Friday, 15 January 2016

Leading caselaw of O 2 R 2 of CPC

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.
CASE NO.:
Appeal (civil)  175 of 2007

PETITIONER:
S. NAZEER AHMED

RESPONDENT:
STATE BANK OF MYSORE AND ORS

DATE OF JUDGMENT: 12/01/2007

BENCH:
H.K. SEMA & P.K. BALASUBRAMANYAN

JUDGMENT:
J U D G M E N T 
(Arising out of SLP(C) No.20624 of 2004)



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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