Supreme Court bars second suit for mesne profits after earlier claim relinquished: Raptakos, Brett & Co. Ltd. vs. Ganesh Property (2017)

Introduction

Date of the Judgment: 5 September 2017

Citation: (2017) INSC 776

Judges: R.K. Agrawal, J. and R. Banumathi, J.

Can a party, after explicitly giving up a claim for mesne profits in a prior suit, pursue the same claim in a subsequent lawsuit? The Supreme Court of India, in this case, addressed this crucial question regarding the maintainability of a second suit for mesne profits. The Court examined the principles of res judicata and Order II Rule 2 of the Code of Civil Procedure, 1908, to determine if a party is barred from claiming mesne profits in a fresh suit after relinquishing it in an earlier suit. The judgment was delivered by a two-judge bench comprising Justice R.K. Agrawal and Justice R. Banumathi.

Case Background

The dispute began with a lease agreement between M/s Ganesh Property (the respondent) and M/s Raptakos, Brett & Co. Ltd. (the appellant). The respondent leased premises at 6, Marquis Street, Calcutta, to the appellant for 21 years, starting March 16, 1964, at a monthly rent of Rs. 2,045.

Before the lease expired on March 15, 1985, the respondent filed a suit for possession (Suit No. 1023 of 1982) in the City Civil Court, Calcutta, for bona fide use. This suit was dismissed on August 6, 1986. Subsequently, on August 11, 1986, the respondent filed another suit (Title Suit No. 1481 of 1986) in the same court for possession and mesne profits. On April 18, 1991, the City Civil Court decreed the suit in favor of the respondent but declined the claim for mesne profits as it was not pressed.

The appellant appealed this decision (F.A.T. No. 1786 of 1991, later re-numbered as First Appeal No. 253 of 1992). The High Court restrained the respondent from executing the decree on the condition that the appellant would pay a monthly rent of Rs. 2,500. On August 11, 1997, the High Court dismissed the appeal, granting the appellant six months to vacate the premises.

The appellant then approached the Supreme Court, which initially dismissed the appeal on September 9, 1998 (Civil Appeal No. 1657 of 1998). However, on a modification application, the Supreme Court directed that if the appellant handed over possession by October 8, 1998, they would pay Rs. 2,500 for October; otherwise, they would pay Rs. 50,000. The appellant handed over possession on October 8, 1998.

Following this, the respondent filed a fresh suit (Civil Suit No. 457 of 1998) in the High Court for damages due to wrongful possession, claiming Rs. 3,23,56,695. The appellant’s application to dismiss this suit was rejected by the High Court. The Division Bench of the High Court partly allowed the appeal, holding the suit maintainable but keeping the mesne profits issue open for trial. This led to the present appeal before the Supreme Court.

Timeline

Course of Proceedings

The City Civil Court, Calcutta, initially dismissed the respondent’s suit for possession (Suit No. 1023 of 1982). Subsequently, in Title Suit No. 1481 of 1986, the same court decreed possession in favor of the respondent but declined mesne profits since the claim was not pressed.

The appellant appealed to the High Court of Calcutta (F.A.T. No. 1786 of 1991, later re-numbered as First Appeal No. 253 of 1992), which restrained the execution of the decree on the condition that the appellant paid a monthly rent of Rs. 2,500. The High Court eventually dismissed the appeal on August 11, 1997, granting the appellant six months to vacate.

The appellant then appealed to the Supreme Court (Civil Appeal No. 1657 of 1998), which initially dismissed the appeal but later modified its order, setting occupation charges for October 1998.

The respondent then filed a fresh suit (Civil Suit No. 457 of 1998) in the High Court for damages. The High Court dismissed the appellant’s application to dismiss this suit, and the Division Bench partly allowed the appeal, holding the suit maintainable but keeping the mesne profits issue open for trial.

Legal Framework

The primary legal provision in question is Order II Rule 2 of the Code of Civil Procedure, 1908, which deals with the inclusion of the whole claim in a suit and the consequences of relinquishing a part of it.

Order II Rule 2 of the Code of Civil Procedure, 1908 states:

“2. Suit to include the whole of the claim:

(1) xxxxx

(2) Relinquishment of part of claim: Where a plaintiff omits to sue in respect of, or intentionally relinquishes, any portion of his claim, he shall not afterwards sue in respect of the portion so omitted or relinquished.

(3) xxxxx”

This provision prevents a plaintiff from splitting their claim and suing for part of it in one suit and then suing for the remaining part in a subsequent suit. The principle is to avoid multiplicity of suits and ensure that all claims arising from the same cause of action are brought forward in a single suit.

Arguments

Appellant’s Arguments:

• The appellant contended that the respondent had relinquished the claim for mesne profits in the earlier suit (Title Suit No. 1481 of 1986), and the issue had attained finality.
• The appellant argued that the Supreme Court’s order dated 25.09.1998, which fixed the use and occupation charges, was complied with, and the respondent cannot claim mesne profits for the same period.
• The appellant submitted that the subsequent suit (Civil Suit No. 457 of 1998) is barred by res judicata, estoppel, and Order II Rule 2 of the Code of Civil Procedure, 1908.
• The appellant relied on the case of Bhanu Kumar Jain vs. Archana Kumar and Another (2005) 1 SCC 787 to support the argument that the issue of mesne profit had attained finality.

Respondent’s Arguments:

• The respondent submitted that the issue of mesne profits in the present suit relates to the period after the decree for eviction (April 18, 1991) in Title Suit No. 1481 of 1986, which is a different cause of action.
• The respondent argued that the waiver of mesne profits in the earlier suit was only up to the date of the decree and not for the period after it.
• The respondent contended that a landlord can maintain a second suit for mesne profits for the period after the decree.
• The respondent relied on the cases of Ram Karan Singh and Others vs. Nakchhad Ahir & Others AIR 1931 Allahabad 429 and State Bank of India vs. Gracure Pharmaceuticals (2014) 3 SCC 595 to support the argument that a separate suit for mesne profits is maintainable.

Submissions Table

Issues Framed by the Supreme Court

The Supreme Court framed the following issue for consideration:

1. Whether, in the facts and circumstances of the present case, the subsequent suit filed by the respondent for mesne profits is maintainable?

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

✓ The Court distinguished Ram Karan Singh and Others vs. Nakchhad Ahir & Others [AIR 1931 Allahabad 429]* stating that the facts of the case were different and that the principle of Order II Rule 2 of the Code of Civil Procedure, 1908 was applicable in the present matter.

✓ The Court relied on Bhanu Kumar Jain vs. Archana Kumar and Another [(2005) 1 SCC 787]* to explain the distinction between “issue estoppel” and “res judicata.”

✓ The Court distinguished State Bank of India vs. Gracure Pharmaceuticals [(2014) 3 SCC 595]* stating that the facts of the case were different and that the principle of Order II Rule 2 of the Code of Civil Procedure, 1908 was applicable in the present matter.

✓ The Court relied on Order II Rule 2 of the Code of Civil Procedure, 1908, to conclude that the respondent was barred from claiming mesne profits in a second suit.

✓ The Court relied on Order II Rule 4 of the Code of Civil Procedure, 1908, to highlight that a claim for mesne profits can be joined with a claim for possession in the same suit, but if the claim is relinquished, a second suit for the same is barred.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the fact that the respondent had consciously relinquished the claim for mesne profits in the earlier suit (Title Suit No. 1481 of 1986). The Court emphasized that the respondent did not press the claim for mesne profits in the City Civil Court, nor in the High Court, and also did not raise it before the Supreme Court in the previous round of litigation.

The Court also noted that the appellant’s possession of the premises was based on the orders of the High Court and the Supreme Court. The appellant was paying the amount as directed by the courts as a condition for continuing in possession of the leased premises. The respondent had not raised any objection to the amount fixed by the court.

The Court held that the respondent, by its own conduct, had accepted the orders passed by the courts allowing the appellant to occupy the premises conditionally on payment of Rs. 2,500. The Court concluded that the respondent, having relinquished the claim for mesne profits and having accepted the court-fixed amount for occupation, could not maintain a second suit for the same claim.

Logical Reasoning:

The Court considered the argument that the cause of action was different because the mesne profits were claimed for the period after the decree. However, the Court rejected this argument, holding that the respondent had consciously given up the claim for mesne profits in the earlier suit and was estopped from claiming it later. The Court emphasized that the principle of Order II Rule 2 of the Code of Civil Procedure, 1908, applied, and a second suit for the same claim was not maintainable.

The Court stated: “In other words, by not pressing the claim of mesne profits raised in a suit before the Court, unconditionally and without any reservation, the respondent cannot thereafter turn around and claim the same relief by filing a fresh suit.”

The Court also noted: “The subsequent suit claiming mesne profits for the very same period during which a fixed amount was paid by the appellant-Company and accepted by the respondent without objection is clearly not maintainable.”

The Court further added: “Therefore, the issue of mesne profit attained finality and the respondent is not entitled to raise the same issue now by way of filing a fresh suit.”

Key Takeaways

• A party cannot file a second suit for mesne profits if they have relinquished the claim for it in an earlier suit.
• Order II Rule 2 of the Code of Civil Procedure, 1908, bars a plaintiff from splitting their claim and suing for part of it in one suit and then suing for the remaining part in a subsequent suit.
• If a party accepts a court order and acts upon it, they are estopped from later challenging or claiming against it.
• This judgment reinforces the principle of finality in litigation and prevents multiplicity of suits.

Directions

The Supreme Court allowed the appeal filed by the appellant-Company, thereby setting aside the High Court’s decision.

Development of Law

The ratio decidendi of this case is that once a claim for mesne profits is relinquished in a suit, a subsequent suit for the same claim is barred by Order II Rule 2 of the Code of Civil Procedure, 1908. This clarifies the application of the principle of res judicata and prevents parties from re-litigating issues that have already been decided or relinquished.

Conclusion

The Supreme Court held that the subsequent suit filed by the respondent for mesne profits was not maintainable. The Court emphasized that the respondent had relinquished the claim for mesne profits in the earlier suit, and the appellant’s possession was based on court orders. The Court concluded that the suit was barred by Order II Rule 2 of the Code of Civil Procedure, 1908. This judgment reinforces the principle that a party cannot pursue a claim in a subsequent suit if they have intentionally relinquished it in a prior legal proceeding.