23 May 2025 Civil Appeals >> Civil & Consumer Law  

The Supreme Court of India recently overturned an order by the High Court of Judicature for Rajasthan at Jodhpur, which had rejected a plaint filed by Vinod Infra Developers Ltd. (appellant/plaintiff) under Order VII Rule 11 of the Code of Civil Procedure, 1908 (CPC). The Supreme Court, comprising Honourable Mr. Justice J.B. Pardiwala and Honourable Mr. Justice R. Mahadevan, found that the High Court erred in dismissing the entire plaint, especially when triable issues remained.

Background of the Dispute:

The case, Vinod Infra Developers Ltd. v/s Mahaveer Lunia & Others (Civil Appeal No. 7109 of 2025), stemmed from a dispute over agricultural land in Jodhpur. Vinod Infra Developers Ltd. claimed ownership of the land and stated they obtained a loan of Rs. 7,50,00,000/- from Respondent No.1 in 2014. In connection with this loan, the appellant executed an unregistered power of attorney and an agreement to sell in favor of Respondent No.1, which they contended were intended as security for the loan, effectively constituting a mortgage.

The appellant company's original sale deeds for the property were impounded for insufficient stamp duty in 2015, a matter they challenged before the Rajasthan Tax Board. Subsequently, in April 2022, when the appellant sought to settle the loan and retrieve their documents, Respondent No.1 failed to respond. This led to the appellant revoking the authority granted to Respondent No.1 through a board resolution on May 24, 2022, and revoking the power of attorney on May 27, 2022.

Despite the revocation, Respondent No.1 executed sale deeds on July 13 and 14, 2022, which were registered on July 19, 2022, in his favour and in favour of Respondent Nos. 2 to 4, leading to mutation of their names in revenue records. Aggrieved by these actions, Vinod Infra Developers Ltd. filed a civil suit seeking declaration, possession, and permanent injunction concerning the property.

Lower Court Proceedings:

During the pendency of the suit, Respondent Nos.1 to 4 filed an application under Order VII Rule 11 CPC to reject the plaint, arguing it disclosed no cause of action, no mortgage existed, and there were issues with valuation and court fees. The Additional District Judge, Jodhpur, dismissed this application, holding that triable issues were raised. However, the High Court allowed the revision petition filed by Respondent Nos.1 to 4, setting aside the trial court's order and rejecting the plaint in its entirety.

Arguments Before the Supreme Court:

The appellant contended that the High Court erred in rejecting the plaint under Order VII Rule 11 CPC, which should only occur if the plaint is manifestly vexatious or discloses no right to sue. They argued that the execution of sale deeds after the power of attorney's cancellation raised triable issues of title and fraud. They also highlighted two distinct causes of action: the unregistered agreement to sell as a mortgage, and the subsequent execution of sale deeds after the power of attorney's revocation. The appellant emphasized that an unregistered agreement to sell does not transfer title and that title to immovable property can only be adjudicated by a civil court. Furthermore, they cited

Central Bank of India v. Prabha Jain to argue that if even one cause of action survives, the entire plaint must be tried.

Conversely, the respondents argued that the documents clearly reflected a sale transaction, not a mortgage, and that the mortgage claim was an afterthought. They asserted that the suit fell under the exclusive jurisdiction of revenue courts as it related to khatedari rights. They also claimed that the appellant improperly merged the claim for redemption of mortgage into declaratory reliefs without paying the necessary court fee.

Supreme Court's Analysis and Decision:

The Supreme Court reiterated that rejection of a plaint under Order VII Rule 11 CPC is permissible only when the plaint, on its face, fails to disclose a cause of action, is barred by law, is undervalued, or is insufficiently stamped. The Court emphasized that at this preliminary stage, the examination must be confined strictly to the averments in the plaint, and if any triable issues arise, the suit cannot be summarily rejected.

The Court noted that the appellant, as the admitted owner of the property, contended that the unregistered power of attorney and agreement to sell were revoked prior to the execution of the impugned sale deeds. The Supreme Court affirmed that unregistered documents do not confer valid authority to transfer title, citing Sections 17 and 49 of the Registration Act, 1908. It referenced S. Kaladevi v. V.R. Somasundaram and K.B. Shah and Sons (P) Ltd v. Development Consultant Ltd to underscore that unregistered documents are generally inadmissible for conveying title, except for collateral purposes or specific performance suits. Since Respondent No.1 had not instituted any suit for specific performance, and the power of attorney was revoked, Respondent No.1 had no valid authority to execute the sale deeds.

Furthermore, the Court cited Section 54 of the Transfer of Property Act, 1882, and its previous ruling in Suraj Lamp & Industries (P) Ltd. v. State of Haryana to stress that an agreement to sell does not create any interest in immovable property and that transfer of ownership occurs only upon execution of a registered conveyance deed. The Court also highlighted that a power of attorney does not transfer title.

Crucially, the Supreme Court held that the High Court erred in treating the second cause of action—pertaining to the sale deeds registered on July 19, 2022—as "academic" and rejecting the plaint in its entirety. Citing Central Bank of India v. Prabha Jain , the Court reiterated that there cannot be a partial rejection of a plaint under Order VII Rule 11 CPC; if even one relief or cause of action survives, the plaint must proceed. The Court also stated that issues related to mutation entries and the applicability of the Rajasthan Tenancy Act, 1955, were matters for trial and did not warrant rejection of the plaint at a preliminary stage. Lastly, the Court emphasized that a plaint should not be dismissed merely for insufficient court fee without first granting the plaintiff an opportunity to rectify the deficiency.

Conclusion:

Finding that the trial court rightly identified triable issues, the Supreme Court allowed the appeal, setting aside the High Court's impugned order and restoring the plaint. This judgment reaffirms the strict interpretation of Order VII Rule 11 CPC and underscores the principle that a civil court must allow a suit to proceed if a genuine cause of action is pleaded and triable issues are raised.

Code of Civil Procedure, 1908  

Section 54, Transfer of Property Act - 1882  

Transfer of Property Act, 1882  

Section 17, Registration Act - 1908  

Section 49, Registration Act - 1908  

Registration Act, 1908