2026 Supreme(SC) 513

SUPREME COURT OF INDIA
J.B. PARDIWALA, R. MAHADEVAN, JJ.
Manjula And Others – Appellant
Versus
D.A. Srinivas – Respondent
Civil Appeal No. 7370 of 2026 [Arising out of SLP (C) NO. 7924 of 2024]
Decided On : 08-05-2026

IMPORTANT POINTS
(1) Rejection of plaint – Application under Order VII Rule 11 of CPC can be taken up along with a preliminary objection and decided together by trial Court.
(2) Admission of plaint is not automatic – Trial Courts shall verify whether plaint satisfies the requirements of Order VII Rule 11 CPC before issuing summons.
(3) A disputed question of fact cannot ordinarily be decided as a preliminary objection while considering application for rejection of plaint.
(4) Fiduciary Relationship – There is no fiduciary relationship between Director of a company and an employee of company.
(5) Bar on inheritance – A person accused of murder of one from whom inheritance is claimed, is disentitled from asserting rights, not only under Section 25 of Hindu Succession Act, 1956 but also on principles of justice, fair play and equity.
(6) A curative or declaratory amendment is retrospective in operation.
(9) Confiscation and prosecution contemplated under Benami Act operate in distinct spheres and are governed by different procedures – Article 20(2) of Constitution is not attracted.

Headnote:

(A) Civil Procedure Code, 1908 – Order VII Rules 11, 12 and 13 – Rejection of plaint – Rejection of plaint under grounds mentioned under Order VII Rule 11 is essentially determinable on the basis of averments contained in plaint – Plaint must disclose cause of action; relief claimed must be properly valued; requisite court fee must be paid; duplicate copy must be filed; and as many copies of plaint as there are defendants must be filed after order of Court directing issuance of summons – While considering a claim that suit is barred by law, thorough and meaningful reading of plaint must be undertaken – If by clever drafting fictional cause of action is created to veil bar under law, it is imperative for Court to reject plaint – Person who has suppressed a material fact is not entitled to any relief – Suppression of a material fact within knowledge of party amounts to fraud upon the Court – Relevancy or otherwise of a fact is to be decided by Court, and parties cannot contend that they omitted a material fact on assumption that it was not relevant – It is not only duty of Court to summarily reject claim of a party suppressing a material fact, but also to ensure that any benefit obtained by such party is undone and status quo ante restored in its fairness and equity. (Paras 8.5, 8.9 and 9.5)

(B) Civil Procedure Code, 1908 – Sections 148 and 151 – Enlargement of time – Jurisdiction to extend or enlarge time, once conferred, cannot be restricted merely by imposing a timeline, and inherent power of Court under Section 151 comes into operation to meet requirements of justice – Such inherent power is to be exercised in appropriate cases where party concerned is unable to comply with direction of Court within time fixed or granted, for reasons beyond his control, and approaches Court for further enlargement of time – Totality of circumstances and prejudice likely to be caused to other side are also to be considered – In matters relating to payment of court fee or filing of requisite copies, it is essentially a matter between Court and plaintiff, and ordinarily no prejudice would be caused to opposite party – Before rejecting plaint for improper valuation or deficit court fee, Court must grant opportunity to plaintiff to properly value relief and pay requisite court fee, failing which plaint shall stand rejected – Time granted by Court to value relief and pay court fee cannot be extended unless plaintiff satisfies Court that for extraordinary reasons, he was unable to do so. (Paras 8.8 and 8.9)

(C) Civil Procedure Code, 1908 – Sections 26 and 27 read with Order IV Rules 1 and 2 – Institution of suit – Once plaint is presented for institution, and before it is admitted, it is duty of Trial Court to verify contents of plaint and ensure that all legal requirements are satisfied before admitting plaint – Trial Court cannot mechanically admit plaint and register suit – Admission of plaint cannot be a mechanical process by which note of Registry is merely endorsed by Court – If, at stage of admission of plaint, Trial Court, upon a meaningful reading of plaint, comes to conclusion that plaint is liable to be rejected, it shall reject plaint – It is not necessary for Trial Court to wait for defendant to enter appearance and seek rejection of plaint. (Para 9.3)

(D) Civil Procedure Code, 1908 – Order VII Rule 11 and Order XIV Rule 2 – Rejection of plaint – Both provisions enable Court to examine maintainability of a suit at the earliest possible stage, though they operate in distinct procedural spheres – Order VII Rule 11 is confined to averments contained in plaint and documents relied upon by plaintiff – Order XIV Rule 2, on other hand, comes into operation after pleadings are complete and issues arise for adjudication – While Order VII Rule 11 and Order XIV Rule 2 are distinct procedural mechanisms, both are designed to prevent unnecessary trials in cases where suit is barred in law – Former operates where defect is evident on face of plaint; latter applies where a pure question of law arises upon admitted or undisputed foundational facts after pleadings are complete – Application for rejection of plaint can be filed at any stage of suit – Once application under Order VII Rule 11 CPC is filed, Trial Court is first bound to decide the same before proceeding with suit – Right to seek rejection of plaint must be exercised at the earliest stage, when right to file written statement subsists – Filing of application to reject plaint does not stop clock for filing written statement – If defendant is set ex parte, he cannot, as of right, participate further in proceedings, unless he exercises his option to file written statement along with application to set aside ex parte order under Order IX Rule 7 CPC – Although limitation is generally a mixed question of law and it may be decided as a preliminary issue – Disputed question of fact cannot ordinarily be decided as a preliminary objection while considering application for rejection of plaint. (Paras 10, 10.1, 10.4 and 10.5)

(E) Prohibition of Benami Property Transactions Act, 1988 – Sections 4 and 6 – Civil Procedure Code, 1908 – Order VII Rule 11 – Rejection of plaint – Benami Act, in effect, extinguished right of real owner to recover property from person in whose name it stood – Adjudication undertaken for the purpose of confiscation of benami property stands on a distinct and independent footing from criminal proceedings initiated for prosecution of offences under the Act – Confiscation is a civil action directed against property itself and not against individuals participating in benami transaction – Protection against retrospectivity generally extends only to vested or accrued rights – Act of 1988 had already prohibited benami transactions – A person cannot claim vested right to enter into transactions designed to defeat or circumvent law – What cannot be done directly cannot be permitted to be done indirectly. (Paras 15.2, 21 and 21.4 and 22.3)

(F) Prohibition of Benami Property Transactions Act, 1988 – Sections 4 and 6 – Benami transaction – 2016 amendments were enacted to cure mischiefs and omissions in original legislation, which had become largely unworkable in practice – Prohibition against benami transactions already existed – No period of limitation was prescribed either under original Act or under amended Act for initiating action against benami property or against persons involved in such transactions – Action for confiscation or prosecution may be taken whenever transaction comes to notice of competent authorities – When a lis comes before Court disclosing a benami transaction, Court is duty-bound to consider applicability of Act and enforce statutory prohibition – Amended provisions merely introduced a complete machinery for attachment, adjudication and appeals – Though attachment and adjudication were elaborately structured for first time, these provisions are essentially procedural and regulatory, intended to ensure fairness and avoid arbitrary action before confiscation – Unless amendment is given retroactive operation, very object of making legislation workable would be defeated – 2016 amendments, insofar as they are declaratory, procedural, curative and machinery-oriented, operate retrospectively/retroactively, while penal provisions creating new offences or enhancing punishment can operate only prospectively. (Paras 22.12, 22.13, 22.15 and 29)

(G) Statute Law – Rule of Prospectivity – Ordinarily, every statute is presumed to be prospective unless statute itself expressly or by necessary implication provides otherwise – Mere fact that a law is brought into force from a particular date does not necessarily mean that it operates only prospectively – To determine true temporal operation of a statute, object of enactment must be considered – If purpose of amendment is to cure a defect, remove an omission, substitute appropriate provisions earlier lacking, effectively implement original legislative intent, or if amendment is clarificatory, declaratory or validating in nature, it may legitimately receive retrospective operation. (Paras 22.2 and 22.6)

(H) Fiduciary Relationship – There is no fiduciary relationship between Director of a company and an employee of company – Relationship between company and its Director is fiduciary in nature – Contractual relationships supported by valid consideration also stand outside fiduciary exception, being commercial transactions and not arrangements founded merely on trust. (Para 29(iv))

(I) Hindu Succession Act, 1956 – Section 25 – Bar on inheritance – Bar under Section 25 of Hindu Succession Act, 1956 applies to both intestate and testamentary succession – A person accused of murder of one from whom inheritance is claimed, is disentitled from asserting rights, not only under Section 25 but also on principles of justice, fair play and equity – Strict proof is not indispensable in civil proceedings if preponderance of probabilities points to commission of offence – A person must not be permitted to profit from or take advantage of his own wrong. (Paras 25.6 and 29(v))

Facts of the case:

Trial Court had allowed application filed by Defendant Nos. 1 to 3 / Appellants under Order VII Rule 11 (a) and (d) of Code of Civil Procedure, 1908 and rejected plaint on the grounds that it did not disclose any cause of action and that suit was barred under Sections 4 and 6 of Prohibition of Benami Property Transactions Act, 1988. However, by impugned judgment, High Court reversed said findings and restored the suit for adjudication on merits.

Findings of Court:

Central Government is directed to appoint an Administrator and take over suit properties, in accordance with law, within a period of eight weeks from date of receipt of this judgment. Since judicial determination declaring transaction to be benami has attained finality, no court shall entertain any claim in respect of subject properties arising out of or founded upon such benami transaction.

Result : Civil Appeal disposed of with directions.