Civil Procedure Law

Dahiben v. Arvindbhai Kalyanji Bhanusali

(2020) 7 SCC 366

Facts

The plaintiffs executed a registered sale deed transferring agricultural land to the purchasers.
The deed recorded the agreed consideration and stated that title and possession had been transferred.
Several years later, the sellers filed a suit seeking cancellation of the registered sale deed.
They alleged principally that:
The full sale consideration had not been paid;
Some cheques were not realised; and
The transaction should therefore be declared void.
The purchasers contended that:
Non-payment of part of the price did not invalidate a completed sale;
The plaintiffs knew all relevant facts when the deed was executed;
The cancellation suit was filed beyond the three-year limitation period; and
The plaint had been drafted artificially to create a later cause of action.
They applied for rejection of the plaint under Order VII Rule 11(a) and (d).
The trial court rejected the application, but the High Court reversed that order and rejected the plaint.
The sellers appealed to the Supreme Court.

Whether the plaint disclosed a real cause of action for cancellation.
Whether the suit was ex facie barred by limitation.
Whether clever drafting could postpone the date on which the right to sue first accrued.

Under Order VII Rule 11:
Clause (a) applies where the plaint discloses no cause of action;
Clause (d) applies where the suit appears from the plaint to be barred by law.
The court must:
Read the plaint as a whole;
Consider its substance rather than labels;
Assume its factual averments to be true; and
Determine whether those facts create an enforceable right.
A cause of action is every material fact the plaintiff must prove to obtain judgment.
Under Article 59 of the Limitation Act, a suit to cancel or set aside an instrument must be filed within three years from when the facts entitling cancellation first become known.
Repetition of later representations or demands does not create a fresh right to sue where the plaintiff already knew the foundational facts.
Under Section 54 of the Transfer of Property Act, a completed sale may be for a price:
Paid;
Promised; or
Partly paid and partly promised.
Mere non-payment of the balance price does not automatically make the registered sale void; the seller may pursue recovery or enforce a statutory charge.

The plaintiffs knew on the date of execution:
The exact consideration;
The amounts actually received;
The cheques issued; and
The transfer of possession and title.
Therefore, any right to challenge the deed based on non-payment arose at or soon after execution.
The suit was filed more than three years later.
The plaintiffs attempted to rely upon later events and communications to suggest that the cause of action arose only when the defendants refused to cancel the deed.
The Supreme Court rejected this as artificial drafting.
A plaintiff cannot keep limitation alive indefinitely by:
Making repeated demands;
Obtaining later refusals; or
Describing an old grievance as a continuing cause of action.
The plaint also failed to explain how non-payment alone legally invalidated a completed conveyance.
Since ownership had passed under a registered instrument, the appropriate remedy was ordinarily recovery of unpaid consideration, not cancellation of the sale.
Thus, even assuming the pleaded facts were true:
They did not establish the asserted right to cancellation; and
They showed that the challenge was filed beyond limitation.
The defect was apparent from the plaint and registered deed; no trial was required to discover it.

The Supreme Court dismissed the appeal and upheld rejection of the plaint.
It held that the suit was barred by limitation and disclosed no legally sustainable cause of action for cancellation.
Courts must reject sham litigation where clever drafting creates only an illusion of a fresh cause of action.
Use this case for: Order VII Rule 11 permits rejection where the plaint itself reveals both an expired limitation period and an illusory cause of action.