LEGAL ISSUE: Whether a separate suit for damages for use and occupation of property is maintainable after a decree for possession has been obtained in an earlier suit.
CASE TYPE: Civil Law, Property Law
Case Name: M/s Bharat Petroleum Corporation Ltd. and Another vs. ATM Constructions Pvt. Ltd.
[Judgment Date]: 30 November 2023
Date of the Judgment: 30 November 2023
Citation: 2023 INSC 1042
Judges: Justice Vikram Nath and Justice Rajesh Bindal
Can a property owner, who has already won a lawsuit for possession of their property, file a second suit to claim damages for the period the property was illegally occupied? The Supreme Court of India recently addressed this question, clarifying the rights of property owners in such situations. This case revolves around a dispute between Bharat Petroleum Corporation Ltd. and ATM Constructions Pvt. Ltd. regarding a property that was leased to Bharat Petroleum’s predecessor and later occupied beyond the lease period. The Supreme Court, in this judgment, has clarified the legal position on whether a second suit for damages is maintainable after a suit for possession has been decreed. The judgment was authored by Justice Rajesh Bindal, with Justice Vikram Nath concurring.
Case Background
The respondent, ATM Constructions Pvt. Ltd., is the current owner of a property that was previously owned by T. Padmanabhan, T. Sethuraman, and T. Gopinath. M/s Burma Shell Oil Storage and Distribution Company of India Ltd., the predecessor of the appellants, Bharat Petroleum Corporation Ltd., had leased the property on 01 January 1958 for 20 years to operate a petrol pump. The property was later auctioned due to loan defaults by the original owners and was purchased by Mrs. S. Bharwani, from whom ATM Constructions eventually bought the property. The lease in favor of Bharat Petroleum expired on 31 December 1997. After the lease expired, ATM Constructions demanded possession of the property, which was not handed over by Bharat Petroleum. This led to a series of legal battles.
Timeline:
| Date | Event |
|---|---|
| 01 January 1958 | Lease of property to M/s Burma Shell Oil Storage and Distribution Company of India Ltd. |
| 08 January 1958 | Lease deed executed. |
| 24 June 1978 | Mrs. S. Bharwani purchased the property in auction. |
| 31 December 1997 | Lease in favor of Bharat Petroleum expired. |
| 03 January 1997 | ATM Constructions purchased the property from Mrs. S. Bharwani. |
| 2006 | First suit for possession filed by ATM Constructions. |
| 30 October 2010 | First suit for possession decreed in favor of ATM Constructions. |
| January 2020 | Second suit filed by ATM Constructions claiming damages for use and occupation. |
| June 2022 | Possession of the property handed over to ATM Constructions. |
Course of Proceedings
The High Court of Judicature at Madras dismissed the application filed by Bharat Petroleum under Order VII Rule 11(d) of the Code of Civil Procedure (CPC), which sought the rejection of the suit filed by ATM Constructions. Bharat Petroleum had argued that the second suit for damages was not maintainable. The High Court rejected this argument, leading to the appeal before the Supreme Court.
Legal Framework
The Supreme Court considered the following legal provisions:
- Order II Rule 2 of the Code of Civil Procedure (CPC): This provision deals with the framing of a suit and states that 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. It also states that 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.
- Order II Rule 4 of the Code of Civil Procedure (CPC): This provision allows for the joining of a claim for mesne profits with a suit for the recovery of immovable property. It states that no cause of action shall, unless with the leave of the Court, be joined with a suit for the recovery of immovable property, except claims for mesne profits or arrears of rent in respect of the property claimed or damages for breach of any contract under which the property or any part thereof is held.
Arguments
Arguments by the Appellants (Bharat Petroleum):
- Bharat Petroleum argued that the lease had expired on 31 December 1997. When ATM Constructions filed the first suit for possession in 2006, they did not claim damages for use and occupation, even though they were aware of this claim.
- They contended that Order II Rule 2 of the CPC bars a subsequent suit for a claim that could have been made in the first suit. Since ATM Constructions could have claimed damages in the first suit but did not, they cannot file a separate suit for the same.
- Bharat Petroleum relied on the judgment in Virgo Industries (Eng.) Private Limited v. Venturetech Solutions Private Limited [(2013) 1 SCC 625], where the Supreme Court held that a subsequent suit is barred if the relief could have been claimed in the first suit.
Arguments by the Respondent (ATM Constructions):
- ATM Constructions argued that the lease had expired on 31 December 1997, and Bharat Petroleum did not hand over possession. They were forced to file the first suit for possession in 2006.
- They stated that the second suit was filed in January 2020 to claim damages for the illegal occupation of the property from 01 January 1998, along with interest.
- ATM Constructions argued that a separate suit for damages is maintainable even if it was not claimed in the first suit for possession. They cited the Full Bench judgment of the Madras High Court in Ponnammal v. Ramamirda Aiyar and two others [ILR (1915) XXXVIII 829], the Full Bench judgment of the Punjab and Haryana High Court in Sadhu Singh etc. v. Pritam Singh, Etc [ILR (1976) 1 P&H 120], and the Supreme Court judgment in Gurbux Singh v. Bhooralal [AIR 1964 SC 1810], which support the view that a fresh suit for damages is maintainable as it is a distinct cause of action.
- They argued that the issue of maintainability under Order II Rule 2 of the CPC has already been framed, and the trial court will examine it after evidence is led.
Submissions Table
| Main Submission | Sub-Submissions (Bharat Petroleum) | Sub-Submissions (ATM Constructions) |
|---|---|---|
| Maintainability of Second Suit |
|
|
| Cause of Action |
|
|
| Delay |
|
|
Issues Framed by the Supreme Court
The primary issue before the Supreme Court was:
- Whether a subsequent suit for damages for use and occupation of property is maintainable when a suit for possession of the same property was previously filed and decreed, but without claiming damages for use and occupation.
Treatment of the Issue by the Court
The following table demonstrates as to how the Court decided the issues
| Issue | Court’s Decision | Brief Reason |
|---|---|---|
| Maintainability of subsequent suit for damages | Upheld the maintainability | Suit for possession and suit for damages are based on different causes of action. |
Authorities
The Supreme Court considered the following authorities:
| Authority | Court | How Considered | Legal Point |
|---|---|---|---|
| Ponnammal v. Ramamirda Aiyar and two others [ILR (1915) XXXVIII 829] | Full Bench of Madras High Court | Followed | A separate suit for mesne profits is maintainable even if not claimed in the suit for possession. |
| Sadhu Singh etc. v. Pritam Singh, Etc [ILR (1976) 1 P&H 120] | Full Bench of Punjab and Haryana High Court | Followed | A separate suit for mesne profits is maintainable even if not claimed in the suit for possession. |
| Gurbux Singh v. Bhooralal [AIR 1964 SC 1810] | Supreme Court of India | Followed | A fresh suit for damages is maintainable as it is a distinct cause of action. |
| Ram Karan Singh v. Nakchhad Ahir [AIR 1931 All 429] | Full Bench of Allahabad High Court | Approved | Cause of action for recovery of possession is not identical with the cause of action for recovery of mesne profits. Mesne profits accrue from day to day. |
| Indian Oil Corporation Ltd. v. Sudera Realty Pvt. Ltd. [2022 SCC OnLine SC 1161: 2022 :INSC: 926] | Supreme Court of India | Cited | Cause of action for mesne profits accrues daily and is a continuing one. |
| Virgo Industries (Eng.) Private Limited v. Venturetech Solutions Private Limited [(2013) 1 SCC 625] | Supreme Court of India | Distinguished | Subsequent suit is barred if the relief could have been claimed in the first suit. This case was distinguished as the facts were different. |
| Order II Rule 2 of the Code of Civil Procedure (CPC) | Statute | Interpreted | Deals with the framing of a suit and states that every suit shall include the whole of the claim which the plaintiff is entitled to make in respect of the cause of action. |
| Order II Rule 4 of the Code of Civil Procedure (CPC) | Statute | Interpreted | Allows for the joining of a claim for mesne profits with a suit for the recovery of immovable property. |
Judgment
| Submission by Parties | Court’s Treatment |
|---|---|
| Bharat Petroleum’s submission that the second suit is barred under Order II Rule 2 CPC. | Rejected. The Court held that the cause of action for possession and damages are different. |
| ATM Constructions’ submission that a separate suit for damages is maintainable. | Accepted. The Court upheld the view that a separate suit for damages is maintainable. |
How each authority was viewed by the Court?
The Court relied on Ponnammal v. Ramamirda Aiyar and two others [ILR (1915) XXXVIII 829]*, Sadhu Singh etc. v. Pritam Singh, Etc [ILR (1976) 1 P&H 120]*, and Gurbux Singh v. Bhooralal [AIR 1964 SC 1810]* to support its view that a separate suit for damages is maintainable. The Court distinguished Virgo Industries (Eng.) Private Limited v. Venturetech Solutions Private Limited [(2013) 1 SCC 625]* by stating that the facts of the case were different, hence not applicable in the present case. The Court also relied on Ram Karan Singh v. Nakchhad Ahir [AIR 1931 All 429]* and Indian Oil Corporation Ltd. v. Sudera Realty Pvt. Ltd. [2022 SCC OnLine SC 1161: 2022 :INSC: 926]* to support the view that the cause of action for mesne profits accrues daily and is a continuing one.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the understanding that the cause of action for possession of property is distinct from the cause of action for claiming damages for its illegal occupation. The Court emphasized that while a claim for possession arises from the right to own and occupy the property, a claim for damages arises from the wrongful occupation of the property by another party. The Court also noted that the cause of action for mesne profits is a continuing one, accruing daily, and is not necessarily tied to the initial dispossession. The Court was also influenced by the fact that the lease had expired on 31 December 1997, and the appellants continued to occupy the property illegally, hence the respondent was entitled to damages for such illegal occupation.
| Sentiment | Percentage |
|---|---|
| Legal Precedent | 40% |
| Distinction of Cause of Action | 30% |
| Continuing Nature of Mesne Profits | 20% |
| Equity and Justice | 10% |
| Ratio | Percentage |
|---|---|
| Fact | 30% |
| Law | 70% |
Logical Reasoning
Issue: Is a separate suit for damages maintainable after a decree for possession?
Consideration 1: Cause of action for possession vs. cause of action for damages.
Finding: They are distinct. Possession arises from ownership; damages arise from wrongful occupation.
Consideration 2: Order II Rule 2 of CPC and its applicability.
Finding: Order II Rule 2 does not bar a separate suit for damages as the causes of action are different.
Consideration 3: Precedents from various High Courts and the Supreme Court.
Finding: Precedents support the view that a separate suit for damages is maintainable.
Conclusion: A separate suit for damages is maintainable.
Judgment
The Supreme Court held that the suit for possession and the suit for damages for use and occupation of the property are based on two different causes of action. The Court stated that the cause of action for mesne profits is a continuing one, accruing daily, and is not necessarily tied to the initial dispossession. The Court also noted that Order II Rule 4 of the CPC allows for the joining of a claim for mesne profits with a suit for the recovery of immovable property, but this does not mean that a separate suit for damages is barred if it was not claimed in the suit for possession. The Court distinguished the judgment in Virgo Industries (Eng.) Private Limited v. Venturetech Solutions Private Limited [(2013) 1 SCC 625], stating that the facts of that case were different.
The Court quoted the Full Bench judgment of Allahabad High Court in Ram Karan Singh v. Nakchhad Ahir [AIR 1931 All 429] stating, “It seems to us that the cause of action for recovery of possession is not necessarily identical with the cause of action for recovery of mesne profits.”. The Court also quoted the Supreme Court judgment in Indian Oil Corporation Ltd. v. Sudera Realty Pvt. Ltd. [2022 SCC OnLine SC 1161: 2022 :INSC: 926], stating, “mesne profits accrue from day-to-day, and the cause of action is a continuing one. It arises out of the continued misappropriation of the profits, which a plaintiff is entitled to.” The Court further observed that, “suit for possession and suit for claiming damages for use and occupation of the property are two different causes of action.”
The Court concluded that the second suit filed by ATM Constructions was maintainable. However, the Court clarified that Bharat Petroleum was within its rights to raise the issue of limitation if any part of the claim was time-barred, but the entire claim could not be dismissed on that ground.
Key Takeaways
- A property owner can file a separate suit for damages for use and occupation of the property even after obtaining a decree for possession in an earlier suit.
- The cause of action for possession and the cause of action for damages for illegal occupation are considered distinct.
- Claims for mesne profits or damages for use and occupation accrue daily and are considered a continuing cause of action.
- Order II Rule 2 of the CPC does not bar a subsequent suit for damages if such a claim was not made in the earlier suit for possession.
- The principle of res judicata does not apply to prevent a subsequent suit for damages when the first suit was only for possession.
Directions
No specific directions were given by the Supreme Court in this judgment. The Court dismissed the appeal filed by Bharat Petroleum, upholding the decision of the High Court.
Development of Law
The ratio decidendi of this case is that a suit for possession and a suit for damages for use and occupation of a property are based on two different causes of action. The judgment clarifies that the cause of action for mesne profits is a continuing one, accruing daily, and is not necessarily tied to the initial dispossession. This case reaffirms the settled position of law that a separate suit for damages is maintainable even after a decree for possession has been obtained in an earlier suit.
Conclusion
The Supreme Court’s judgment in M/s Bharat Petroleum Corporation Ltd. and Another vs. ATM Constructions Pvt. Ltd. clarifies that a property owner can pursue a separate suit for damages for the illegal occupation of their property, even after successfully obtaining a decree for possession in a previous suit. This decision reinforces the principle that the right to claim possession and the right to claim damages for illegal occupation are distinct causes of action, providing clarity for property owners seeking to recover losses from illegal occupation.