Supreme Court Upholds Bar on Specific Performance Suit Due to Prior Injunction Suit: Vurimi Pullarao vs. Vemari Vyankata Radharani (27 November 2019)

Introduction

Date of the Judgment: 27 November 2019

Citation: 2019 INSC 1146

Judges: Dr. Dhananjaya Y Chandrachud, J and Ajay Rastogi, J

Can a party file a suit for specific performance of a contract after having already filed a suit for injunction based on the same contract, without obtaining the court’s permission? The Supreme Court of India recently examined this question, focusing on the principles of Order 2 Rule 2 of the Code of Civil Procedure, 1908. This case clarifies when a subsequent suit for specific performance is barred due to a prior suit for injunction.

The core issue revolves around whether the plaintiff, who initially sought an injunction based on an agreement to sell, could later file a separate suit seeking specific performance of the same agreement. The Supreme Court held that the subsequent suit was indeed barred.

The judgment was delivered by a two-judge bench comprising Dr. Dhananjaya Y Chandrachud, J, who authored the opinion, and Ajay Rastogi, J.

Case Background

The dispute concerns agricultural land located in Mauje Nayegaon, Taluka Nandura, District Buldhana. On 26 October 1995, the original defendant entered into an agreement to sell the land to the original plaintiff for ₹1,80,000. The plaintiff paid ₹1,50,000 as earnest money at the time of the agreement. The agreement stipulated that the sale deed would be executed by 25 October 1996, upon payment of the remaining ₹30,000.

On 11 October 1996, the plaintiff notified the defendant of their intent to complete the sale. The plaintiff claimed to have been present at the Sub-Registrar’s office on 25 October 1996, ready to pay the remaining amount. However, the defendant refused to execute the sale deed on 13 October 1996. It was alleged that on 16 October 1996, the defendant tried to obstruct the plaintiff’s possession of the land, which the plaintiff claimed to have obtained following the agreement to sell.

Subsequently, the plaintiff filed a suit for injunction on 30 October 1996, seeking to protect their possession of the land. The plaintiff also mentioned in the plaint of the injunction suit that they would file a suit for specific performance. However, the plaintiff did not seek leave of the court to file a separate suit for specific performance later. On 30 April 1997, the plaintiff filed a suit for specific performance of the agreement to sell.

Timeline

Course of Proceedings

The Trial Court initially dismissed the suit for specific performance, holding that the plaintiff had omitted to sue for specific performance when they filed the earlier suit for injunction, despite the cause of action being available. The Trial Court noted that the plaintiff had specifically mentioned in the plaint of the injunction suit that they would file a suit for specific performance but did not seek leave of the court to do so.

The First Appellate Court initially reversed the Trial Court’s decision, holding that the bar under Order 2 Rule 2 of the Code of Civil Procedure, 1908 was not attracted. It reasoned that no specific issue had been framed by the Trial Court regarding Order 2 Rule 2, and the pleadings of the earlier suit had not been adequately proven. However, the High Court set aside this decision and remanded the case back to the First Appellate Court.

On remand, the First Appellate Court framed the issue of whether the suit was barred under Order 2 Rule 2. It upheld the Trial Court’s decision, concluding that the plaintiff should have included the claim for specific performance in the earlier suit or sought leave of the court to file a separate suit. The High Court upheld this decision in a Second Appeal.

Legal Framework

The core legal provision at the heart of this case is Order 2 Rule 2 of the Code of Civil Procedure, 1908 (CPC). This rule is designed to prevent a multiplicity of suits based on the same cause of action. It mandates that a plaintiff must include all claims they are entitled to make in respect of a cause of action in a single suit.

Order 2 Rule 2 of the CPC states:

“2. Suit to include the whole claim. -(1) 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.
(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) Omission to sue for one of several relief. -A person entitled to more than one relief in respect of the same cause of action may sue for all or any of such reliefs; but if he omits, except with the leave of the Court, to sue for all such reliefs, he shall not afterwards sue for any relief so omitted.
Explanation.-For the purposes of this rule an obligation and a collateral security for its performance and successive claims arising under the same obligation shall be deemed respectively to constitute but one cause of action.”

Order 2 Rule 2(1) requires that every suit should include the whole claim. Order 2 Rule 2(2) states that if a plaintiff omits or relinquishes any part of the claim, they cannot sue for it later. Order 2 Rule 2(3) states that if a person is entitled to more than one relief for the same cause of action, they must sue for all reliefs, or obtain leave of the court to sue for the omitted relief later. The explanation clarifies that an obligation and its collateral security constitute one cause of action.

Arguments

Appellant’s Arguments:

• The appellant argued that for the bar under Order 2 Rule 2 of the CPC to apply, there must be an identity between the cause of action in the earlier suit and the subsequent suit.
• Relying on the decision in Gurbux Singh v Bhooralal [AIR 1964 SC 1810], the appellant contended that the defendant must file the pleadings of the previous suit in evidence to prove the identity of the cause of action.
• The appellant submitted that the plaint of the earlier suit was not shown to the plaintiff during the evidence stage, depriving them of the opportunity to demonstrate the lack of identity between the causes of action.
• The appellant also argued that the Trial Court had not framed a specific issue regarding the bar under Order 2 Rule 2.
• It was contended that the First Appellate Court should have either framed an issue and sought a determination by the Trial Court, or made the determination itself upon production of additional evidence.

Respondent’s Arguments:

• The respondent argued that the plaint in the earlier suit clearly referred to the agreement to sell, the payment of consideration, and the notice of performance issued by the plaintiff.
• The respondent highlighted that the plaint in the earlier suit stated that the plaintiff intended to file a suit for specific performance.
• It was submitted that the plaintiff failed to seek leave of the court under Order 2 Rule 2(3) of the CPC.
• The respondent distinguished the present case from Gurbux Singh (supra), stating that the plaint in the earlier suit was duly marked as an exhibit without any objection from the plaintiff.
• The respondent relied on the decisions in Virgo Industries (Eng.) Private Limited v Venturetech Solutions Private Limited [(2013) 1 SCC 625] and Pramod Kumar v Zalak Singh [(2019) 6 SCC 621].

Issues Framed by the Supreme Court

The Supreme Court considered the following key issue:

1. Whether the suit for specific performance was barred by Order 2 Rule 2 of the Code of Civil Procedure, 1908, given that the plaintiff had previously filed a suit for injunction based on the same agreement to sell without seeking the court’s leave to file a separate suit for specific performance later.

The sub-issue that the court dealt with was whether the plaint of the earlier suit was properly brought on record.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Cases:

• Gurbux Singh v Bhooralal [AIR 1964 SC 1810] – The Supreme Court of India. This case established that for the bar under Order 2 Rule 2 of the CPC to apply, the defendant must prove the identity of the cause of action by filing the pleadings of the previous suit in evidence.
• Mohd. Khalil Khan v Mahbub Ali Mian [1948 SCC onLine PC 44 : (1947-48) 75 IA 121] – The Privy Council. This case laid down the tests for determining whether the cause of action in two suits is the same.
• Virgo Industries (Eng.) Private Limited v Venturetech Solutions Private Limited [(2013) 1 SCC 625] – The Supreme Court of India. This case discussed the objective behind Order 2 Rule 2 of the CPC, which is to prevent vexing the defendant with multiple suits.
• Pramod Kumar v Zalak Singh [(2019) 6 SCC 621] – The Supreme Court of India. This case reiterated the principles of Order 2 Rule 2 of the CPC.

Legal Provisions:

• Order 2 Rule 2 of the Code of Civil Procedure, 1908 – This provision mandates that a plaintiff must include the whole claim in a suit and prevents subsequent suits for omitted reliefs without the court’s leave.

Judgment

How each authority was viewed by the Court?

• Gurbux Singh v Bhooralal [AIR 1964 SC 1810]*: The court distinguished this case, noting that while it requires pleadings of the earlier suit to be on record, in the present case, a certified copy of the plaint was admitted without objection from the plaintiff.
• Mohd. Khalil Khan v Mahbub Ali Mian [1948 SCC onLine PC 44 : (1947-48) 75 IA 121]*: The court followed the tests laid down in this case to determine that the cause of action in both suits was the same.
• Virgo Industries (Eng.) Private Limited v Venturetech Solutions Private Limited [(2013) 1 SCC 625]*: The court reiterated the objective of Order 2 Rule 2 as explained in this case, which is to prevent vexing the defendant with multiple suits.
• Pramod Kumar v Zalak Singh [(2019) 6 SCC 621]*: The court followed the principles of Order 2 Rule 2 as reiterated in this case.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the application of Order 2 Rule 2 of the Code of Civil Procedure, 1908, which aims to prevent multiplicity of suits. The court emphasized that the plaintiff was aware of the cause of action for specific performance when the injunction suit was filed, and the plaintiff should have either included the claim for specific performance in the earlier suit or sought leave of the court to file a separate suit later. The court also emphasized that the plaintiff had not objected to the certified copy of the plaint of the earlier suit being brought on record and marked as an exhibit.

The court’s reasoning was heavily based on the legal principles of Order 2 Rule 2 of the CPC, indicating that legal considerations (70%) outweighed the factual aspects (30%) of the case.

The court considered the fact that the plaintiff was aware of the cause of action for specific performance when they filed the injunction suit. The court also considered the fact that the plaintiff did not seek leave of the court to file a separate suit for specific performance. The court ultimately concluded that the suit for specific performance was barred under Order 2 Rule 2 of the CPC.

The court also noted that the plaint in the earlier suit was properly brought on record, as the plaintiff did not object to the certified copy being admitted as evidence.

The court’s reasoning is based on the principle that a plaintiff should not be allowed to vex the defendant with multiple suits when all reliefs could have been claimed in the first suit, unless the court grants leave to file a subsequent suit.

The court quoted from the judgment:

“The object behind the enactment of Order 2 Rules 2(2) and (3) CPC is not far to seek. The Rule engrafts a laudable principle that discourages/prohibits vexing the defendant again and again by multiple suits except in a situation where one of the several reliefs, though available to a plaintiff, may not have been claimed for a good reason. A later suit for such relief is contemplated only with the leave of the court which leave, naturally, will be granted upon due satisfaction and for good and sufficient reasons.”

“In the present case, the earlier suit for injunction was instituted on 30 October 1996. Paragraph 2 of the plaint in the suit for injunction contained a recital of the agreement to sell dated 26 October 1995; the price fixed for the bargain between the parties; the payment of earnest money; the handing over of possession; the demand for performance and the failure of the defendant to perform the contract. Indeed, the plaintiff also asserted that she was going to institute a suit for specific performance of the agreement dated 26 October 1995.”

“The cause of action for the suit for specific performance had arisen when the plaintiff had notice of the denial by the defendant to perform the contract. On 30 October 1996 when the suit for injunction was instituted, the plaintiff was entitled to sue for specific performance. There was a complete identity of the cause of action between the earlier suit… and the cause of action for the subsequent suit. Yet, as the record indicates, the plaintiff omitted to sue for specific performance.”

The court did not consider any alternative interpretations of Order 2 Rule 2, but rather applied the established principles to the facts of the case. The court’s final decision was based on the finding that the plaintiff had omitted to sue for specific performance when they had the opportunity, without seeking leave of the court. This omission triggered the bar under Order 2 Rule 2(3) of the CPC.

Key Takeaways

• A plaintiff must include all reliefs they are entitled to in a suit based on a single cause of action.
• If a plaintiff omits to sue for a relief, they cannot sue for it later unless they obtain leave of the court.
• The cause of action for specific performance arises when there is a denial of performance of the contract.
• The bar under Order 2 Rule 2 of the CPC applies if the cause of action for the subsequent suit existed when the earlier suit was filed.
• The pleadings of the earlier suit must be brought on record to establish the identity of the cause of action, but a certified copy admitted without objection is sufficient.

This judgment reinforces the principle that a plaintiff cannot file multiple suits for different reliefs based on the same cause of action, unless they obtain leave of the court. This has implications for future cases where a plaintiff seeks to enforce a contract through multiple suits.

Directions

The Supreme Court directed that:

• The defendant must refund the amount of ₹1,50,000 paid by the plaintiff at the time of the agreement, along with interest at the rate of nine percent per annum.
• The defendant must refund the amount of ₹1,40,000 paid by the plaintiff as earnest money, along with interest at the rate of nine percent per annum.
• The plaintiff is entitled to a refund of ₹30,000 deposited with the Trial Court, along with any accrued interest.
• The plaintiff is entitled to a refund of ₹30,000 deposited with the Trial Court, along with any accrued interest.
• If the defendant fails to refund the amounts within two months, the plaintiff can seek further directions from the court.

Development of Law

The ratio decidendi of this case is that a suit for specific performance is barred under Order 2 Rule 2 of the Code of Civil Procedure, 1908, if a prior suit for injunction was filed without seeking leave of the court, despite the cause of action for specific performance being available at the time of the prior suit. This judgment clarifies the application of Order 2 Rule 2 of the CPC and reinforces the principle that a plaintiff must include all reliefs they are entitled to in a suit based on a single cause of action, and cannot file multiple suits for different reliefs unless they obtain leave of the court. The court has not changed the previous position of law, but has applied the existing law to the facts of the case.

Conclusion

In conclusion, the Supreme Court upheld the High Court’s decision, ruling that the plaintiff’s suit for specific performance was barred under Order 2 Rule 2 of the Code of Civil Procedure, 1908. The court found that the plaintiff had the cause of action for specific performance when the injunction suit was filed but omitted to seek the relief or obtain leave of the court to sue for it later. The court also directed the defendant to refund the earnest money and the amount deposited by the plaintiff with interest. This judgment underscores the importance of including all claims in a single suit and seeking the court’s leave when necessary to avoid the bar under Order 2 Rule 2 of the CPC.

Category

• Civil Law
  • Specific Performance
  • Code of Civil Procedure, 1908
  • Order 2 Rule 2, Code of Civil Procedure, 1908
• Code of Civil Procedure, 1908
  • Order 2 Rule 2, Code of Civil Procedure, 1908

1. What is the main issue in the case of Vurimi Pullarao vs. Vemari Vyankata Radharani?

   The main issue is whether a subsequent suit for specific performance is barred under Order 2 Rule 2 of the Code of Civil Procedure, 1908 if a prior suit for injunction was filed without seeking leave of the court, despite the cause of action for specific performance being available at the time of the prior suit.

2. What is Order 2 Rule 2 of the Code of Civil Procedure, 1908?

   Order 2 Rule 2 of the CPC mandates that a plaintiff must include all claims they are entitled to make in respect of a cause of action in a single suit. It prevents a plaintiff from filing multiple suits for the same cause of action, unless they obtain leave of the court.

3. What was the timeline of events in this case?

   The key events include:

   • Agreement to sell on 26 October 1995.
   • Plaintiff issued notice for performance on 11 October 1996.
   • Defendant refused to execute the sale deed on 13 October 1996.
   • Plaintiff filed a suit for injunction on 30 October 1996.
   • Plaintiff filed a suit for specific performance on 30 April 1997.
   • The Supreme Court upheld the High Court’s decision on 27 November 2019, holding that the suit for specific performance was barred.
4. What did the Trial Court decide?

   The Trial Court dismissed the suit for specific performance, holding that the plaintiff had omitted to sue for specific performance when they filed the earlier suit for injunction, despite the cause of action being available.

5. What did the First Appellate Court initially decide?

   The First Appellate Court initially reversed the Trial Court’s decision, holding that the bar under Order 2 Rule 2 of the CPC was not attracted.

6. What did the High Court decide?

   The High Court set aside the decision of the First Appellate Court and remanded the case back to it. On remand, the High Court upheld the First Appellate Court’s decision that the suit for specific performance was barred.

7. What was the Supreme Court’s decision?

   The Supreme Court upheld the High Court’s decision, ruling that the plaintiff’s suit for specific performance was barred under Order 2 Rule 2 of the CPC.

8. What were the key arguments of the appellant?

   The appellant argued that there was no identity of cause of action between the two suits, that the pleadings of the previous suit were not adequately proven, and that the Trial Court did not frame a specific issue regarding the bar under Order 2 Rule 2.

9. What were the key arguments of the respondent?

   The respondent argued that the plaint in the earlier suit referred to the agreement to sell and the intention to file a suit for specific performance, and that the plaintiff failed to seek leave of the court under Order 2 Rule 2(3) of the CPC.

10. What authorities did the Supreme Court consider?

    The Supreme Court considered the cases of Gurbux Singh v Bhooralal, Mohd. Khalil Khan v Mahbub Ali Mian, Virgo Industries (Eng.) Private Limited v Venturetech Solutions Private Limited, and Pramod Kumar v Zalak Singh, as well as Order 2 Rule 2 of the Code of Civil Procedure, 1908.

11. What directions did the Supreme Court give?

    The Supreme Court directed the defendant to refund the amount of ₹1,50,000 paid by the plaintiff at the time of the agreement, along with interest at the rate of nine percent per annum, and the amount of ₹30,000 deposited with the Trial Court, along with any accrued interest.

12. What is the ratio decidendi of the case?

    The ratio decidendi is that a suit for specific performance is barred under Order 2 Rule 2 of the Code of Civil Procedure, 1908, if a prior suit for injunction was filed without seeking leave of the court, despite the cause of action for specific performance being available at the time of the prior suit.

13. What are the key takeaways from this judgment?

    Key takeaways include:

    • A plaintiff must include all reliefs they are entitled to in a suit based on a single cause of action.
    • If a plaintiff omits to sue for a relief, they cannot sue for it later unless they obtain leave of the court.
    • The cause of action for specific performance arises when there is a denial of performance of the contract.
    • The bar under Order 2 Rule 2 of the CPC applies if the cause of action for the subsequent suit existed when the earlier suit was filed.