Delhi High Court Rejects Suit Challenging Registered Sale Deed: Holds That Oral Agreements Cannot Override Written Contracts, Fraud Allegations Already Quashed, and Non-Payment of Court Fee Makes Suit Liable for Rejection

Court’s Decision

The Delhi High Court set aside the trial court’s order dismissing the petitioners’ application under Order VII Rule 11(a), (b), and (d) of CPC and rejected the suit filed by the plaintiff. The court ruled that:

1. The plaint did not disclose any cause of action, as the claims made were contrary to the registered Sale Deed and thus legally untenable.
2. The suit was barred by law, as the fraud allegations had already been dismissed by the High Court in prior criminal proceedings.
3. The plaintiff failed to pay the requisite court fee, despite multiple opportunities, making the suit liable for rejection.

As a result, the plaint was rejected under Order VII Rule 11 of CPC.

Facts of the Case

1. The Disputed Sale Deed: The case revolves around a Sale Deed executed in October 2011 for Shop No. C-51, Malviya Nagar, New Delhi. The Sale Deed was executed by Defendant No. 3 (since deceased) through his attorney, Defendant No. 2, in favor of Defendant No. 1.
2. Plaintiff’s Challenge to the Sale Deed: The plaintiff sought to declare the Sale Deed null and void, claiming that he had entered into an oral agreement with Defendant No. 1 and Defendant No. 2 for half-ownership of the shop.
3. Alleged Financial Contribution by Plaintiff: According to the plaintiff:
   • The total sale consideration of the shop was ₹45 lakhs.
   • Since Defendant No. 1 lacked funds, he agreed to sell 50% ownership to the plaintiff for ₹22.5 lakhs.
   • The plaintiff claimed to have paid ₹7.5 lakhs in cash and ₹10 lakhs through Defendant No. 2, with the remaining ₹5 lakhs to be paid at the time of execution of the Sale Deed.
4. Allegations of Fraud: The plaintiff claimed that despite these payments, Defendant No. 1 and Defendant No. 2 fraudulently executed the Sale Deed in favor of Defendant No. 1 alone, excluding the plaintiff from ownership.
5. Reliefs Sought by Plaintiff:
   • Declaration of the Sale Deed as null and void.
   • Possession of the suit shop.
   • Mandatory and prohibitory injunction against Defendant No. 1.
   • Alternative relief of ₹16 lakhs with interest.

Issues Before the Court

1. Whether the plaint disclosed a valid cause of action under Order VII Rule 11 CPC?
2. Whether an oral agreement can override a registered Sale Deed?
3. Whether the fraud allegations were legally sustainable, given that a prior criminal case on the same issue was quashed?
4. Whether the suit was liable to be rejected due to non-payment of the required court fee?

Petitioners’ (Defendants’) Arguments

1. No Cause of Action Exists: The plaintiff’s suit was baseless as it relied on oral claims contrary to the written and registered Sale Deed.
2. Oral Agreements Are Not Admissible:
   • The Sale Deed explicitly mentioned the sale consideration of ₹2 lakhs, as Defendant No. 1 was already occupying the property as a tenant.
   • Any oral claim that contradicts a written contract is inadmissible under Sections 91 and 92 of the Indian Evidence Act, 1872.
3. Fraud Allegations Were Already Dismissed:
   • The plaintiff had previously filed a criminal complaint alleging fraud.
   • The Delhi High Court had quashed this complaint in Crl. M.C. No. 5191/2015, ruling that no fraud was committed.
   • The plaintiff could not re-litigate the fraud claim in a civil suit.
4. Suit Barred Under Specific Relief Act:
   • Section 31 of the Specific Relief Act, 1963 allows cancellation of a Sale Deed only if it is void or voidable against the claimant.
   • The plaintiff was not the owner of the suit property and had no locus standi to challenge the Sale Deed.
5. Non-Payment of Court Fee:
   • The plaintiff failed to pay the required court fee despite multiple opportunities.
   • This was an independent ground for rejection of the suit.

Respondent’s (Plaintiff’s) Arguments

1. Oral Agreement for Half-Ownership: The plaintiff argued that Defendant No. 1 had agreed to transfer half-ownership of the shop to him.
2. Payment of ₹17.5 Lakhs: The plaintiff claimed to have paid ₹7.5 lakhs in cash and ₹10 lakhs through Defendant No. 2.
3. Fraudulent Intent of Defendants: The plaintiff alleged that the defendants acted dishonestly by executing the Sale Deed in favor of Defendant No. 1 alone.

Analysis of the Law

1. Order VII Rule 11 CPC: No Cause of Action

• A suit must disclose a valid cause of action to be maintainable.
• The plaintiff’s allegations were based on an oral agreement contradicting the written Sale Deed, making them legally inadmissible.
• The plaintiff had no legal right over the property and therefore had no valid cause of action.

2. Indian Evidence Act, 1872 (Sections 91 & 92): Oral Evidence Not Admissible

• Section 91: A written contract cannot be contradicted by oral evidence.
• Section 92: When a contract is in writing, oral claims modifying or contradicting it are inadmissible.
• Application in This Case:
  • The Sale Deed clearly mentioned a sale price of ₹2 lakhs.
  • The plaintiff’s oral claims of a ₹45 lakh valuation were inadmissible.

3. Specific Relief Act, 1963 (Section 31): Plaintiff Had No Locus Standi

• Section 31: Only an owner or someone directly affected can seek cancellation of a Sale Deed.
• The plaintiff was not the owner of the shop and thus had no right to seek cancellation.

4. Prior Fraud Case Quashed: Res Judicata Applies

• The Delhi High Court had already quashed the plaintiff’s criminal complaint alleging fraud.
• Once fraud allegations are dismissed in criminal proceedings, they cannot be re-litigated in a civil suit.

5. Non-Payment of Court Fee: Suit Barred

• The plaintiff failed to pay the required court fee, despite multiple chances.
• The suit was liable to be rejected on this ground alone.

Precedent Analysis

1. Keventer Agro Ltd. vs. Kalyan Vyapar Pvt. Ltd. & Anr. (2016 (154) DRJ 124)

• Oral evidence contradicting a written contract is inadmissible under Section 91 of the Indian Evidence Act.

2. T. Arivandandam vs. T.V. Satyapal & Anr. (1997 (4) SCC 467)

• Frivolous suits without a cause of action should be rejected at the threshold under Order VII Rule 11 CPC.

3. Delhi High Court’s Order in Crl. M.C. No. 5191/2015

• Fraud allegations already dismissed in criminal proceedings cannot be raised again in a civil suit.

Court’s Final Conclusion

• The plaint disclosed no cause of action and was legally untenable.
• The fraud claim was already dismissed in criminal proceedings.
• The plaintiff had no legal standing to challenge the Sale Deed.
• The suit was also liable to be rejected for non-payment of court fees.
• The Delhi High Court set aside the trial court’s order and rejected the suit under Order VII Rule 11 CPC.

Implications

• Reinforces that oral claims cannot override written Sale Deeds.
• Prevents re-litigation of fraud claims already dismissed in criminal proceedings.
• Upholds procedural discipline by rejecting suits for non-payment of court fees.

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