IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 16.08.2011 Coram The Hon'ble Mrs. Justice R.BANUMATHI and The Hon'ble Mr. Justice B.RAJENDRAN O.S.A.Nos.100 to 102 of 2006 O.S.A.No.100 of 2006: M/s.Ponniamman Educational Trust represented by its Chairperson/ Managing Trustee, Old No.12-C, New No.24, Sixth Main Road, Kasturibai Nagar, Adyar, Chennai – 600 020. .. Appellant Vs The Church of Christ Charitable Trust and Educational Charitable Society, rep.by its Chairman No.35, Lock Street, Kotturpuram Chennai – 600 085. .. Respondents O.S.A.Nos.101 and 102 of 2006: M/s.Ponniamman Educational Trust represented by its Chairperson/ Managing Trustee, Old No.12-C, New No.24, Sixth Main Road, Kasturibai Nagar, Adyar, Chennai – 600 020. .. Appellant in both Appeals Vs. 1. The Church of Christ Charitable Trust and Educational Charitable Society, rep.by its Chairman No.35, Lock Street, Kotturpuram Chennai – 600 085. https://hcservices.ecourts.gov.in/hcservices/ 2. S.Velayudham .. Respondents in both Appeals Appeal in O.S.A.Nos.100 to 102 of 2006 are filed under Order XXXVI Rule 5 of O.S. Rules with Clause 15 of Letters Patent against the order and decretal order dated 25.1.2006 in A.No.3560 of 2005, O.A.No.132 of 2005 and O.A.No.179 of 2006 respectively in C.S.No.115 of 2005 on the file of this Court. For Appellant : Mr.G.Masilamani,Sr.Counsel for Mr.T.Sathiya Moorthy For Respondent : Mrs.Nalini Chidambaram, in O.S.A.No.100/2006 Sr.Counsel and for R.1 in O.S.A. for Nos.101 and 102 M/s.Gladys Daniel of 2006 For Respondent No.2 : Mr.P.Seshadri in O.S.A.Nos.101 and 102 of 2006 JUDGMENT (Judgment of the Court was delivered by R.BANUMATHI, J.) These three appeals arise out of the common order dated 25.1.2006 in A.No.3560 of 2005, O.A.No.132 of 2005 and O.A.No.179 of 2006 respectively in C.S.No.115 of 2005 allowing application- A.No.3560 of 2005 and thereby rejecting the plaintiff's suit for specific performance – C.S.No.115 of 2005 as against the 1st defendant and dismissing the applications filed by the plaintiff for interim injunction and for amendment. Unsuccessful plaintiff- Trust is the appellant. 2. Shorn of all previous litigations, the plaint averments in brief are as follows:- The 2nd respondent/2nd defendant entered into an agreement of sale/MOU dated 4.8.2001 agreeing to sell 28 grounds and 1952 sq.ft in Door No.35, Lock Street, Kotturpuram, Chennai – 600 085. The agreement of sale was executed by the 2nd defendant in his capacity as agreement holder of 1st defendant and also as the power of attorney holder of 1st defendant. Under the said MOU between plaintiff/appellant and the 2nd defendant, 2nd defendant agreed to sell the suit property for a sale consideration of Rs.19,00,000/- per ground. Plaintiff paid Rs.30,00,000/- as advance for purchase of the suit property. Alleging that the defendants failed and neglected to perform their part of the contract and that the plaintiff is ready and willing to perform their part of the https://hcservices.ecourts.gov.in/hcservices/ contract, plaintiff filed the suit – C.S.No.115 of 2005 praying for (i) specific performance of agreement of sale dated 4.8.2001 between the plaintiff and defendants or alternatively (ii) to refund the plaintiff a sum of Rs.30,00,000/- together with interest at 24 percent per annum from 4.8.2001; (iii) directing the defendants to pay a sum of Rs.1,83,45,333/- towards damage for committing breach of the agreement dated 4.8.2001. 3. Defendants entered appearance and contested the suit. First defendant - the Church of Christ Charitable Trust Educational and Charitable Society filed A.No.3560 of 2005 to reject the plaint – C.S.No.115 of 2005 in so far as the 1st defendant is concerned claiming that the 1st defendant had informed the 2nd defendant that by letter dated 19.11.1991, the agreement of sale dated 7.1.1990 was cancelled. It was further averred that the power of attorney in favour of S.Velayutham was revoked by registered document No.501/1991 dated 16.10.1991 on the file of Sub- Registrar's Office, Alandur and therefore 2nd defendant has no locus standi to enter into any agreement of sale. 4. It was further averred that M/s.Karthik Granites Private Limited is a Company closely connected with the appellant and the said Karthik Granites Private Limited has filed C.S.No.915 of 1994 for specific performance of agreement to transfer the 51 grounds and 1950 sq.ft, which comprises the suit schedule property also. In 1997, a MOU dated 13.2.1997 was entered into between defendants 1 and 2 and Karthik Granites Private Limited and Appasamy Real Estates. As per the said MOU, Rs.65,00,000/- was paid to M/s.Karthik Granites and it withdrew the suit - C.S.No.915 of 1994. According to 1st defendant, 2nd defendant – Velayutham has no locus standi to enter into agreement of sale with plaintiff and the same is not binding on the the 1st defendant and therefore the suit against 1st defendant is without any cause of action and prayed to reject the suit against the 1st defendant. 5. The appellant resisted the application contending that in O.A.No.939 of 1991 in C.S.No.1576 of 1991, the High Court granted interim injunction restraining the 1st defendant from alienating the property. Based on the power of attorney executed in his favour (19.10.1990), 2nd defendant has filed C.S.No.1576 of 1991, wherein the Court has granted interim injunction, which according to the plaintiff, is still in force. The 2nd defendant entered into an agreement of sale with Karthik Granites on 24.3.1990 and was paid Rs.10,00,000/- as advance. In the suit - C.S.No.915 of 1994 filed by Karthik Granites, a MOU was entered into as per which Karthik Granites received Rs.65 lakhs and agreed to withdraw C.S.No.915 of 1994. Pursuant to the memo of compromise, Karthik Granites withdrew C.S.No.915 of 1994. 6. The 1st defendant, having suffered an order of injunction https://hcservices.ecourts.gov.in/hcservices/ in C.S.No.1576 of 1991, cannot be heard to put forth a claim contrary to the orders of Court in C.S.No.1576 of 1991. According to Appellant/plaintiff, 2nd defendant had executed agreement of sale as power of attorney of the 1st defendant. According to the plaintiff, cause of action for the suit against 1st defendant has been clearly pleaded in the plaint and therefore the application to reject the plaint filed under Order VII Rule 11A of C.P.C. is totally misconceived. 7. The plaintiff/appellant has filed A.No.179 of 2006 to amend the plaint to the effect that at the time of entering into Memorandum of compromise (13.2.1997), under which Karthik Granties gave up its right of purchase of the entire 55 grounds of land, there was oral agreement between M/s.Karthik Granites and the defendants 1 and 2 under which the defendants 1 and 2 agreed to convey the present suit property to M/s.Karthik Granties or its nominee. Stating that it was only under the above circumstances 2nd defendant executed suit agreement dated 4.8.2001 as power of attorney of the 1st defendant in favour of the plaintiff, who was a nominee of the said Karthik Granites, plaintiff filed A.No.179 of 2006 seeking permission to amend the plaint as detailed in the judge's summons. Case of plaintiff is that the averments pertaining to circumstances leading to the execution of suit agreement between plaintiff and 2nd defendant, particulars of the earlier litigation and conduct of the parties leading to the filing of the present suit and the collusion between the defendants are very much essential, to be incorporated in the plaint by way of amendment. 8. By a common order dated 25.1.2006, the learned single Judge allowed A.No.3560 of 2005 - application to reject the plaint holding that the earlier suit (C.S.No.915 of 1994) filed by Karthik Granites came to be dismissed and in the said suit, the plaintiff was not in the picture. The learned judge further held that the original power deed in favour of the 2nd defendant (dated 19.10.1990), which was subsequently revoked by document No.501/91 dated 16.10.1991, the power of attorney in favour of 2nd defendant does not survive and while so there is no cause of action against the 1st defendant and on those findings rejected the suit as against the 1st defendant. 9. In so far as the amendment application – O.A.No.179 of 2006, the learned judge held that in the suit agreement there is no reference about the agreement of sale in favour of Karthik Granites followed by memorandum of compromise (13.2.1997) and withdrawal of C.S.No.915 of 1994 and while so, the plaintiff, by way of filing amendment application, seeks to introduce inconsistent pleas and a a new cause of action and on those findings the amendment application came to be dismissed. By the same order, the injunction application – O.A.No.132 of 2005 also came to be dismissed. https://hcservices.ecourts.gov.in/hcservices/ 10. O.S.A.No.100 of 2006 arising out of Application – A.No.3560 of 2005 rejecting the plaint against 1st Defendant :- Challenging the impugned order, learned Senior Counsel Mr.G.Masilamani appearing for the appellant submitted that learned judge failed to see that the 1st defendant had given a go by to the alleged revocation of power of attorney given by 1st defendant to the 2nd defendant, which is evident from the terms of MOU dated 13.2.1997, wherein the rights of the 2nd defendant to deal with the suit property has been clearly established. It was further submitted that the learned judge did not keep in view that the collusive suit filed by 1st defendant against 2nd defendant in C.S.No.1576 of 1991 is still subsisting and that the 2nd defendant is in possession of the suit property and that the plaintiff/appellant can claim suit for specific performance as a nominee or assignee under the 2nd defendant and while so, the learned judge ought not to have rejected the plaint in respect of the 1st defendant. 11. Mr.G.Masilamani, learned Senior Counsel appearing for the appellant contended that while considering the application under Order VII Rule 11 C.P.C, Court has to look into only the averments in the plaint and whether the plaint averments disclose a cause of action and the Court cannot take into consideration the averments in the counter/written statement. In support of his contention, the learned Senior Counsel placed reliance upon decisions of RAPTAKOS BRETT & CO. LTD. VS. GANESH PROPERTY, (1999 (I) CTC 175); SALEEM BHAI AND OTHERS VS. STATE OF MAHARASHTRA AND OTHERS, (2003 (1) CTC 186), MAYAR (H.K.) LTD. AND OTHERS VS. OWNERS & PARTIES, VESSEL M.V.FORTUNE EXPRESS AND OTHERS, ((2006) 3 SCC 100) and WIPRO LIMITED VS. OUSHADHA CHANDRIKA AYURVEDIC INDIA (P) LIMITED, (2008 (3) CTC 724). 12. On the other hand, taking us through the plaint averments, M/s.Nalini Chaidambaram, the learned Senior Counsel for 1st defendant submitted that the suit agreement is between plaintiff and 1st defendant and the power of attorney in favour of 2nd defendant having been revoked by document No.501/91 dated 16.10.1991, absolutely there is no cause of action against 1st defendant. It was further submitted that mere loose using of word “defendants” in the plaint is not sufficient to disclose the cause of action as against the 1st defendant. The main contention of 1st defendant is that since the power of attorney dated 19.10.1990 in favour of 2nd defendant was cancelled under document No.501/91 dated 16.10.1991, the 2nd defendant has no power to alienate/sell the property and the plaintiff seeks to introduce a new case by way of amendment and the learned judge has rightly rejected the suit as against the 1st defendant and rightly dismissed the amendment application. https://hcservices.ecourts.gov.in/hcservices/ 13. In the light of the rival contentions, the question falling for consideration is, whether the learned judge was right in allowing the application – A.No.34560 of 2005 and rejecting the suit as against the 1st defendant. 14. Even at the outset, it is to be pointed out that while considering the application to reject the plaint against 1st defendant along with the amendment application, the learned judge appears to have been greatly influenced by the proposed amendment, which refers to the earlier suit – C.S.No.915 of 1994 and also various happenings surrounding MOU dated 13.2.1997. The learned judge appears to have proceeded under the footing that the plaintiff/Ponniamman Educational Trust was nowhere in the picture in C.S.No.915 of 1994. 15. Before we go into the factual aspects of the matter, we may note the legal ambit of Order VII Rule 11 C.P.C. Order VII Rule 11 C.P.C. reads as under: “11. Rejection of plaint - The plaint shall be rejected in the following cases:— (a) where it does not disclose a cause of action; (b) & (c) ..... (d) where the suit appears from the statement in the plaint to be barred by any law; (e) & (f) ..... " 16. In SALEEM BHAI VS. STATE OF MAHARASHTRA, ((2003) 1 SCC 557), it was held with reference to Order 7 Rule 11 of the Code that the relevant facts which need to be looked into for deciding an application thereunder are the averments in the plaint. The trial court can exercise the power at any stage of the suit - before registering the plaint or after issuing summons to the defendant at any time before the conclusion of the trial. For the purpose of deciding an application under clauses (a) and (d) of Order 7 Rule 11 of the Code, the averments in the plaint are germane. The pleas taken by the defendant in the written statement would be wholly irrelevant at that stage. In I.T.C.LTD. V. DEBTS RECOVERY APPELLATE TRIBUNAL, (1998) 2 SCC 70, it was held that the basic question to be decided while dealing with an application filed under Order 7 Rule 11 of the Code is 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 of the Code. https://hcservices.ecourts.gov.in/hcservices/ 17. It is well settled that the whole plaint has to be read and there cannot be any compartmentalisation, dissection, segregation of various paragraphs/averments in the plaint. It is the substance and not merely the form that has to be looked into. The plaint pleading has to be construed as it stands and the intention of the party concerned has to be gathered primarily from the tenor and the terms of the pleadings. If clever drafting has created the illusion of a cause of action, it has to be nipped in the bud at the first hearing by examining the party searchingly under Order 10 of the Code. (vide T.ARIVANDANDAM V. T.V.SATYAPAL, (1977) 4 SCC 467)). 18. In the light of the above well settled principles, let us consider the facts of the present case. Suit – C.S.No.115 of 2005 is a suit for specific performance simpliciter. Plaintiff/Appellant claims specific performance based on Memorandum of Understanding/agreement of sale (dated 4.8.2001) between plaintiff and the 2nd defendant in his capacity as power agent of 1st defendant and as agreement holder from 1st defendant for sale of 28 grounds and 1952 sq.ft at Rs.19,00,000/- per ground. The plaintiff paid Rs.30,00,000/- as advance on various dates. In paragraph No.4 of the plaint, the plaintiff has clearly alleged “defendants entered into an agreement of sale dated 4.8.2001 wherein the 2nd defendant as agreement holder to purchase the property from the 1st defendant and also a registered power of attorney holder of the 1st defendant executed the sale agreement. Paragraph No.5 of the plaint refers to payment of advance of Rs.30,00,000/- on various dates by Cheques. Plaint paragraph No.5 also reiterates that the amounts were received by the 2nd defendant in his individual capacity and also in his capacity as power of attorney of 1st defendant and thus the agreement of sale dated 4.8.2001 is binding on the 1st defendant also, who is owner of the property. 19. In the plaint, in more than one place, the 2nd defendant is referred to as agreement holder as well as the power of attorney of the 1st defendant, who is the owner of the suit property. The plaintiff has also alleged that the defendants are acting in collusion. Nowhere in the plaint, the plaintiff traced the earlier sequence of events and C.S.No.915 of 1994 under which the MOU was entered into between the parties. The 2nd defendant has been simply described as agreement holder as well as the power of attorney of 1st defendant. 20. When the 2nd defendant is alleged to be the power of attorney of 1st defendant and also stated to be the agreement holder of the 1stt defendant, the 1st defendant is a necessary party to the suit. Dehors the 1st defendant, plaintiff cannot seek for specific performance against 1st defendant or seek for the https://hcservices.ecourts.gov.in/hcservices/ alternative relief of refund of advance money. Considering in the light of well settled principles the application for amendment, only the plaint averments need to be looked into and no other material. 21. Only by filing a counter statement to the injunction application and in A.No.3560 of 2005 – application to reject the plaint, the 1st defendant has traced the earlier happenings and the earlier litigations. In the counter affidavit filed in the injunction application as well as in the application to reject the plaint, the 1st defendant has traced the title of the 1st defendant for the land measuring 51 grounds and 756 sq.ft., that the 1st defendant had purchased the same under sale deed dated 20.11.1967. The 1st defendant has also referred to agreement of sale dated 7.1.1990 with the 2nd defendant – S.Velayutham and also refers to the registered power of attorney dated 19.10.1990 bearing document No.430 of 1990 executed in favour of the 2nd defendant by the 1st defendant. The counter also refers to the revocation of power of attorney dated 19.10.1990 under document No.501/91 dated 16.10.1991. Karthik Granites, with whom, the 2nd defendant entered into an agreement of sale had filed C.S.No.915 of 1994. In the said suit, a Memorandum of Understanding was entered into between (1) M/s.Karthick Granites Pvt.Ltd. - Party of First Part, (2) Educational and Charitable Society – Party of Second Part, (3) S.Velayutham – Party of Third Part, (4) A.Srinivasan alias Ravi Appasamy Real Estate – Party of Fourth Part, whereby the parties have arrived at a settlement as per which 23 grounds and 143 sq.ft out of total extent of 55 grounds has to be sold in favour of A.Srinivasan alias Ravi Appasamy. A.Srinivasan alias Ravi Appasamy has paid Rs.65 lakhs to M/s.Karthik Granites and agreed to withdraw the suit – C.S.No.915 of 1994; A.Srinivasan alias Ravi Appasamy's clients – 16 persons, who were also shown in the MOU are to purchase 23 grounds and 143 sq.ft out of 55 grounds. As per the said MOU dated 13.2.1997, A.Srinivasan alias Ravi Appasamy paid Rs.65 lakhs to Karthik Granites and C.S.No.915 of 1994 was dismissed as settled out of Court. 22. In the application to reject the plaint, after referring to the earlier litigations, the 1st defendant has averred that the power of attorney given to 2nd defendant – S.Velayutham was revoked even on 16.10.1991 under document No.501/91 and the 2nd defendant did not have any locus standi to enter into an agreement of sale dated 4.8.2001 with the plaintiff and the same is not binding on the 1st defendant. The 1st defendant sought rejection of plaint against it mainly on the ground of revocation of power of attorney in favour of 2nd defendant and that the 2nd defendant has no semblance of right in the suit property and if at all the plaintiff is entitled to any relief, it is entitled to refund of a sum of Rs.30,00,000/- given as advance to Velayutham and there is no cause of action against the 1st defendant. https://hcservices.ecourts.gov.in/hcservices/ 23. Accepting the contention of 1st defendant, the learned Judge allowed the application – A.No.3560 of 2005 and rejected the suit against the 1st dependant on the findings:- (i) The power of attorney given to 2nd defendant was already cancelled by document No.501/91 dated 16.10.1991 and the 2nd defendant has no locus standi to enter into agreement of sale (4.8.2001) with the plaintiff; (ii) There is no privity of contract between the 1st defendant and the plaintiff; (iii) The plaint does not disclose any cause of action against the 1st defendant. 24. In Paragraph No.9 of the impugned order, the learned Judge further observed that the plaintiff - Ponniamman Educational Trust was nowhere in the picture in C.S.No.915 of 1994. It is pertinent to note that the said MOU between Karthik Granites and others was entered into on 13.2.1997, whereas the plaintiff claims specific performance based on the agreement of sale dated 4.8.2001 between the plaintiff and the 2nd defendant. In our considered view, the learned Judge was not right in referring to the averments in the counter affidavit filed by the 1st dependant to injunction application (O.A.No.132 of 2005) and the averments in the application (A.No.3560 of 2005) to reject the plaint as against the 1st defendant. Any application filed under Order 7 Rule 11 of C.P.C ought to have been considered only in the light of plaint averments and not by any other materials. 25. In fact, notwithstanding the revocation of power of attorney, parties seem to be governed by the MOU dated 13.2.1997. As pointed out earlier, in the MOU dated 13.2.1997, Karthik Granites is mentioned as party of “First part” and defendants 1 and 2 as Party of “Second Part” and “Third Part” respectively. A.Srinivasan alias Ravi Appasamy is party of “Fourth Part”. As per the terms of compromise, A.Srinivasan alias Ravi Appasamy paid Rs.65 lakhs to Karthik Granites to purchase B Schedule property in the said MOU i.e., 23 grounds and 143 sq.ft out of 55 grounds . In so far as the remaining property, parties understood that the party of the “Second Part” (1st defendant society) and party of the “Third part” (2nd defendant) are at liberty to sell the retained portion as seen from the following clauses in the MOU: “.... 6(b) In any event the Party of the First Part shall have no surviving right or claim or demand against Party of the Second and Third Part either personally or against the property retained by them as coloured GREEN in the Plan attached hereto in any manner. .... 9. The Party of the Second and Third Parts are at liberty to sell the retained portion marked GREEN in the plan attached hereto without an restriction in view of https://hcservices.ecourts.gov.in/hcservices/ the Memorandum of Understanding and the Party of the First Part has no objection for the same.” 26. It is pertinent to note that MOU dated 13.2.1997 is not disputed by the 1st defendant. Therefore, the questions:- (i) notwithstanding the revocation of the power of attorney in favour of the 2nd defendant, in pursuance to the MOU dated 13.2.1997, whether the 1st defendant retained the right to deal with the remaining extent; (ii) effect of MOU dated 13.2.1997; (iii) effect of pendency of the suit filed by the 2nd defendant – C.S.No.1576 of 1991 and the injunction granted thereon could be determined in the suit filed by the plaintiff only with the presence of the 1st defendant. In the light of the defence raised by the 1st defendant, in particular, the above said clauses in MOU (13.2.1997), it cannot be said that there is no cause of action against the 1st defendant to result in rejection of the suit at the threshold. 27. The suit for specific performance was presented before the Court on 24.11.2004 and filed on 10.2.2005. The plaintiff has not only sought for prayer for specific performance, but also alternative relief for refund of advance amount of Rs.30,00,000/-. It was also stated before us that pursuant to the Order dated 1.2.2008 made in A.No.8007 of 2007, the 2nd defendant had also deposited a sum of Rs.92,30,000/- to the credit of the suit. In the light of the clauses found in MOU dated 13.2.1997, the prayer sought for by the plaintiff could be effectively determined only in the presence of the 1st defendant. The plaintiff, having made clear averments that the 2nd defendant is the agreement holder as well as the power of attorney holder of the 1st defendant, Plaintiff's suit cannot be rejected against the 1st defendant. Therefore, the order of the learned single Judge in A.No.3560 of 2005 cannot be sustained and is