Case Number: Civil Appeal No. 4665 2021

Judges Name: Hon’ble Judges Dr Dhananjaya Y Chandrachud J, MR Shah J.

Order dated:  09.08.2021

“Suit is barred by any law must be determined from the statements in the plaint and it is not open to decide the issue on the basis of any other material including the written statement”

Facts of the case:

• The matter revolves around a property dispute. The property in dispute initially belonged to the respondent and his brother and the same was later mortgaged to Karnataka State Finance Corporation as security against a loan. KSFC auctioned the suit property since the loan amount was unpaid and the property was purchased by the Appellant. However, the respondent did not handover possession of the suit property to the Appellant. The appellant filed a suit for possession.
  
• On the other hand, the respondent instituted a suit challenging the sale deed executed by KSFC in appellant’s favour on the ground that KSFC had no right to put the property for sale. The Trial Judge decreed that first respondent and his brother in the suit to hand over vacant and peaceful possession of the suit property to the Appellant.  The Respondent appealed against this judgment of the trial court; however, the Karnataka High Court affirmed the trial court’s judgment. Pursuant to the judgment of the High Court, the appellant who has purchased the suit property from the third respondent, filed an application for rejection of plaint under Order 7 Rule 11 of the CPC on the grounds of (i) non-payment of court fee; (ii) non-disclosure of cause of action; and (iii) the suit being barred by res judicata. It was contended that the suit instituted by the first respondent was barred by res judicata as the grounds relating to the validity of the sale deed and the issue of title were raised in the previous suit.
  
• The appellant urged that after the judgment of the Trial Court, which had been affirmed by the High Court, the rights of the parties cannot be further adjudicated and re-litigated upon.

Supreme Court held/ observed:

• The Hon’ble Supreme Court laid down the guiding principles for deciding an application under Order 7 Rule 11(d) can be summarized as follows: 

(i) To reject a plaint on the ground that the suit is barred by any law, only the averments in the plaint will have to be referred to; 

(ii) The defense made by the defendant in the suit must not be considered while deciding the merits of the application; 

(iii) To determine whether a suit is barred by res judicata, it is necessary that (i) the ‘previous suit’ is decided, (ii) the issues in the subsequent suit were directly and substantially in issue in the former suit; (iii) the former suit was between the same parties or parties through whom they claim, litigating under the same title; and (iv) that these issues were adjudicated and finally decided by a court competent to try the subsequent suit; and 

(iv) Since an adjudication of the plea of res judicata requires consideration of the pleadings, issues and decision in the ‘previous suit’, such a plea will be beyond the scope of Order 7 Rule 11 (d), where only the statements in the plaint will have to be perused. 

• The Supreme Court held that the plaint was not liable to be rejected under Order 7 Rule 11(d) and affirmed the findings of the Trial Court and the High Court. The Supreme Court clarified however, that the Court has not expressed opinion on whether the subsequent suit is barred by the principles of res judicata. The Supreme Court granted liberty to the Appellant, who claims as an assignee of the bona fide purchaser of the suit property in an auction conducted by KSFC, to raise an issue of the maintainability of the suit before the Additional Civil Judge.