In a significant ruling by the Supreme Court, the case involving Orbit Corporation Ltd. and Bank of India has been carefully analyzed. The judgment discusses the rejection of plaint and the interpretation of Section 34 of the 2002 Act. This decision holds substantial implications for future legal proceedings in similar matters.
Facts
- The appellant(s) in the suits wanted to purchase flats in a project called ‘Orbit Heaven’ being developed by Orbit Corporation Ltd.
- They paid substantial amounts to the builder for the flats even though the construction was in progress.
- Appellant(s) did not have registered agreements for the flats but relied on correspondence and allotment letters from the builder.
- The appellants claimed reliefs against the builder and other parties in the suits filed by them.
- The bank gave a loan of Rs. 150 crores to the builder in around 2013, secured by a mortgage deed over the project.
- The appellants only became aware of this mortgage when a public notice was published in September 2016.
- The total contributions of the appellants towards the flats were much more than the loan amount given to the builder.
- The appellants sought injunctions and declarations against the bank and the builder regarding their rights to the flats.
Also Read: Balancing Justice: Case Summary of C.P. No. 16/2017
Arguments
- Appellant(s) are considered as investors of Orbit Corporation Ltd. (In Liq.) and not genuine home buyers.
- Single Judge rejected the objection raised by the appellant(s) against rejecting the plaint only against one defendant by relying on the Division Bench decision.
- Division Bench allowed the notice of motion filed by the bank to reject the plaint based on Section 34 of the 2002 Act.
- Appellant(s) argued that the decisions considered by the High Court were not applicable to their case as it involved third party claims under the 1963 Act.
- Appellant(s) took commercial unsecured risks by investing a huge amount under the guise of purchasing flats, which was against the provisions of the 1963 Act.
- Allegations of fraud played upon the appellant(s) were deemed vague and general by respondent No.1-bank.
- Division Bench justified in rejecting the plaint against the bank based on Section 34 of the 2002 Act.
- Respondent No.1 supported the Division Bench’s judgment.
- Respondent No.1 argues that the bank is not a necessary or proper party in a suit for specific performance of an alleged agreement.
- Respondent No.1 contends that the bank should not be included in a suit for alternative relief of damages against the developers.
- No case can be found in the plaint to categorize the suit filed by the appellant within the exceptions outlined in Mardia Chemicals Ltd.
Also Read: Redefining Pre-Deposit Requirements: Ideal Detonators Pvt. Ltd. v. Commercial Tax Officer
Analysis
- Take complete charge of the building
- Call for balance money from flat purchasers
- Execute agreement with plaintiff on behalf of Defendants
- Pay all requisite fees to Municipal Corporation
- Appoint existing Architect and Contractor for project completion
- Submit progress reports to the Court regularly
- Make applications to Corporation and other Authorities
- Apply for Occupancy and Completion Certificates after project completion
- Hand over completed flats to the Plaintiff
- The Court addressed the question of whether the plaint can be rejected partially under Order 7 Rule 11(d) of CPC.
- It was determined that the plaint must be rejected as a whole and not in part under the mentioned rule.
- The Single Judge initially held that the suit against the bank was maintainable, but the Division Bench reversed this opinion.
- The appeals were filed by four out of five plaintiffs in response to the rejection of the plaint against the bank.
- The High Court dismissed the motion against the bank based on the interpretation of Section 34 of the 2002 Act.
- All reasons given by the Division Bench were contested, leading to the appeals being allowed by the Division Bench in the end.
- Concerning the rejection of the plaint against the bank, the Court emphasized its necessity to be done as a whole.
- The precedence set by the Sejal Glass Limited case supported the rejection of the plaint as a whole under Order 7 Rule 11(d) of CPC.
- The analysis concluded that the rejection of the plaint can only be pursued concerning all defendants, not selectively.
- The learned Single Judge referred to decisions of the Court in Mardia Chemicals Ltd. and Ors. Vs. Union of India and Ors., Jagdish Singh Vs. Heeralal and Ors., State Bank of India Vs. Smt. Jigishaben B. Sanghvi and Ors., and Arasa Kumar Vs. Nauammal.
- These references were made to support the reasoning and conclusions in the judgment for the case being discussed.
- The cases cited helped in establishing legal precedents and principles that were relevant to the present matter.
- The judgments of the High Courts and this Court were invoked to provide a solid legal foundation for the decision reached by the learned Single Judge.
- The power under Order 7 Rule 11(d) of CPC is limited to rejecting the plaint as a whole or not at all.
- The relief claimed by Original Name in the notice of motion is a jurisdictional error and cannot be entertained under Order 7 Rule 11(d) of CPC.
- Objections regarding reliefs barred by Section 34 of 2002 Act can be raised at the appropriate stage through other remedies like Order 6 Rule 16 of CPC.
- The High Court’s examination of these matters in the judgment is to be effaced, with the Court ordering accordingly for a fresh consideration on its own merits.
- The argument of appellants regarding the inapplicability of judgments and correctness of principles in the judgment are left open for determination in accordance with the law.
- The appeals succeed due to the principal relief sought in the notice of motion by Original Name being jurisdictionally erroneous.
Also Read: Interpreting Section 14 of the 2002 Act: Equivalence of CJM and CMM
Decision
- The impugned judgment of the Division Bench is set aside.
- The order of the Single Judge dismissing the notice of motion(s) in the suit(s) is restored.
- No costs are awarded.
- All pending interim applications are disposed of.
- Plaintiff to pay Three Lakhs Fifty Thousand along with interest to Defendant No.1.
- Payment by Plaintiff is declared as valid charge on the land and flat Nos. 2302 and 2402.
- Enforcement of Plaintiff’s charge on the properties if the payment is not made.
- Defendant is ordered to pay damages of Rs. 15,00,00,000 to the Plaintiff.
- Notice of motion by Defendant dismissed with liberty to Defendant.
Case Title: MADHAV PRASAD AGGARWAL Vs. AXIS BANK LTD
Case Number: C.A. No.-005126-005126 / 2019
