Plea Of Demurrer Is Act Of Objecting Or Taking Exception Or Protest: Supreme Court Summarises Position Of Law

The Supreme Court has summarized the position of law with regard to the Plea of Demurrer.

The Court was hearing a Special Leave Petitions (SLPs) arising from the common Judgment and Order of the Bombay High Court, which dismissed an Appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (A&C Act).

The two-Judge Bench comprising Justice J.B. Pardiwala and Justice K.V. Viswanathan summarized the following points –

(i) The plea of demurrer is an act of objecting or taking exception or a protest. It is a pleading made by one party which “assumes” the truth of the matter as alleged by the opposite party, but sets up that it is insufficient in law to sustain the claim, or that there is some other defect in the pleadings which constitutes a legal reason as to why the suit must not be allowed to proceed further.

(ii) To put it simply, a decision on demurrer has to be determined ex-facie the plaint.

(iii) The decision of the Supreme Court brought to the fore an important perspective – that only certain objections are capable of being decided by way of demurrer. Only those objections which do not involve questions of facts nor the adducing of any further evidence, could be decided by way of demurrer.

(iv) The rule that when a mixed question of law and fact is decided on the basis of a demurrer, the issue would not be permanently foreclosed.

(v) The Supreme Court in a case was directly concerned with the issue of limitation being decided by way of demurrer and it directed attention to the mandate under Order XIV Rule 2 of the Civil Procedure Code, 1908 (CPC) which provides that only if the Court is of the opinion that the case or any part thereof may be disposed of on a pure issue of law alone, it may try that issue first. This issue of law can very well be whether the suit is barred by limitation or not, but, provided that such a question of limitation is purely an issue of law.

(vi) Disputed questions cannot, as a matter of rule, be decided while considering an application filed under Order VII Rule 11(d). What has to be decided is whether on the face of it, the averments made in the plaint, without any doubt or dispute, show that the suit is or is not barred by limitation or any other law in force.

(vii) There may arise situations wherein it cannot be decided whether the suit could be dismissed as barred by limitation or not without the aid of proper pleadings, the framing of an issue of limitation and the taking of evidence. In other words, it cannot be decided ex-facie the plaint.

(viii) Therefore, it is inherent in the nature of a decision as regards the rejection of a plaint that, if the Court deems it fit to not reject the plaint at the threshold upon an examination of the averments in the plaint, the ground that the suit is still barred by any law can be taken by the defendant in the course of the suit proceedings, after leading evidence.

(ix) This is because the defendant is not given an opportunity to put forward his defence as regards the issue that the suit is barred by any law, on record, during the Order VII Rule 11(d) stage. Even if he does, the Court would not look into the defendant’s written statements or any evidence which he may want to adduce. Therefore, a decision which goes against him, at the preliminary stage, without giving him an opportunity to properly defend it, must not be to his detriment. Since a plea of demurrer is akin to an application made under Order VII Rule 11(d), the same principles must apply.

(x) It cannot be said that at the stage of rejection of plaint, the defendant/respondent chooses to waive his right to plead and instead, adopts the course of only testing the sufficiency of the plaint in law. At this stage, there is no choice between either pleading or demurring and the defendant/respondent cannot be taken to have elected to demur instead of pleading. This is simply because, there exists no burden of proof on him, at that stage, to plead. He can simply pause or wait for the plaintiff to prove the sufficiency of his claim in law, without affecting his right to plead or lead evidence in the future.

(xi) Insofar as the decision on the objection which is raised as a preliminary point is concerned, everything stated in the plaint would be taken as true. In other words, the Privy Council had unequivocally and clearly stated that a decision on a mixed point of law and fact, taken by way of demurrer, would not be foreclosed in a situation where the party taking such a plea is unsuccessful.

(xii) The Calcutta High Court also buttressed that when a defendant/respondent raises a plea by way of demurrer, it cannot be said that it constitutes an admission of the facts in the suit or the application, whose dismissal is sought for, for all times to come. In other words, the assumption made while seeking a decision on a preliminary point cannot be said to have the consequence of such an applicant forfeiting his right to contest the case later. Such an assertion cannot be made by adverting to the principles contained in Order VIII because a decision herein is sought for on a point of maintainability and not on the merits of the matter.

Senior Advocate Neeraj Kishan Kaul appeared on behalf of the Petitioner.

Court’s Observations

The Supreme Court after hearing the contentions of the counsel, noted, “… the decision on demurrer must be a “final adjudication” between the parties for it to have the effect of barring the demurring party from raising the issue subsequently. Such an observation is made also as a consequence of the stage at which the plea of demurrer is raised and the object it seeks to achieve i.e., whether it seeks to test the maintainability of the suit/claim or whether it seeks to have an impact on the final decision on merits.”

Legal Position in the United States:

The Court said that only a few States in the U.S., more particularly California and Virginia, still use the demurrer, while most of the other States and the federal government seem to have replaced it with the functionally equivalent “motion to dismiss” for failure to state a claim.

“The concept of demurrer is well-entrenched in the civil procedure system of the aforementioned States in the U.S. It is a valid method through which any party can reply to the averments of another. Generally, such a route is adopted when the exists no issue of fact to be tried in the cause”, it added.

The Court observed that the Civil Procedure Code in those States of the U.S. which still employ demurrer as a concept have detailed instructions on how such a plea or objection may be raised by one party and it is a legislatively sanctioned method of replying to the averments and raising objections to the pleadings of another party.

“On facts that the parties disagree on, a decision on demurrer can never be rendered. Only on the facts agreed upon, if a pure issue of law arises, the situation can be directed for a decision on demurrer”, it further noted.

The Court elucidated that it is only when the ‘merits’ of the matter are decided upon the overruling of a demurrer, could it be said that every material matter of fact which was sufficiently pleaded, was admitted.

“The aforesaid summary of the position in the United States brings to the fore one conclusion – that the understanding of the concept of demurrer in American jurisprudence cannot be directly imported to ours. Their version of the idea of demurrer is heavily rooted in the civil procedure that they follow, the stage at which the demurrer is made and the nature of the decision which is rendered on demurrer”, it added.

Indian Jurisprudence:

The Court remarked that in contradistinction to the legal system and jurisprudence in the Unites States, the concept of ‘demurrer’ has not found a direct mention in any of our statute books and such an idea remains alien insofar as the CPC is concerned.

“Coming back to the facts of the present case, the arbitrator, while passing the interim award could not have decided the issue of limitation, on the basis of demurrer, owing to the fact that it was a mixed question of law and fact. Even if he had chosen to do so, he could not have foreclosed the issue permanently”, it held.

Conclusion

Moreover, the Court held that the interim award is capable of being partially set-aside, provided the grounds for interference under Section 34 are made out.

“The question of limitation cannot be decided in such a manner, especially if there exists some disputed questions of fact. … There is no gainsaying that the Arbitral Tribunal is neither required to conduct arbitration proceedings strictly like a civil court nor that the provisions of the CPC and Evidence Act respectively do not apply stricto sensu to arbitral proceedings. However, it cannot be denied that any procedure adopted in the arbitral proceedings must subscribe to and not be at variance with the underlying principles of justice”, it said.

The Court, therefore, concluded that the interim award warranted interference under Section 34 A&C Act and it was rightly held that the preliminary issue of limitation decided on the basis of demurrer could be further examined by the Arbitral Tribunal on the basis of evidence and other materials on record, if tendered and if so warranted.

Accordingly, the Apex Court directed the Registry to forward one copy each of its Judgment to all the High Courts.

Cause Title- Urban Infrastructure Real Estate Fund v. The Neeklanth Realty Private Limited & Ors. (Neutral Citation: 2025 INSC 1255)

Appearance:

Senior Advocate Neeraj Kishan Kaul, Advocates Amarjit Singh Bedi, Aditya Bapat, Surekha Raman, Shreyash Kumar, Sidharth Nair, Harshit Singh, Yashwant Sanjenbam, and Ira Mahajan.

Click here to read/download the Judgment