In Gurbux
Singh v. Bhooralal AIR 1964 SC 1810 the scope of the above-mentioned
provision was further explained as under:
“In order that a plea of a Bar under Order 2 Rule 2(3) of the
Civil Procedure Code should succeed the defendant who raises the
plea must make out; (i) that the second suit was in respect of
the same cause of action as that on which the previous suit was
based; (2) that in respect of that cause of action the plaintiff
was entitled to more than one relief; (3) that being thus
entitled to more than one relief the plaintiff, without leave
obtained from the Court omitted to sue for the relief for which
the second suit had been filed. From this analysis it would be
seen that the defendant would have to establish primarily and to
start with, the precise cause of action upon which the previous
suit was filed, for unless there is identity between the cause
of action on which the earlier suit was filed and that on which
the claim in the latter suit is based there would be no scope
for the application of the bar.”
H
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOs. 10531-10532 OF 2013
(@ Special Leave Petition (C) Nos.5945-5946 of 2009)
State Bank of India … Appellant
Versus
Gracure Pharmaceuticals Ltd. … Respondents
Citation; 2014(4) MHLJ 20 SC
K.S. Radhakrishnan, J.
Leave granted.
2. We are, in this case, concerned with the applicability of Order
2 Rule 2 of the Code of Civil Procedure (for short “the CPC”) in
respect of two suits filed by the respondent, one in the Original side
of the Delhi High Court and another before the District Court, Delhi.
Original Suit No.1145 of 2003 was filed by the respondent herein on
15.05.2003 for recovery of an amount of Rs.44,30,994 against the
appellant bank and its officers towards the amount of Letter of Credit
issued by Credit Du Nord, Paris (CDN) and towards interest for the
delay in receipt of payment from BNP – Paribas S.A., Ivry-Sur-Scine
(BNP) with cost pendente lite and future interest @ 18% per annum.
3. Suit No.288/03/04 of 2003 was also filed by the respondent on
21.05.2003 claiming damages of Rs.3,09,000/- with cost and pendente
lite and future interest @ 18% per annum against bank and its officers
for withdrawing credit facility on 23.03.2002. Notice was issued to
the bank and its officers by the District Court, Delhi.
4. The bank and its officers then filed an application under Order
7 Rule 11 CPC in Suit No.288/03/04 of 2003 before the District Court,
Delhi for rejection of the plaint in the suit for damages on the
ground that the same is barred by the provisions of Order 2 Rule 2
CPC. The District Court elaborately heard the matter and after
perusing the plaints, averments in both the suits as well as the
reliefs sought for, came to the conclusion that the cause of action in
both the suits was same and the relief sought for in Suit No.288/03/04
of 2003 could have been claimed by the plaintiff in the Suit No.1145
of 2003 filed before the Delhi High Court. The application under
Order 7 Rule 11 was, therefore, allowed, holding that the latter suit
was barred under Order 2 Rule 2, CPC and plaint was accordingly
rejected.
5. The respondent, aggrieved by the said order, filed RFA No.490 of
2006 before the Delhi High Court. The High Court took the view that
the earlier suit No.1145 of 2003 was founded on cause of action
pertaining to the contract between the parties and the second Suit
No.288/03/04 of 2003 was on entirely different footing, being the
malicious action of the officers of the bank to withdraw the credit
facility because of their animus emanating from the action of the
respondent to lodge a complaint before the Ombudsman Banking.
Holding so, the appeal was allowed and the order dated 10.05.2006 of
the District Court was set aside. Challenging the above-mentioned
order these appeals have been filed by the State Bank of India.
6. Shri C.U. Singh, learned senior counsel appearing for the bank
submitted that the High Court has failed to consider the scope of
Order 2 Rule 2, CPC and committed a mistake in holding that the
respondent could not have claimed the relief of damages in Suit
No.1145 of 2003, the earlier suit filed before the High Court.
Learned senior counsel submitted that the respondent, on the date of
filing of the earlier suit, was aware that the bank had declined to
grant any further credit facility, in the event of which, the
respondent could have sought the relief for damages against the bank
and its officers in the earlier suit. Learned senior counsel
submitted that, having omitted to claim such a relief in the earlier
suit, the Court ought to have held that the respondent had
relinquished its claim and is estopped from preferring a second suit
in view of the provisions of Order 2 Rule 2, CPC. Learned senior
counsel also submitted, what is required is, that every suit shall
hold whole of the claim arising out of one and the same cause of
action and it was obligatory on the part of the respondent to raise
the whole claim at the time of institution of the first suit. Learned
senior counsel placed reliance on the Judgments of this Court in Deva
Ram and another v. Ishwar Chand and another (1995) 6 SCC 733 and
Sandeep Polymers (P) Ltd. v. Bajaj Auto Ltd. and others (2007) 7 SCC
148.
7. The respondent filed a detailed counter affidavit before this
Court explaining its stand. It was pointed out that the cause of
action to file the first suit arose much prior to the subsequent suit
since on the basis of wrongful debits made by the bank to the account
of the respondent on 01.05.2001 and 14.06.2001 for the amounts of two
Letters of Credit, one of which the bank could not recover and second
was recovered later from the foreign bank. Further, it was also
pointed out that the facts on the basis of which two suits have been
filed and respective reliefs sought for, are absolutely distinct and
separate and cause of action subsequently arose because of the
wrongful acts of the bank depriving the respondent of various banking
facilities. Further, it was also pointed out that the damages claimed
in the subsequent suit have no link or nexus to the cause of action
with the previous one. Consequently, it was pointed out that the High
Court has rightly allowed the appeal which calls for no interference
by this Court under Article 136 of the Constitution of India.
8. We may, before examining the rival contentions, extract the
relevant provisions of Order 2 Rule 2, CPC for easy reference which
reads as under:
“2. Suit to include the whole claim.— (1) Every suit shall
include the whole of the claim which the plaintiff be 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 reliefs.— 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 reliefs so omitted.”
9. The scope of the above-mentioned provisions came up for
consideration before this Court in several cases. The earliest one
dealt by the Privy Council was reported in Naba Kumar Hazra v.
Radhashyam Mahish AIR 1931 PC 229 wherein the Privy Council held that
the plaintiff cannot be permitted to draw the defendant to court twice
for the same cause by splitting up the claim and suing, in the first
instance, in respect of a part of claim only. In Sidramappa v.
Rajashetty and Others (1970) 1 SCC 186 this Court held that if the
cause of action on the basis of which the previous suit was brought,
does not form the foundation of subsequent suit and in the earlier
suit the plaintiff could not have claimed the relief which he sought
in the subsequent suit, the latter, namely, the subsequent suit, will
not be barred by the rule contained in Order 2 Rule 2, CPC. In Gurbux
Singh v. Bhooralal AIR 1964 SC 1810 the scope of the above-mentioned
provision was further explained as under:
“In order that a plea of a Bar under Order 2 Rule 2(3) of the
Civil Procedure Code should succeed the defendant who raises the
plea must make out; (i) that the second suit was in respect of
the same cause of action as that on which the previous suit was
based; (2) that in respect of that cause of action the plaintiff
was entitled to more than one relief; (3) that being thus
entitled to more than one relief the plaintiff, without leave
obtained from the Court omitted to sue for the relief for which
the second suit had been filed. From this analysis it would be
seen that the defendant would have to establish primarily and to
start with, the precise cause of action upon which the previous
suit was filed, for unless there is identity between the cause
of action on which the earlier suit was filed and that on which
the claim in the latter suit is based there would be no scope
for the application of the bar.”
10. In Sandeep Polymers (P) Ltd.’s case (supra), the above-mentioned
principles were reiterated and this Court held as under:
“Under Order 2 Rule 1 of the Code which contains provisions of
mandatory nature, the requirement is that the plaintiffs are
duty-bound to claim the entire relief. The suit has to be so
framed as to afford ground for final decision upon the subjects
in dispute and to prevent further litigation concerning them.
Rule 2 further enjoins on the plaintiff to include the whole of
the claim which the plaintiff is entitled to make in respect of
the cause of action. If the plaintiff omits to sue or
intentionally relinquishes any portion of his claim, it is not
permissible for him to sue in respect of the portion so omitted
or relinquished afterwards.
11. The above-mentioned decisions categorically lay down the law
that if a plaintiff is entitled to seek reliefs against the defendant
in respect of the same cause of action, the plaintiff cannot split up
the claim so as to omit one part to the claim and sue for the other.
If the cause of action is same, the plaintiff has to place all his
claims before the Court in one suit, as Order 2 Rule 2, CPC is based
on the cardinal principle that defendant should not be vexed twice for
the same cause.
12. Order 2 Rule 2, CPC, therefore, requires the unity of all claims
based on the same cause of action in one suit, it does not contemplate
unity of distinct and separate cause of action. On the above-
mentioned legal principle, let us examine whether the High Court has
correctly applied the legal principle in the instant case.
13. We have gone through the plaints and the averments contained in
both the suits in extenso and also the reliefs claimed in both the
suits. Respondents had availed of various credit facilities from the
State Bank of India. It had an export order from M/s Medipharma
Company, France who had opened two Letters of Credit. The first
Letter of Credit was opened with CDN and second Letter of Credit was
opened with BNP. The date of issue of first Letter of Credit by CDN
was 16.01.2001 and it was to expire on 10.04.2001. Similarly, second
Letter of Credit opened with BNP was issued on 16.01.2001 and was to
expire on 30.04.2001. On 20.03.2001, proceeds of the export deal were
paid by the bank honouring the bills of exchange against the Letter of
Credit opened with CDN and credited the same to the account of the
respondent on the understanding that in case the relevant documents
were accepted by the opening owner/issuing bank for any reason
whatsoever, the respondent was liable to repay to the bank, without
demur or demand, the amount of the bills/documents along with overdue
interest and other charges. Other clauses were also incorporated so
as to safeguard the interest of the bank. On 28.03.2001, the bank
honoured the bills of exchange against the LC opened with BNP subject
to the various conditions. The amount was credited to the account of
the respondent subject to realization of LC. Since the amount of the
LC was not received with the issuing bank on 01.05.2001, the amount
was debited to the account of the respondent on account of non-receipt
of LC from CDN. Similarly, the amount of LC having not received from
the issuing bank by 14.06.2001, the amount was debited to the account
of the respondent for non-receipt of LC from BNP.
14. The bank sent various letters to the respondent to regularize
the accounts. Since the accounts were not regularized, the bank
decided not to grant further facility. The respondent then on receipt
of the payment from the foreign buyer and having failed to take any
steps to realize the payment from the buyer or issuing bank, filed a
complaint on 30.09.2001 with the Banking Ombudsman against the bank on
account of reversing the entry on non-receipt of payment of LCs. The
complaint filed by the respondent was, however, later withdrawn. The
bank’s stand is that closure of account was done on 20.03.2002 due to
the fault of the respondent on non-regularization of their accounts
i.e. after non-receipt of payment of LC, the amount became irregular
and remained so continuously. Let us now examine the averments
contained in paragraph 37 of the subsequent suit No.288/03/04 of 2003
in the above perspective. Paragraph 37 is extracted hereinbelow for
easy reference:
“37. That the cause of action to file the present suit
accrued in favour of the plaintiff and against the Defendants on
all those occasions when the Defendants wrote various letters to
the Plaintiff threatening initiate or actually initiating action
against the Plaintiff in relation to various credit facilities
which were being enjoyed by the Plaintiff. The cause of action
to file the present suit accrued further in favour of the
Plaintiff and against the Defendants on all those occasions when
the Defendants actually initiated action against the Plaintiff
in relation to various credit facilities, which were being
enjoyed by the plaintiff and thereby did not provide the said
facilities to the Plaintiff. The cause of action further
accrued when the Defendants wrote letter dated 20.03.2002 to the
Plaintiff conveying their decision to unilaterally and illegally
rescind and contract between the parties and thereby stopping
all credit facilities to the Plaintiff. The cause of action
accrued further when on 26.3.2002, the general Manager
(Commercial) of the Defendant No.1 did not intervene to stop the
arbitrary and illegal action of the concerned officers of the
Industrial Finance Branch. The cause of action accrued further
when prior to filing of the suit, the Plaintiff through its
counsel, issued and served upon the Defendants a legal notice
dated 24.12.2002. The cause of action is still continuing and
subsisting.”
15. When we go through the above quoted paragraph it is clear that
the facts on the basis of which subsequent suit was filed, existed on
the date on which the earlier suit was filed. The earlier suit was
filed on 15.03.2003 and subsequent suit was filed on 21.05.2003. No
fresh cause of action arose in between the first suit and the second
suit. The closure of account, as already indicated, was intimated on
20.03.2002 due to the alleged fault of the respondent in not
regularizing their accounts i.e. after non-receipt of payment of LC,
the account became irregular. When the first suit for recovery of
dues was filed i.e. on 15.03.2001 for alleged relief, damages sought
for in the subsequent suit could have also been sought for. Order 2
Rule 2 provides that every suit shall include the whole of the claim
which the plaintiff is entitled to make in respect of the same cause
of action. Respondent is not entitled to split the cause of action
into parts by filing separate suits. We find, as such, that
respondent had omitted certain reliefs which were available to it at
the time of filing of the first suit and after having relinquished the
same, it cannot file a separate suit in view of the provisions of sub-
rule 2 of Order 2 Rule 2, CPC. The object of Order 2 Rule 2 is to
avoid multiplicity of proceedings and not to vex the parties over and
again in a litigative process. The object enunciated in Order 2 Rule
2, CPC is laudable and it has a larger public purpose to achieve by
not burdening the court with repeated suits.
16. We are, therefore, of the view that the High Court has committed
an error in reversing the order dated 10.05.2005, passed by the
District Court, allowing the application under Order 7 Rule 11, CPC.
The appeals are accordingly allowed and the judgment of the High Court
is set aside. However, there will be no order as to costs.
..………………………J.
(K.S. Radhakrishnan)
………………………..J.
(A.K. Sikri)
New Delhi
November 22, 2013
Singh v. Bhooralal AIR 1964 SC 1810 the scope of the above-mentioned
provision was further explained as under:
“In order that a plea of a Bar under Order 2 Rule 2(3) of the
Civil Procedure Code should succeed the defendant who raises the
plea must make out; (i) that the second suit was in respect of
the same cause of action as that on which the previous suit was
based; (2) that in respect of that cause of action the plaintiff
was entitled to more than one relief; (3) that being thus
entitled to more than one relief the plaintiff, without leave
obtained from the Court omitted to sue for the relief for which
the second suit had been filed. From this analysis it would be
seen that the defendant would have to establish primarily and to
start with, the precise cause of action upon which the previous
suit was filed, for unless there is identity between the cause
of action on which the earlier suit was filed and that on which
the claim in the latter suit is based there would be no scope
for the application of the bar.”
H
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOs. 10531-10532 OF 2013
(@ Special Leave Petition (C) Nos.5945-5946 of 2009)
State Bank of India … Appellant
Versus
Gracure Pharmaceuticals Ltd. … Respondents
Citation; 2014(4) MHLJ 20 SC
K.S. Radhakrishnan, J.
Leave granted.
2. We are, in this case, concerned with the applicability of Order
2 Rule 2 of the Code of Civil Procedure (for short “the CPC”) in
respect of two suits filed by the respondent, one in the Original side
of the Delhi High Court and another before the District Court, Delhi.
Original Suit No.1145 of 2003 was filed by the respondent herein on
15.05.2003 for recovery of an amount of Rs.44,30,994 against the
appellant bank and its officers towards the amount of Letter of Credit
issued by Credit Du Nord, Paris (CDN) and towards interest for the
delay in receipt of payment from BNP – Paribas S.A., Ivry-Sur-Scine
(BNP) with cost pendente lite and future interest @ 18% per annum.
3. Suit No.288/03/04 of 2003 was also filed by the respondent on
21.05.2003 claiming damages of Rs.3,09,000/- with cost and pendente
lite and future interest @ 18% per annum against bank and its officers
for withdrawing credit facility on 23.03.2002. Notice was issued to
the bank and its officers by the District Court, Delhi.
4. The bank and its officers then filed an application under Order
7 Rule 11 CPC in Suit No.288/03/04 of 2003 before the District Court,
Delhi for rejection of the plaint in the suit for damages on the
ground that the same is barred by the provisions of Order 2 Rule 2
CPC. The District Court elaborately heard the matter and after
perusing the plaints, averments in both the suits as well as the
reliefs sought for, came to the conclusion that the cause of action in
both the suits was same and the relief sought for in Suit No.288/03/04
of 2003 could have been claimed by the plaintiff in the Suit No.1145
of 2003 filed before the Delhi High Court. The application under
Order 7 Rule 11 was, therefore, allowed, holding that the latter suit
was barred under Order 2 Rule 2, CPC and plaint was accordingly
rejected.
5. The respondent, aggrieved by the said order, filed RFA No.490 of
2006 before the Delhi High Court. The High Court took the view that
the earlier suit No.1145 of 2003 was founded on cause of action
pertaining to the contract between the parties and the second Suit
No.288/03/04 of 2003 was on entirely different footing, being the
malicious action of the officers of the bank to withdraw the credit
facility because of their animus emanating from the action of the
respondent to lodge a complaint before the Ombudsman Banking.
Holding so, the appeal was allowed and the order dated 10.05.2006 of
the District Court was set aside. Challenging the above-mentioned
order these appeals have been filed by the State Bank of India.
6. Shri C.U. Singh, learned senior counsel appearing for the bank
submitted that the High Court has failed to consider the scope of
Order 2 Rule 2, CPC and committed a mistake in holding that the
respondent could not have claimed the relief of damages in Suit
No.1145 of 2003, the earlier suit filed before the High Court.
Learned senior counsel submitted that the respondent, on the date of
filing of the earlier suit, was aware that the bank had declined to
grant any further credit facility, in the event of which, the
respondent could have sought the relief for damages against the bank
and its officers in the earlier suit. Learned senior counsel
submitted that, having omitted to claim such a relief in the earlier
suit, the Court ought to have held that the respondent had
relinquished its claim and is estopped from preferring a second suit
in view of the provisions of Order 2 Rule 2, CPC. Learned senior
counsel also submitted, what is required is, that every suit shall
hold whole of the claim arising out of one and the same cause of
action and it was obligatory on the part of the respondent to raise
the whole claim at the time of institution of the first suit. Learned
senior counsel placed reliance on the Judgments of this Court in Deva
Ram and another v. Ishwar Chand and another (1995) 6 SCC 733 and
Sandeep Polymers (P) Ltd. v. Bajaj Auto Ltd. and others (2007) 7 SCC
148.
7. The respondent filed a detailed counter affidavit before this
Court explaining its stand. It was pointed out that the cause of
action to file the first suit arose much prior to the subsequent suit
since on the basis of wrongful debits made by the bank to the account
of the respondent on 01.05.2001 and 14.06.2001 for the amounts of two
Letters of Credit, one of which the bank could not recover and second
was recovered later from the foreign bank. Further, it was also
pointed out that the facts on the basis of which two suits have been
filed and respective reliefs sought for, are absolutely distinct and
separate and cause of action subsequently arose because of the
wrongful acts of the bank depriving the respondent of various banking
facilities. Further, it was also pointed out that the damages claimed
in the subsequent suit have no link or nexus to the cause of action
with the previous one. Consequently, it was pointed out that the High
Court has rightly allowed the appeal which calls for no interference
by this Court under Article 136 of the Constitution of India.
8. We may, before examining the rival contentions, extract the
relevant provisions of Order 2 Rule 2, CPC for easy reference which
reads as under:
“2. Suit to include the whole claim.— (1) Every suit shall
include the whole of the claim which the plaintiff be 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 reliefs.— 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 reliefs so omitted.”
9. The scope of the above-mentioned provisions came up for
consideration before this Court in several cases. The earliest one
dealt by the Privy Council was reported in Naba Kumar Hazra v.
Radhashyam Mahish AIR 1931 PC 229 wherein the Privy Council held that
the plaintiff cannot be permitted to draw the defendant to court twice
for the same cause by splitting up the claim and suing, in the first
instance, in respect of a part of claim only. In Sidramappa v.
Rajashetty and Others (1970) 1 SCC 186 this Court held that if the
cause of action on the basis of which the previous suit was brought,
does not form the foundation of subsequent suit and in the earlier
suit the plaintiff could not have claimed the relief which he sought
in the subsequent suit, the latter, namely, the subsequent suit, will
not be barred by the rule contained in Order 2 Rule 2, CPC. In Gurbux
Singh v. Bhooralal AIR 1964 SC 1810 the scope of the above-mentioned
provision was further explained as under:
“In order that a plea of a Bar under Order 2 Rule 2(3) of the
Civil Procedure Code should succeed the defendant who raises the
plea must make out; (i) that the second suit was in respect of
the same cause of action as that on which the previous suit was
based; (2) that in respect of that cause of action the plaintiff
was entitled to more than one relief; (3) that being thus
entitled to more than one relief the plaintiff, without leave
obtained from the Court omitted to sue for the relief for which
the second suit had been filed. From this analysis it would be
seen that the defendant would have to establish primarily and to
start with, the precise cause of action upon which the previous
suit was filed, for unless there is identity between the cause
of action on which the earlier suit was filed and that on which
the claim in the latter suit is based there would be no scope
for the application of the bar.”
10. In Sandeep Polymers (P) Ltd.’s case (supra), the above-mentioned
principles were reiterated and this Court held as under:
“Under Order 2 Rule 1 of the Code which contains provisions of
mandatory nature, the requirement is that the plaintiffs are
duty-bound to claim the entire relief. The suit has to be so
framed as to afford ground for final decision upon the subjects
in dispute and to prevent further litigation concerning them.
Rule 2 further enjoins on the plaintiff to include the whole of
the claim which the plaintiff is entitled to make in respect of
the cause of action. If the plaintiff omits to sue or
intentionally relinquishes any portion of his claim, it is not
permissible for him to sue in respect of the portion so omitted
or relinquished afterwards.
11. The above-mentioned decisions categorically lay down the law
that if a plaintiff is entitled to seek reliefs against the defendant
in respect of the same cause of action, the plaintiff cannot split up
the claim so as to omit one part to the claim and sue for the other.
If the cause of action is same, the plaintiff has to place all his
claims before the Court in one suit, as Order 2 Rule 2, CPC is based
on the cardinal principle that defendant should not be vexed twice for
the same cause.
12. Order 2 Rule 2, CPC, therefore, requires the unity of all claims
based on the same cause of action in one suit, it does not contemplate
unity of distinct and separate cause of action. On the above-
mentioned legal principle, let us examine whether the High Court has
correctly applied the legal principle in the instant case.
13. We have gone through the plaints and the averments contained in
both the suits in extenso and also the reliefs claimed in both the
suits. Respondents had availed of various credit facilities from the
State Bank of India. It had an export order from M/s Medipharma
Company, France who had opened two Letters of Credit. The first
Letter of Credit was opened with CDN and second Letter of Credit was
opened with BNP. The date of issue of first Letter of Credit by CDN
was 16.01.2001 and it was to expire on 10.04.2001. Similarly, second
Letter of Credit opened with BNP was issued on 16.01.2001 and was to
expire on 30.04.2001. On 20.03.2001, proceeds of the export deal were
paid by the bank honouring the bills of exchange against the Letter of
Credit opened with CDN and credited the same to the account of the
respondent on the understanding that in case the relevant documents
were accepted by the opening owner/issuing bank for any reason
whatsoever, the respondent was liable to repay to the bank, without
demur or demand, the amount of the bills/documents along with overdue
interest and other charges. Other clauses were also incorporated so
as to safeguard the interest of the bank. On 28.03.2001, the bank
honoured the bills of exchange against the LC opened with BNP subject
to the various conditions. The amount was credited to the account of
the respondent subject to realization of LC. Since the amount of the
LC was not received with the issuing bank on 01.05.2001, the amount
was debited to the account of the respondent on account of non-receipt
of LC from CDN. Similarly, the amount of LC having not received from
the issuing bank by 14.06.2001, the amount was debited to the account
of the respondent for non-receipt of LC from BNP.
14. The bank sent various letters to the respondent to regularize
the accounts. Since the accounts were not regularized, the bank
decided not to grant further facility. The respondent then on receipt
of the payment from the foreign buyer and having failed to take any
steps to realize the payment from the buyer or issuing bank, filed a
complaint on 30.09.2001 with the Banking Ombudsman against the bank on
account of reversing the entry on non-receipt of payment of LCs. The
complaint filed by the respondent was, however, later withdrawn. The
bank’s stand is that closure of account was done on 20.03.2002 due to
the fault of the respondent on non-regularization of their accounts
i.e. after non-receipt of payment of LC, the amount became irregular
and remained so continuously. Let us now examine the averments
contained in paragraph 37 of the subsequent suit No.288/03/04 of 2003
in the above perspective. Paragraph 37 is extracted hereinbelow for
easy reference:
“37. That the cause of action to file the present suit
accrued in favour of the plaintiff and against the Defendants on
all those occasions when the Defendants wrote various letters to
the Plaintiff threatening initiate or actually initiating action
against the Plaintiff in relation to various credit facilities
which were being enjoyed by the Plaintiff. The cause of action
to file the present suit accrued further in favour of the
Plaintiff and against the Defendants on all those occasions when
the Defendants actually initiated action against the Plaintiff
in relation to various credit facilities, which were being
enjoyed by the plaintiff and thereby did not provide the said
facilities to the Plaintiff. The cause of action further
accrued when the Defendants wrote letter dated 20.03.2002 to the
Plaintiff conveying their decision to unilaterally and illegally
rescind and contract between the parties and thereby stopping
all credit facilities to the Plaintiff. The cause of action
accrued further when on 26.3.2002, the general Manager
(Commercial) of the Defendant No.1 did not intervene to stop the
arbitrary and illegal action of the concerned officers of the
Industrial Finance Branch. The cause of action accrued further
when prior to filing of the suit, the Plaintiff through its
counsel, issued and served upon the Defendants a legal notice
dated 24.12.2002. The cause of action is still continuing and
subsisting.”
15. When we go through the above quoted paragraph it is clear that
the facts on the basis of which subsequent suit was filed, existed on
the date on which the earlier suit was filed. The earlier suit was
filed on 15.03.2003 and subsequent suit was filed on 21.05.2003. No
fresh cause of action arose in between the first suit and the second
suit. The closure of account, as already indicated, was intimated on
20.03.2002 due to the alleged fault of the respondent in not
regularizing their accounts i.e. after non-receipt of payment of LC,
the account became irregular. When the first suit for recovery of
dues was filed i.e. on 15.03.2001 for alleged relief, damages sought
for in the subsequent suit could have also been sought for. Order 2
Rule 2 provides that every suit shall include the whole of the claim
which the plaintiff is entitled to make in respect of the same cause
of action. Respondent is not entitled to split the cause of action
into parts by filing separate suits. We find, as such, that
respondent had omitted certain reliefs which were available to it at
the time of filing of the first suit and after having relinquished the
same, it cannot file a separate suit in view of the provisions of sub-
rule 2 of Order 2 Rule 2, CPC. The object of Order 2 Rule 2 is to
avoid multiplicity of proceedings and not to vex the parties over and
again in a litigative process. The object enunciated in Order 2 Rule
2, CPC is laudable and it has a larger public purpose to achieve by
not burdening the court with repeated suits.
16. We are, therefore, of the view that the High Court has committed
an error in reversing the order dated 10.05.2005, passed by the
District Court, allowing the application under Order 7 Rule 11, CPC.
The appeals are accordingly allowed and the judgment of the High Court
is set aside. However, there will be no order as to costs.
..………………………J.
(K.S. Radhakrishnan)
………………………..J.
(A.K. Sikri)
New Delhi
November 22, 2013
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