Supreme Court breaks down Order II Rule 2 of CPC, discusses general principles underlying its operation

Supreme Court: In a set of two civil appeals against Madras High Court’s decisions, allowing the respondent’s (original plaintiff) second appeal for the execution of the sale deed, holding that the same was not barred by operation of Order II Rule 2 of the Code of Civil Procedure 1908 (‘CPC’), the Division Bench of JB Pardiwala* and R. Mahadevan, JJ. dismissed the appeal and upheld the High Court’s decisions to the extent of the conclusive part.

The Court analysed the Order II Rule 2 of the CPC and held that it stipulates the inclusion of the whole claim arising in respect of the same cause of action, in one suit, however, this must not be misunderstood to mean that every suit shall include every claim or every cause of action that the plaintiff may have against the defendant. Therefore, where the causes of action are different in the two suits, Order II Rule 2 would have no application

Background

Chemplast Cuddalore Vinyls Limited (‘respondent /original plaintiff’) entered into an agreement for sale with respondent 2/original defendant, whereby the defendant agreed to sell the suit property to the original plaintiff for a total consideration of Rs. 1,50,000. The defendant executed an irrevocable Power of Attorney to enable the plaintiff to complete the formalities regarding the execution and registration of the sale deed pertaining to the suit property. The Power of Attorney was registered with the Office of the Sub Registrar, Joint I, Chennai Central. Consequently, the plaintiff got the agreement for sale in respect of the suit property registered with the Joint Sub Registrar II, Cuddalore.

However, the defendant issued a letter inter alia revoking the Power of Attorney issued in favour of the plaintiff. Another letter was issued to the plaintiff in which a demand draft of the sum of Rs. 1,50,000 was enclosed. The plaintiff furnished notice to the defendant asking her to perform her part of the agreement for sale by executing the sale deed and further not to alienate the property in favour of any other person.

The plaintiff’s case was that they had visited the office of the sub-registrar on multiple occasions to register the sale deed, however, the same was refused. Aggrieved by such refusal, the plaintiff approached the High Court. During the pendency of these writ proceedings, it was found out that the revenue authorities had declined to register the sale deed due to the existence of a Government Order (‘GO’) dated 08-08-1986 issued by the Government of Tamil Nadu by which certain parcels of land situated at Thiyagavalli (where the suit property is located) and Kudikkadu villages were reserved exclusively for a thermal power station to be set up by the Tamil Nadu Electricity Board (‘TNEB’). Furthermore, vide letter dated 23-10-2006, the TNEB had authorized the Cuddalore Powergen Corporation Ltd. (‘appellant/original defendant 2’) to develop a power station.

On 05-03-2008, a Division Bench of the High Court heard the public interest litigation in Thiyagavalli Panchayathai Serntha Nochikkadu Grama Vivasayigal Pdthukappu Mattrum Makkal Pothunala Sangam v. Chairman, Tamil Nadu Electricity Board 2008 SCC OnLine Mad 188 and quashed the G.O. dated 08-08-1986 along with the letter by which lands including the suit property were reserved exclusively for the appellant. The High Court also directed the revenue authorities to receive and register all the documents pertaining to the Thiyagavalli and Kudikkadu villages presented to them, if such documents fulfilled all the stipulations contained in the Registration Act or any other enactment governing such registration.

Thereafter, the plaintiff filed another Suit (‘second suit’) before the Trial Court, praying that (a) defendant be directed to specifically perform the terms and conditions of the agreement for sale by executing and registering the sale deed in favour of plaintiff; (b) the sale deed executed by defendant in favour of the appellant be declared as null and void; and (c) permanent injunction restraining the defendant and the appellant from interfering with the peaceful possession and enjoyment of the suit property by the plaintiff be granted.

Contending that the second suit was hit by the bar under Order II Rule 2 of the CPC, the appellant moved an I.A. in the second suit under Order VII Rule 11 read with Section 151 of the CPC, for the rejection of plaint. The First Additional Subordinate Judge passed a decree rejecting the plaint in the second suit. The First Appellate Court also confirmed the Trial Court’s order. In an appeal before the High Court, the same was allowed ex-parte and the plaint in the second suit was restored, viewing that the second suit was not hit by the bar under Order II Rule 2 and that the plaint could not have been rejected.

Issue

Whether the principles enumerated under Order II Rule 2 of the CPC barred the institution of a second suit and warranted rejection of the plaint filed by the plaintiff.

Analysis

General Principles Underlying Order II Rule 2 of the CPC

The Court stated that the object of both Rules 1 and 2 of Order II of the CPC is to prevent the multiplicity of suits. The Court pointed out that Order II Rule 2 is based on the principle that a person should not be vexed twice for the same cause; and is directed against two evils i.e., the splitting up of claims and the splitting up of remedies. Order II Rule 2 stipulates the inclusion of the whole claim arising in respect of the same cause of action, in one suit. However, the Court added that this must not be misunderstood to mean that every suit shall include every claim or every cause of action that the plaintiff may have against the defendant. Therefore, where the causes of action are different in the two suits, Order II Rule 2 would have no application. The Court explained that the words “the cause of action” used in Order II Rule 2(1) must be read to mean “the particular cause of action”. This infers that where there are different causes of action, Order II Rule 2 will not apply; and where the causes of action are the same, the bar imposed by Order II Rule 2 may apply.

Further, regarding Rule 2(2) and (3) of Order II of the CPC, the Court explained that a conjoint reading of these sub-rules of Order II Rule 2 contemplates two different situations, firstly, where a plaintiff omits or relinquishes a part of a claim which he is entitled to make and, secondly, where the plaintiff omits or relinquishes one out of the several reliefs that he could have claimed in the suit. It is only in the latter situation that the plaintiff can file a subsequent suit seeking the relief omitted in the earlier suit, provided that at the time of omission to claim the particular relief, he had obtained the leave of the Court in the first suit.

For construing the meaning of the phrase “cause of action”, the Court noted that in Mohammad Khalil Khan v. Mahbub Ali Mian, 1948 SCC OnLine PC 44, the Privy Council agreed that “cause of action” means every fact which would be necessary for the plaintiff to prove if traversed, in order to support his right to the judgment of the Court. It does not comprise every piece of evidence that is necessary to prove each fact, but every fact that is necessary to be proved. The Court reiterated that for the purposes of Order II Rule 2 of the CPC, “cause of action” would mean the cause of action which gives an occasion for and forms the foundation of the suit. If that cause enables a person to ask for a larger and wider relief than that to which he limits his claim, he cannot be permitted to recover the balance reliefs through independent proceedings afterward, especially when the leave of the court has not been obtained.

Referring to Gurbux Singh v. Bhooralal, 1964 SCC OnLine SC 101, wherein while emphasizing that the plaint in the former suit would have to be produced in order to sustain a plea of applicability of Order II Rule 2 in the subsequent suit, it was stated that “cause of action” would be the facts which the plaintiff had then alleged to support the right to the relief that he claimed, the Court reiterated that there must exist an identity between the cause of action which forms the basis of the former and the subsequent suit. Since the plea taken under Order II Rule 2 is a technical one, it has to be established satisfactorily and it cannot be presumed merely on the basis of inferential reasoning.

The Court summed up the following guidelines:

1. The object of Order II Rule 2 is to prevent the multiplicity of suits and the provision is founded on the principle that a person shall not be vexed twice for one and the same cause.

2. The mandate of Order II Rule 2 is the inclusion of the whole claim arising in respect of one and the same cause of action, in one suit. It must not be misunderstood to mean that all the different causes of action arising from the same transaction must be included in a single suit.

3. Several definitions have been given to the phrase “cause of action” and it can safely be said to mean — “every fact which would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the Court”.

4. Similarly, several tests have been laid out to determine the applicability of Order II Rule 2 to a suit. A correct and reliable test is to determine whether the claim in the new suit is in fact founded upon a cause of action distinct from that which was the foundation of the former suit. Additionally, if the evidence required to support the claims is different, then the causes of action can also be considered to be different. Furthermore, it is necessary for the causes of action in the two suits to be identical in substance and not merely technically identical.

5. The defendant who takes shelter under the bar imposed by Order II Rule 2(3) must establish that (a) the second suit was in respect of the same cause of action as that on which the previous suit was based; (b) in respect of that cause of action, the plaintiff was entitled to more than one relief; and (c) being thus entitled to more than one relief, the plaintiff, without any leave obtained from the Court, omitted to sue for the relief for which the second suit had been filed.

6. The defendant must also have produced the earlier plaint in evidence in order to establish that there is an identity in the causes of action between both the suits and that there was a deliberate relinquishment of a larger relief on the part of the plaintiff.

7. Since the plea is a technical bar, it has to be established satisfactorily and cannot be presumed merely on the basis of inferential reasoning.

Status/Stage of the first suit is immaterial for the applicability of Order II Rule 2 CPC

The Court pointed out that Order II Rule 2 does not impose any restriction on the applicability of the principles therein based on the stage or status of the first suit.

“There is no clear requirement that the first suit either be pending or disposed of in order to make a plea of bar under Order II Rule 2 as regards the second or subsequent suit. It is conspicuous by the absence of such a stipulation that the law makers thought fit that the bar under this provision would apply if there is an identity in the causes of action of both suits and irrespective of whether the first suit is disposed or not.”

Furthermore, the Court added that the object is to prevent the multiplicity of suits and the splitting of claims. The Court explained that if it is held that it is a necessary condition for the first suit to be disposed of, for a plea under Order II Rule 2 to be maintainable, parties would still be able to file multiple suits with the excuse that the first suit is pending. Declaring so would not serve to further the object of Order II Rule 2 in any manner whatsoever.

Decision

Applying the principles discussed above on the matter at hand, the Court said that the first suit was still pending before the concerned Court and it would have no material impact in deciding whether the subsequent suit was barred by the Order II Rule 2. On a conjoint reading of the averments made by the plaintiff in the plaints of both the suits, the Court noted that the refusal by the defendant to perform the agreement for sale was brought to the knowledge of the plaintiff much prior to the filing of the first suit. Keeping this in mind, the Trial Court arrived at the conclusion that the second suit was subjected to the bar imposed under Order II Rule 2, implying that when the plaintiff could have prayed for a larger relief in their first suit, their omission to do so precluded them for agitating the same subsequently. The Court added that however, the Trial Court failed to address a key aspect —whether the relief of specific performance and the relief to pray for the cancellation of the sale deed executed in favour of the appellant were “available” to the plaintiff at the time of filing the first suit in view of the ban imposed on the registration of sale deeds at the Thyagavalli village by the G.O. dated 08-08-1986 issued by the Government of Tamil Nadu and the notification dated 23-10-2006 issued by the TNEB which exclusively allowed the appellant to register the sale deeds at the Thyagavalli village where the suit property is situate.

Regarding the “entitlement to” along with the “availability of” the relief as a requisite in determining the applicability of Order II Rule 2, the Court elucidated that, the true import of the bar under Order II Rule 2 must be that it operates to preclude a plaintiff from instituting a second suit, on the same cause of action, for a claim, any portion of a claim, or reliefs, which the plaintiff was entitled to avail at the time of filing of the first suit.

There may arise a situation where the plaintiff may be entitled to a relief but such a relief was not available at a certain point in time. In other words, that obtaining such a relief was impossible due to the circumstances which existed during the institution of the first suit. It is our opinion that, in such scenarios, Courts must give such an interpretation to the principles under Order II Rule 2 that is not bogged down by mere technicalities.

Approving the view taken in Ramjilal Rais v. Commissioner of Income-Tax, 1964 SCC OnLine All 411 wherein the High Court opined that Order II Rule 2 does not require that a person must seek all the remedies to which he may be entitled, even though it would be impossible for him to obtain the remedy from the opposite party, the Court stated that the plaintiff couldn’t have obtained the relief of possession from the defendant in his initial suit since the defendant himself was put in actual possession of the property much after the institution of the first suit. Hence, the Court held that the plaintiff had not intentionally relinquished any portion of his claim or that he omitted to ask for a relief which he could have otherwise obtained.

In the matter at hand, the Court highlighted that the factual situation was slightly different from one where there is a statutory requirement under any law which mandates that a permission/sanction from certain competent authorities must be obtained before registering a sale deed. The Court said that, in such a scenario, the Court would be empowered to grant a conditional decree of specific performance subject to such permission/sanction being obtained by the appropriate party and a suit for specific performance would be maintainable. However, there was an absolute ban and not a conditional restriction to execute the sale deeds. Therefore, a suit for specific performance could not have been instituted by the plaintiff since it would have been nothing but a futile attempt.

Conclusively, the Court held that for altogether different reasons than what was elaborated by the Court, the High Court held that the bar under Order II Rule 2 was not applicable. Hence, the plaint in the second suit was restored. The Trial Court was accordingly directed to decide both the suits together on their own merits and in accordance with law, within a period of six months.