Bhargavi Constructions vs Kothakapu Muthyam Reddy

CIVIL APPEAL No.11345 OF 2017 (Arising out of S.L.P.(C) No.23605 of 2015)

Bharvagi Constructions & Anr. ….Appellant(s)

VERSUS

Kothakapu Muthyam Reddy & Ors. …Respondent(s)

JUDGMENT

Abhay Manohar Sapre, J.

1) Leave granted.

2) This appeal is filed by the defendants against

the final judgment and order dated 25.06.2015

passed by the High Court of Judicature at

Hyderabad for the State of Telangana and the State

Signature Not Verified of Andhra Pradesh in Appeal Suit No. 968 of 2013 Digitally signed by ASHA SUNDRIYAL Date: 2017.09.07 17:07:27 IST Reason: whereby the High Court allowed the appeal filed by

1 the respondents herein with costs and set aside the

order dated 24.07.2013 passed by the second

Additional District Judge, Ranga Reddy District in

I.A. No.894 of 2010 in O.S. No.107 of 2010.

3) In order to appreciate the short legal

controversy involved in the appeal, it may not be

necessary to set out the factual controversy involved

in the case in detail and only narration of few facts

to appreciate the legal question arising in the case

would suffice for the disposal of this appeal.

4) On 07.05.2007, T. Jagat Singh (respondent

No. 5 herein) filed a civil suit being O.S. No. 481 of

2007 against respondent Nos. 1 to 34 herein

(defendant Nos. 1 to 33) in the Court of District

Judge, Ranga Reddy District Court.

5) The suit was for specific performance of

agreement of sale dated 28.12.1995 said to have

been entered into between the parties in respect of

agricultural land totally admeasuring AC. 51.29

guntas in (Sy.Nos. 262-274) situated at Pappalguda

2 village of Rajendranagar Mandal, Ranga Reddy

District (hereinafter referred to as the "suit land").

6) Originally, the plaintiff had filed suit only

against defendant Nos. 1 to 9 but later on defendant

Nos. 10 to 33 made an application for being joined

as defendant Nos. 10 to 33 in the civil suit as

according to them, they had an interest in the

subject matter of the civil suit and also in its

decision and, therefore, they were necessary parties

to the suit. Their prayer was allowed. The

defendants then contested the suit.

7) During the pendency of civil suit, on

22.08.2007, the parties (plaintiff and defendants)

settled the matter in relation to the suit land and

accordingly entered into written compromise.

8) A joint compromise petition signed by all the

parties to the suit was accordingly filed before the

Lok Adalat, which held its Lok Adalat sitting in the

Court on 22.08.2007.

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9) The members of the Lok Adalat before whom

the suit was posted for its disposal in terms of the

compromise petition filed by the parties perused the

compromise petition and accepted the compromise

petition finding it to be in order. An Award was

accordingly passed on 22.08.2007 under Section 21

of the Legal Services Authorities Act, 1987

(hereinafter referred to as “the Act”) in terms of the

compromise petition, which, in turn, disposed of the

suit as having been compromised. (Annexure P-2).

10) On 14.11.2009, respondent Nos. 1 to 4 herein

(who were original defendant Nos. 22 to 25 in Suit

No. 481 of 2007) filed Civil Suit No. 107 of 2010

against the plaintiff and the remaining defendants

of Civil Suit No. 481 of 2007. This suit was filed in

the Court of II Additional District Judge, Ranga

Reddy District at L.B.Nagar.

11) This suit was for a declaration that the award

dated 22.08.2007 passed by the Lok Adalat in Civil

Suit No. 481 of 2007 was obtained by the

4 defendants of this suit by playing fraud/mis-

representation on the plaintiffs and hence the

Award dated 22.08.2007 be declared illegal, null

and void and not binding on the plaintiffs.

12) According to the plaintiffs, though they were

parties to the award along with defendants in Civil

Suit No. 481/2007 but since the award dated

22.08.2007 was obtained by the parties by

misrepresenting the facts to the plaintiffs which was

nothing short of fraud played by the defendants on

them to grab their more land without their

knowledge and taking advantage of their illiteracy,

the same is not a legal award and hence not binding

on the plaintiffs. On these averments, the plaintiffs

prayed that the award dated 22.08.2007 be declared

illegal, void, in-operative and not binding on the

plaintiffs.

13) The defendants, on being served with the

notice of the suit, filed an application under Order 7

Rule 11 (d) of the Code of Civil Procedure, 1908

5 (hereinafter referred to as "the Code") and prayed for

rejection of the plaint. According to the defendants,

since the suit seeks to challenge the Award of Lok

Adalat, it is not maintainable being barred by virtue

of rigour contained in Order 7 Rule 11(d) of Code. It

was contended that the remedy of the plaintiff was

in filing writ petition under Article 226 or/and 227

of the Constitution of India to challenge the award

dated 22.08.2007 as held by this Court in State of

Punjab & Anr. Vs. Jalour Singh & Ors., (2008) 2

SCC 660 .

14) The Trial Court, by order dated 24.07.2013

allowed the application filed by the defendants and

rejected the plaint by invoking powers under clause

(d) of Rule 11. It was held that the filing of the civil

suit to challenge the award of Lok Adalat is

impliedly barred and the remedy of the plaintiffs is

to challenge the award by filing writ petition under

Article 226 or/and 227 of the Constitution in the

6 High Court as held by this Court in the case of

State of Punjab (supra).

15) The plaintiffs, felt aggrieved, filed an appeal

before the High Court. The High Court, by

impugned order, allowed the appeal, set aside the

order of the Trial Court and restored the suit on its

file for its disposal on merits in accordance with

law. The High Court held that since the suit is

founded on the allegations of misrepresentation and

fraud, it is capable of being tried on its merits by

the Civil Court.

16) Against this order, the defendants have felt

aggrieved and filed this appeal by way of special

leave before this Court.

17) Heard Mr. Dushyant Dave and Mr. Jayant

Bhushan, learned senior counsel for the appellants

and Mr. B. Adinarayana, learned senior counsel,

Mr. D. Mahesh Babu, Mr. Pranab Mullick, Mr. Ejaz

Maqbool for the respondents.

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18) Mr. Dushyant Dave, learned senior counsel,

appearing for the appellants (defendants) while

assailing the legality and correctness of the

impugned order argued only one legal point. He

urged that the reasoning and the conclusion arrived

at by the Trial Court was right whereas the

reasoning and the conclusion arrived at by the High

Court was not so and hence the Trial Court's order

deserves to be restored.

19) Elaborating his submission, Mr. Dushyant

Dave placed reliance on the law laid down by this

Court in State of Punjab (supra) and contended

that the issue urged by him no longer remains res

integra and stands answered by this Court in

appellant's favour.

20) It was his submission that the expression

"barred by any law" occurring in clause (d) of Rule

11 of Order 7 not only includes any Act enacted by

the legislature creating a “bar” but the expression

“law” includes therein “judicial decision of the

8 Supreme Court" also, which are binding on all the

Courts in the Country by virtue of Article 141 of the

Constitution of India.

21) In other words, his submission was that the

expression “law” occurring in clause(d) of Rule 11 of

Order 7 should be construed liberally so as to

include therein not only any “Act" which is

admittedly a “law” made by the legislature but also

include therein a "a decision of Supreme Court ".

22) Learned counsel urged that the appellants

(defendants) were, therefore, fully justified in

invoking the powers under Order 7 Rule 11(d) of the

Code praying for rejection of the plaint as being

barred on the strength of law laid down by this

Court in State of Punjab (supra).

23) In reply, learned counsel for the respondents

while supporting the impugned order contended

that the reasoning and the conclusion arrived at by

the High Court is just and proper and hence does

not call for any interference.

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24) Having heard the learned counsel for the

parties and on perusal of the record of the case, we

find force in the submissions of the learned counsel

for the appellants.

25) The question arose before this Court (Three

Judge Bench) in the case of State of Punjab (supra)

as to what is the remedy available to the person

aggrieved of the award passed by the Lok Adalat

under Section 20 of the Act. In that case, the award

was passed by the Lok Adalat which had resulted in

disposal of the appeal pending before the High

Court relating to a claim case arising out of Motor

Vehicle Act. One party to the appeal felt aggrieved of

the Award and, therefore, questioned its legality and

correctness by filing a writ petition under Article

226/227 of the Constitution of India. The High

Court dismissed the writ petition holding it to be not

maintainable. The aggrieved party, therefore, filed

an appeal by way of special leave before this Court.

This Court, after examining the scheme of the Act

10 allowed the appeal and set aside the order of the

High Court. This Court held that the High Court

was not right in dismissing the writ petition as not

maintainable. It was held that the only remedy

available with the aggrieved person was to challenge

the award of the Lok Adalat by filing a writ petition

under Article 226 or/and 227 of the Constitution of

India in the High Court and that too on very limited

grounds. The case was accordingly remanded to the

High Court for deciding the writ petition filed by the

aggrieved person on its merits in accordance with

law.

26) This is what Their Lordships held in Para 12:

“12. It is true that where an award is made by the Lok Adalat in terms of a settlement arrived at between the parties (which is duly signed by parties and annexed to the award of the Lok Adalat), it becomes final and binding on the parties to the settlement and becomes executable as if it is a decree of a civil court, and no appeal lies against it to any court. If any party wants to challenge such an award based on settlement, it can be done only by filing a petition under Article 226 and/or Article 227 of the Constitution, that too on very limited grounds. But where no compromise or settlement is signed by the

11 parties and the order of the Lok Adalat does not refer to any settlement, but directs the respondent to either make payment if it agrees to the order, or approach the High Court for disposal of appeal on merits, if it does not agree, is not an award of the Lok Adalat. The question of challenging such an order in a petition under Article 227 does not arise. As already noticed, in such a situation, the High Court ought to have heard and disposed of the appeal on merits.”

27) In our considered view, the aforesaid law laid

down by this Court is binding on all the Courts in

the country by virtue of mandate of Article 141 of

the Constitution. This Court, in no uncertain terms,

has laid down that challenge to the award of Lok

Adalat can be done only by filing a writ petition

under Article 226 and/or Article 227 of the

Constitution of India in the High Court and that too

on very limited grounds.

28) In the light of clear pronouncement of the law

by this Court, we are of the opinion that the only

remedy available to the aggrieved

person(respondents herein/plaintiffs) was to file a

writ petition under Article 226 and/or 227 of the

12 Constitution of India in the High Court for

challenging the award dated 22.08.2007 passed by

the Lok Adalat. It was then for the writ Court to

decide as to whether any ground was made out by

the writ petitioners for quashing the award and, if

so, whether those grounds are sufficient for its

quashing.

29) The High Court was, therefore, not right in by

passing the law laid down by this Court on the

ground that the suit can be filed to challenge the

award, if the challenge is founded on the allegations

of fraud. In our opinion, it was not correct approach

of the High Court to deal with the issue in question

to which we do not concur.

30) We also do not agree with the submissions of

Mr. Adinarayana Rao, learned senior counsel for the

respondents when he urged that firstly, the

expression "law" occurring in clause(d) of Rule 11

Order 7 does not include the "judicial decisions"

and clause (d) applies only to bar which is contained

13 in “the Act” enacted by the Legislature; and

Secondly, even if it is held to include the “judicial

decisions”, yet the law laid down in the case of

State of Punjab (supra) cannot be read to hold that

the suit is barred. Both these submissions, in our

view, have no merit.

31) Black's Law Dictionary (Ninth Edition) defines

the expression "law". It says that “Law" includes the

“judicial precedents" (see at page 962). Similarly,

the expression "law” defined in Jowett’s Dictionary

of English Law (Third Edition Volume-2, (pages

1304/1305) says that "law is derived from judicial

precedents, legislation or from custom. When

derived from judicial precedents, it is called

common law, equity, or admiralty, probate or

ecclesiastical law according to the nature of the

Courts by which it was originally enforced".

32) The question as to whether the expression

"law" occurring in clause(d) of Rule 11 of Order 7 of

the Code includes "judicial decisions of the Apex

14 Court" came up for consideration before the Division

Bench of the Allahabad High Court in Virender

Kumar Dixit vs. State of U.P., 2014(9) ADJ 1506.

The Division Bench dealt with the issue in detail in

the context of several decisions on the subject and

held in para 15 as under:

“15. Law includes not only legislative enactments but also judicial precedents. An authoritative judgment of the Courts including higher judiciary is also law.”

33) This very issue was again considered by the

Gujarat High Court (Single Bench) in the case of

Hermes Marines Limited vs. Capeshore Maritime

Partners F.Z.C. & Anr. (unreported decision in Civil

Application (OJ) No.144 of 2016 in Admiralty Suit

No.10 of 2016 decided on 22.04.2016). The learned

Single Judge examined the issue and relying upon

the decision of the Allahabad High Court quoted

supra held in Para 53 as under:

“53. In the light of the above discussion, in the considered view of this Court, it cannot be said that the term “barred by any law” occurring in clause(d) of Rule 11 of Order 7 of

15 the Code, ought to be read to mean only the law codified in a legislative enactment and not the law laid down by the Courts in judicial precedents. The judicial precedent of the Supreme Court in Liverpool & London Steamship Protection and Indemnity Association vs. M.V. Sea Success, 2004(9) SCC 512 has been followed by the decision of the Division Bench in Croft Sales & Distribution Ltd. vs. M.V. Basil, 2011(2) GLR 1027. It is, therefore, the law as of today, which is that the Geneva Convention of 1999 cannot be made applicable to a contract that does not involve public law character. Such a contract would not give rise to a maritime claim. As discussed earlier, the word ‘law’ as occurring in Order 7 Rule 11(d) would also mean judicial precedent. If the judicial precedent bars any action that would be the law.”

34) Similarly, this very issue was again examined

by the Bombay High Court (Single Judge) in Shahid

s. Sarkar & Ors. Vs. Usha Ramrao Bhojane, 2017

SCC OnLine Bom 3440. The learned Judge placed

reliance on the decisions of the Allahabad High

Court in Virender Kumar Dixit vs. State of U.P.

(Supra) and the Gujarat High Court in Hermes

Marines Limited (supra) and held as under:

“18…………….The law laid down by the highest court of a State as well as the Supreme Court, is the law. In fact, Article 141 of the Constitution of India categorically

16 states that the law declared by the Supreme Court shall be binding on all Courts within the territories of India. There is nothing even in the C.P.C. to restrict the meaning of the words “barred by any law” to mean only codified law or statute law as sought to be contended by Mr. Patil. In the view that I have taken, I am supported by a decision of the Gujarat High Court in the case of Hermes Marines Ltd..………..........................”

“19. One must also not lose sight of the purpose and intention behind Order VII Rule 11(d). The intention appears to be that when the suit appears from the statement in the plaint to be barred by any law, the Courts will not unnecessarily protract the litigation and proceed with the hearing of the suit. The purpose clearly appears to be to ensure that where a Defendant is able to establish that the Plaint ought to be rejected on any of the grounds set out in the said Rule, the Court would be duty bound to do so, so as to save expenses, achieve expedition and avoid the court’s resources being used up on cases which will serve no useful purpose. A litigation, which in the opinion of the court, is doomed to fail would not further be allowed to be used as a device to harass a Defendant…………………..”

35) Similarly, issue was again examined by the

High Court of Jharkhand(Single Judge) in Mira

Sinha & Ors. Vs. State of Jharkhand & Ors., 2015

SCC OnLine Jhar.4377. The learned Judge, in

paragraph 7 held as under:

17 “7. In the background of the law laid down by the Hon’ble Supreme Court, it is apparent that Order VII Rule 11(d) C.P.C. application is maintainable only when the suit is barred by any law. The expression “law” included in Rule 11(d) includes Law of Limitation and, it would also include the law declared by the Hon’ble Supreme Court………”

36) We are in agreement with the view taken by

Allahabad, Gujarat, Bombay and Jharkhand High

Courts in the aforementioned four decisions which,

in our opinion, is the proper interpretation of the

expression "law" occurring in clause (d) of Rule 11 of

Order 7 of the Code. This answers the first

submission of the learned counsel for the

respondents against the respondents.

37) So far as the second submission of learned

counsel for the respondents is concerned, it also

has no merit. In our view, the decision rendered in

the case of State of Punjab (supra) is by the larger

Bench (Three Judge) and is, therefore, binding on

us. No efforts were made and rightly to contend that

the said decision needs reconsideration on the issue

in question. That apart, when this Court has laid

18 down a particular remedy to follow for challenging

the award of Lok Adalat then in our view, the same

is required to be followed by the litigant in letter and

spirit as provided therein for adjudication of his

grievance in the first instance. The reason being

that it is a law of the land under Article 141 of the

Constitution of India (see - M. Nagaraj & Ors. Vs.

U.O.I. & Ors. 2006 ( 8 ) SCC 212). It is then for

the writ court to decide as to what orders need to be

passed on the facts arising in the case.

38) In the light of foregoing discussion, we cannot

concur with the reasoning and the conclusion

arrived at by the High Court.

39) As a result, the appeal succeeds and is

allowed. Impugned order is set aside and that of the

order passed by the Trial Court is restored. As a

consequence, the application filed by the appellants

(defendants) under Order 7 Rule 11 (d) of the Code

is allowed resulting in rejection of the plaint.

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40) We, however, make it clear that the

respondents (plaintiffs) would be at liberty to

challenge the legality and correctness of the award

dated 22.08.2007 passed by the Lok Adalat by filing

the writ petition under Article 226 or/and 227 of

the Constitution in the High Court in accordance

with law.

41) We also make it clear that we have not

examined the merits of case of either parties which

is the subject matter of the suit and hence the writ

court, in the event of writ petition being filed, would

decide the writ petition strictly in accordance with

law without being influenced by any of our

observations.

………...................................J. [R.K. AGRAWAL]

…...

……..................................J. [ABHAY MANOHAR SAPRE] New Delhi;

September 07, 2017

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