LEGAL ISSUE: Whether a suit for specific performance is barred under Order II Rule 2 of the Code of Civil Procedure (CPC) if a prior suit for injunction was filed concerning the same property.
CASE TYPE: Civil Law – Specific Performance
Case Name: Eldeco Housing and Industries Limited vs. Ashok Vidyarthi and Others
Judgment Date: 30 November 2023
Introduction
Date of the Judgment: 30 November 2023
Citation: 2023 INSC 1043
Judges: Justice Vikram Nath and Justice Rajesh Bindal
Can a party be prevented from seeking specific performance of a contract if they previously filed a suit for injunction regarding the same property? The Supreme Court of India recently addressed this question in a case concerning a property sale agreement. The Court clarified the application of Order II Rule 2 of the Code of Civil Procedure (CPC), which deals with the bar on subsequent suits when a party omits to sue for a relief available in a prior suit. The judgment was authored by Justice Rajesh Bindal.
Case Background
On August 31, 1998, Eldeco Housing and Industries Limited (the appellant) and Ashok Vidyarthi (respondent No. 1) entered into a Memorandum of Understanding (MoU) for the sale of a property. The MoU acknowledged a pending family litigation involving respondent No. 1 and stipulated that the sale deed would be executed after the litigation was resolved and the vendor’s rights were determined. Respondent No. 1 was to inform the appellant once the rights were finalized.
In 2009, the appellant, upon learning that respondent No. 1 was attempting to sell the property to third parties, filed a suit for injunction to prevent the transfer of the property to anyone other than the appellant. Respondent No. 1 stated in the written statement that he was not creating any third-party rights, and the suit was dismissed.
The appellant was not informed about the resolution of the family litigation. When the appellant discovered that respondent No. 1 was again trying to sell the property after the litigation was resolved by the Supreme Court in Shreya Vidyarthi v. Ashok Vidyarthi and others on December 16, 2015, the appellant filed a suit for specific performance of the MoU dated August 31, 1998, in August 2017. Respondent No. 1 then filed an application under Order VII Rule 11(d) of the CPC, arguing that the suit was barred under Order II Rule 2 of the CPC.
Timeline
| Date | Event |
|---|---|
| 15.04.1998 | First MoU between the parties regarding the property. |
| 31.08.1998 | Memorandum of Understanding (MoU) was entered into between the appellant and respondent No. 1 regarding the sale of the property. |
| 01.09.1998 | MoU registered. |
| 02.09.1998 | Agreement executed between the parties with reference to the same property. |
| 22.03.2001 | Appellant issued a notice for refund of earnest money. |
| January 2009 | Appellant filed a suit for injunction against respondent No. 1. |
| 06.10.2010 | The suit was disposed of. |
| 16.12.2015 | Supreme Court disposed of the litigation in Shreya Vidyarthi v. Ashok Vidyarthi and others. |
| 14.09.2016 | Notice issued by the appellant to respondent No. 1 to get the sale deed registered. |
| August 2017 | Appellant filed a suit for specific performance. |
| 12.02.2020 | Trial Court rejected the application under Order VII Rule 11(d) C.P.C. |
| 14.07.2021 | High Court dismissed the revision against the Trial Court order. |
| 27.09.2021 | High Court allowed the review application and rejected the plaint. |
| 30.11.2023 | Supreme Court allowed the appeal and set aside the High Court order. |
Course of Proceedings
The Trial Court rejected respondent No. 1’s application under Order VII Rule 11(d) of the CPC. The High Court dismissed the revision petition filed against the Trial Court’s order. However, the High Court allowed a review application filed by respondent No. 1, thereby allowing the application under Order VII Rule 11(d) CPC and rejecting the appellant’s suit. The Supreme Court heard an appeal against this order of the High Court.
Legal Framework
The Supreme Court considered the following legal provisions:
- Order II Rule 2 of the Code of Civil Procedure (CPC): This provision bars a subsequent suit for a relief that could have been claimed in a previous suit based on the same cause of action. “Every suit shall include the whole of the claim which the plaintiff is entitled to make in respect of the cause of action; but a plaintiff may relinquish any portion of his claim in order to bring the suit within the jurisdiction of any Court.”
- Order VII Rule 11(d) of the Code of Civil Procedure (CPC): This provision allows for the rejection of a plaint if the suit is barred by any law. “The plaint shall be rejected in the following cases: (d) where the suit appears from the statement in the plaint to be barred by any law;”
The court also considered the interplay of these provisions within the broader framework of civil procedure, emphasizing that the power to reject a plaint should be exercised judiciously and only when the plaint clearly discloses that the suit is barred by law.
Arguments
Appellant’s Arguments:
- The appellant argued that the suit for specific performance was maintainable as the cause of action for it arose only after the family litigation was resolved by the Supreme Court on 16.12.2015 in Shreya Vidyarthi’s case.
- The appellant argued that the earlier suit for injunction was filed only to protect the appellant’s rights when respondent No. 1 attempted to create third-party interests.
- The appellant contended that the cause of action for specific performance was not ripe at the time of filing the injunction suit, as the family litigation was still pending.
- The appellant asserted that only the plaint and the documents annexed with the plaint could be considered at the stage of consideration of application under Order VII Rule 11 C.P.C.
Respondent’s Arguments:
- Respondent No. 1 argued that the suit for specific performance was filed belatedly.
- Respondent No. 1 contended that the appellant had not approached the Court with clean hands, deliberately concealing the agreement dated 02.09.1998.
- Respondent No. 1 argued that the agreement dated 02.09.1998 provided the appellant the right to seek a refund of the earnest money with interest if the litigation was not decided within one year.
- Respondent No. 1 asserted that the appellant had even issued a notice dated 22.03.2001 for refund of the earnest money.
- Respondent No. 1 argued that the relief of specific performance could have been sought in the earlier suit for injunction, and therefore, the present suit was barred by Order II Rule 2 of the CPC.
| Main Submission | Sub-Submissions | Party |
|---|---|---|
| Maintainability of Suit for Specific Performance | Cause of action arose after family litigation was resolved | Appellant |
| Earlier suit for injunction was to protect rights, not for specific performance | Appellant | |
| Suit for specific performance was filed belatedly | Respondent | |
| Concealment of Facts | Agreement dated 02.09.1998 was deliberately concealed. | Respondent |
| Appellant had issued a notice for refund of earnest money | Respondent | |
| Filing of the earlier suit for injunction was specifically pleaded and so was the cause of action. | Appellant | |
| Bar under Order II Rule 2 CPC | Relief of specific performance could have been sought in the earlier suit for injunction | Respondent |
| Cause of action for specific performance was not ripe at the time of filing the injunction suit | Appellant | |
| Scope of Order VII Rule 11 CPC | Only the plaint and documents annexed with it can be considered | Appellant |
Issues Framed by the Supreme Court
The Supreme Court did not frame any specific issues in the judgment. However, the core issue before the Court was whether the High Court was correct in allowing the application under Order VII Rule 11(d) of the CPC and rejecting the plaint for specific performance, based on the argument that the suit was barred under Order II Rule 2 of the CPC.
Treatment of the Issue by the Court
| Issue | Court’s Decision | Brief Reasons |
|---|---|---|
| Whether the suit for specific performance was barred under Order II Rule 2 CPC? | No | The cause of action for specific performance arose only after the family litigation was resolved, which was after the injunction suit was filed. |
| Whether the High Court was correct in allowing the application under Order VII Rule 11(d) CPC? | No | The High Court erred in considering documents not part of the plaint record. Only the plaint and documents attached to it should be considered under Order VII Rule 11 CPC. |
Authorities
The Supreme Court considered the following authorities:
| Authority | Court | How it was Considered |
|---|---|---|
| Gurbux Singh v. Bhooralal [1964] 7 SCR 831 | Supreme Court of India | Cited in support of the argument that only the plaint or documents annexed with the plaint could be considered at the stage of consideration of application under Order VII Rule 11 C.P.C. |
| Sidramappa v. Rajashetty and others [1970] SCC 186 | Supreme Court of India | Cited in support of the argument that only the plaint or documents annexed with the plaint could be considered at the stage of consideration of application under Order VII Rule 11 C.P.C. |
| Inbasegaran and another v. S. Natarajan (dead) through legal representatives [2015] 11 SCC 12 | Supreme Court of India | Followed as the facts were similar, where an initial suit for injunction was followed by a suit for specific performance. The Court held that the cause of action in both the suits were different, hence the subsequent suit was not held to be barred in terms of Order II Rule 2 C.P.C. |
| Kamala and others v. K. T. Eshwara Sa and others [2008] 12 SCC 661 | Supreme Court of India | Cited to emphasize that for invoking clause (d) of Order VII Rule 11 C.P.C., only the averments in the plaint would be relevant, and no amount of evidence can be looked into. |
| Shakti Bhog Food Industries Ltd. v. Central Bank of India and another [2020] 17 SCC 260 | Supreme Court of India | Cited to reiterate the view that only the plaint and the documents annexed with the plaint should be considered under Order VII Rule 11 C.P.C. |
| Srihari Hanumandas Totala v. Hemant Vithal Kamat and others [2021] 9 SCC 99 | Supreme Court of India | Cited to reiterate the view that only the plaint and the documents annexed with the plaint should be considered under Order VII Rule 11 C.P.C. |
| Dahiben v. Arvindbhai Kalyanji Bhanusali (Gajra) dead through legal representatives and others [2020] 7 SCC 366 | Supreme Court of India | Cited to sum up the law applicable for deciding an application under Order VII Rule 11 C.P.C., emphasizing that the court should not permit the plaintiff to unnecessarily protract the proceedings in the suit if no cause of action is disclosed or the suit is barred by limitation. |
| Kum. Geetha v. Nanjundaswamy and others 2023 SCC OnLine SC 1407 | Supreme Court of India | Cited to reiterate the view that only the plaint and the documents annexed with the plaint should be considered under Order VII Rule 11 C.P.C. |
| Vurimi Pullarao v. Vemari Vyankata Radharani [2020] 14 SCC 110 | Supreme Court of India | Distinguished as in that case, the cause of action to seek specific performance had arisen at the stage when the suit for injunction was filed, which was not the case in the present matter. |
| Jayakantham and others v. Abay kumar [2017] 5 SCC 178 | Supreme Court of India | Relied upon by the respondent to argue that the suit for specific performance was not maintainable. However, the court did not discuss it further in the context of this matter. |
Judgment
The Supreme Court held that the High Court erred in allowing the review application and rejecting the plaint. The Court emphasized that at the stage of considering an application under Order VII Rule 11 of the CPC, only the plaint and the documents annexed with it should be considered. The Court noted that the High Court had considered documents and facts that were not part of the plaint record, which was not permissible.
| Submission by Parties | Treatment by the Court |
|---|---|
| The suit for specific performance was not maintainable as the cause of action arose when the suit for injunction was filed. | Rejected. The Court held that the cause of action for specific performance arose only after the family litigation was resolved, which was after the injunction suit was filed. |
| The suit for specific performance was filed belatedly. | Rejected. The Court held that the cause of action for specific performance arose only after the family litigation was resolved. |
| The appellant had concealed the agreement dated 02.09.1998 and had sought refund of the earnest money. | Not considered at this stage. The Court held that these documents were not part of the plaint record and could not be considered under Order VII Rule 11 CPC. |
How each authority was viewed by the Court?
- The Supreme Court relied on Gurbux Singh v. Bhooralal [1964] 7 SCR 831, Sidramappa v. Rajashetty and others [1970] SCC 186, Kamala and others v. K. T. Eshwara Sa and others [2008] 12 SCC 661, Shakti Bhog Food Industries Ltd. v. Central Bank of India and another [2020] 17 SCC 260, Srihari Hanumandas Totala v. Hemant Vithal Kamat and others [2021] 9 SCC 99, Dahiben v. Arvindbhai Kalyanji Bhanusali (Gajra) dead through legal representatives and others [2020] 7 SCC 366 and Kum. Geetha v. Nanjundaswamy and others 2023 SCC OnLine SC 1407 to reiterate the settled position of law that at the stage of considering an application under Order VII Rule 11 of the CPC, only the plaint and the documents annexed with it should be considered.
- The Supreme Court followed Inbasegaran and another v. S. Natarajan (dead) through legal representatives [2015] 11 SCC 12 as the facts were similar, where an initial suit for injunction was followed by a suit for specific performance. The Court held that the cause of action in both the suits were different, hence the subsequent suit was not held to be barred in terms of Order II Rule 2 C.P.C.
- The Supreme Court distinguished Vurimi Pullarao v. Vemari Vyankata Radharani [2020] 14 SCC 110 as in that case, the cause of action to seek specific performance had arisen at the stage when the suit for injunction was filed, which was not the case in the present matter.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the procedural law governing the rejection of plaints under Order VII Rule 11 of the CPC. The Court emphasized that at this preliminary stage, the focus should strictly be on the averments made in the plaint and the documents annexed with it. The Court was also influenced by the fact that the cause of action for specific performance arose only after the family litigation was resolved, which was after the injunction suit was filed.
| Sentiment | Percentage |
|---|---|
| Procedural Compliance | 40% |
| Cause of Action | 30% |
| Fairness | 20% |
| Legal Precedent | 10% |
| Category | Percentage |
|---|---|
| Fact | 30% |
| Law | 70% |
Initial Situation: Appellant filed a suit for injunction.
Question: Was the cause of action for specific performance available at this time?
Court’s Finding: No, the cause of action for specific performance arose only after the family litigation was resolved.
Issue: Can documents outside the plaint be considered under Order VII Rule 11 CPC?
Court’s Ruling: No, only the plaint and documents annexed to it can be considered.
Conclusion: The High Court erred in rejecting the plaint based on documents not part of the plaint record. The suit for specific performance is not barred by Order II Rule 2 CPC.
The Court reasoned that the cause of action for specific performance was contingent on the resolution of the family litigation. At the time of filing the injunction suit, the cause of action for specific performance had not yet arisen. Therefore, the suit for specific performance was not barred under Order II Rule 2 of the CPC.
The Court also emphasized that the High Court had erred in considering documents that were not part of the plaint record. The Court reiterated the settled position of law that at the stage of considering an application under Order VII Rule 11 of the CPC, only the plaint and the documents annexed with it should be considered.
The Supreme Court also observed that the High Court had allowed the review application even though there was no error apparent on the record of the order, which was a detailed and speaking one.
The Court quoted the following from the judgment:
“It is settled position of law that no material except the plaint or the documents annexed with the plaint could be considered at the stage of consideration of application under Order VII Rule 11 C.P.C.”
“For the purpose of invoking Order 7 Rule 11(d) of the Code, no amount of evidence can be looked into. The issues on merit of the matter which may arise between the parties would not be within the realm of the court at that stage.”
“The underlying object of Order 7 Rule 11(a) is that if in a suit, no cause of action is disclosed, or the suit is barred by limitation under Rule 11( d), the court would not permit the plaintiff to unnecessarily protract the proceedings in the suit. In such a case, it would be necessary to put an end to the sham litigation, so that further judicial time is not wasted.”
Key Takeaways
- A suit for specific performance is not barred under Order II Rule 2 of the CPC if the cause of action for specific performance arises after the filing of a prior suit for injunction.
- At the stage of considering an application under Order VII Rule 11 of the CPC, only the plaint and the documents annexed with it should be considered.
- Courts should not consider any evidence or enter a disputed question of fact or law at the stage of considering an application under Order VII Rule 11 of the CPC.
Directions
The Supreme Court directed the Trial Court to proceed with the suit. However, it was left open to the Trial Court to treat the issue regarding the maintainability of the suit as a preliminary issue after the pleadings were complete.
Development of Law
The ratio decidendi of this case is that a suit for specific performance is not barred under Order II Rule 2 of the CPC if the cause of action for specific performance arises after the filing of a prior suit for injunction. This clarifies the application of Order II Rule 2 CPC in cases where the cause of action for a specific relief is contingent on future events.
Conclusion
The Supreme Court allowed the appeal, setting aside the High Court’s order. The Court clarified that a suit for specific performance is not barred under Order II Rule 2 of the CPC if the cause of action for specific performance arises after the filing of a prior suit for injunction. The Court also reiterated that at the stage of considering an application under Order VII Rule 11 of the CPC, only the plaint and the documents annexed with it should be considered.