Rejection Of Civil Suit Under Order VII Rule 11 CPC Does Not Operate As Res Judicata Against Consumer Complaint: Delhi State Commission
Pranav B Prem
The Delhi State Consumer Disputes Redressal Commission has held that rejection of a civil suit under Order VII Rule 11 of the Code of Civil Procedure, 1908 does not amount to an adjudication on merits and, therefore, does not operate as res judicata so as to bar a consumer complaint on the same cause of action. Setting aside the order of the District Consumer Forum which had dismissed the complaint on the ground of res judicata, the State Commission remanded the matter for fresh adjudication on merits. The appeal was decided by Ms. Bimla Kumari, Presiding Member, in an appeal filed by Ms. Shobha Rani against the order dated December 10, 2009 passed by the District Consumer Disputes Redressal Forum (West), Janakpuri.
The complainant, Ms. Shobha Rani, was carrying on the business of sale and purchase of photographic material at Vishal Market, Chandni Chowk, Delhi. She had obtained a burglary and fire insurance policy for a sum insured of ₹20,00,000 from National Insurance Co. Ltd. to cover the stock lying in her shop. On May 17, 1995, a fire broke out in Vishal Market, resulting in complete destruction of her shop, stock, and business records.
Following the incident, the complainant lodged a claim with the insurer for the insured amount. A surveyor assessed the loss at ₹14,10,407, but the insurer offered a sum of ₹5,46,000, which was paid to the complainant. According to her, this amount was accepted under protest and not towards full and final settlement, though the insurer claimed otherwise. Aggrieved by the partial settlement, the complainant filed a consumer complaint seeking recovery of the balance amount of ₹8,64,407 along with compensation.
The consumer complaint was initially dismissed by the District Forum on the ground that the services were availed for commercial purposes. On appeal, the State Commission set aside that order and remanded the matter to the District Forum for decision on merits. In the meantime, the complainant had also instituted a civil suit in the year 2004 for recovery of ₹14,54,000 against the insurer and Punjab National Bank. The civil court rejected the plaint under Order VII Rule 11 CPC, holding that the suit was barred by limitation and that the civil court lacked jurisdiction in view of proceedings involving the bank.
After the consumer complaint was revived pursuant to remand, the District Forum again dismissed it, this time holding that the rejection of the civil suit operated as res judicata. Challenging this finding, the complainant approached the State Commission.
The insurer argued that the complainant had already pursued a civil remedy on the same cause of action and that the civil suit had been decided against her. It was further contended that the complainant had accepted the amount paid by the insurer towards full and final settlement and that the civil suit was rightly rejected as barred by limitation.
The State Commission examined the scope and effect of rejection of a plaint under Order VII Rule 11 CPC and observed that such rejection does not involve adjudication of the dispute on merits. The Commission noted that determination of res judicata requires examination of pleadings, issues, and findings in the earlier proceedings, which is beyond the limited scope of an inquiry under Order VII Rule 11 CPC. It observed that in the present case, the civil court had rejected the suit on the grounds of limitation and lack of jurisdiction, and not after adjudicating the substantive rights of the parties.
Relying on decisions of the Supreme Court, including Pandurangan v. T. Jayarama Chettiar and Srihari Hanumandas Totala v. Hemant Vithal Kamat, the State Commission reiterated that the plea of res judicata cannot be conclusively determined at the stage of rejection of a plaint. It held that a plaint rejected under Order VII Rule 11 CPC cannot be treated as a decision on merits so as to bar fresh proceedings before a competent forum.
Holding that the District Forum had committed a material irregularity in dismissing the complaint on the ground of res judicata, the State Commission allowed the appeal and set aside the impugned order. The matter was remanded to the District Consumer Forum (West), Janakpuri, with a direction to decide the complaint afresh on merits. Considering the long pendency of the matter, the District Forum was directed to dispose of the complaint expeditiously, preferably within three months.
Cause Title: Ms. Shobha Rani v. National Insurance Co. Ltd.
Case No: First Appeal No. 50/2010
Coram: Ms. Bimla Kumari, Presiding Member
