In Mohammad Khalil Khan
& Ors. Vs. Mahbub Ali Mian & ors. [A.I.R. 1949 Privy
Council 78 (75 Indian Appeals 121)], the Privy Council has
summarised the principle thus:
"The principles laid down in the cases thus
far discussed may be thus summarised:
(1) The correct test in cases falling under
O.2, R.2, is "whether the claim in the new
suit is in fact founded upon a cause of
action distinct from that which was the
foundation for the former suit." Moonshee
Buzloor Ruheem V. Shumsunnissa Begum,
(1867-11 M.I.A. 551 : 2 Sar. 259 P.C.)
(supra)
(2) The cause of action means every fact
which will be necessary for the plaintiff to
prove if traversed in order to support his
right to the judgment. Read V. Brown,
(1889-22 Q.B.D. 128 : 58 L.J.Q.B. 120)
(supra)
(3) If the evidence to support the two
claims is different, then the causes of
action are also different. Brundsden v.
Humphrey, (1884-14 Q.B.D. 141 : 53
L.J.Q.B. 476) (supra)
(4) The causes of action in the two suits
may be considered to be the same if in
substance they are identical. Brundsden v.
Humphrey, (1884-14 Q.B.D. 141 : 53
L.J.Q.B. 476) (supra)
(5) The causes of action has no relation
whatever to the defence that may be set up
by the defendant nor does it depend upon
the character of the relief prayed for by the
plaintiff. It refers . to the media upon
which the plaintiff asks the Court to arrive
at a conclusion in his favour. Muss.
Chandkour v. Partab Singh, (15 I.A. 156 :
16 Cal. 98 P.C.) (supra). This observation
was made by Lord Watson in a case under
S. 43 of the Act of 1882 (corresponding to
O.2 R.2), where plaintiff made various
claims in the same suit."
A Constitution Bench of this Court has
explained the scope of the plea based on Order II Rule 2 of
the Code in Gurbux Singh Vs. Bhooralal (supra). It will
be useful to quote from the Head note of that decision:
"Held: (i) A plea under Order 2 rule 2 of the
Code based on the existence of a former
pleading cannot be entertained when the
pleading on which it rests has not been
produced. It is for this reason that a plea of
a bar under O.2 r.2 of the Code can be
established only if the defendant files in
evidence the pleadings in the previous suit
and thereby proves to the court the identity
of the cause of action in the two suits. In
other words a plea under O.2 r.2 of the
Code cannot be made out except on proof of
the plaint in the previous suit the filing of
which is said to create the bar. Without
placing before the court the plaint in which
those facts were alleged, the defendant
cannot invite the court to speculate or infer
by a process of deduction what those facts
might be with reference to the reliefs which
were then claimed. On the facts of this
case it has to be held that the plea of a bar
under O.2 r.2 of the Code should not have
been entertained at all by the trial court
because the pleadings in civil suit No. 28 of
1950 were not filed by the appellant in
support of this plea.
(ii) In order that a plea of a bar under O. 2.
r. 2(3) of the 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; (ii) that in
respect of that cause of action the plaintiff
was entitled to more than one relief (iii) 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.
SUPREME COURT OF INDIA
Appeal (civil) 175 of 2007
S. NAZEER AHMED V STATE BANK OF MYSORE AND ORS
DATE OF JUDGMENT: 12/01/2007
BENCH:
H.K. SEMA & P.K. BALASUBRAMANYAN
2. Defendant No. 1, the appellant, borrowed a sum
of Rs.1,10,000/- from the plaintiff Bank for the purchase
of a bus. He secured repayment of that loan by
hypothecating the bus and further by equitably
mortgaging two items of immovable properties. The Bank
first filed O.S. No. 131 of 1984 for recovery of the money
due. The said suit was decreed. The Bank, in execution,
sought to proceed against the hypothecated bus. The bus
could not be traced and the money could not be recovered.
The Bank tried to proceed against the mortgaged
properties in execution. The appellant resisted by
pointing out that there was no decree on the mortgage and
the bank could, if at all, only attach the properties and
could not sell it straightaway. That objection was upheld.
The Bank thereupon instituted the present suit, O.S. No.
35 of 1993, for enforcement of the equitable mortgage.
The appellant resisted the suit by pleading that the suit
was barred by Order II Rule 2 of the Code of Civil
Procedure, that the transaction of loan stood satisfied by a
tripartite arrangement and transfer of the vehicle to one
Fernandes, that there was no valid equitable mortgage
created and no amount could be recovered from him
based on it and that the suit was barred by limitation.
3. The trial court held that the suit was not hit by
Order II Rule 2 of the Code. It also held that the appellant
has not proved that the loan transaction has come to an
end by the claim being satisfied. But, it dismissed the suit
holding that the suit was barred by limitation. It also held
that there was no creation of a valid equitable mortgage
since the memorandum in that behalf was not registered.
The Bank filed an appeal in the High Court. The High
Court held that the memorandum did not require
registration and that a valid and enforceable equitable
mortgage was created. The suit was held to be in time. It
held that the suit was hit by Order II Rule 2 of the Code.
But, since the appellant had not challenged the finding of
the trial court that the suit was not hit by Order II Rule 2
of the Code by filing a memorandum of cross objections,
the plea in that behalf could not be and need not be
upheld. It purported to invoke Order XLI Rule 33 of the
Code to grant the Bank a decree against the appellant
though it refused a decree to the Bank against the
guarantor. It did not disturb the finding of the trial court
on the tripartite arrangement set up by the appellant
based on the alleged transfer of the vehicle.
4. Being aggrieved by the decree, the appellant
approached this Court with the Petition for Special Leave
to Appeal. This Court while issuing notice, confined the
appeal to two questions. They were:
1) Why the second suit would not be hit by
Order 2 Rule 2, C.P.C.?; and
2) In view of the finding arrived at vide para 19
of the judgment (Annexure P-2), why
defendant No.1 should not have been held to
have been discharged from the liability?
5. We do not think it necessary to broaden the
scope of challenge in this appeal in the light of the
findings entered and in the circumstances of the case. We
are therefore inclined only to examine the two questions
posed by this Court at the stage of issuing notice in the
Petition for Special Leave to Appeal.
6. We will first consider whether the suit is barred
by Order II Rule 2 of the Code. Whereas the trial court
held that the suit on the equitable mortgage filed by the
Bank was not barred by Order II Rule 2 of the Code
especially in the context of Order XXXIV Rules 14 and 15
of the Code, the High Court was inclined to the view that
the suit was barred, though it did not accede to the prayer
of the appellant to dismiss the suit as being hit by Order II
Rule 2 of the Code. The High Court seems to have been of
the view that since the Bank in the prior suit omitted to
sue on the equitable mortgage without the leave of the
court, the present suit was barred. But it proceeded to
rely on Order XLI Rule 33 of the Code and ended up by
granting the Bank a decree against the appellant. It is not
very clear to us why Order XLI Rule 33 of the Code or the
principle embodied therein has to be invoked in the case,
since the plaintiff Bank had filed an appeal against the
decree dismissing its suit and was claiming the relief
claimed in the suit..
7. The High Court, in our view, was clearly in error
in holding that the appellant not having filed a
memorandum of cross-objections in terms of Order XLI
Rule 22 of the Code, could not challenge the finding of the
trial court that the suit was not barred by Order II Rule 2
of the Code. The respondent in an appeal is entitled to
support the decree of the trial court even by challenging
any of the findings that might have been rendered by the
trial court against himself. For supporting the decree
passed by the trial court, it is not necessary for a
respondent in the appeal, to file a memorandum of cross-
objections challenging a particular finding that is rendered
by the trial court against him when the ultimate decree
itself is in his favour. A memorandum of cross-objections
is needed only if the respondent claims any relief which
had been negatived to him by the trial court and in
addition to what he has already been given by the decree
under challenge. We have therefore no hesitation in
accepting the submission of the learned counsel for the
appellant that the High Court was in error in proceeding
on the basis that the appellant not having filed a
memorandum of cross-objections, was not entitled to
canvass the correctness of the finding on the bar of Order
II Rule 2 rendered by the trial court.
8. We also see considerable force in the submission
of learned counsel for the appellants that the High Court
has misconceived the object of Order XLI Rule 33 of the
Code and has erred in invoking it for the purpose of
granting the plaintiff Bank a decree. This is a case where
the suit filed by the plaintiff Bank had been dismissed by
the trial court. The plaintiff Bank had come up in appeal.
It was entitled to challenge all the findings rendered
against it by the trial court and seek a decree as prayed
for in the plaint, from the appellate court. Once it is
found entitled to a decree on the basis of the reasoning of
the appellate court, the suit could be decreed by reversing
the appropriate findings of the trial court on which the
dismissal of the suit was based. For this, no recourse to
Order XLI Rule 33 is necessary. Order XLI Rule 33
enables the appellate court to pass any decree that ought
to have been passed by the trial court or grant any further
decree as the case may require and the power could be
exercised notwithstanding that the appeal was only
against a part of the decree and could even be exercised in
favour of the respondents, though the respondents might
not have filed any appeal or objection against what has
been decreed. There is no need to have recourse to Order
XLI Rule 33 of the Code, in a case where the suit of the
plaintiff has been dismissed and the plaintiff has come up
in appeal claiming a decree as prayed for by him in the
suit. Then, it will be a question of entertaining the appeal
considering the relevant questions and granting the
plaintiff the relief he had sought for if he is found entitled
to it. In the case on hand therefore there was no occasion
for applying Order XLI Rule 33 of the Code. If the view of
the High Court was that the suit was barred by Order II
Rule 2 of the Code, it is difficult to see how it could have
resorted to Order XLI Rule 33 of the Code to grant a
decree to the plaintiff in such a suit. In that case, a
decree has to be declined. That part of the reasoning of
the High Court is therefore unsustainable.
9. Now, we come to the merit of the contention of
the appellant that the present suit is hit by Order II Rule 2
of the Code in view of the fact that the plaintiff omitted to
claim relief based on the mortgage, in the earlier suit O.S.
No. 131 of 1984. Obviously, the burden to establish this
plea was on the appellant. The appellant has not even
cared to produce the plaint in the earlier suit to show
what exactly was the cause of action put in suit by the
Bank in that suit. That the production of pleadings is a
must is clear from the decisions of this Court in Gurbux
Singh Vs. Bhooralal [(1964) 7 S.C.R. 831] and M/s
Bengal Waterproof Limited Vs. M/s Bombay
Waterproof Manufacturing Co. & Anr. [(1996) Supp. 8
S.C.R. 695]. From the present plaint, especially
paragraphs 10 to 12 thereof, it is seen that the Bank had
earlier sued for recovery of the loan with interest thereon
as a money suit. No relief was claimed for recovery of the
money on the foot of the equitable mortgage. In that suit,
the Bank appears to have attempted in execution, to bring
the mortgaged properties to sale. The appellant had
objected that the suit not being on the mortgage, the
mortgaged properties could not be sold in execution
without an attachment. That objection was upheld. The
Bank was therefore suing in enforcement of the mortgage
by deposit of title deeds by the appellant.
10. From this, it is not possible to say that the
present claim of the plaintiff Bank has arisen out of the
same cause of action that was put forward in O.S. No. 131
of 1984. What Order II Rule 2 insists upon is the
inclusion of the whole of the claim which the plaintiff is
entitled to make in respect of the cause of action put in
suit. We must notice at this stage that in respect of a suit
in enforcement of a mortgage, the bar under Order II Rule
2 has been kept out by Order XXXIV Rule 14 of the Code.
Rule 15 of Order XXXIV makes the rules of Order XXXIV
applicable to a mortgage by deposit of title deeds. We may
quote Order XXXIV Rule 14 hereunder:
"Suit for sale necessary for bringing
mortgaged property to sale (1) Where a
mortgage has obtained a decree for the
payment of money in satisfaction of a claim
arising under the mortgage, he shall not be
entitled to bring the mortgaged property to
sale otherwise than by instituting a suit for
sale in enforcement of the mortgage, and he
may institute such suit notwithstanding
anything contained in Order II Rule 2.
2) Nothing in sub-rule (1) shall apply
to any territories to which the Transfer of
Property Act, 1882 (4 of 1882), has not
been extended."
11. It is clear from sub-rule (1) of Rule 14 of Order
XXXIV of the Code that notwithstanding anything
contained in Order II Rule 2 of the Code, a suit for sale in
enforcement of the mortgage can be filed by the plaintiff
Bank and in fact that is the only remedy available to the
Bank to enforce the mortgage since it would not be
entitled to bring the mortgaged property to sale without
instituting such a suit. Be it noted, that Rule 14 has been
enacted for the protection of the mortgagor. In the context
of Rule 14 of Order 34 of the Code, it is difficult to uphold
a plea based on Order II Rule 2. If the appellant wanted to
show that the causes of action were identical in the two
suits, it was necessary for the appellant to have marked in
evidence the earlier plaint and make out that there was a
relinquishment of a relief by the plaintiff, without the leave
of the court. Even then, the effect of Rule 14 will remain
to be considered.
12. That apart, the cause of action for recovery of
money based on a medium term loan transaction
simpliciter or in enforcement of the hypothecation of the
bus available in the present case, is a cause of action
different from the cause of action arising out of an
equitable mortgage, though the ultimate relief that the
plaintiff Bank is entitled to is the recovery of the term loan
that was granted to the appellant. On the scope of Order
II Rule 2, the Privy Council in Payana Reena Saminatha
& Anr. Vs. Pana Lana Palaniappa [XLI Indian Appeals
142] has held that Order II Rule 2 is directed to securing
an exhaustion of the relief in respect of a cause of action
and not to the inclusion in one and the same action of
different causes of action, even though they may arise
from the same transactions. In Mohammad Khalil Khan
& Ors. Vs. Mahbub Ali Mian & ors. [A.I.R. 1949 Privy
Council 78 (75 Indian Appeals 121)], the Privy Council has
summarised the principle thus:
"The principles laid down in the cases thus
far discussed may be thus summarised:
(1) The correct test in cases falling under
O.2, R.2, is "whether the claim in the new
suit is in fact founded upon a cause of
action distinct from that which was the
foundation for the former suit." Moonshee
Buzloor Ruheem V. Shumsunnissa Begum,
(1867-11 M.I.A. 551 : 2 Sar. 259 P.C.)
(supra)
(2) The cause of action means every fact
which will be necessary for the plaintiff to
prove if traversed in order to support his
right to the judgment. Read V. Brown,
(1889-22 Q.B.D. 128 : 58 L.J.Q.B. 120)
(supra)
(3) If the evidence to support the two
claims is different, then the causes of
action are also different. Brundsden v.
Humphrey, (1884-14 Q.B.D. 141 : 53
L.J.Q.B. 476) (supra)
(4) The causes of action in the two suits
may be considered to be the same if in
substance they are identical. Brundsden v.
Humphrey, (1884-14 Q.B.D. 141 : 53
L.J.Q.B. 476) (supra)
(5) The causes of action has no relation
whatever to the defence that may be set up
by the defendant nor does it depend upon
the character of the relief prayed for by the
plaintiff. It refers . to the media upon
which the plaintiff asks the Court to arrive
at a conclusion in his favour. Muss.
Chandkour v. Partab Singh, (15 I.A. 156 :
16 Cal. 98 P.C.) (supra). This observation
was made by Lord Watson in a case under
S. 43 of the Act of 1882 (corresponding to
O.2 R.2), where plaintiff made various
claims in the same suit."
13. A Constitution Bench of this Court has
explained the scope of the plea based on Order II Rule 2 of
the Code in Gurbux Singh Vs. Bhooralal (supra). It will
be useful to quote from the Head note of that decision:
"Held: (i) A plea under Order 2 rule 2 of the
Code based on the existence of a former
pleading cannot be entertained when the
pleading on which it rests has not been
produced. It is for this reason that a plea of
a bar under O.2 r.2 of the Code can be
established only if the defendant files in
evidence the pleadings in the previous suit
and thereby proves to the court the identity
of the cause of action in the two suits. In
other words a plea under O.2 r.2 of the
Code cannot be made out except on proof of
the plaint in the previous suit the filing of
which is said to create the bar. Without
placing before the court the plaint in which
those facts were alleged, the defendant
cannot invite the court to speculate or infer
by a process of deduction what those facts
might be with reference to the reliefs which
were then claimed. On the facts of this
case it has to be held that the plea of a bar
under O.2 r.2 of the Code should not have
been entertained at all by the trial court
because the pleadings in civil suit No. 28 of
1950 were not filed by the appellant in
support of this plea.
(ii) In order that a plea of a bar under O. 2.
r. 2(3) of the 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; (ii) that in
respect of that cause of action the plaintiff
was entitled to more than one relief (iii) 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.
It is not necessary to multiply authorities except to notice
that the decisions in Sidramappa Vs. Rajashetty & Ors.
[(1970) 3 S.C.R. 319], Deva Ram & Anr. Vs. Ishwar
Chand & Anr. [(1995) Supp. 4 S.C.R. 369] and State of
Maharashtra & Anr. Vs. M/s National Construction
Company, Bombay and Anr. [(1996) 1 S.C.R. 293] have
reiterated and re-emphasized this principle.
14. Applying the test so laid down, it is not possible
to come to the conclusion that the suit to enforce the
equitable mortgage is hit by Order II Rule 2 of the Code in
view of the earlier suit for recovery of the mid term loan,
especially in the context of Order XXXIV Rule 14 of the
Code. The two causes of action are different, though they
might have been parts of the same transaction. Even
otherwise, Order XXXIV rule 14 read with rule 15 removes
the bar if any that may be attracted by virtue of Order II
Rule 2 of the Code. The decision of the Rangoon High
Court in Pyu Municipality Vs. U. Tun Nyein (AIR 1933
Rangoon 158) relied on by learned counsel for the
appellant does not enable him to successfully canvass for
the position that the present suit was barred by Order II
Rule 2 of the Code, as the said decision itself has pointed
out the effect of Order XXXIV Rule 14 and in the light of
what we have stated above.
15. Then the question is whether the appellant has
established that there was a tripartite arrangement come
to, by which the bus was made over by him to one
Fernandes and Fernandes undertook to the Bank to
discharge the liability under the mid term loan. In
support of his case, the appellant had only produced
Exhibits D1 to D4 which only indicate an attempt to bring
about an arrangement of that nature. But they do not
show that there was any such concluded arrangement and
there was a taking over of the liability by Fernandes as
agreed to by the Bank. The fact that the Bank has paid
the insurance premium for the bus in question, would not
advance the case of the appellant since the Bank, as the
hypothecatee of the bus was entitled to and in fact, as a
prudent mortgagee, was bound to, protect the security
and the insurance of the vehicle effected in that behalf
cannot be taken as a circumstance in support of the plea
put forward by the appellant. The trial court, after
considering the evidence, rightly noticed that the burden
was on the appellant to show that he had handed over the
possession of the vehicle to one Fernandes on the
intervention of the Bank and on the basis of a tripartite
arrangement or taking over of liability by Fernandes and
that the liability of the appellant had come to an end
thereby. Learned counsel for the Bank rightly submitted
that no novation was proved so as to enable the appellant
to riggle out of the liability under the loan transaction.
The High Court has not interfered with the reasoning and
conclusion of the trial court on this aspect and has in fact
proceeded to grant the plaintiff Bank a decree for the suit
amount based on the equitable mortgage. We were taken
through Exhibits D1 to D4 and even a fresh document
attempted to be marked in this Court along with its
counter affidavit by the Bank. On going through the said
documents, the other evidence and the reasoning adopted
by the trial court, we are satisfied that there is no evidence
to show that there was a tripartite agreement on the basis
of which the appellant could disclaim liability based on it.
It is seen that the appellant has not even examined
Fernandes in support of the plea of the tripartite
arrangement and the taking over of the liability of the
appellant, by him. In this situation, we see no reason to
uphold the plea of the appellant that the liability has been
transferred to Fernandes at the instance of the Bank and
that the appellant was no more liable for the plaint
amount.
16. Thus, on a consideration of all the relevant
aspects, we are satisfied that the High Court was correct
in granting the Bank a decree in the suit. There is
therefore no reason to interfere with that decree. We
therefore confirm the judgment and decree of the High
Court and dismiss this appeal with costs.
Print Page
& Ors. Vs. Mahbub Ali Mian & ors. [A.I.R. 1949 Privy
Council 78 (75 Indian Appeals 121)], the Privy Council has
summarised the principle thus:
"The principles laid down in the cases thus
far discussed may be thus summarised:
(1) The correct test in cases falling under
O.2, R.2, is "whether the claim in the new
suit is in fact founded upon a cause of
action distinct from that which was the
foundation for the former suit." Moonshee
Buzloor Ruheem V. Shumsunnissa Begum,
(1867-11 M.I.A. 551 : 2 Sar. 259 P.C.)
(supra)
(2) The cause of action means every fact
which will be necessary for the plaintiff to
prove if traversed in order to support his
right to the judgment. Read V. Brown,
(1889-22 Q.B.D. 128 : 58 L.J.Q.B. 120)
(supra)
(3) If the evidence to support the two
claims is different, then the causes of
action are also different. Brundsden v.
Humphrey, (1884-14 Q.B.D. 141 : 53
L.J.Q.B. 476) (supra)
(4) The causes of action in the two suits
may be considered to be the same if in
substance they are identical. Brundsden v.
Humphrey, (1884-14 Q.B.D. 141 : 53
L.J.Q.B. 476) (supra)
(5) The causes of action has no relation
whatever to the defence that may be set up
by the defendant nor does it depend upon
the character of the relief prayed for by the
plaintiff. It refers . to the media upon
which the plaintiff asks the Court to arrive
at a conclusion in his favour. Muss.
Chandkour v. Partab Singh, (15 I.A. 156 :
16 Cal. 98 P.C.) (supra). This observation
was made by Lord Watson in a case under
S. 43 of the Act of 1882 (corresponding to
O.2 R.2), where plaintiff made various
claims in the same suit."
A Constitution Bench of this Court has
explained the scope of the plea based on Order II Rule 2 of
the Code in Gurbux Singh Vs. Bhooralal (supra). It will
be useful to quote from the Head note of that decision:
"Held: (i) A plea under Order 2 rule 2 of the
Code based on the existence of a former
pleading cannot be entertained when the
pleading on which it rests has not been
produced. It is for this reason that a plea of
a bar under O.2 r.2 of the Code can be
established only if the defendant files in
evidence the pleadings in the previous suit
and thereby proves to the court the identity
of the cause of action in the two suits. In
other words a plea under O.2 r.2 of the
Code cannot be made out except on proof of
the plaint in the previous suit the filing of
which is said to create the bar. Without
placing before the court the plaint in which
those facts were alleged, the defendant
cannot invite the court to speculate or infer
by a process of deduction what those facts
might be with reference to the reliefs which
were then claimed. On the facts of this
case it has to be held that the plea of a bar
under O.2 r.2 of the Code should not have
been entertained at all by the trial court
because the pleadings in civil suit No. 28 of
1950 were not filed by the appellant in
support of this plea.
(ii) In order that a plea of a bar under O. 2.
r. 2(3) of the 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; (ii) that in
respect of that cause of action the plaintiff
was entitled to more than one relief (iii) 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.
SUPREME COURT OF INDIA
Appeal (civil) 175 of 2007
S. NAZEER AHMED V STATE BANK OF MYSORE AND ORS
DATE OF JUDGMENT: 12/01/2007
BENCH:
H.K. SEMA & P.K. BALASUBRAMANYAN
2. Defendant No. 1, the appellant, borrowed a sum
of Rs.1,10,000/- from the plaintiff Bank for the purchase
of a bus. He secured repayment of that loan by
hypothecating the bus and further by equitably
mortgaging two items of immovable properties. The Bank
first filed O.S. No. 131 of 1984 for recovery of the money
due. The said suit was decreed. The Bank, in execution,
sought to proceed against the hypothecated bus. The bus
could not be traced and the money could not be recovered.
The Bank tried to proceed against the mortgaged
properties in execution. The appellant resisted by
pointing out that there was no decree on the mortgage and
the bank could, if at all, only attach the properties and
could not sell it straightaway. That objection was upheld.
The Bank thereupon instituted the present suit, O.S. No.
35 of 1993, for enforcement of the equitable mortgage.
The appellant resisted the suit by pleading that the suit
was barred by Order II Rule 2 of the Code of Civil
Procedure, that the transaction of loan stood satisfied by a
tripartite arrangement and transfer of the vehicle to one
Fernandes, that there was no valid equitable mortgage
created and no amount could be recovered from him
based on it and that the suit was barred by limitation.
3. The trial court held that the suit was not hit by
Order II Rule 2 of the Code. It also held that the appellant
has not proved that the loan transaction has come to an
end by the claim being satisfied. But, it dismissed the suit
holding that the suit was barred by limitation. It also held
that there was no creation of a valid equitable mortgage
since the memorandum in that behalf was not registered.
The Bank filed an appeal in the High Court. The High
Court held that the memorandum did not require
registration and that a valid and enforceable equitable
mortgage was created. The suit was held to be in time. It
held that the suit was hit by Order II Rule 2 of the Code.
But, since the appellant had not challenged the finding of
the trial court that the suit was not hit by Order II Rule 2
of the Code by filing a memorandum of cross objections,
the plea in that behalf could not be and need not be
upheld. It purported to invoke Order XLI Rule 33 of the
Code to grant the Bank a decree against the appellant
though it refused a decree to the Bank against the
guarantor. It did not disturb the finding of the trial court
on the tripartite arrangement set up by the appellant
based on the alleged transfer of the vehicle.
4. Being aggrieved by the decree, the appellant
approached this Court with the Petition for Special Leave
to Appeal. This Court while issuing notice, confined the
appeal to two questions. They were:
1) Why the second suit would not be hit by
Order 2 Rule 2, C.P.C.?; and
2) In view of the finding arrived at vide para 19
of the judgment (Annexure P-2), why
defendant No.1 should not have been held to
have been discharged from the liability?
5. We do not think it necessary to broaden the
scope of challenge in this appeal in the light of the
findings entered and in the circumstances of the case. We
are therefore inclined only to examine the two questions
posed by this Court at the stage of issuing notice in the
Petition for Special Leave to Appeal.
6. We will first consider whether the suit is barred
by Order II Rule 2 of the Code. Whereas the trial court
held that the suit on the equitable mortgage filed by the
Bank was not barred by Order II Rule 2 of the Code
especially in the context of Order XXXIV Rules 14 and 15
of the Code, the High Court was inclined to the view that
the suit was barred, though it did not accede to the prayer
of the appellant to dismiss the suit as being hit by Order II
Rule 2 of the Code. The High Court seems to have been of
the view that since the Bank in the prior suit omitted to
sue on the equitable mortgage without the leave of the
court, the present suit was barred. But it proceeded to
rely on Order XLI Rule 33 of the Code and ended up by
granting the Bank a decree against the appellant. It is not
very clear to us why Order XLI Rule 33 of the Code or the
principle embodied therein has to be invoked in the case,
since the plaintiff Bank had filed an appeal against the
decree dismissing its suit and was claiming the relief
claimed in the suit..
7. The High Court, in our view, was clearly in error
in holding that the appellant not having filed a
memorandum of cross-objections in terms of Order XLI
Rule 22 of the Code, could not challenge the finding of the
trial court that the suit was not barred by Order II Rule 2
of the Code. The respondent in an appeal is entitled to
support the decree of the trial court even by challenging
any of the findings that might have been rendered by the
trial court against himself. For supporting the decree
passed by the trial court, it is not necessary for a
respondent in the appeal, to file a memorandum of cross-
objections challenging a particular finding that is rendered
by the trial court against him when the ultimate decree
itself is in his favour. A memorandum of cross-objections
is needed only if the respondent claims any relief which
had been negatived to him by the trial court and in
addition to what he has already been given by the decree
under challenge. We have therefore no hesitation in
accepting the submission of the learned counsel for the
appellant that the High Court was in error in proceeding
on the basis that the appellant not having filed a
memorandum of cross-objections, was not entitled to
canvass the correctness of the finding on the bar of Order
II Rule 2 rendered by the trial court.
8. We also see considerable force in the submission
of learned counsel for the appellants that the High Court
has misconceived the object of Order XLI Rule 33 of the
Code and has erred in invoking it for the purpose of
granting the plaintiff Bank a decree. This is a case where
the suit filed by the plaintiff Bank had been dismissed by
the trial court. The plaintiff Bank had come up in appeal.
It was entitled to challenge all the findings rendered
against it by the trial court and seek a decree as prayed
for in the plaint, from the appellate court. Once it is
found entitled to a decree on the basis of the reasoning of
the appellate court, the suit could be decreed by reversing
the appropriate findings of the trial court on which the
dismissal of the suit was based. For this, no recourse to
Order XLI Rule 33 is necessary. Order XLI Rule 33
enables the appellate court to pass any decree that ought
to have been passed by the trial court or grant any further
decree as the case may require and the power could be
exercised notwithstanding that the appeal was only
against a part of the decree and could even be exercised in
favour of the respondents, though the respondents might
not have filed any appeal or objection against what has
been decreed. There is no need to have recourse to Order
XLI Rule 33 of the Code, in a case where the suit of the
plaintiff has been dismissed and the plaintiff has come up
in appeal claiming a decree as prayed for by him in the
suit. Then, it will be a question of entertaining the appeal
considering the relevant questions and granting the
plaintiff the relief he had sought for if he is found entitled
to it. In the case on hand therefore there was no occasion
for applying Order XLI Rule 33 of the Code. If the view of
the High Court was that the suit was barred by Order II
Rule 2 of the Code, it is difficult to see how it could have
resorted to Order XLI Rule 33 of the Code to grant a
decree to the plaintiff in such a suit. In that case, a
decree has to be declined. That part of the reasoning of
the High Court is therefore unsustainable.
9. Now, we come to the merit of the contention of
the appellant that the present suit is hit by Order II Rule 2
of the Code in view of the fact that the plaintiff omitted to
claim relief based on the mortgage, in the earlier suit O.S.
No. 131 of 1984. Obviously, the burden to establish this
plea was on the appellant. The appellant has not even
cared to produce the plaint in the earlier suit to show
what exactly was the cause of action put in suit by the
Bank in that suit. That the production of pleadings is a
must is clear from the decisions of this Court in Gurbux
Singh Vs. Bhooralal [(1964) 7 S.C.R. 831] and M/s
Bengal Waterproof Limited Vs. M/s Bombay
Waterproof Manufacturing Co. & Anr. [(1996) Supp. 8
S.C.R. 695]. From the present plaint, especially
paragraphs 10 to 12 thereof, it is seen that the Bank had
earlier sued for recovery of the loan with interest thereon
as a money suit. No relief was claimed for recovery of the
money on the foot of the equitable mortgage. In that suit,
the Bank appears to have attempted in execution, to bring
the mortgaged properties to sale. The appellant had
objected that the suit not being on the mortgage, the
mortgaged properties could not be sold in execution
without an attachment. That objection was upheld. The
Bank was therefore suing in enforcement of the mortgage
by deposit of title deeds by the appellant.
10. From this, it is not possible to say that the
present claim of the plaintiff Bank has arisen out of the
same cause of action that was put forward in O.S. No. 131
of 1984. What Order II Rule 2 insists upon is the
inclusion of the whole of the claim which the plaintiff is
entitled to make in respect of the cause of action put in
suit. We must notice at this stage that in respect of a suit
in enforcement of a mortgage, the bar under Order II Rule
2 has been kept out by Order XXXIV Rule 14 of the Code.
Rule 15 of Order XXXIV makes the rules of Order XXXIV
applicable to a mortgage by deposit of title deeds. We may
quote Order XXXIV Rule 14 hereunder:
"Suit for sale necessary for bringing
mortgaged property to sale (1) Where a
mortgage has obtained a decree for the
payment of money in satisfaction of a claim
arising under the mortgage, he shall not be
entitled to bring the mortgaged property to
sale otherwise than by instituting a suit for
sale in enforcement of the mortgage, and he
may institute such suit notwithstanding
anything contained in Order II Rule 2.
2) Nothing in sub-rule (1) shall apply
to any territories to which the Transfer of
Property Act, 1882 (4 of 1882), has not
been extended."
11. It is clear from sub-rule (1) of Rule 14 of Order
XXXIV of the Code that notwithstanding anything
contained in Order II Rule 2 of the Code, a suit for sale in
enforcement of the mortgage can be filed by the plaintiff
Bank and in fact that is the only remedy available to the
Bank to enforce the mortgage since it would not be
entitled to bring the mortgaged property to sale without
instituting such a suit. Be it noted, that Rule 14 has been
enacted for the protection of the mortgagor. In the context
of Rule 14 of Order 34 of the Code, it is difficult to uphold
a plea based on Order II Rule 2. If the appellant wanted to
show that the causes of action were identical in the two
suits, it was necessary for the appellant to have marked in
evidence the earlier plaint and make out that there was a
relinquishment of a relief by the plaintiff, without the leave
of the court. Even then, the effect of Rule 14 will remain
to be considered.
12. That apart, the cause of action for recovery of
money based on a medium term loan transaction
simpliciter or in enforcement of the hypothecation of the
bus available in the present case, is a cause of action
different from the cause of action arising out of an
equitable mortgage, though the ultimate relief that the
plaintiff Bank is entitled to is the recovery of the term loan
that was granted to the appellant. On the scope of Order
II Rule 2, the Privy Council in Payana Reena Saminatha
& Anr. Vs. Pana Lana Palaniappa [XLI Indian Appeals
142] has held that Order II Rule 2 is directed to securing
an exhaustion of the relief in respect of a cause of action
and not to the inclusion in one and the same action of
different causes of action, even though they may arise
from the same transactions. In Mohammad Khalil Khan
& Ors. Vs. Mahbub Ali Mian & ors. [A.I.R. 1949 Privy
Council 78 (75 Indian Appeals 121)], the Privy Council has
summarised the principle thus:
"The principles laid down in the cases thus
far discussed may be thus summarised:
(1) The correct test in cases falling under
O.2, R.2, is "whether the claim in the new
suit is in fact founded upon a cause of
action distinct from that which was the
foundation for the former suit." Moonshee
Buzloor Ruheem V. Shumsunnissa Begum,
(1867-11 M.I.A. 551 : 2 Sar. 259 P.C.)
(supra)
(2) The cause of action means every fact
which will be necessary for the plaintiff to
prove if traversed in order to support his
right to the judgment. Read V. Brown,
(1889-22 Q.B.D. 128 : 58 L.J.Q.B. 120)
(supra)
(3) If the evidence to support the two
claims is different, then the causes of
action are also different. Brundsden v.
Humphrey, (1884-14 Q.B.D. 141 : 53
L.J.Q.B. 476) (supra)
(4) The causes of action in the two suits
may be considered to be the same if in
substance they are identical. Brundsden v.
Humphrey, (1884-14 Q.B.D. 141 : 53
L.J.Q.B. 476) (supra)
(5) The causes of action has no relation
whatever to the defence that may be set up
by the defendant nor does it depend upon
the character of the relief prayed for by the
plaintiff. It refers . to the media upon
which the plaintiff asks the Court to arrive
at a conclusion in his favour. Muss.
Chandkour v. Partab Singh, (15 I.A. 156 :
16 Cal. 98 P.C.) (supra). This observation
was made by Lord Watson in a case under
S. 43 of the Act of 1882 (corresponding to
O.2 R.2), where plaintiff made various
claims in the same suit."
13. A Constitution Bench of this Court has
explained the scope of the plea based on Order II Rule 2 of
the Code in Gurbux Singh Vs. Bhooralal (supra). It will
be useful to quote from the Head note of that decision:
"Held: (i) A plea under Order 2 rule 2 of the
Code based on the existence of a former
pleading cannot be entertained when the
pleading on which it rests has not been
produced. It is for this reason that a plea of
a bar under O.2 r.2 of the Code can be
established only if the defendant files in
evidence the pleadings in the previous suit
and thereby proves to the court the identity
of the cause of action in the two suits. In
other words a plea under O.2 r.2 of the
Code cannot be made out except on proof of
the plaint in the previous suit the filing of
which is said to create the bar. Without
placing before the court the plaint in which
those facts were alleged, the defendant
cannot invite the court to speculate or infer
by a process of deduction what those facts
might be with reference to the reliefs which
were then claimed. On the facts of this
case it has to be held that the plea of a bar
under O.2 r.2 of the Code should not have
been entertained at all by the trial court
because the pleadings in civil suit No. 28 of
1950 were not filed by the appellant in
support of this plea.
(ii) In order that a plea of a bar under O. 2.
r. 2(3) of the 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; (ii) that in
respect of that cause of action the plaintiff
was entitled to more than one relief (iii) 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.
It is not necessary to multiply authorities except to notice
that the decisions in Sidramappa Vs. Rajashetty & Ors.
[(1970) 3 S.C.R. 319], Deva Ram & Anr. Vs. Ishwar
Chand & Anr. [(1995) Supp. 4 S.C.R. 369] and State of
Maharashtra & Anr. Vs. M/s National Construction
Company, Bombay and Anr. [(1996) 1 S.C.R. 293] have
reiterated and re-emphasized this principle.
14. Applying the test so laid down, it is not possible
to come to the conclusion that the suit to enforce the
equitable mortgage is hit by Order II Rule 2 of the Code in
view of the earlier suit for recovery of the mid term loan,
especially in the context of Order XXXIV Rule 14 of the
Code. The two causes of action are different, though they
might have been parts of the same transaction. Even
otherwise, Order XXXIV rule 14 read with rule 15 removes
the bar if any that may be attracted by virtue of Order II
Rule 2 of the Code. The decision of the Rangoon High
Court in Pyu Municipality Vs. U. Tun Nyein (AIR 1933
Rangoon 158) relied on by learned counsel for the
appellant does not enable him to successfully canvass for
the position that the present suit was barred by Order II
Rule 2 of the Code, as the said decision itself has pointed
out the effect of Order XXXIV Rule 14 and in the light of
what we have stated above.
15. Then the question is whether the appellant has
established that there was a tripartite arrangement come
to, by which the bus was made over by him to one
Fernandes and Fernandes undertook to the Bank to
discharge the liability under the mid term loan. In
support of his case, the appellant had only produced
Exhibits D1 to D4 which only indicate an attempt to bring
about an arrangement of that nature. But they do not
show that there was any such concluded arrangement and
there was a taking over of the liability by Fernandes as
agreed to by the Bank. The fact that the Bank has paid
the insurance premium for the bus in question, would not
advance the case of the appellant since the Bank, as the
hypothecatee of the bus was entitled to and in fact, as a
prudent mortgagee, was bound to, protect the security
and the insurance of the vehicle effected in that behalf
cannot be taken as a circumstance in support of the plea
put forward by the appellant. The trial court, after
considering the evidence, rightly noticed that the burden
was on the appellant to show that he had handed over the
possession of the vehicle to one Fernandes on the
intervention of the Bank and on the basis of a tripartite
arrangement or taking over of liability by Fernandes and
that the liability of the appellant had come to an end
thereby. Learned counsel for the Bank rightly submitted
that no novation was proved so as to enable the appellant
to riggle out of the liability under the loan transaction.
The High Court has not interfered with the reasoning and
conclusion of the trial court on this aspect and has in fact
proceeded to grant the plaintiff Bank a decree for the suit
amount based on the equitable mortgage. We were taken
through Exhibits D1 to D4 and even a fresh document
attempted to be marked in this Court along with its
counter affidavit by the Bank. On going through the said
documents, the other evidence and the reasoning adopted
by the trial court, we are satisfied that there is no evidence
to show that there was a tripartite agreement on the basis
of which the appellant could disclaim liability based on it.
It is seen that the appellant has not even examined
Fernandes in support of the plea of the tripartite
arrangement and the taking over of the liability of the
appellant, by him. In this situation, we see no reason to
uphold the plea of the appellant that the liability has been
transferred to Fernandes at the instance of the Bank and
that the appellant was no more liable for the plaint
amount.
16. Thus, on a consideration of all the relevant
aspects, we are satisfied that the High Court was correct
in granting the Bank a decree in the suit. There is
therefore no reason to interfere with that decree. We
therefore confirm the judgment and decree of the High
Court and dismiss this appeal with costs.
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