Suits cannot be dismissed under Order 7 Rule 11 CPC based on procedural deficiencies regarding cash payments exceeding Rs. 2,00,000/- if they disclose a valid cause of action.

ORDER :

1. Since both the Civil Revision Petitions involve a common question of law, the same are decided by this common order.

2. The brief facts are that the respondents/plaintiffs filed two suits, being Civil Original Suit No. 30/2016 (CIS No.75/2018) and Civil Original Suit No. 31/2016 (CIS No.76/2018), before the learned Additional District Judge No.2, Nimbahera, Chittorgarh.

3. In Civil Original Suit No. 30/2016 (CIS No.75/2018), it was stated that the original defendant No.1, namely Hansraj Chaplot, and respondents/plaintiffs No.1 and 2 entered into an agreement to sell dated 10.07.2013 for the sale of a three-storied building known as “Chopda Wali Haveli” located in Nimbahera, Rajasthan. The total sale price of the property in question was disclosed to be Rs. 25,00,000/-. Against the total sale consideration of Rs. 25,00,000/-, the original defendant received an advance payment of Rs. 10,00,000/-. The remaining amount was to be paid within eleven months. The sale agreement was executed between the parties in the presence of one Mr. Sudhir Kumar Kumawat. Upon failure of the original defendant to execute the sale deed pursuant to the agreement to sell dated 10.07.2013, the respondents/plaintiffs filed a suit for specific performance and permanent injunction, seeking enforcement of the said sale agreement and a permanent injunction restraining the petitioner/defendant from alienating the property or creating third-party rights over it.

4. In Civil Original Suit No.31/2016 (CIS No.76/2018), it was stated that a loan agreement dated 10.07.2013 was executed between original defendant No.1 – Hansraj Chaplot and original defendant No.2 – Sunita, as the first party, and respondents/plaintiffs No. 1 and 2 as the second party, whereby a loan of Rs. 35,00,000/- was advanced by the respondents/plaintiffs to the petitioners/defendants for their business activities and for the construction of a multi-storied building. As security for the loan, seven undated cheques of Rs. 5,00,000/- each were handed over to the respondents/plaintiffs. Upon failure of the petitioners/defendants to repay the amount, a summary suit under Order 37 CPC for recovery of Rs. 47,70,000/-, including the principal and accrued interest as per the terms of the agreement, was instituted.

5. Learned counsel for the petitioners/defendants submitted that in both suits, the petitioners/defendants filed applications under Order 7 Rule 11 CPC for rejection of the plaint on the ground that, in both plaints, it is stated that an advance payment of more than Rs. 2,00,000/- was made in cash towards the alleged transactions. He submitted that the Hon’ble Supreme Court of India, in the case of The Correspondence, RBANMS Educational Institution vs. B. Gunashankar & Anr. 2025 INSC 490 , directed that whenever a suit is filed with a claim of Rs. 2,00,000/- and above being paid in cash towards any transaction, the courts must intimate the same to the jurisdictional Income Tax Department to verify the transaction and to examine any violation of Section 269ST of the Income Tax Act. It was urged that the suits were filed in utter disregard of the provisions of the Income Tax Act and were based on agreements that do not fulfill the essential ingredients of a valid contract under Section 10 of the Indian Contract Act, 1872. According to learned counsel, of the Indian Contract Act mandatorily prescribes attestation of an agreement by at least two witnesses, whereas, in the present case, the agreements were attested by only one witness, namely Mr. Sudhir Kumar Kumawat. Learned counsel placed reliance on the judgment of the Hon’ble Supreme Court of India in Asha John Divianathan vs. Vikram Malhotr