[2025] 7 S.C.R. 190
(Civil Appeal No. 7109 of 2025), delivered on 23 May 2025.
Core Issue
The Supreme Court considered whether the High Court erred in rejecting a plaint in its entirety under Order VII Rule 11 of the Code of Civil Procedure, 1908 (CPC), particularly when some of the reliefs sought were legally untenable, but others were maintainable and based on independent causes of action1. The case also scrutinised whether an unregistered agreement to sell and power of attorney could confer valid title or authority for alienation, and the jurisdiction of civil courts over property title disputes12.
Factual Background
Vinod Infra Developers Ltd. (the appellant) claimed ownership of agricultural land and stated they obtained a loan of ₹7.5 crores from Mahaveer Lunia (Respondent No.1) in May 201434. In connection with this loan, the appellant’s Managing Director executed an unregistered power of attorney and an unregistered agreement to sell in favour of Respondent No.1, which the appellant contended were intended as security for the loan, effectively constituting a mortgage, and not a transfer of ownership3….
The appellant claimed to have revoked the board resolution and power of attorney on 24 May 2022 and 27 May 2022, respectively46. Despite this, Respondent No.1 executed sale deeds on 13 and 14 July 2022, which were registered on 19 July 2022, in his favour and in favour of other respondents (Nos. 2-4)47. Consequently, the appellant filed a civil suit seeking declaration, possession, and injunction, asserting that these sale deeds were void due to the prior revocation of authority47.
Lower Courts’ Decisions
During the pendency of the suit, Respondent Nos. 1 to 4 filed an application under Order VII Rule 11 CPC, seeking rejection of the plaint. The Trial Court dismissed this application, holding that triable issues were raised89. However, the High Court allowed the application and rejected the plaint in its entirety, concluding that the restrictions on enjoyment were void under Section 10 of the Transfer of Property Act, 1882 (TPA), and implicitly treating the transaction as a sale that could not be restricted8…. The High Court erred in treating the second cause of action as “academic”11.
Supreme Court’s Reasoning and Decision
The Supreme Court allowed the appeal, setting aside the High Court’s judgment and restoring the Trial Court’s order. The Court’s reasoning was multifaceted:
• Nature of Transaction and Unregistered Documents:
◦ The Court clarified that the unregistered power of attorney and agreement to sell could not confer valid authority to transfer title12…. Sections 17 and 49 of the Registration Act, 1908, explicitly state that such documents are inadmissible as evidence for conveying title or completing a sale, except for collateral purposes or in a suit for specific performance12….
◦ Section 54 of the TPA dictates that a contract for sale does not, by itself, create any interest in or charge on immovable property521. The Court reiterated that immovable property can be legally transferred only by a registered deed of conveyance22….
◦ The High Court’s reliance on Section 10 of the TPA was misplaced because that section deals with conditions absolutely restraining alienation of transferred property, whereas here, the issue was whether title was transferred at all given the unregistered nature and prior revocation of the documents25.
◦ The power of attorney was merely a creation of agency and could be revoked at any time, especially since it was not coupled with interest6…. Its revocation prior to the execution of the impugned sale deeds rendered any subsequent actions by Respondent No.1 without valid authority5….
• Rejection of Plaint under Order VII Rule 11 CPC:
◦ The Court emphasised that rejection of a plaint is only permissible when, on its face, it fails to disclose a cause of action or is clearly barred by law29.
◦ Crucially, the Court 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 action1…. The High Court’s wholesale rejection was an improper application of this rule, particularly as the suit involved a distinct cause of action regarding the sale deeds executed after the revocation of the power of attorney11….
◦ Serious triable issues arose from the pleadings, such as the true nature of the transaction (mortgage vs. sale) and the validity of the subsequent sale deeds, which could not be summarily dismissed at this preliminary stage1….
• Jurisdiction of Courts and Revenue Records:
◦ The Court reaffirmed that issues relating to title of immovable property fall exclusively within the jurisdiction of civil courts, not revenue authorities2…. Revenue entries are administrative and for fiscal purposes only, not conclusive proof of title2….
◦ Therefore, the plea that the suit was barred under Section 207 of the Rajasthan Tenancy Act, 1955 (relating to khatedari rights) was inapplicable, as the issues pertained to ownership and validity of sale deeds, which are civil in nature2….
• Insufficient Court Fee:
◦ The Court noted that a suit cannot be dismissed merely for insufficient court fee; the plaintiff must be afforded an opportunity to rectify the deficiency38….
Final Outcome
The Supreme Court set aside the High Court’s order and restored the Trial Court’s decision, allowing the plaint to proceed. It directed the trial court to adjudicate the suit in accordance with law, uninfluenced by its observations in the judgment, as significant triable issues remained142.
