for initiating appropriate disciplinary action against such officer
who failed to intimate the transactions. [Para 18.1]

Case Law Cited
Rambhau Namdeo Gajre v. Narayan Bapuji Dhotra Dead throught
LRs. & Anr. [2004] Supp. 3 SCR 817 : (2004) 8 SCC 614; Suraj
Lamp & Industries (P) Ltd. v. State of Haryana & Another [2011] 11
SCR 848 : (2012) 1 SCC 656; K. Basavarajappa v. Tax Recovery
Commissioner, Bangalore & Others [1996] Supp. 7 SCR 523 :
(1996) 11 SCC 632; Jharkhand State Housing Board v. Didar Singh
& Another (2019) 17 SCC 692; Premji Ratansey Shah & Others v.
Union of India & Others [1994] Supp. 2 SCR 117 : (1994) 5 SCC
547; T. Arivandandam v. T.V. Satyapal & Another [1978] 1 SCR
742 : (1977) 4 SCC 467; P.V. Guru Raj Reddy v. P. Neeradha
Reddy & Others [2015] 1 SCR 1108 : (2015) 8 SCC 331; Soumitra
Kumar Sen v. Shyamal Kumar Sen & Others (2018) 5 SCC 644;
Dahiben v. Arvindbhai Kalyanji Bhanusali (Gajra) dead through
legal representatives [2020] 5 SCR 694 : (2020) 7 SCC 366; Om
Prakash Srivastava v. Union of India & Another [2006] Supp. 3
SCR 803 : (2006) 6 SCC 207; Cosmos Co. Operative Bank Ltd v.
Central Bank of India & Ors., 2025 SCC OnLine SC 352; Anathula
Sudhakar v. P. Buchi Reddy (Dead) by LRs and others [2008] 5
SCR 331 : AIR 2008 SC 2033 – referred to.

List of Acts
Transfer of Property Act, 1882; Specific Relief Act, 1963; Income
Tax Act, 1961; Contract Act, 1872; Registration Act, 1908.

List of Keywords
Agreement to sell immovable property; Consideration in cash;
Rejection of plaint; Suspicious circumstances surrounding the
agreement; Title; Fictitious suit; Abuse of judicial process; Privity
between parties; Relief of declaration; Vendors not parties to
suit; Personal interest; Right to sue; Incurable defects in case;
Fictitious cause of action; Public interest implications; Impeding
charitable work; Curbing black money; Digital economy; Budget
speech 2017; Dark economy; Finance Bill 2017; Cap on cash
transactions; Ignorance in law.
98 [2025] 5 S.C.R.

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Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5200 of 2025
From the Judgment and Order dated 02.06.2022 of the High Court
of Karnataka at Bengaluru in CRP No. 130 of 2021

Appearances for Parties
Advs. for the Appellant:
Ms. Asmita Singh, Tushar Nair.
Advs. for the Respondents:
Abraham Mathews, S Shivaprasad, Nishe Rajen Shonker.

Judgment / Order of the Supreme Court

Judgment

R. Mahadevan, J.

Leave granted.

2. The present appeal challenges the order dated 02.06.2022 passed
by the High Court of Karnataka at Bengaluru 1 in Civil Revision
Petition No.130 of 2021, whereby the High Court dismissed the
revision petition filed by the appellant against the order of the trial
Court dated 11.06.2021 rejecting their application filed under Order
VII Rule 11(a) and (d) of the Code of Civil Procedure, 19082 for
rejection of the plaint.
3. On 12.08.2022, when the matter was taken up for consideration,
this Court has passed the following order:
“Issue notice, returnable in six weeks.
There will be stay of the operation of proceedings in OS
No.25968 of 2018 pending before the Court of XIII Addl.
City Civil & Sessions Judge, MayoHall Unit, Bengaluru
(CCH-22) till the next date of hearing.”

1 Hereinafter referred to as “the High Court”
2 For short, “CPC”
[2025] 5 S.C.R. 99

The Correspondence, RBANMS Educational Institution v.
B. Gunashekar & Another

3.1. On 22.11.2024, the aforesaid interim order was extended by this
Court and is in force till date.

BRIEF FACTS

4. The appellant viz., R.B.A.N.M.S. Educational Institution, was established
in the year 1873 as a public charitable trust, dedicated to serving first-
generation learners from marginalized communities in urban Bangalore.
In 1905, a significant parcel of land, then known as ‘the Sappers
Practice Ground,’ was leased to the appellant. Subsequently, in 1929,
this property was formally conveyed to the appellant by the Municipal
Commissioner of Civil and Military Station of Bangalore. Since then,
the appellant has been in continuous possession of the said property,
utilizing it for various educational purposes including Pre-University
Colleges, first-grade degree colleges, and sporting facilities serving
both their institutions and the youth of Bangalore.
5. The respondents filed a suit bearing O.S.No.25968 of 2018 against the
appellant, before the City Civil Court and Sessions Judge at Bangalore,
seeking permanent injunction restraining the appellant from creating
any third-party interest over the suit schedule property, based on an
alleged agreement to sell executed by the respondents and Ramesh
S. Reddy with one Maheshwari Ranganathan and others, in respect of
the suit schedule property, on 10th April, 2018 for a sale consideration
of Rs.9,00,00,000/-, for which, they claim to have paid Rs.75,00,000/-
as an advance payment. It was alleged in the plaint that the appellant
was trying to manipulate the title deeds of the suit schedule property
with an intention to alienate or dispose of the same to third parties.
6. After service of summons, the appellant filed an application bearing
I.A. No. 3 of 2018 under Order VII Rule 11(a) and (d) CPC, seeking
rejection of the plaint, inter alia stating that the respondents are only
agreement holders and not owners of the suit schedule property
and that, mere execution of an agreement to sell does not create or
confer any right or interest in the property in favour of the proposed
purchasers.
7. The respondents filed their objections to the aforesaid application
filed by the appellant.
8. Upon hearing both sides, the trial Court rejected the aforesaid
application seeking rejection of the plaint on 03.06.2020. Challenging
100 [2025] 5 S.C.R.

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the same, the appellant preferred C.R.P. No. 205 of 2020, which was
allowed in part, by the High Court vide order dated 19.11.2020. The
operative portion of the order reads as under:
“The petition is allowed in part. The impugned order dated
3.6.2020 in O.S.No.25968/2018 on the XIII Additional City
Civil and Sessions Judge, Mayohall Unit, Bengaluru is set
aside. The petitioner’s application filed under Order VII
Rule 11(a) and (d) of Code of Civil Procedure is restored
for reconsideration calling upon the Civil Court to decide
on merits of the application in accordance with law in the
light of the grounds urged in an expedited manner but
within an outer limit of three months from the date of first
hearing after this order.”
9. Pursuant to the aforesaid order, the trial Court reconsidered the
application filed under Order VII Rule 11(a) and (d) CPC and
ultimately, rejected the same, on 11.06.2021. Aggrieved by the
same, the appellant preferred Civil Revision Petition No. 130 of
2021 before the High Court and the same also ended in dismissal
by the order impugned herein. Therefore, the appellant is before us
with the present appeal.

CONTENTIONS OF THE PARTIES
10. The learned counsel appearing for the appellant submitted that the
alleged agreement to sell, which forms the fundamental basis of
the suit, cannot create any interest in the suit schedule property as
per Section 54 of the Transfer of Property Act, 1882. In this regard,
the learned counsel relied on the judgment in Rambhau Namdeo
Gajre v. Narayan Bapuji Dhotra Dead throught LRs. & Anr.,3 wherein,
this Court held that a mere agreement to sell does not create any
interest in the property. This position was further reinforced in the
judgment in Suraj Lamp & Industries (P) Ltd. v. State of Haryana
& Another4, which reiterated that a contract for sale merely confers
a limited right under Section 53-A of the Transfer of Property Act,
1882. The learned counsel also highlighted the practical application
of this principle in K. Basavarajappa v. Tax Recovery Commissioner,

3 (2004) 8 SCC 614
4 (2012) 1 SCC 656
[2025] 5 S.C.R. 101

The Correspondence, RBANMS Educational Institution v.
B. Gunashekar & Another

Bangalore & Others,5 in which, it was held by this Court that a
proposed vendee with an agreement to sell lacks locus standi to
challenge third-party rights.
10.1. The learned counsel emphasized the suspicious circumstances
surrounding the alleged agreement to sell i.e., the purported
vendors have not been made parties to the suit, their addresses
were conspicuously absent in the plaint, and the entire advance
payment of Rs.75 lakhs was claimed to have been made in
cash without any documentary proof. Additionally, the learned
counsel invited our attention to the respondents’ pattern of
filing similar suits in respect of the other valuable properties in
Bangalore, suggesting a systematic attempt at land grabbing
through dubious agreements to sell.
10.2. The learned counsel further pointed out impropriety of
maintaining a pure injunction suit where title itself is in dispute.
Citing the decision of this court in Jharkhand State Housing
Board v. Didar Singh & Another,6 the learned counsel contended
that when there is a cloud over title, a suit merely for injunction
without seeking declaration of title is not maintainable. Referring
to the decision in Premji Ratansey Shah & Others v. Union of
India & Others,7 the learned counsel contended that Section
41(h) and (j) of the Specific Relief Act, 1963, bars grant of
injunction when equally efficacious relief is available through
other means and when the plaintiffs have no personal interest
in the property. Ultimately, the learned counsel submitted that
applying the ratio laid down in the decision in T. Arivandandam v.
T.V. Satyapal & Another8 to the facts of the present case, the
plaint is barred by law and does not disclose a right to sue
against the appellant herein on the basis of an agreement to
sell executed by the respondents, with third parties.
10.3. With these submissions and case laws, the learned counsel
prayed that this appeal will have to be allowed and the suit
filed by the respondents deserves to be rejected under Order
VII Rule 11 CPC.

5 (1996) 11 SCC 632
6 (2019) 17 SCC 692
7 (1994) 5 SCC 547
8 (1977) 4 SCC 467
102 [2025] 5 S.C.R.

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11. Per contra, the learned counsel appearing for the respondents would
submit that at the stage of considering an application under Order
VII Rule 11 CPC, the court must confine itself to the averments in
the plaint without examining the defense or other external materials.
Placing reliance on the decisions in P.V. Guru Raj Reddy v. P.
Neeradha Reddy & Others9 and Soumitra Kumar Sen v. Shyamal
Kumar Sen & Others,10 the learned counsel proceeded to argue that
the plaint’s averments must be accepted as true at this stage, and
the defendant’s objections are immaterial.
11.1. According to the learned counsel, the suit was filed to protect
the respondents’ legitimate interests over the property in
question under the agreement to sell, apprehending alienation
of the property by third parties. Further, the learned counsel
distinguished the decisions cited by the appellant, particularly
that in Rambhau Namdeo Gajre (supra) and contended that
it was decided after full trial and examination of evidence,
unlike the present case where the cause of action stems
from the agreement itself. The learned counsel also sought to
differentiate the decision in T. Arivandandam (supra) noting that
unlike that case which involved vexatious litigation following
lost eviction proceedings, the present matter involved genuine
rights under a registered agreement to sell. The learned counsel
further submitted that rejection of plaint is a drastic remedy that
should be exercised sparingly, only when the plaint is manifestly
vexatious and meritless; and that, the proper course would
be for the appellant to file a written statement and contest
the suit on merits, rather than seeking rejection of the plaint
at the threshold.
11.2. It is further submitted that both the Courts below have examined
the plaint in the light of Order VII Rule 11 (a) CPC to ascertain
that it does indeed make out a valid cause of action, i.e., that
the Respondents have acquired an interest in the property by
virtue of the agreement to sell dated 10.04.2018 and hence,
if the claim of the appellant is that they hold a valid title to the
property, it is for them to prove the same during trial.

9 (2015) 8 SCC 331
10 (2018) 5 SCC 644
[2025] 5 S.C.R. 103

The Correspondence, RBANMS Educational Institution v.
B. Gunashekar & Another

11.3. The learned counsel also submitted that the appellant is
misguided in asserting that the provisions of Section 53-A of
the Transfer of Property Act, 1882 act as a bar against parties
or interlopers who are not party to the transaction envisaged
in that section. That apart, the decision in K. Basavarajappa
(supra) does not apply to the facts of the present case, for
that the same was about whether an agreement to sell will
stand in the way of the property being sold under auction for
tax recovery purposes and the same cannot and should not
be used as a device to defeat the suit at the threshold.
11.4. Therefore, according to the learned counsel, the impugned
order of the High Court does not require any interference at
the hands of this court.

DISCUSSION AND FINDINGS
12. We have heard the learned counsel appearing for both sides and
perused the materials available record.
13. Seemingly, the appellant institution’s journey began nearly 150
years ago, and its possession of the disputed property dates back
to 1905, when it was initially leased and subsequently conveyed by
the Commissioner of Civil and Military Station of Bangalore. The
present dispute arose when the respondents filed a suit in O.S. No.
25968 of 2018 seeking permanent injunction against the appellant.
The respondents’ claim rests entirely on an agreement to sell dated
10.04.2018, purportedly executed by certain individuals who, notably,
are not parties to the suit. The appellant, confronted with this litigation,
filed an application under Order VII Rule 11(a) and (d) CPC seeking
rejection of the plaint. Both the trial court and the High Court rejected
the said application filed by the appellant. Hence, this appeal came
to be filed by the appellant before us.
14. Let us first examine the scope and purpose of Order VII Rule 11
CPC.11 This Court in Dahiben v. Arvindbhai Kalyanji Bhanusali

11 “11. Rejection of plaint.– The plaint shall be rejected in the following cases–
(a) where it does not disclose a cause of action;
(b) where the relief claimed in undervalued, and the plaintiff, on being required by the Court to correct the
valuation within a time to be fixed by the Court, fails to do so;
(c) where the relief claimed is properly valued but the plaint is written upon paper insufficiently stamped,
and the plaintiff, on being required by the Court to supply the requisite stamp-paper within a time to be
fixed by the Court, fails to do so;
104 [2025] 5 S.C.R.

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(Gajra) dead through legal representatives12, explained in detail the
applicable law for deciding the application for rejection of the plaint.
The relevant paragraphs of the said decision are reproduced below:
“23.1 …
23.2. The remedy under Order VII Rule 11 is an
independent and special remedy, wherein the Court is
empowered to summarily dismiss a suit at the threshold,
without proceeding to record evidence, and conducting a
trial, on the basis of the evidence adduced, if it is satisfied
that the action should be terminated on any of the grounds
contained in this provision.
23.3. The underlying object of Order VII Rule 11 (a) is that
if in a suit, no cause of action is disclosed, or the suit is
barred by limitation under Rule 11 (d), the Court would not
permit the plaintiff to unnecessarily protract the proceedings
in the suit. In such a case, it would be necessary to put
an end to the sham litigation, so that further judicial time
is not wasted.
23.4. In Azhar Hussain v. Rajiv Gandhi13 this Court held
that the whole purpose of conferment of powers under this
provision is to ensure that a litigation which is meaningless,
and bound to prove abortive, should not be permitted to
waste judicial time of the court, in the following words :
(SCC p.324, para 12)
“12. …The whole purpose of conferment of such power
is to ensure that a litigation which is meaningless, and
bound to prove abortive should not be permitted to
occupy the time of the Court, and exercise the mind

(d) where the suit appears from the statement in the plaint to be barred by any law;
(e) where it is not filed in duplicate;
(f) where the plaintiff fails to comply with the provisions of rule 9:
Provided that the time fixed by the Court for the correction of the valuation or supplying of the requisite
stamp paper shall not be extended unless the Court, for reasons to be recorded, is satisfied that the
plaintiff was prevent by any cause of exceptional nature for correction the valuation or supplying the
requisite stamp-paper, as the case may be, within the time fixed by the Court and that refusal to extend
such time would cause grave injustice to the plaintiff.”
12 (2020) 7 SCC 366 : 2020 SCC OnLine SC 562
13 1986 Supp SCC 315. Followed in Manvendrasinhji Ranjitsinhji Jadeja v. Vijaykunverba, 1998 SCC
OnLine Guj 281 : (1998) 2 GLH 823
[2025] 5 S.C.R. 105

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of the respondent. The sword of Damocles need not
be kept hanging over his head unnecessarily without
point or purpose. Even in an ordinary civil litigation,
the Court readily exercises the power to reject a
plaint, if it does not disclose any cause of action.”
23.5. The power conferred on the court to terminate a
civil action is, however, a drastic one, and the conditions
enumerated in Order VII Rule 11 are required to be strictly
adhered to.
23.6. Under Order VII Rule 11, a duty is cast on the
Court to determine whether the plaint discloses a cause
of action by scrutinizing the averments in the plaint14 read
in conjunction with the documents relied upon, or whether
the suit is barred by any law.
23.7. Order VII Rule 14(1) provides for production of
documents, on which the plaintiff places reliance in his
suit, which reads as under:
“14. Production of document on which plaintiff sues or
relies.– (1)Where a plaintiff sues upon a document or
relies upon document in his possession or power in
support of his claim, he shall enter such documents
in a list, and shall produce it in Court when the plaint
is presented by him and shall, at the same time
deliver the document and a copy thereof, to be filed
with the plaint.
(2) Where any such document is not in the possession
or power of the plaintiff, he shall, wherever possible,
state in whose possession or power it is.
(3) A document which ought to be produced in Court
by the plaintiff when the plaint is presented, or to
be entered in the list to be added or annexed to the
plaint but is not produced or entered accordingly,
shall not, without the leave of the Court, be received
in evidence on his behalf at the hearing of the suit.

14 Liverpool & London S.P. & I Assn. Ltd. V. M.V. Sea Success I (2004) 9 SCC 512
106 [2025] 5 S.C.R.

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(4) Nothing in this rule shall apply to document
produced for the cross examination of the plaintiff’s
witnesses, or, handed over to a witness merely to
refresh his memory.”
(emphasis supplied)

23.8. Having regard to Order VII Rule 14 CPC, the
documents filed alongwith the plaint, are required to be
taken into consideration for deciding the application under
Order VII Rule 11(a). When a document referred to in the
plaint, forms the basis of the plaint, it should be treated
as a part of the plaint.
23.9. In exercise of power under this provision, the Court
would determine if the assertions made in the plaint are
contrary to statutory law, or judicial dicta, for deciding
whether a case for rejecting the plaint at the threshold is
made out.
23.10. At this stage, the pleas taken by the defendant in
the written statement and application for rejection of the
plaint on the merits, would be irrelevant, and cannot be
adverted to, or taken into consideration15.
23.11. The test for exercising the power under Order VII
Rule 11 is that if the averments made in the plaint are
taken in entirety, in conjunction with the documents relied
upon, would the same result in a decree being passed.
This test was laid down in Liverpool & London S.P. & I
Assn. Ltd. v. M.V.Sea Success I which reads as : (SCC
p.562, para 139)
“139. Whether a plaint discloses a cause of action
or not is essentially a question of fact. But whether
it does or does not must be found out from reading
the plaint itself. For the said purpose, the averments
made in the plaint in their entirety must be held to be
correct. The test is as to whether if the averments
made in the plaint are taken to be correct in their
entirety, a decree would be passed.”

15 Sopan Sukhdeo Sable v. Charity Commr. (2004) 3 SCC 137
[2025] 5 S.C.R. 107

The Correspondence, RBANMS Educational Institution v.
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23.12. In Hardesh Ores (P.) Ltd. v. Hede & Co.16 the Court
further held that it is not permissible to cull out a sentence
or a passage, and to read it in isolation. It is the substance,
and not merely the form, which has to be looked into. The
plaint has to be construed as it stands, without addition or
subtraction of words. If the allegations in the plaint prima
facie show a cause of action, the court cannot embark
upon an enquiry whether the allegations are true in fact.
D.Ramachandran v. R.V.Janakiraman17.
23.13. If on a meaningful reading of the plaint, it is found
that the suit is manifestly vexatious and without any merit,
and does not disclose a right to sue, the court would be
justified in exercising the power under Order VII Rule 11
CPC.
23.14. The power under Order VII Rule 11 CPC may be
exercised by the Court at any stage of the suit, either
before registering the plaint, or after issuing summons to
the defendant, or before conclusion of the trial, as held
by this Court in the judgment of Saleem Bhai v. State of
Maharashtra18. The plea that once issues are framed, the
matter must necessarily go to trial was repelled by this
Court in Azhar Hussain (supra).
23.15. The provision of Order VII Rule 11 is mandatory in
nature. It states that the plaint “shall” be rejected if any of
the grounds specified in clause (a) to (e) are made out. If
the Court finds that the plaint does not disclose a cause
of action, or that the suit is barred by any law, the Court
has no option, but to reject the plaint.
24. “Cause of action” means every fact which would be
necessary for the plaintiff to prove, if traversed, in order
to support his right to judgment. It consists of a bundle of
material facts, which are necessary for the plaintiff to prove
in order to entitle him to the reliefs claimed in the suit.

16 (2007) 5 SCC 614
17 (1999) 3 SCC 267
18 (2003) 1 SCC 557
108 [2025] 5 S.C.R.

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24.1. In Swamy Atmanand v. Sri Ramakrishna Tapovanam19
this Court held:
“24. A cause of action, thus, means every fact, which
if traversed, it would be necessary for the plaintiff
to prove an order to support 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 actual
infringement of the right sued on but includes all the
material facts on which it is founded”
(emphasis supplied)

24.2. In T. Arivandandam v. T.V. Satyapal20 this 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: (SCC p. 470, para 5)
“5. …The learned Munsif must remember that if on
a meaningful – not formal – reading of the plaint it is
manifestly vexatious, and meritless, in the sense of
not disclosing a clear right to sue, he should exercise
his power under Order VII, Rule 11 C.P.C. 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 …”
(emphasis supplied)

24.3. Subsequently, in I.T.C. Ltd. v. Debt Recovery
Appellate Tribunal 21 this Court held that law cannot permit
clever drafting which creates illusions of a cause of action.
What is required is that a clear right must be made out
in the plaint.

19 (2005) 10 SCC 51
20 (1977) 4 SCC 467
21 (1998) 2 SCC 170
[2025] 5 S.C.R. 109

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24.4. If, however, by clever drafting of the plaint, it has
created the illusion of a cause of action, this Court in
Madanuri Sri Ramachandra Murthy v. Syed Jalal22 held
that it should be nipped in the bud, so that bogus litigation
will end at the earliest stage. The Court must be vigilant
against any camouflage or suppression, and determine
whether the litigation is utterly vexatious, and an abuse
of the process of the court.
…..
28. A three-Judge Bench of this Court in State of Punjab
v. Gurdev Singh23 held that the Court must examine the
plaint and determine when the right to sue first accrued
to the plaintiff, and whether on the assumed facts, the
plaint is within time. The words “right to sue” means the
right to seek relief by means of legal proceedings. The
right to sue accrues only when the cause of action arises.
The suit must be instituted when the right asserted in the
suit is infringed, or when there is a clear and unequivocal
threat to infringe such right by the defendant against whom
the suit is instituted. Order VII Rule 11(d) provides that
where a suit appears from the averments in the plaint to
be barred by any law, the plaint shall be rejected.”
14.1. Thus, it is clear that the above provision viz., Order VII Rule 11
CPC serves as a crucial filter in civil litigation, enabling courts
to terminate proceedings at the threshold where the plaintiff’s
case, even if accepted in its entirety, fails to disclose any cause
of action or is barred by law, either express or by implication.
The scope of Order VII Rule 11 CPC and the authority of the
courts is well settled in law. There is a bounden duty on the
Court to discern and identify fictitious suit, which on the face
of it would be barred, but for the clever pleadings disclosing
a cause of action, that is surreal. Generally, sub-clauses (a)
and (d) are stand alone grounds, that can be raised by the
defendant in a suit. However, it cannot be ruled out that under
certain circumstances, clauses (a) and (d) can be mutually

22 (2017) 13 SCC 174
23 (1991) 4 SCC 1 : 1991 SCC (L&S) 1082
110 [2025] 5 S.C.R.

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inclusive. For instances, when clever drafting veils the implied
bar to disclose the cause of action; it then becomes the duty of
the Court to lift the veil and expose the bar to reject the suit at
the threshold. The power to reject a plaint under this provision
is not merely procedural but substantive, aimed at preventing
abuse of the judicial process and ensuring that court time is
not wasted on fictitious claims failing to disclose any cause
of action to sustain the suit or barred by law. Therefore, the
appeal before us requires careful consideration of the scope of
rejection of the plaint under Order VII Rule 11 CPC, particularly,
in the context of the suit filed based on an agreement to sell
against third parties in possession.
15. Order VII Rule 11(a) CPC mandates rejection of the plaint where it
does not disclose a cause of action. In Om Prakash Srivastava v.
Union of India & Another,24 this Court pointed out that cause of
action means every fact which, if traversed, would be necessary
for the plaintiff to prove in order to support their right to judgment.
It consists of bundle of facts which narrate the circumstances and
the reasons for filing such suit. It is the foundation on which the
entire suit would rest. Therefore, it goes without saying that merely
including a paragraph on cause of action is not sufficient but rather,
on a meaningful reading of the plaint and the documents, it must
disclose a cause of action. The plaint should contain such cause of
action that discloses all the necessary facts required in law to sustain
the suit and not mere statements of fact which fail to disclose a legal
right of the plaintiff to sue and breach or violation by the defendant(s).
It is pertinent to note here that even if a right is found, unless there
is a violation or breach of that right by the defendant, the cause of
action should be deemed to be unreal. This is where the substantive
laws like Specific Relief Act, 1963, Contract Act, 1872, and Transfer
of Property Act, 1882, come into operation. A pure question of law
that can be decided at the early stage of litigation, ought to be
decided at the earliest stage. In the present case, the respondents’
claim based on an agreement to sell. The legal effect of such an
agreement must be examined in light of Section 54 of the Transfer
of Property Act, 1882, which explicitly states that a contract for the
sale of immovable property does not, of itself, create any interest

24 (2006) 6 SCC 207
[2025] 5 S.C.R. 111

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B. Gunashekar & Another

in or charge on such property. This principle has been consistently
upheld by this Court in the following judgments:

(i) Rambhau Namdeo Gajre (supra)
“13. The agreement to sell does not create an interest of
the proposed vendee in the suit property. As per Section
54 of the Act, the title in immovable property valued at
more than Rs 100 can be conveyed only by executing a
registered sale deed. Section 54 specifically provides that
a contract for sale of immovable property is a contract
evidencing the fact that the sale of such property shall
take place on the terms settled between the parties, but
does not, of itself, create any interest in or charge on such
property. It is not disputed before us that the suit land
sought to be conveyed is of the value of more than Rs
100. Therefore, unless there was a registered document of
sale in favour of Pishorrilal (the proposed transferee) the
title of the suit land continued to vest in Narayan Bapuji
Dhotra (original plaintiff) and remain in his ownership.
This point was examined in detail by this Court in State
of U.P. v. District Judge [(1997) 1 SCC 496] and it was
held thus : (SCC pp. 499-500, para 7)
“7. Having given our anxious consideration to the rival
contentions we find that the High Court with respect
had patently erred in taking the view that because
of Section 53-A of the Transfer of Property Act the
proposed transferees of the land had acquired an
interest in the lands which would result in exclusion
of these lands from the computation of the holding
of the tenure-holder transferor on the appointed day.
It is obvious that an agreement to sell creates no
interest in land. As per Section 54 of the Transfer of
Property Act, the property in the land gets conveyed
only by registered sale deed. It is not in dispute that
the lands sought to be covered were having value
of more than Rs 100. Therefore, unless there was a
registered document of sale in favour of the proposed
transferee agreement-holders, the title of the lands
would not get divested from the vendor and would
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remain in his ownership. There is no dispute on this
aspect. However, strong reliance was placed by
learned counsel for Respondent 3 on Section 53-A
of the Transfer of Property Act. We fail to appreciate
how that section can at all be relevant against the third
party like the appellant State. That section provides
for a shield of protection to the proposed transferee
to remain in possession against the original owner
who has agreed to sell these lands to the transferee
if the proposed transferee satisfies other conditions
of Section 53-A. That protection is available as a
shield only against the transferor, the proposed
vendor, and would disentitle him from disturbing the
possession of the proposed transferees who are
put in possession pursuant to such an agreement.
But that has nothing to do with the ownership of
the proposed transferor who remains full owner of
the said lands till they are legally conveyed by sale
deed to the proposed transferees. Such a right to
protect possession against the proposed vendor
cannot be pressed in service against a third party
like the appellant State when it seeks to enforce
the provisions of the Act against the tenure-holder,
proposed transferor of these lands.”
(emphasis supplied)

There was no agreement between the appellant and the
respondent in connection with the suit land. The doctrine of
part-performance could have been availed of by Pishorrilal
against his proposed vendor subject, of course, to the
fulfilment of the conditions mentioned above. It could not
be availed of by the appellant against the respondent
with whom he has no privity of contract. The appellant
has been put in possession of the suit land on the basis
of an agreement of sale not by the respondent but by
Pishorrilal, therefore, the privity of contract is between
Pishorrilal and the appellant and not between the appellant
and the respondent. The doctrine of part-performance as
contemplated in Section 53-A can be availed of by the
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proposed transferee against his transferor or any person
claiming under him and not against a third person with
whom he does not have a privity of contract.”

(ii) Suraj Lamp & Industries (P) Ltd. v. State of Haryana & Another,25
wherein, this Court comprehensively examined the nature of rights
created by an agreement to sell and concluded that such agreements
create, at best, a personal right enforceable against the vendor. The
relevant paragraphs read as under:
“16. Section 54 of TP Act makes it clear that a contract of
sale, that is, an agreement of sale does not, of itself, create
any interest in or charge on such property. This Court in
Narandas Karsondas v. S.A. Kamtam and Anr. (1977) 3
SCC 247, observed: (SCC pp.254-55, paras 32-33 & 37)
“32. A contract of sale does not of itself create
any interest in, or charge on, the property. This is
expressly declared in Section 54 of the Transfer of
Property Act. See Rambaran Prasad v. Ram Mohit
Hazra [1967]1 SCR 293. The fiduciary character
of the personal obligation created by a contract for
sale is recognised in Section 3 of the Specific Relief
Act, 1963, and in Section 91 of the Trusts Act. The
personal obligation created by a contract of sale is
described in Section 40 of the Transfer of Property Act
as an obligation arising out of contract and annexed
to the ownership of property, but not amounting to
an interest or easement therein.
33. In India, the word ‘transfer’ is defined with
reference to the word ‘convey’. The word `conveys’
in Section 5 of Transfer of Property Act is used in
the wider sense of conveying ownership...
37....that only on execution of conveyance, ownership
passes from one party to another....”
17. In Rambhau Namdeo Gajre v. Narayan Bapuji Dhotra
[2004 (8) SCC 614] this Court held:

25 (2012) 1 SCC 656
114 [2025] 5 S.C.R.

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“10. Protection provided under Section 53-A of
the Act to the proposed transferee is a shield only
against the transferor. It disentitles the transferor
from disturbing the possession of the proposed
transferee who is put in possession in pursuance
to such an agreement. It has nothing to do with the
ownership of the proposed transferor who remains
full owner of the property till it is legally conveyed
by executing a registered sale deed in favour of the
transferee. Such a right to protect possession against
the proposed vendor cannot be pressed in service
against a third party.”
18. It is thus clear that a transfer of immovable property
by way of sale can only be by a deed of conveyance (sale
deed). In the absence of a deed of conveyance (duly
stamped and registered as required by law), no right, title
or interest in an immovable property can be transferred.
19. Any contract of sale (agreement to sell) which is not
a registered deed of conveyance (deed of sale) would fall
short of the requirements of Sections 54 and 55 of the TP
Act and will not confer any title nor transfer any interest in
an immovable property (except to the limited right granted
under Section 53-A of the TP Act). According to the TP Act,
an agreement of sale, whether with possession or without
possession, is not a conveyance. Section 54 of the TP Act
enacts that sale of immovable property can be made only
by a registered instrument and an agreement of sale does
not create any interest or charge on its subject-matter.”
(iii) Cosmos Co. Operative Bank Ltd v. Central Bank of India & Ors26
“25. The observations made by this Court in Suraj Lamp
(supra) in paras 16 and 19 are also relevant.
…..
26. Suraj Lamp (supra) later came to be referred to and
relied upon by this Court in Shakeel Ahmed v. Syed Akhlaq

26 2025 SCC OnLine SC 352
[2025] 5 S.C.R. 115

The Correspondence, RBANMS Educational Institution v.
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Hussain, 2023 SCC OnLine SC 1526 wherein the Court
after referring to its earlier judgment held that the person
relying upon the customary documents cannot claim to be
the owner of the immovable property and consequently
not maintain any claims against a third-party. The relevant
paras read as under:—
“10. Having considered the submissions at the outset, it is
to be emphasized that irrespective of what was decided
in the case of Suraj Lamps and Industries (supra) the fact
remains that no title could be transferred with respect to
immovable properties on the basis of an unregistered
Agreement to Sell or on the basis of an unregistered
General Power of Attorney. The Registration Act, 1908
clearly provides that a document which requires compulsory
registration under the Act, would not confer any right, much
less a legally enforceable right to approach a Court of Law
on its basis. Even if these documents i.e. the Agreement
to Sell and the Power of Attorney were registered, still it
could not be said that the respondent would have acquired
title over the property in question. At best, on the basis of
the registered agreement to sell, he could have claimed
relief of specific performance in appropriate proceedings.
In this regard, reference may be made to sections 17 and
49 of the Registration Act and section 54 of the Transfer
of Property Act, 1882.
11. Law is well settled that no right, title or interest in
immovable property can be conferred without a registered
document. Even the judgment of this Court in the case
of Suraj Lamps & Industries (supra) lays down the same
proposition. Reference may also be made to the following
judgments of this Court:
(i). Ameer Minhaj v. Deirdre Elizabeth (Wright) Issar (2018)
7 SCC 639
(ii). Balram Singh v. Kelo Devi Civil Appeal No. 6733 of 2022
(iii). Paul Rubber Industries Private Limited v. Amit Chand
Mitra, SLP(C) No. 15774 of 2022.
116 [2025] 5 S.C.R.

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12. The embargo put on registration of documents would
not override the statutory provision so as to confer title
on the basis of unregistered documents with respect to
immovable property. Once this is the settled position,
the respondent could not have maintained the suit for
possession and mesne profits against the appellant, who
was admittedly in possession of the property in question
whether as an owner or a licensee.
13. The argument advanced on behalf of the respondent
that the judgment in Suraj Lamps & Industries (supra)
would be prospective is also misplaced. The requirement
of compulsory registration and effect on non-registration
emanates from the statutes, in particular the Registration
Act and the Transfer of Property Act. The ratio in Suraj
Lamps & Industries (supra) only approves the provisions
in the two enactments. Earlier judgments of this Court
have taken the same view.”
15.1. Undoubtedly, a sale deed, which amounts to conveyance, has
to be a registered document, as mandated under Section 17 of
the Registration Act, 1908. On the other hand, an agreement for
sale, which also requires to be registered, does not amount to
a conveyance as it is merely a contractual document, by which
one party, namely the vendor, agrees or assures or promises
to convey the property described in the schedule of such
agreement to the other party, namely the purchaser, upon the
latter performing his part of the obligation under the agreement
fully and in time. Section 54 of the Transfer of Property Act,
1882 explicitly lays down that a contract for sale will not confer
any right or interest. Section 53-A of the Transfer of Property
Act, 1882 offers protection only to a proposed transferee who
has part performed his part of the promise and has been put
into possession, against the actions of transferor, acting against
the interest of the transferee. For the proposed transferee to
seek any protection against the transferor, he must have either
performed his part of obligation in full or in part. The applicability
of Section 53-A of the Transfer of Property Act, 1882 is subject
to certain conditions viz., (a) the agreement must be in writing
with the owner of the property or in other words, the transferor
must be either the owner or his aut horised representative, (b)
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the transferee must have been put into possession or must
have acted in furtherance of the agreement and made some
developments, (c) the protection under Section 53-A is not an
exemption to Section 52 of the Transfer of Property Act, 1882
or in other words, a transferee, put into possession with the
knowledge of a pending lis, is not entitled to any protection,
(d) the transferee must be in possession when the lis is
initiated against his transferor and must be willing to perform
the remaining part of his obligation, (e) the transferee must be
entitled to seek specific performance or in other words, must
not be barred by any of the provisions of the Specific Relief
Act, 1963 from seeking such performance. The protection
under Section 53-A is not available against a third party who
may have an adversarial claim against the vendor. Therefore,
unless and until the sale deed is executed, the purchaser is
not vested with any right, title or interest in the property except
to the limited extent of seeking specific performance from his
vendor. An agreement for sale does not confer any right to the
purchaser to file a suit against a third party who is either the
owner or in possession, or who claims to be the owner and
to be in possession. In such cases, the vendor will have to
approach the court and not the proposed transferee.
15.2. In the present case, juxtaposing the above legal principles
to the facts of the case, we find that the respondents’ claim
suffers from multiple fatal defects that go to the root of the
case, which are as follows:
15.2.1. First, there is no privity between the respondents and
the appellant. The agreement to sell, is not between
the parties to the suit. According to Section 7 of the
Transfer of Property Act, 1882, only the owner, or any
person authorised by him, can transfer the property. We
have already held that an agreement to sell does not
confer any right on the proposed purchaser under the
agreement. Therefore, as a natural corollary, any right,
until the sale deed is executed, will vest only with the
owner, or in other words, the vendor to take necessary
action to protect his interest in the property. According
to the respondents, the property belongs to the vendors
and according to the appellant, the property vests in
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them. Since the respondents are not divested any right
by virtue of the agreement, they cannot sustain the suit
as they would not have any locus. Consequently, they
also cannot seek any declaration in respect of the title
of the vendors. But when the title is under a cloud, it is
necessary that a declaration be sought as laid down by
this Court in the judgment in Anathula Sudhakar v. P.
Buchi Reddy (Dead) by LRs and others27. Therefore,
the suit at the instance of the respondents/plaintiffs
is not maintainable and only the vendors could have
approached the court for a relief of declaration. In the
present case, strangely, the vendors are not arrayed as
parties to even support any semblance of right sought
by the respondents/plaintiffs, which we found not to be
in existence. Further, the respondents/plaintiffs claim
to have paid the entire consideration of Rs.75,00,000/-
in cash, despite the introduction of Section 269ST to
the Income Tax Act in 2017 and the corresponding
amendment to Section 271 DA. As held by us, the
agreement can only create rights against the proposed
vendors and not against third parties like the appellant
herein. As the agreement to sell does not create any
transferable interest or title in the property in favour
of the respondents/ plaintiffs, as per Section 54 of the
Transfer of Property Act, 1882, we hold that the attempt
of the plaintiffs to disclose the cause of action through
clever drafting, based solely on an agreement to sell,
must fail, as such disclosure cannot be restricted to
mere statement of facts but must disclose a legal right
to sue.
15.2.2. Secondly, and perhaps more fundamentally, as we
have seen and held above, the respondents have no
legal right that can be enforced against the appellant
as their claim is impliedly barred by virtue of Section
54 of the Transfer of Property Act, 1882. Their remedy,
if any, lies against their proposed vendors. The plaint
averments remain silent regarding the execution of

27 AIR 2008 SC 2033 : MANU/SC/7376/2008
[2025] 5 S.C.R. 119

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a registered sale deed in favour of the respondents,
which alone can confer a valid right on them to file a
suit against the appellant as held by us earlier. Another,
remedy available to them is to institute a suit against
the vendors for specific performance. This principle
was clearly established in K. Basavarajappa (supra),
wherein this Court held that an agreement holder
lacks locus standi to maintain actions against third
parties. The relevant paragraph of the said judgment
is extracted below:
“8. … By mere agreement to sell the appellant
got no interest in the property put to auction
to enable him to apply for setting aside such
auction under Rule 60 and especially when
his transaction was hit by Rule 16(1) read
with Rules 51 and 48. Consequently he could
not be said to be having any legal interest
to entitle him to move such an application.
Consequently no fault could be found with
the decision of the Division Bench of the
High Court rejecting the entitlement of the
appellant to move such an application.”
15.2.3. The contention of the learned counsel for the
respondents that the judgements relied upon by the
appellant are not applicable, cannot be accepted for the
simple reason that the ratio laid down by this court, is
applicable irrespective of the stage at which it is relied
upon. What is relevant is the ratio and not the stage.
Such contentions go against the spirit of Article 141 of
the Constitution of India. Once a ratio is laid down, the
courts have to apply the ratio, considering the facts of
the case and once, found to be applicable, irrespective
of the stage, the same has to be applied, to throw out
frivolous suits. There is no gainsaying in contending
that the other party must be put to undergo the ordeal
of entire trial, when the plaintiff’s claim is either barred
by law or the plaint fails to disclose a cause of action,
as it would amount to abuse of process of law, wasting
the precious time of the courts. On the other hand,
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the judgments relied upon by the respondents do not
come into their aid as the judgments referred to by
them also lay down the proposition that the plaint can
be rejected if on a meaningful reading of it, fails to
disclose a cause of action or is barred by law. In the
present case, from the facts, we also find this to be a
case of champertous litigation, between the plaintiffs
and the vendors, who are not parties to the suit.
Though champertous litigations have been recognized
in our country to some extent by way of amendment
to CPC by certain states, considering the facts of the
present case and the averments in the plaint, we only
find the litigation to be inequitable, unconscionable or
extortionate.
15.2.4. Further, the respondents are not in possession of
the property. Whereas, the appellant’s possession
since 1905 is admitted in the plaint itself. In such
circumstances, where the plaintiffs are not in possession
and the defendant is in settled possession for over
a century, a suit for bare injunction by a proposed
transferee is clearly not maintainable. Section 41(j) of
the Specific Relief Act, 1963 prohibits grant of injunction
when the plaintiff has no personal interest in the matter.
In the present case, the respondents, being mere
agreement holders, have no personal interest in the
suit schedule property that can be enforced against
third parties. The “personal interest” is to be understood
in the context of a legally enforceable right, as when
there is a bar in law, the mere existence of an interest
in the outcome cannot give a right to sue. As held by
us above, no declaratory relief has been sought as
contemplated under Section 34 of the Specific Relief
Act, 1963. This principle was clearly established in
Jharkhand State Housing Board (supra), in which, this
Court emphasized that where title is in dispute, a mere
suit for injunction is not maintainable. The relevant
portion of the said judgment is reproduced hereunder:-
“11. It is well settled by catena of judgments of
this Court that in each and every case where
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the defendant disputes the title of the plaintiff
it is not necessary that in all those cases
plaintiff has to seek the relief of declaration.
A suit for mere injunction does not lie only
when the defendant raises a genuine dispute
with regard to title and when he raises a cloud
over the title of the plaintiff, then necessarily in
those circumstances, plaintiff cannot maintain
a suit for bare injunction.”
15.2.5. Yet another defect in the plaint is regarding the identity
of the property. The respondents/plaintiffs, as seen
above, have admitted to the possession of the appellant
over the suit property. The plaint, on one hand, raises
a dispute as to whether the property claimed by the
respondents is the same as that possessed by the
appellant, and on the other hand, seeks only a relief
of permanent injunction restraining the appellant/
defendant from alienating the property, without seeking
a declaration affirming the title of their vendors. The
entitlement of the plaintiffs to the possession rests on
the title of their vendors and it is not an independent
right. Without possession and without seeking a
declaration of title, not only is the suit barred but the
cause of action is also fictitious.
16. The High Court without noticing the above defects in the plaint,
dismissed the application filed by the appellant under Order VII
Rule 11 CPC by observing that the cause of action is a mixed
question of fact and law and that the matter requires trial. When
the defects go to the root of the case, barred by law with fictitious
allegations and are incurable, no amount of evidence can salvage
the plaintiffs’ case. Though an agreement to sell creates certain
rights, these rights are purely personal between the parties to the
agreement and can only be enforced against the vendors or, in
limited circumstances, under Section 53A of the Transfer of Property
Act, 1882, against a subsequent transferee with notice, as held
by us above. They cannot be enforced against third parties who
claim independent title and possession. Therefore, the High Court’s
observation that an agreement to sell creates an “enforceable right”
cannot be countenanced by us.
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17. At the same time, we are conscious of principle that only averments
in the plaint are to be considered under Order VII Rule 11 CPC.
While it is true that the defendant’s defense is not to be considered
at this stage, this does not mean that the court must accept
patently untenable claims or shut its eyes to settled principles of
law and put the parties to trial, even in cases which are barred
and the cause of action is fictitious. In T. Arivandandam (supra),
this Court emphasized that where the plaint is manifestly vexatious
and meritless, courts should exercise their power under Order
VII Rule 11 CPC and not waste judicial time on matters that are
legally barred and frivolous. The present case falls squarely within
this principle.
18. In the instant case, admittedly, no sale was originally effected and only
part consideration was made, which was not even to the appellant,
but rather to a third party. Upon discovering that the property did
not belong to the third party, the respondents instituted a suit. It
must be noted that the appellant has been in possession of the suit
schedule property for several decades. Given these circumstances,
the trial court must have adopted a fair and balanced approach,
carefully weighing all relevant factors, considered the provisions of
the Transfer of Property Act, 1882 and the Specific Relief Act, 1963,
but it did not do so. The decision of the trial Court was also affirmed
by the High Court. However, we have to take into consideration that
the respondents are in the habit of filing similar suits in respect of
other valuable properties in Bangalore, based on various alleged
agreements to sell, which do not confer any right to sue. On the
other hand, the appellant is a 148-year-old charitable trust serving
marginalized communities. The public interest implications of this
case are significant consideration. Such institutions must be protected
from speculative litigation that can drain their resources and impede
their charitable work. Moreover, allowing suits like the present one
to proceed to trial, would not only waste judicial time and resources,
but also encourage similar speculative and extortionate litigations.
Hence, this is a fit case for the imposition of costs on the respondents
under Section 35A of the Civil Procedure Code, 1908. However, we
refrain from doing so at this stage. At the same time, the respondents
are hereby cautioned that any future misuse of the judicial process
lacking in bonafides may invite strict action including imposition of
exemplary costs.
[2025] 5 S.C.R. 123

The Correspondence, RBANMS Educational Institution v.
B. Gunashekar & Another

18.1. Further, through the averments made in the plaint and in the
agreement, the respondents/plaintiffs have claimed to have
paid huge sum towards consideration by cash. It is pertinent to
recall that Section 269ST of the Income Tax Act, was introduced
to curb black money by digitalising the transactions above
Rs.2,00,000/- and contemplating equal amount of penalty under
Section 271DA of the Act. As per the said provisions, action is
to be taken on the recipient. However, there is also an onus on
the plaintiffs to disclose their source for such huge cash. The
Central Government thought it fit to cap the cash transactions
and move forwards towards digital economy to curb the dark
economy which has a drastic effect on the economy of the
country. It will be useful to refer to the Budget Speech during
the introduction of the Finance Bill, 2017 and the extract of
the memo presented with the Finance Bill, 2017, which lay
down the object:
Budget Speech:
“VII. DIGITAL ECONOMY
111. Promotion of a digital economy is an integral
part of Government’s strategy to clean the system
and weed out corruption and black money. It has a
transformative impact in terms of greater formalisation
of the economy and mainstreaming of financial
savings into the banking system. This, in turn, is
expected to energise private investment in the country
through lower cost of credit. India is now on the cusp
of a massive digital revolution.
…..
Promoting Digital Economy
162. The Special Investigation Team (SIT) set up by
the Government for black money has suggested that
no transaction above Rs.3 lakh should be permitted
in cash. The Government has decided to accept this
proposal. Suitable amendment to the Income-tax
Act is proposed in the Finance Bill for enforcing this
decision.”
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Extract from Memo of Finance Bill, 2017
“Restriction on cash transactions
In India, the quantum of domestic black money is
huge which adversely affects the revenue of the
Government creating are source crunch for its various
welfare programmes. Black money is generally
transacted in cash and large amount of unaccounted
wealth is stored and used in form of cash.
In order to achieve the mission of the Government
to move towards a less cash economy to reduce
generation and circulation of black money, it is
proposed to insert section 269ST in the Act to provide
that no person shall receive an amount of three lakh
rupees or more,—
(a) in aggregate from a person in a day;
(b) in respect of a single transaction; or
(c) in respect of transactions relating to one event or
occasion from a person, otherwise than by an account
payee cheque or account payee bank draft or use of
electronic clearing system through a bank account.
It is further proposed to provide that the said
restriction shall not apply to Government, any
banking company, post office, savings bank or co-
operative bank. Further, it is proposed that such
other persons or class of persons or receipts may
be notified by the Central Government, for reasons
to be recorded in writing, on whom the proposed
restriction on cash transactions shall not apply.
Transactions of the nature referred to in section
269SS are proposed to be excluded from the scope
of the said section.
It is also proposed to insert new section 271DA in the
Act to provide for levy of penalty on a person who
receives a sum in contravention of the provisions of
the proposed section 269ST. The penalty is proposed
to be a sum equal to the amount of such receipt. The
[2025] 5 S.C.R. 125

The Correspondence, RBANMS Educational Institution v.
B. Gunashekar & Another

said penalty shall however not be levied if the person
proves that there were good and sufficient reasons for
such contravention. It is also proposed that any such
penalty shall be levied by the Joint Commissioner.
It is also proposed to consequentially amend the
provisions of section 206C to omit the provision
relating to tax collection at source at the rate of
one per cent. of sale consideration on cash sale of
jewellery exceeding five lakh rupees.
These amendments will take effect from 1st April
2017.”
However, when the Bill was passed, the permissible limit was capped
under Rupees Two Lakhs, instead of the proposed Rupees Three
Lakhs. When a suit is filed claiming Rs.75,00,000/- paid by cash,
not only does is create a suspicion on the transaction, but also
displays, a violation of law. Though the amendment has come into
effect from 01.04.2017, we find from the present litigation that the
same has not brought the desired change. When there is a law in
place, the same has to be enforced. Most times, such transactions
go unnoticed or not brought to the knowledge of the income tax
authorities. It is settled position that ignorance in fact is excusable
but not the ignorance in law. Therefore, we deem it necessary to
issue the following directions:
(A) Whenever, a suit is filed with a claim that Rs. 2,00,000/- and
above is paid by cash towards any transaction, the courts must
intimate the same to the jurisdictional Income Tax Department to
verify the transaction and the violation of Section 269ST of the
Income Tax Act, if any,
(B) Whenever, any such information is received either from the
court or otherwise, the Jurisdictional Income Tax authority shall take
appropriate steps by following the due process in law,
(C) Whenever, a sum of Rs. 2,00,000/- and above is claimed to be
paid by cash towards consideration for conveyance of any immovable
property in a document presented for registration, the jurisdictional
Sub-Registrar shall intimate the same to the jurisdictional Income
Tax Authority who shall follow the due process in law before taking
any action,
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(D) Whenever, it comes to the knowledge of any Income Tax
Authority that a sum of Rs. 2,00,000/- or above has been paid by
way of consideration in any transaction relating to any immovable
property from any other source or during the course of search or
assessment proceedings, the failure of the registering authority shall
be brought to the knowledge of the Chief Secretary of the State/UT
for initiating appropriate disciplinary action against such officer who
failed to intimate the transactions.
19. In light of the above discussion, we are of the firm view that the
plaint ought to have been rejected under Order VII Rule 11(a) and (d)
CPC. Hence, the orders passed by the High Court as well as the
trial Court rejecting the application filed by the appellant, cannot be
sustained in law and deserve to be set aside.

CONCLUSION
20. In fine,
(i) This appeal is allowed.
(ii) The impugned judgment of the High Court dated 02.06.2022
and the order of the trial Court dated 11.06.2021 are set
aside.
(iii) As a sequel, the application filed under Order VII Rule
11(a) and (d) CPC is allowed.
(iv) The plaint in O.S. No. 25968 of 2018 pending on the file
of XIII Additional City Civil and Sessions Judge, Mayohall
Unit, Bengaluru, is rejected.
(v) The directions given by us in paragraph 18.1 of this
judgment shall be intimated by the Registrars of the
High Courts, the Chief Secretaries of the States/Union
Territories and the Principal Chief Commissioner of Income
Tax Department to the District Judiciary, the officials of
the registration department and the jurisdictional officers
under the Income Tax Department respectively, so as to
facilitate the conduct of periodical audit.
(vi) The parties shall bear their respective costs throughout
the proceedings.
(vii) Miscellaneous Application(s), if any, shall stand disposed of.
[2025] 5 S.C.R. 127

The Correspondence, RBANMS Educational Institution v.
B. Gunashekar & Another

21. The Registrar (Judicial) is directed to circulate a copy of this
Judgment to the Registrar General of all the High Courts, the Chief
Secretaries of all the States / Union Territories, and the Principal
Chief Commissioner of Income Tax Department, enabling them to
communicate the directions issued by this Court for strict compliance.

Result of the case: Appeal allowed.

†
Headnotes prepared by: Nidhi Jain