Order 7 Rule 11 (d) of the Code – Suit for Declaration that Lokadalat award was obtained by playing fraud – not maintainable and as such liable the suit is liable to rejected – Writ is the only remedy

1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No.11345 OF 2017
(Arising out of S.L.P.(C) No.23605 of 2015)
Bharvagi Constructions & Anr. ….Appellant(s)
VERSUS
Kothakapu Muthyam
Reddy & Ors. …Respondent(s)
J U D G M E N T
Abhay Manohar Sapre, J.
1) Leave granted.
2) This appeal is filed by the defendants against
the final judgment and order dated 25.06.2015
passed by the High Court of Judicature at
Hyderabad for the State of Telangana and the State
of Andhra Pradesh in Appeal Suit No. 968 of 2013
whereby the High Court allowed the appeal filed by
2
the respondents herein with costs and set aside the
order dated 24.07.2013 passed by the second
Additional District Judge, Ranga Reddy District in
I.A. No.894 of 2010 in O.S. No.107 of 2010.
3) In order to appreciate the short legal
controversy involved in the appeal, it may not be
necessary to set out the factual controversy involved
in the case in detail and only narration of few facts
to appreciate the legal question arising in the case
would suffice for the disposal of this appeal.
4) On 07.05.2007, T. Jagat Singh (respondent
No. 5 herein) filed a civil suit being O.S. No. 481 of
2007 against respondent Nos. 1 to 34 herein
(defendant Nos. 1 to 33) in the Court of District
Judge, Ranga Reddy District Court.
5) The suit was for specific performance of
agreement of sale dated 28.12.1995 said to have
been entered into between the parties in respect of
agricultural land totally admeasuring AC. 51.29
guntas in (Sy.Nos. 262-274) situated at Pappalguda
3
village of Rajendranagar Mandal, Ranga Reddy
District (hereinafter referred to as the “suit land”).
6) Originally, the plaintiff had filed suit only
against defendant Nos. 1 to 9 but later on defendant
Nos. 10 to 33 made an application for being joined
as defendant Nos. 10 to 33 in the civil suit as
according to them, they had an interest in the
subject matter of the civil suit and also in its
decision and, therefore, they were necessary parties
to the suit. Their prayer was allowed. The
defendants then contested the suit.
7) During the pendency of civil suit, on
22.08.2007, the parties (plaintiff and defendants)
settled the matter in relation to the suit land and
accordingly entered into written compromise.
8) A joint compromise petition signed by all the
parties to the suit was accordingly filed before the
Lok Adalat, which held its Lok Adalat sitting in the
Court on 22.08.2007.
4
9) The members of the Lok Adalat before whom
the suit was posted for its disposal in terms of the
compromise petition filed by the parties perused the
compromise petition and accepted the compromise
petition finding it to be in order. An Award was
accordingly passed on 22.08.2007 under Section 21
of the Legal Services Authorities Act, 1987
(hereinafter referred to as “the Act”) in terms of the
compromise petition, which, in turn, disposed of the
suit as having been compromised. (Annexure P-2).
10) On 14.11.2009, respondent Nos. 1 to 4 herein
(who were original defendant Nos. 22 to 25 in Suit
No. 481 of 2007) filed Civil Suit No. 107 of 2010
against the plaintiff and the remaining defendants
of Civil Suit No. 481 of 2007. This suit was filed in
the Court of II Additional District Judge, Ranga
Reddy District at L.B.Nagar.
11) This suit was for a declaration that the award
dated 22.08.2007 passed by the Lok Adalat in Civil
Suit No. 481 of 2007 was obtained by the
5
defendants of this suit by playing fraud/misrepresentation
on the plaintiffs and hence the
Award dated 22.08.2007 be declared illegal, null
and void and not binding on the plaintiffs.
12) According to the plaintiffs, though they were
parties to the award along with defendants in Civil
Suit No. 481/2007 but since the award dated
22.08.2007 was obtained by the parties by
misrepresenting the facts to the plaintiffs which was
nothing short of fraud played by the defendants on
them to grab their more land without their
knowledge and taking advantage of their illiteracy,
the same is not a legal award and hence not binding
on the plaintiffs. On these averments, the plaintiffs
prayed that the award dated 22.08.2007 be declared
illegal, void, in-operative and not binding on the
plaintiffs.
13) The defendants, on being served with the
notice of the suit, filed an application under Order 7
Rule 11 (d) of the Code of Civil Procedure, 1908
6
(hereinafter referred to as “the Code”) and prayed for
rejection of the plaint. According to the defendants,
since the suit seeks to challenge the Award of Lok
Adalat, it is not maintainable being barred by virtue
of rigour contained in Order 7 Rule 11(d) of Code. It
was contended that the remedy of the plaintiff was
in filing writ petition under Article 226 or/and 227
of the Constitution of India to challenge the award
dated 22.08.2007 as held by this Court in State of
Punjab & Anr. Vs. Jalour Singh & Ors., (2008) 2
SCC 660 .
14) The Trial Court, by order dated 24.07.2013
allowed the application filed by the defendants and
rejected the plaint by invoking powers under clause
(d) of Rule 11. It was held that the filing of the civil
suit to challenge the award of Lok Adalat is
impliedly barred and the remedy of the plaintiffs is
to challenge the award by filing writ petition under
Article 226 or/and 227 of the Constitution in the
7
High Court as held by this Court in the case of
State of Punjab (supra).
15) The plaintiffs, felt aggrieved, filed an appeal
before the High Court. The High Court, by
impugned order, allowed the appeal, set aside the
order of the Trial Court and restored the suit on its
file for its disposal on merits in accordance with
law. The High Court held that since the suit is
founded on the allegations of misrepresentation and
fraud, it is capable of being tried on its merits by
the Civil Court.
16) Against this order, the defendants have felt
aggrieved and filed this appeal by way of special
leave before this Court.
17) Heard Mr. Dushyant Dave and Mr. Jayant
Bhushan, learned senior counsel for the appellants
and Mr. B. Adinarayana, learned senior counsel,
Mr. D. Mahesh Babu, Mr. Pranab Mullick, Mr. Ejaz
Maqbool for the respondents.
8
18) Mr. Dushyant Dave, learned senior counsel,
appearing for the appellants (defendants) while
assailing the legality and correctness of the
impugned order argued only one legal point. He
urged that the reasoning and the conclusion arrived
at by the Trial Court was right whereas the
reasoning and the conclusion arrived at by the High
Court was not so and hence the Trial Court’s order
deserves to be restored.
19) Elaborating his submission, Mr. Dushyant
Dave placed reliance on the law laid down by this
Court in State of Punjab (supra) and contended
that the issue urged by him no longer remains res
integra and stands answered by this Court in
appellant’s favour.
20) It was his submission that the expression
“barred by any law” occurring in clause (d) of Rule
11 of Order 7 not only includes any Act enacted by
the legislature creating a “bar” but the expression
“law” includes therein “judicial decision of the
9
Supreme Court” also, which are binding on all the
Courts in the Country by virtue of Article 141 of the
Constitution of India.
21) In other words, his submission was that the
expression “law” occurring in clause(d) of Rule 11 of
Order 7 should be construed liberally so as to
include therein not only any “Act” which is
admittedly a “law” made by the legislature but also
include therein a “a decision of Supreme Court “.
22) Learned counsel urged that the appellants
(defendants) were, therefore, fully justified in
invoking the powers under Order 7 Rule 11(d) of the
Code praying for rejection of the plaint as being
barred on the strength of law laid down by this
Court in State of Punjab (supra).
23) In reply, learned counsel for the respondents
while supporting the impugned order contended
that the reasoning and the conclusion arrived at by
the High Court is just and proper and hence does
not call for any interference.
10
24) Having heard the learned counsel for the
parties and on perusal of the record of the case, we
find force in the submissions of the learned counsel
for the appellants.
25) The question arose before this Court (Three
Judge Bench) in the case of State of Punjab (supra)
as to what is the remedy available to the person
aggrieved of the award passed by the Lok Adalat
under Section 20 of the Act. In that case, the award
was passed by the Lok Adalat which had resulted in
disposal of the appeal pending before the High
Court relating to a claim case arising out of Motor
Vehicle Act. One party to the appeal felt aggrieved of
the Award and, therefore, questioned its legality and
correctness by filing a writ petition under Article
226/227 of the Constitution of India. The High
Court dismissed the writ petition holding it to be not
maintainable. The aggrieved party, therefore, filed
an appeal by way of special leave before this Court.
This Court, after examining the scheme of the Act
11
allowed the appeal and set aside the order of the
High Court. This Court held that the High Court
was not right in dismissing the writ petition as not
maintainable. It was held that the only remedy
available with the aggrieved person was to challenge
the award of the Lok Adalat by filing a writ petition
under Article 226 or/and 227 of the Constitution of
India in the High Court and that too on very limited
grounds. The case was accordingly remanded to the
High Court for deciding the writ petition filed by the
aggrieved person on its merits in accordance with
law.
26) This is what Their Lordships held in Para 12:
“12. It is true that where an award is made by
the Lok Adalat in terms of a settlement
arrived at between the parties (which is duly
signed by parties and annexed to the award of
the Lok Adalat), it becomes final and binding
on the parties to the settlement and becomes
executable as if it is a decree of a civil court,
and no appeal lies against it to any court. If
any party wants to challenge such an award
based on settlement, it can be done only by
filing a petition under Article 226 and/or
Article 227 of the Constitution, that too on
very limited grounds. But where no
compromise or settlement is signed by the
12
parties and the order of the Lok Adalat does
not refer to any settlement, but directs the
respondent to either make payment if it
agrees to the order, or approach the High
Court for disposal of appeal on merits, if it
does not agree, is not an award of the Lok
Adalat. The question of challenging such an
order in a petition under Article 227 does not
arise. As already noticed, in such a situation,
the High Court ought to have heard and
disposed of the appeal on merits.”
27) In our considered view, the aforesaid law laid
down by this Court is binding on all the Courts in
the country by virtue of mandate of Article 141 of
the Constitution. This Court, in no uncertain terms,
has laid down that challenge to the award of Lok
Adalat can be done only by filing a writ petition
under Article 226 and/or Article 227 of the
Constitution of India in the High Court and that too
on very limited grounds.
28) In the light of clear pronouncement of the law
by this Court, we are of the opinion that the only
remedy available to the aggrieved
person(respondents herein/plaintiffs) was to file a
writ petition under Article 226 and/or 227 of the
13
Constitution of India in the High Court for
challenging the award dated 22.08.2007 passed by
the Lok Adalat. It was then for the writ Court to
decide as to whether any ground was made out by
the writ petitioners for quashing the award and, if
so, whether those grounds are sufficient for its
quashing.
29) The High Court was, therefore, not right in by
passing the law laid down by this Court on the
ground that the suit can be filed to challenge the
award, if the challenge is founded on the allegations
of fraud. In our opinion, it was not correct approach
of the High Court to deal with the issue in question
to which we do not concur.
30) We also do not agree with the submissions of
Mr. Adinarayana Rao, learned senior counsel for the
respondents when he urged that firstly, the
expression “law” occurring in clause(d) of Rule 11
Order 7 does not include the “judicial decisions”
and clause (d) applies only to bar which is contained
14
in “the Act” enacted by the Legislature; and
Secondly, even if it is held to include the “judicial
decisions”, yet the law laid down in the case of
State of Punjab (supra) cannot be read to hold that
the suit is barred. Both these submissions, in our
view, have no merit.
31) Black’s Law Dictionary (Ninth Edition) defines
the expression “law”. It says that “Law” includes the
“judicial precedents” (see at page 962). Similarly,
the expression “law” defined in Jowett’s Dictionary
of English Law (Third Edition Volume-2, (pages
1304/1305) says that “law is derived from judicial
precedents, legislation or from custom. When
derived from judicial precedents, it is called
common law, equity, or admiralty, probate or
ecclesiastical law according to the nature of the
Courts by which it was originally enforced”.
32) The question as to whether the expression
“law” occurring in clause(d) of Rule 11 of Order 7 of
the Code includes “judicial decisions of the Apex
15
Court” came up for consideration before the Division
Bench of the Allahabad High Court in Virender
Kumar Dixit vs. State of U.P., 2014(9) ADJ 1506.
The Division Bench dealt with the issue in detail in
the context of several decisions on the subject and
held in para 15 as under:
“15. Law includes not only legislative
enactments but also judicial precedents. An
authoritative judgment of the Courts
including higher judiciary is also law.”
33) This very issue was again considered by the
Gujarat High Court (Single Bench) in the case of
Hermes Marines Limited vs. Capeshore Maritime
Partners F.Z.C. & Anr. (unreported decision in Civil
Application (OJ) No.144 of 2016 in Admiralty Suit
No.10 of 2016 decided on 22.04.2016). The learned
Single Judge examined the issue and relying upon
the decision of the Allahabad High Court quoted
supra held in Para 53 as under:
“53. In the light of the above discussion, in
the considered view of this Court, it cannot
be said that the term “barred by any law”
occurring in clause(d) of Rule 11 of Order 7 of
16
the Code, ought to be read to mean only the
law codified in a legislative enactment and
not the law laid down by the Courts in
judicial precedents. The judicial precedent of
the Supreme Court in Liverpool & London
Steamship Protection and Indemnity
Association vs. M.V. Sea Success, 2004(9)
SCC 512 has been followed by the decision of
the Division Bench in Croft Sales &
Distribution Ltd. vs. M.V. Basil, 2011(2) GLR
1027. It is, therefore, the law as of today,
which is that the Geneva Convention of 1999
cannot be made applicable to a contract that
does not involve public law character. Such a
contract would not give rise to a maritime
claim. As discussed earlier, the word ‘law’ as
occurring in Order 7 Rule 11(d) would also
mean judicial precedent. If the judicial
precedent bars any action that would be the
law.”
34) Similarly, this very issue was again examined
by the Bombay High Court (Single Judge) in Shahid
s. Sarkar & Ors. Vs. Usha Ramrao Bhojane, 2017
SCC OnLine Bom 3440. The learned Judge placed
reliance on the decisions of the Allahabad High
Court in Virender Kumar Dixit vs. State of U.P.
(Supra) and the Gujarat High Court in Hermes
Marines Limited (supra) and held as under:
“18…………….The law laid down by the
highest court of a State as well as the
Supreme Court, is the law. In fact, Article
141 of the Constitution of India categorically
17
states that the law declared by the Supreme
Court shall be binding on all Courts within
the territories of India. There is nothing
even in the C.P.C. to restrict the meaning of
the words “barred by any law” to mean only
codified law or statute law as sought to be
contended by Mr. Patil. In the view that I
have taken, I am supported by a decision of
the Gujarat High Court in the case of Hermes
Marines Ltd..……………………………..”
“19. One must also not lose sight of
the purpose and intention behind Order VII
Rule 11(d). The intention appears to be that
when the suit appears from the statement in
the plaint to be barred by any law, the Courts
will not unnecessarily protract the litigation
and proceed with the hearing of the suit. The
purpose clearly appears to be to ensure that
where a Defendant is able to establish that
the Plaint ought to be rejected on any of the
grounds set out in the said Rule, the Court
would be duty bound to do so, so as to save
expenses, achieve expedition and avoid the
court’s resources being used up on cases
which will serve no useful purpose. A
litigation, which in the opinion of the court,
is doomed to fail would not further be allowed
to be used as a device to harass a
Defendant…………………..”
35) Similarly, issue was again examined by the
High Court of Jharkhand(Single Judge) in Mira
Sinha & Ors. Vs. State of Jharkhand & Ors., 2015
SCC OnLine Jhar.4377. The learned Judge, in
paragraph 7 held as under:
18
“7. In the background of the law laid down by
the Hon’ble Supreme Court, it is apparent
that Order VII Rule 11(d) C.P.C. application is
maintainable only when the suit is barred by
any law. The expression “law” included in
Rule 11(d) includes Law of Limitation and, it
would also include the law declared by the
Hon’ble Supreme Court………”
36) We are in agreement with the view taken by
Allahabad, Gujarat, Bombay and Jharkhand High
Courts in the aforementioned four decisions which,
in our opinion, is the proper interpretation of the
expression “law” occurring in clause (d) of Rule 11 of
Order 7 of the Code. This answers the first
submission of the learned counsel for the
respondents against the respondents.
37) So far as the second submission of learned
counsel for the respondents is concerned, it also
has no merit. In our view, the decision rendered in
the case of State of Punjab (supra) is by the larger
Bench (Three Judge) and is, therefore, binding on
us. No efforts were made and rightly to contend that
the said decision needs reconsideration on the issue
in question. That apart, when this Court has laid
19
down a particular remedy to follow for challenging
the award of Lok Adalat then in our view, the same
is required to be followed by the litigant in letter and
spirit as provided therein for adjudication of his
grievance in the first instance. The reason being
that it is a law of the land under Article 141 of the
Constitution of India (see – M. Nagaraj & Ors. Vs.
U.O.I. & Ors. 2006 ( 8 ) SCC 212). It is then for
the writ court to decide as to what orders need to be
passed on the facts arising in the case.
38) In the light of foregoing discussion, we cannot
concur with the reasoning and the conclusion
arrived at by the High Court.
39) As a result, the appeal succeeds and is
allowed. Impugned order is set aside and that of the
order passed by the Trial Court is restored. As a
consequence, the application filed by the appellants
(defendants) under Order 7 Rule 11 (d) of the Code
is allowed resulting in rejection of the plaint.
20
40) We, however, make it clear that the
respondents (plaintiffs) would be at liberty to
challenge the legality and correctness of the award
dated 22.08.2007 passed by the Lok Adalat by filing
the writ petition under Article 226 or/and 227 of
the Constitution in the High Court in accordance
with law.
41) We also make it clear that we have not
examined the merits of case of either parties which
is the subject matter of the suit and hence the writ
court, in the event of writ petition being filed, would
decide the writ petition strictly in accordance with
law without being influenced by any of our
observations.

……………………………………..J.
[R.K. AGRAWAL]

……
………………………………….J.
[ABHAY MANOHAR SAPRE]
New Delhi;
September 07, 2017