M/S FROST INTERNATIONAL LIMITED versus M/S MILAN DEVELOPERS AND BUILDERS (P) LIMITED & ANR.

Citation: [2022] 14 S.C.R. 1100 · Decided: 01-04-2022 · Supreme Court of India · Bench: M.R. SHAH · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · cites 8 · see the full citation network in Lexace

Judgment (excerpt)

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SUPREME COURT REPORTS
[2022] 14 S.C.R.
M/S FROST INTERNATIONAL LIMITED
v.
 M/S MILAN DEVELOPERS AND BUILDERS (P) LIMITED &
ANR.
(Civil Appeal No. 1689 of 2022)
APRIL 01, 2022
[M. R. SHAH AND B. V. NAGARATHNA, JJ.]
Code of Civil Procedure, 1908 : ss. 96, 115 and Or.VII r.11 -
Negotiable Instruments Act - ss. 118, 138 - Specific Relief Act - ss.
34, 41 – Suit for declaration – Rejection of plaint - Respondent
no.1 engaged in business of exporting iron ore from Paradeep Port,
had a plot on licence from Paradeep Port Trust Authority for carrying
its business - Respondent no.1 and appellant entered into a
Cooperation Agreement, however, as per respondent no.1, it was
not given effect – Thereafter, appellant filed a complaint against
respondent no.1 with Paradeep Port Trust Authority for violating
terms and conditions of his license – Parties then entered into a
Memorandum of understanding agreeing the appellant would take
steps to protect the license of the plot given to the respondent no.1
from cancellation and that the respondent no.1 would issue a cheque
for Rs.56 lakhs in favour of appellant and the same would remain
in the custody of the respondent no.2 as security, which is equivalent
to the cost of 3876 MT of iron ore, and if the appellant succeeded
in protecting the licence from being cancelled then respondent no.
1 would supply iron ore fines to appellant - Accordingly cheque
was given to the respondent no.2 as security, however, the appellant
took no step to save the license of the plot and the license was
cancelled, and the cheque of Rs.56 lakhs was handed over to
appellant, who presented the same for encashment and it got
dishonoured – Appellant issued notice u/s. 138 of N.I. Act to the
respondent no. 1 – Respondent no.1 then filed suit for declaration
against the appellant and the respondent no. 2 that the cheque which
was dishonoured was handed over by him to respondent no.2 as a
security and that appellant had not acquired any right over the
said cheque as the respondent no.1 had no liability to discharge in
favour of appellant – Appellant then filed an application u/Or. VII
Rule 11seeking rejection of the plaint – Dismissed by trial court,
[2022] 14 S.C.R. 1100
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however, the revisional court set aside the order of the trial court
and rejected the plaint – In writ petition, the High Court set aside
the order of the revisional court and remanded the matter holding
that the revisional court had exceeded its jurisdiction in rejecting
the plaint – On appeal, held : High Court was not right in holding
that the revisional court had exceeded its jurisdiction and it could
not have allowed the application filed under Order VII Rule 11 and
thereby reversed the order of the trial court and finally disposed of
the suit - High Court failed to appreciate the second proviso to s.
115 of CPC (Orissa amendment) in its true perspective - Revisional
court, being the High Court or the District Court, as the case may
be, can reverse an order which would finally dispose of the suit or
other proceeding - Revisional court being the District Court, did
the same.
s.115 and Order VII Rule 11 - Specific Relief Act,1963 -
ss.34,41 - Negotiable Instruments Act - ss. 118, 138 - Revisional
court-District Court allowing the application filed u/ord. VII r 11
by the appellant and thereby rejecting the plaint filed by the
respondent no.1 – Justification of – Appellant’s case that respondent
no.2 has sought only declaratory that the cheque issued in the name
of the appellant was a security and the appellant had no right to
encash it and has not sought further or consequential reliefs, thus,
suit is barred under Specific Relief Act; and that the suit filed by the
respondent no.1 is an attempt to frustrate the possibility of the
appellant initiating action under the provisions of the N.I. Act for
the dishonour of cheque - Held : Omission on the part of the
respondent no. 1 in praying for further consequential relief, would
become relevant only at the time of final adjudication of the suit -
Right of appellant to prosecute the respondent no. 1 owing to the
dishonour of the cheque issued by the respondent no. 1 cannot be
frustrated by seeking a declaration that the said cheque was handed
over as a security – Such a declaration cannot be ex facie granted
as it would be contrary to the provisions of the N.I. Act and
particularly s.118(a) thereof – In these circumstances, while the
respondent no. 1 has ce

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