Supreme Court Upholds Rejection of Dismissal Under Order VII Rule 11 — “Serious Triable Issues Arise from Revocation of Power of Attorney and Subsequent Sale Deeds; If Any Triable Issue is Disclosed, the Plait Cannot Be Summarily Rejected”

Court’s Decision

The Supreme Court allowed the civil appeal and set aside the High Court’s order that had rejected the appellant’s suit under Order VII Rule 11 of the CPC. The Court restored the trial court’s order that had refused to reject the plaint and held that the case raised “serious triable issues” which require adjudication by a civil court. It ruled that:

“The High Court erred in rejecting the plaint in its entirety without appreciating that the reliefs claimed flowed from multiple and distinct causes of action.”

The plaint is directed to be restored to the file of the trial court for further proceedings.

Facts

• The appellant company purchased agricultural land in 2013 and secured a loan of ₹7.5 crores from Respondent No. 1.
• On 23.05.2014, the Board of Directors authorised Mr. Vinod Singhvi and Respondent No. 1 to sell the land.
• On 24.05.2014, an unregistered power of attorney and agreement to sell were executed in Respondent No. 1’s favour.
• The original sale deeds were impounded in 2015 for inadequate stamp duty but were later returned to the appellant after remand.
• The appellant claims these documents were handed to Respondents as loan security.
• In May 2022, the board resolution and power of attorney were revoked.
• Despite the revocation, Respondent No. 1 executed registered sale deeds in July 2022 in favour of himself and Respondents 2–4.
• A civil suit was filed in 2022 seeking declaration, possession, and permanent injunction.
• The trial court rejected the respondents’ application under Order VII Rule 11 CPC; the High Court reversed this and rejected the plaint.
• The present appeal challenges the High Court’s rejection.

Issues

1. Whether the plaint disclosed a cause of action sufficient to survive scrutiny under Order VII Rule 11 CPC?
2. Whether the execution of sale deeds after revocation of the power of attorney raised triable issues?
3. Whether the unregistered agreement to sell could support any proprietary rights or relief?
4. Whether the civil court had jurisdiction in view of Section 207 of the Rajasthan Tenancy Act, 1955?
5. Whether the High Court erred in rejecting the entire plaint despite the presence of distinct and severable causes of action?

Petitioner’s Arguments

• The sale deeds were executed after the power of attorney was revoked and are thus void.
• The transaction was not a sale but a mortgage disguised as a sale, and the appellant is ready to repay ₹19 crores.
• Unregistered documents do not confer title and cannot be relied upon without registration or a suit for specific performance.
• The High Court failed to consider the second cause of action independently.
• Triable issues exist, and the plaint cannot be rejected when even one cause of action survives.
• Reliefs based on title must be decided by civil courts, not revenue authorities.
• The appellant relied on Central Bank of India v. Prabha Jain and Suraj Bhan v. Financial Commissioner to argue that revenue entries don’t confer title and that unregistered documents are legally ineffective.

Respondent’s Arguments

• The transaction was a completed sale, not a mortgage; the mortgage claim is a belated afterthought.
• The suit was improperly valued and court fees were not paid for mortgage redemption.
• Civil court lacks jurisdiction due to Section 207 of the Rajasthan Tenancy Act.
• The sale deeds were valid and mutation was done accordingly.
• The High Court was correct in rejecting the plaint as no cause of action existed.

Analysis of the Law

• The Court reiterated that rejection under Order VII Rule 11 CPC must be based solely on the plaint’s averments.
• If any triable issue is disclosed, the plaint cannot be summarily rejected.
• Sections 17 and 49 of the Registration Act bar the use of unregistered documents to prove title unless they are used in a suit for specific performance or for collateral purposes.
• Section 54 of the Transfer of Property Act clarifies that a contract for sale does not itself create any interest in property.

Precedent Analysis

The Court relied extensively on the following judgments:

• S. Kaladevi v. V.R. Somasundaram (2010) 5 SCC 401
  Held that unregistered documents are inadmissible for title but can be admitted for limited collateral purposes.
• Suraj Lamp & Industries v. State of Haryana (2012) 1 SCC 656
  Clarified that agreements to sell or powers of attorney do not convey title or create interest in immovable property.
• Muruganandam v. Muniyandi 2025 SCC OnLine SC 1067
  Affirmed that only registered documents can transfer interest; unregistered documents have limited evidentiary value.
• Cosmos Co-operative Bank v. Central Bank of India 2025 SCC OnLine SC 352
  Reiterated that registration is mandatory for title transfer; GPA sales don’t confer ownership.
• Central Bank of India v. Prabha Jain 2025 INSC 95
  Held that partial defects do not justify rejection of the entire plaint if at least one cause of action survives.
• Tajender Singh Ghambhir v. Gurpreet Singh (2014) 10 SCC 702
  Clarified that plaintiffs must be given opportunity to correct deficiencies in court fee before rejection.

Court’s Reasoning

• The appellant was the owner and had revoked the power of attorney prior to sale deeds.
• The sale deeds executed post-revocation were clearly disputed and raise triable issues.
• The High Court erred in treating the second cause of action as “academic.”
• Title disputes and validity of documents must be resolved by civil courts.
• Deficiencies in court fee must be first addressed by affording the plaintiff an opportunity to cure the defect.
• The High Court exceeded its jurisdiction by adjudicating on facts at the preliminary stage.

Conclusion

The Supreme Court found that the High Court’s rejection of the plaint was premature and not in accordance with established principles of Order VII Rule 11 CPC. The plaint raised serious triable issues which require adjudication on merits.

“Selective severance of reliefs is impermissible where different causes of action are independently pleaded and supported by distinct facts.”

The appeal was accordingly allowed and the trial court was directed to proceed with the suit in accordance with law.

Implications

• Reinforces the limited scope of Order VII Rule 11 CPC and protects litigants from premature dismissal of claims that raise genuine triable issues.
• Clarifies the legal ineffectiveness of unregistered agreements to sell and GPAs in transferring property rights.
• Strengthens the jurisdiction of civil courts in matters of title and ownership.
• Reinforces the rule that opportunity must be granted before rejection on the ground of insufficient court fee.

Also Read – Supreme Court Rejects State’s Claim of Paper Possession Under Urban Land Ceiling Act — “Vesting Does Not Mean Possession”: Actual Physical Possession Must Be Established Through Due Process, Not Just Administrative Records