2025 (6) TMI 675 - SC - Indian Laws

Claim for ownership of the subject property (agricultural land) - Rejection of plaint under Order VII Rule 11 of the CPC - manifestly vexatious or does not disclose any right to sue - cause of action - Insufficient stamp duty - seeking reliefs of declaration possession and permanent injunction in respect of the subject property - HELD THAT - Section 23 of the Registration Act mandates that any document required to be registered must be presented for registration within four months from the date of its execution. This requirement has not been fulfilled in the present case as the power of attorney and the agreement to sell both executed in 2014 remain unregistered. Despite the execution of the agreement to sell on 24.05.2014 no attempt was made by Respondent No.1 to have it registered within the stipulated period. This inaction further supports the appellant s contention that the said agreement is not only inadmissible under Sections 17 and 49 of the Act but also legally ineffective due to non-compliance with the mandatory requirement of timely registration. The failure to seek specific performance or register the document within the period prescribed under Section 23 renders the foundational document unenforceable in law. That apart the revocation of the Board Resolution and Power of Attorney prior to the execution of the impugned sale deeds vitiates the authority under which those deeds were executed by Respondent No.1. Accordingly serious triable issues arise which must be adjudicated by a competent civil court. However the High Court erred in treating the second cause of action pertaining to the sale deeds registered on 19.07.2022 as merely academic and proceeded to reject the plaint in its entirety without undertaking a judicial examination of this distinct issue. This approach is contrary to the well settled legal principle that a plaint may be rejected under Order VII Rule 11 CPC only if on a plain reading of the plaint it discloses no cause of action or falls within the other narrowly defined grounds under the said provision such as under-valuation insufficient court fees or bar by any law. In this context we may place reliance on the judgment in Central Bank of India 2025 (2) TMI 1186 - SUPREME COURT wherein this Court while examining the jurisdiction of civil courts in disputes involving immovable property and proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 held that a plaint cannot be rejected in its entirety merely because one of the prayers or reliefs sought is legally untenable so long as other reliefs are maintainable and based on independent causes of action. Therefore the High Court s wholesale rejection of the plaint without appreciating that the reliefs claimed flowed from multiple and distinct causes of action particularly one arising after the revocation of the power of attorney amounts to an improper application of Order VII Rule 11 CPC. Selective severance of reliefs is impermissible where different causes of action are independently pleaded and supported by distinct facts. Although the private respondents contend that the power of attorney was notarized a consent letter was executed and the transaction was reflected in the income tax records while also asserting possession over the subject property and alleging that the suit was instituted merely to harass and disturb such possession these are all matters that require adjudication during trial. Such factual disputes cannot be resolved at the stage of considering an application under Order VII Rule 11 CPC. Therefore these contentions even if raised do not furnish a valid ground for rejection of the plaint at the threshold. Furthermore the contention of the private respondents that the appellant handed over the impounded documents based on which the sale deeds were executed and mutation effected are again factual matters to be examined at trial and not at the stage of Order VII Rule 11 CPC. That apart the decisions relied upon by the respondents are of no assistance as they are factually distinguishable. Thus we find that the trial court rightly held that the issues are triable and that the application filed under Order VII Rule 11 CPC was without merit. In contrast the High Court erred in overturning this finding and rejecting the plaint in its entirety. Accordingly the appeal is allowed. The impugned order of the High Court is set aside and the order of the Additional District Judge is restored. Consequently the plaint is directed to be taken on the file of the trial Court which shall proceed with the suit in accordance with law uninfluenced by any observations made in this judgment. The parties shall bear their own costs.

Summary

The core legal questions considered in this judgment are:

1. Whether the plaint filed by the appellant discloses a cause of action and is maintainable under Order VII Rule 11 of the Code of Civil Procedure, 1908 (CPC), or whether it is liable to be rejected at the threshold for non-disclosure of cause of action, jurisdictional defects, or insufficient court fee.

2. The legal effect and admissibility of unregistered documents, specifically the unregistered agreement to sell and power of attorney executed in 2014, in relation to transfer of immovable property and whether such documents can confer title or ownership rights.

3. The validity and effect of revocation of the power of attorney and board resolution by the appellant in 2022, and the impact of such revocation on the subsequent sale deeds executed and registered by Respondent No.1 and others.

4. The jurisdictional competence of civil courts versus revenue courts in adjudicating disputes relating to khatedari rights, possession, and title over agricultural land under the Rajasthan Tenancy Act, 1955.

5. Whether mutation entries in revenue records based on disputed sale deeds constitute conclusive proof of title or are merely administrative and fiscal in nature.

6. The procedural requirement of payment of proper court fee and whether the plaint can be rejected solely on the ground of insufficient court fee without affording an opportunity to rectify the deficiency.

Issue-wise Detailed Analysis

1. Maintainability of the Suit and Rejection of the Plaint under Order VII Rule 11 CPC

The legal framework mandates that rejection of a plaint under Order VII Rule 11 CPC is permissible only where the plaint on its face does not disclose any cause of action, is barred by law, undervalued, or insufficiently stamped. The court must confine itself to the averments in the plaint without delving into the merits or evidence. If triable issues emerge from the pleadings, the suit must proceed.

The Court noted that the appellant's plaint alleged two distinct causes of action: (i) the unregistered agreement to sell and power of attorney executed in 2014, asserted as a mortgage arrangement, and (ii) the execution of registered sale deeds in 2022 after revocation of the earlier authority. The High Court erred in treating the entire plaint as unsustainable based solely on the invalidity of the first cause of action, without judicially examining the second cause of action, which raised serious triable issues.

The Court emphasized binding precedent that partial defects in a plaint do not justify wholesale rejection if at least one cause of action is maintainable. The principle from Central Bank of India was applied, which mandates that if any relief sought survives, the plaint must be admitted for trial.

2. Legal Effect of Unregistered Agreement to Sell and Power of Attorney

The Court extensively analyzed Sections 17, 23, and 49 of the Registration Act, 1908, and Section 54 of the Transfer of Property Act, 1882, which collectively establish that documents required to be registered, if unregistered, do not confer any title or interest in immovable property and are inadmissible as evidence of transfer except in suits for specific performance or as evidence of collateral transactions.

Precedents such as S. Kaladevi v. V.R. Somasundaram, Muruganandam v. Muniyandi, Suraj Lamp & Industries Ltd., and Cosmos Co. Operative Bank Ltd. were relied upon to reaffirm that an unregistered agreement to sell and power of attorney cannot transfer ownership or create proprietary rights. The Court highlighted that the appellant did not file any suit for specific performance, which would have allowed reliance on the unregistered agreement as evidence of contract. Hence, Respondent No.1's claim based on these unregistered documents was legally untenable.

The Court also clarified that a power of attorney is an agency document, revocable unless coupled with interest, and does not itself transfer title. Any acts done by the attorney must be within the scope of authority granted and are revocable by the principal.

3. Effect of Revocation of Authority and Subsequent Sale Deeds

The appellant revoked the board resolution and power of attorney in May 2022. Despite this, Respondent No.1 executed registered sale deeds in July 2022. The Court held that such execution was without authority and legally invalid. The revocation nullified any power Respondent No.1 had to transfer the property.

The Court found that the High Court's dismissal of the second cause of action related to these sale deeds as "academic" was erroneous. The validity of these deeds raised serious triable issues that could not be summarily decided at the threshold. These issues required full adjudication by the trial court.

4. Jurisdiction of Civil Courts versus Revenue Courts

The respondents contended that the suit related to khatedari rights and tenancy and was thus within the exclusive jurisdiction of revenue courts under Section 207 of the Rajasthan Tenancy Act, 1955. The Court rejected this contention, citing authoritative rulings that title and ownership disputes over immovable property fall exclusively within civil court jurisdiction. Revenue entries and mutation are administrative and fiscal and do not confer title.

The Court held that the appellant's suit, seeking declaration of title, possession, and injunction, squarely fell within civil jurisdiction. The High Court's reliance on tenancy law to reject the plaint was misplaced.

5. Mutation Entries and Proof of Title

The Court reiterated that mutation in revenue records is not conclusive evidence of ownership or title. Such entries are administrative and cannot override substantive civil rights. The appellant's challenge to the mutation based on disputed sale deeds was a matter for trial and not for summary rejection of the plaint.

6. Court Fee and Procedural Requirements

The respondents argued insufficient court fee as a ground for rejection. The Court emphasized the settled legal position that a plaintiff must be given an opportunity to rectify any deficiency in court fee before the plaint can be rejected. This principle was drawn from Tajender Singh Ghambhir and others, which mandates courts to record findings on court fee sufficiency and allow time for payment of deficiency.

The Court found no evidence that the appellant was denied such opportunity, and thus rejection on this ground was improper.

Treatment of Competing Arguments and Evidence

The respondents' contentions that the transaction was a completed sale, possession was with them, the power of attorney was notarized, and mutation was valid were held to be factual disputes requiring trial. The Court refused to resolve these at the threshold stage under Order VII Rule 11 CPC.

The appellant's claim that the transaction was in substance a mortgage and they were willing to redeem the property was accepted as raising triable issues. The Court recognized the exceptions under the Indian Evidence Act permitting oral and extrinsic evidence to establish the true nature of the transaction.

Conclusions

The High Court erred in rejecting the plaint under Order VII Rule 11 CPC. The unregistered agreement to sell and power of attorney did not confer title; their revocation nullified any authority to execute sale deeds. The subsequent registered sale deeds executed post revocation raised serious triable issues. The suit was maintainable in civil court, mutation entries were not conclusive proof of title, and procedural safeguards regarding court fee were not complied with. The matter deserved trial.

Significant Holdings

"Section 49 gives teeth to Section 17 by providing effect of non-registration of documents required to be registered. Section 49 reads thus: 'No document required by Section 17 or by any provision of the Transfer of Property Act, 1882 to be registered shall affect any immovable property comprised therein, or be received as evidence of any transaction affecting such property unless it has been registered.'"

"A power of attorney is not an instrument of transfer in regard to any right, title or interest in an immovable property... It is revocable or terminable at any time unless it is made irrevocable in a manner known to law."

"A transfer of immovable property by way of sale can only be by a deed of conveyance (sale deed). In the absence of a deed of conveyance (duly stamped and registered as required by law), no right, title or interest in an immovable property can be transferred."

"Mutation entries in revenue records are administrative in nature and intended only for fiscal purposes and do not confer title."

"A plaint cannot be rejected in its entirety merely because one of the prayers or reliefs sought is legally untenable, so long as other reliefs are maintainable and based on independent causes of action."

"The plaintiff must be afforded an opportunity to make good any deficiency in court fee before the plaint can be rejected."

The Court restored the order of the trial court, setting aside the High Court's order, and directed the suit to proceed on merits. Each issue was held to raise triable questions unsuitable for summary rejection under Order VII Rule 11 CPC.