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1997 (12) TMI 519 - SUPREME COURT
Whether a real cause of action has been set out in the plaint or something purely illusory has been stated with a view to get out of order 7 rule 11/
Held that:- Appeal allowed. Non-movement of goods by the seller could be due to a variety of tenable or untenable reasons, the seller may be in breach of the contract but that by itself does not permit a plaintiff to use the word ‘fraud’ in the plaint and get over any objections that may be raised by way of filing an application under order 7 rule 11. The ritual of repeating a word or creation of an illusion in the plaint can certainly be unravelled and exposed by the Court while dealing with an application under order 7 rule 11(a). Inasmuch as the mere allegation of drawal of monies without movement of goods does not amount to a cause of action based on ‘fraud’, the bank cannot take shelter under the word ‘fraud’ or ‘misrepresentation’ used in the plaint.
The learned counsel for the appellant also contended that this was a case where a Letter of Credit was without recourse to the invoice value. Thus we hold that there is no cause of action even from the plaint allegations, against the appellant. Thus plaint is rejected under order 7 rule 11(a) as against the appellant-5th defendant.