Delhi High Court
Rehau Polymers Pvt Ltd vs Mantralaya Impex Pvt Ltd & Ors on 7 January, 2025
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment Pronounced on: 07.01.2025
+ RFA 30/2020
REHAU POLYMERS PVT LTD .....Appellant
versus
MANTRALAYA IMPEX PVT LTD & ORS .....Respondents
Advocates who appeared in this case:
For the Appellant : Mr. Shohit Chaudhry, Mr. Manoj Kumar
Goel, Mr. Shiv Bahadur Chetrya, Mr.
Chinnhal Singh Chauhan and Mr. V.P.
Nahar, Advs.
For the Respondents : None.
CORAM:
HON'BLE MS. JUSTICE TARA VITASTA GANJU
JUDGMENT
TARA VITASTA GANJU, J.:
1. The present Appeal arises out of an order/judgment dated
17.07.2019 passed by the learned Additional District Judge, Tis
Hazari Court, Delhi in Civil Suit No. 437/2018 [hereinafter referred
to as “Impugned Order”]. By the Impugned Order the Learned Trial
Court has rejected the plaint filed by the Appellant/Plaintiff under
Order VII Rule 11 of the Code of Civil Procedure, 1908 [hereinafter
referred to as “CPC“].
2. Briefly the facts are that the Appellant entered into an Agreement
with the Respondents on 11.02.2009 for transfer of the right to
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process the Appellant’s uPVC window sections into structural
elements [hereinafter referred to as “the Agreement”]. The
Agreement was executed by the Respondent No. 4/Vandana on
behalf of Respondent No.3/Mantralaya Impex a proprietorship firm.
Although, the Agreement set out that it is between the Appellant
and a party named as Mantralaya Impex Pvt. Ltd., it is the case of
the Appellant that Mantralaya Impex was only incorporated as a
private limited company on 23.01.2015, six years after the
Agreement was signed.
2.1 The Agreement was for a duration of three years extendible
automatically unless terminated by a six months’ notice at the end
of the respective year. The Agreement also sets out in Clause 10
that Indian Law shall apply and the local Courts at Delhi shall have
exclusive jurisdiction to try disputes, irrespective of the amount in
dispute.
3. The Appellant terminated the Agreement by a written
communication dated 21.04.2015 setting out that Clause 3 of the
Agreement was breached by the Respondent No.1 and that the
Respondent No.1 was purchasing uPVC profiles from other
suppliers during the tenure of the Agreement. This was followed by
a legal notice addressed on behalf of the Appellant to the
Respondents seeking encashment and release of a letter of credit
dated 09.04.2015 [hereinafter referred to as “LOC”] opened at
HDFC Bank, Chennai for an amount of Rs. 13,27,968/-.
4. It was further contended that the Appellant had duly supplied the
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goods in terms of the purchase order dated 07.04.2015 which was
received by the Respondents on 15.04.2015 at its offices in
Chennai, however, the Respondents had refused to honour the LOC.
5. The Appellant filed a suit on 21.08.2015 under the provisions of
Order XXXVII of the CPC claiming a sum of Rs. 13,27,968/- from
the Respondent No.1 in terms of the LOC by the Appellant. The
suit was filed before the Jt. Civil Judge Senior Division Khed-
Rajgurunagar, Pune [hereinafter referred to as “Pune Court”]
against Respondent No.1 titled “Rehau Polymers Pvt. Ltd. v.
Mantralaya Impex Pvt. Ltd.” [hereinafter referred to as “Pune
Suit”]. An application for leave to defend was filed by the
Respondent No.1. Conditional Leave to defend was granted by the
Pune Court by its order dated 15.11.2016, subject to the payment of
Rs. 6,00,000/- to be deposited by Respondent No.1 within three
months.
6. Subsequently, the Appellant filed a pursis for withdrawal of the suit
seeking liberty to file a fresh suit before the appropriate Court
having jurisdiction to try the said suit. The Respondent No.1 filed
an application seeking withdrawal of the amount of Rs. 6,00,000/-
deposited with the Pune Court and a no objection was given by
Respondent No.1 for withdrawal of the suit. In addition, the
Appellant gave its no objection for the withdrawal of Rs. 6,00,000/-
deposited by the Respondent No.1.
6.1 By its order dated 07.03.2018, the Pune Court permitted the
Appellant to withdraw the suit with liberty to file a fresh suit and
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passed directions for refund of the Court fee to the
plaintiff/Appellant and the amount deposited to be returned to the
Respondent No.1.
7. On 12.04.2018, the Appellant filed a suit before Additional District
Judge (West), Tis Hazari Courts, Delhi which was numbered as CS
No. 437/2018 [hereinafter referred to as “Delhi Suit”] for the
recovery of a sum of Rs.22,45,071/- (Rupees Twenty-Two Lakhs
Forty Five Thousand and Seventy One) along with interest @18%
per annum till the date of realization. The Appellant also added
Respondent No 2 to 5 to the array of parties in the Delhi Suit stating
that the Respondent No.1 to 4 are inter connected and their
constituents/employees have constantly represented each other
interchangeably and Respondent No. 5 is the Bank which issued the
LOC.
8. Two written statements were filed in the Delhi Suit, one on behalf
of Respondent Nos. 1 and 2, while the second on behalf of
Respondent Nos. 3 and 4. The Respondent Nos. 1 to 4 also filed an
Application under Order VII Rule 11 of the CPC stating that the
Appellant had filed Pune Suit for recovery only against Respondent
No.1 i.e. Mantralaya Impex Pvt. Ltd. and the Pune Suit was
withdrawn citing formal defect of “lack of jurisdiction” of the
Courts at Pune. However, Appellant had amended the memo of
parties to include Respondent No 2 to 5 which were absent from the
memo of parties in the Pune Suit, which is not permissible.
8.1 It was further stated by Respondent Nos. 1 to 4 that when a liberty
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to file a fresh suit upon same cause of action is granted under Order
XXIII Rule 1(3) of the CPC, the Plaintiff cannot amend the suit to
fill in the lacuna and improve upon its case to change the entire
nature of the suit.
8.2 In addition, it was contended that the suit is barred under the
provisions of Order II Rule 2 (2) of the CPC. The plea in relation to
the provisions of Order II Rule 2 (2) of the CPC was taken by
Respondent Nos. 1 to 4, however, it is the contention of the
Appellant that the same was not pressed at the time of arguments
before the learned Trial Court. In any event, the Impugned Order
does not address this plea.
9. A reply was filed by the Appellant to the Application under Order
VII Rule 11 of the CPC stating that the plaint is not barred by the
provisions under Order II Rule 2 of the CPC or under Order XXIII
Rule 1 (3) of the CPC which would require the suit to be rejected
under Order VII Rule 11(d) of the CPC. It was contended on behalf
of the Appellant that it is the same plaint which has been filed
seeking recovery of the amounts due under the LOC, however,
since after the filing of the Pune Suit, there were certain
developments in the matter. The memo of parties thus needed to be
revised and changed before the learned Trial Court in Delhi. It was
further contended that Respondent Nos. 1 to 4 are interconnected
entities/individuals.
10. The learned Trial Court passed the Impugned Order holding that the
Appellant cannot be allowed to implead parties (Respondent Nos. 2
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to 5) which were not there in the original suit instituted in Pune and
that such amendments to the plaint which was filed in the Pune Suit
cannot be made. In addition, the learned Trial Court held that once
the liberty is sought under Order XXIII Rule 1 and 2 of the CPC
and granted by the concerned Court, the Appellant was not within
his rights to make amendments in the body of the plaint either.
Hence, the learned Trial Court rejected the plaint under Order VII
Rule 11 of the CPC.
11. This led to the filing of the present Appeal. Notice in the present
Appeal was issued by a Coordinate Bench of this Court on
17.01.2020 and several attempts were made to serve the
Respondents. Since, none appeared for the Respondents, the
Respondents were proceeded with ex parte by this Court on
28.08.2024.
12. The Appellant has raised the following contentions before this
Court:
(i) In the first instance, the learned Counsel for the Appellant has
contended that Respondent No.1 was only incorporated on
23.01.2015 and thereafter it changed its name to Ecube Windoors
Private Limited, Respondent No.2 herein. The Master Data as
available with the office of the Registrar of Companies, Chennai
shows that the Directors of the Respondent No.2 company are
Respondent No.4 and one Mr. Arjun Srinivasan. Respondent No.3
is a sole proprietorship of Respondent No.4. Respondent No. 4 is
the executant of the Agreement with the Appellant, as soleSignature Not Verified
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proprietor of Respondent No.3. Thus, it is contended that the
Respondent Nos.1 to 4 are all inter related and basically the same
party.
(ii) Learned Counsel for the Appellant contends that the Delhi Suit was
filed by impleading all the Respondents to avoid multiplicity of
proceedings and as a matter of abundant caution specific averments
were made in the plaint to specify how the Respondent Nos. 1 to 4
were interconnected. While the Court has power to strike out or add
parties, it is settled position of law that misjoinder or non-joinder of
parties would not lead to a suit being barred.
(iii) The Appellant contended that the suit could not have been said to
be barred under Order II Rule 2 (2) of the CPC as the relief sought
for by the Appellant in the Pune Suit and the Delhi Suit is identical.
(iv) Learned Counsel for the Appellant sought to rely upon the order
dated 15.11.2016 passed in Pune Suit to submit that the learned
Civil Judge at Pune while granting leave to defend had given a
finding that Respondent No.1 had access to confidential
information of other parties to submit that thus the inter-relation
between the parties was clear from the very beginning and the
Court was of the view that until the evidences of the parties are
brought on record, it cannot be said that the there is no written
contract in absence of implied terms therein or not concluded
contract. The relevant extract of the order 15.11.2016 is reproduced
below:
“9. Taking into consideration all these aspects along with
pleadings and documents placed on record, it apparently showsSignature Not Verified
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that defendant is separate entity. But still the question remains
that as to how the defendant has accessed to the confidential
information like pan card, certificate of registration of others.
Moreover, it appears that no objection was raised in respect of
title of agreement as M/s Mantralaya Impex Pvt. Ltd. at that time.
No doubt the plaintiff has placed on record a written agreement
dated 11-02-2009 apart from purchase order, invoice emails etc.
In my view unless and until the evidence of the parties are
recorded it can not be said that there is no written contract in
absence of implied terms therein or not concluded contract. …”
[Emphasis Supplied]
(v) Relying on the judgment of a Coordinate Bench of this Court in
Nutan Tyagi v. Nirmala Dabas1 it was contended by the learned
Counsel for the Appellant that where a suit is withdrawn with
permission to bring a fresh suit, the effect of such withdrawal is to
leave matters in the position as they would have stood if no such
suit had been instituted.
(vi) In addition, while relying on Order XXIII Rule 1(3) of the CPC and
judgment passed by a Division Bench of this Court in N.D. Tiwari
v. Rohit Shekhar & Ors.2, it was contended by the learned Counsel
for the Appellant that in the context of Order XXIII Rule 1(3) of the
CPC, what is permitted to be withdrawn and subsequently
instituted, is a fresh suit in respect of the same subject matter. It was
held in N.D. Tiwari case that the term “subject matter” is of a
wider amplitude than the term “cause of action” and thus, the Delhi
Suit could not have been dismissed under Order VII Rule 11 of the
CPC and the Impugned Order suffers from infirmities.
1
2016: DHC: 5159: 2016 SCC OnLine Del 4056
2
2010: DHC: 5482
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(vii) Lastly, the learned Counsel for the Appellant submits that the Court
has jurisdiction to grant permission to withdraw the suit with liberty
to file a fresh one on the same cause of action where it is satisfied
that the formal defect pointed out by the parties may result in
dismissal of the suit. Given the existence of an exclusive
jurisdiction clause, the suit was withdrawn from the Court at Pune
and filed in Delhi. In this regard, learned Counsel places reliance on
the judgement in the case of Pritam Singh & Ors. v. Bachan Singh
& Ors.3 which states that the Court has jurisdiction to grant
permission to withdraw the suit with liberty to file a fresh one on
the same cause of action where it is satisfied that the formal defect
pointed out by the parties may result in dismissal of the suit.
Reliance has been placed on paragraph 4 of the said judgement
which is reproduced below:
“4. After hearing learned counsel for the parties, I am of the
opinion that the contention of the learned counsel has no merit.
This court in Kanhyia Lal and anr. v. Nathu and ors., 1989 96
P.L.R 449 held that the provisions of Order 6 Rule 17 of the Code
have to be read as not to make Order 23 Rule 1 redundant, If the
sweeping contention of the petitioners to the effect that where a
suit can be amended, the permission to withdraw the suit cannot be
granted, is accepted, it would render Order 23 Rule 1 of the Code
of Civil Procedure obsolete. The court has jurisdiction to grant
permission to withdraw the suit with liberty to file a fresh one on
the same cause of action where it is satisfied that the formal
defect pointed out by the parties may result in dismissal of the
suit. It was further held that the court can also grant permission
to withdraw the suit for other sufficient grounds where justice
and equity demand. In the reported case, the plaintiffs had filed a
suit for mandatory injunction based on title. The defendants
contended that the suit for injunction and declaration simplicitor
was not maintainable as they are not in possession of the premises.
Since the relief of possession had not been claimed, the application
was moved to withdraw the suit with liberty to file a fresh one on3
(1999) 121(1) PLR 137
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the same cause of action. The permission was granted.”
[Emphasis supplied]
Analysis
13. It is settled law that in order to examine the Application under
Order VII Rule 11 of the CPC, the Court is required to enquire into
the Plaint and the documents attached with the Plaint. The defence
of the defendants cannot be looked into and nor can any of the
documents filed by them.
14. As stated above, Respondent Nos. 1 to 4 filed a joint Application for
rejection of the plaint under Order VII Rule 11 of the CPC. It was
stated in the said Application that the plaint could only be altered to
the extent of liberty sought under Order XXIII Rule 1(3) of the CPC
and cannot be amended by the Appellant to improve or to fill up the
lacuna in its case. The Respondents stated that the memo of parties
added new parties (Respondent Nos. 2 to 5) and that the Appellant
was merely trying to improve upon the gaps in the previous suit
(Pune Suit). It was further stated that the prayers in the Delhi Suit
were completely changed. Thus, it was contended by the
Respondents No. 1 to 4 that by inserting of new parties in the
subsequent suit and altering pleadings, it changed the nature of the
suit under the garb of “lack of jurisdiction” and is barred by law as
set out under Order XXIII Rule 1(3) of the CPC.
15. The Application for rejection of the plaint also set out that the claims
as raised by the Appellant in the Delhi Suit were never raised in the
Pune Suit and hence, in terms of the provisions of Order II Rule 2(2)
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of the CPC, the said claims would be relinquished or omitted and
could not be raised at a subsequent stage by the Appellant.
16. An examination of the Impugned Order shows that the learned Trial
Court while relying on a judgment of the Bombay High Court in
Tarachand Bapuchand v. Gaibihaji Ahmed Bagwan4 has found
that the failure to implead parties in respect of a claim is not to be
regarded as a formal defect. Thus, it has been held by the learned
Trial Court that the liberty to file a fresh suit allowed by the orders
of the Court at Pune, could not include the amendment to the memo
of parties and that the suit is barred under the provisions of Order
XXIII Rule 1(3) of the CPC, resulting in dismissal of the plaint.
17. The primary contention of the Appellant in the present Appeal has
been that the Pune Suit was withdrawn in view of the “exclusive
jurisdiction clause” in the Agreement. The Respondent No.1 gave
its no objection to the withdrawal of the Pune Suit and by order
dated 07.03.2018, the Pune Suit was withdrawn with liberty to file a
fresh suit. The Delhi Suit was thereafter filed impleading all the
Respondents to avoid multiplicity of proceedings and specific
averments were also set out explaining the relationship between the
Respondents.
18. The Respondents on the other hand have contended that the
Appellant was not permitted to add parties to the suit and the
addition of the parties could not be considered as a formal defect,
thus the plaint is barred by law.
4
AIR 1956 Bombay 632
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19. At this stage, it is necessary to set out certain undisputed facts. The
Agreement was executed on 11.02.2009. The Agreement in its
recitals states that it has been executed between the Appellant and
M/s Mantralaya Private Limited (Respondent No. 1). However, the
signature clause at the end of the Agreement bears the signature of
Respondent No. 4 along with a stamp of Respondent No.3.
19.1 The Company Master Data record as available with the Office of
the Registrar of Companies, which was placed on record by the
Appellant, shows that the date of incorporation of Respondent
No.1 as 13.09.2013. Thus, at the time of signing of the
Agreement, Respondent No.1 was not in existence. The Master
Data also reflects that there are two Directors of Respondent No.1
and that Respondent No. 1 changed its name to Respondent No.2
as Ecube Windoors Private Limited. Respondent No.4 shown as
one of the Directors of Respondent No. 2 .
19.2 Along with the plaint, the Appellant filed three (3) applications:
under Order X Rules 1 and 2 of the CPC; Order XII Rule 6 of the
CPC and Section 151 of the CPC.
19.3 The Application under Order X Rule 1 and 2 of the CPC was filed
seeking examination of Respondent No.4, and was stated to be
filed to determine the entity on whose behalf the Agreement was
signed. It was averred therein that the role of Respondent No. 4 in
Respondent Nos. 1 to 3 companies is required to be determined. It
was set out by the Appellant in this Application, that Respondent
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have represented each other interchangeably to the Appellant. It
was further stated that the Respondents No.1 to 4 are attempting to
escape liability and unjustly gain an advantage by creating
multiple entities/parties. Paragraph 4 and 5 of the said Application
are set out below:
“4. The Defendant nos. 1 to 4 are inter-connected and their
constituents/employees have constantly represented each other to
the Plaintiff interchangeably, both in writing and oral
representations. The Defendant nos. 1 to 4 and/or their
constituents have already attempted to gain unjust advantage in
related proceedings before the District Court, Pune.
5. In view of the above, it is prayed that the present case is a fit
case wherein the examination of the Defendant No. 4 would be
required in order to determine the entity on whose behalf the
Fabricator Agreement dated 11.02.2009 was signed by her and to
determine the role of Defendant no. 4 in the Defendant 1 to 3
Companies.”
[Emphasis supplied]
19.4 Two Replies were filed to this Application. One joint Reply was
filed by Respondent Nos. 1 and 2 and a separate Reply by
Respondent Nos. 4 on behalf of Respondent Nos. 3 and 4. Both
Replies were verbatim to each other and contained an admission
that Respondent No. 4 is the proprietor of Respondent No. 3.
Respondent Nos. 1, 2 and 4 however averred that Respondent No.
4 is the proprietor of Respondent No. 3 company and one of the
Directors of Respondent Nos. 1 and 2. It was further contended in
these Replies that it was thus not necessary to examine
Respondent No. 4.
19.5 Clearly, therefore, there was no dispute with regard to the
transaction and the fact that the parties were interconnected and
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related to each other.
20. The Appellant also filed an Application under Order XII Rule 6 of
the CPC for judgment on admissions based on an email dated
31.03.2018 by Respondent Nos. 1 to 4 wherein it was stated that
the following were admitted by the Respondents as extracted
below:
“2. Vide email dated 31.03.2018, sent to the Plaintiff, the
Defendant nos. 1 to 4, inter-alia, admitted-
a. the factum of issuance of Purchase Order No. MIG0008 dated
07.04.2015 to the Plaintiff Company;
b. the factum of issuance of Letter of Credit bearing\
No.004LC03150990001 dated 09.04.2015;
c. the factum of supply of goods by the Plaintiff to the Defendant
nos. 1 to 4;
d. their liability to the tune of Rs.7,00,000/- (Rupees Seven
Lakhs).”
20.1 Two separate Replies were filed to this Application, one by
Respondent Nos. 1 and 2 and other by Respondent No. 4. The
Replies were verbatim with each other and stated that there was no
admission on the liability to the extent of Rs. 7 lakhs, but it was
merely a “without prejudice” settlement proposal.
21. The Application under Order VII Rule 11(d) of the CPC for
rejection of the Plant was jointly filed by the Respondent Nos. 1 to
4 before the learned Trial Court. The Application states that that the
suit is barred on of account of the fact that there was an addition of
parties and that the Appellant has added several paragraphs to the
Plaint to try and fill up the lacuna in its case.
21.1 The application was supported by two Affidavits, one by a Mr.
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Arjun Srinivasan as authorised signatory for Respondent No. 2 and
one by Respondent No. 4 – Vandana Srinivasan for self and as sole
proprietor of Respondent No. 3. The Affidavits also reveal that Ms.
Vandana Srinivasan is the mother of Mr. Arjun Srinivasan.
22. As can be seen from the aforegoing, the Appellant had stated in the
plaint as well in the Applications filed along with the plaint that
Respondent Nos. 1 to 4 are interconnected. The Respondent No.1 to
4 have not denied executing the Agreement or the transaction
between the parties, therein. There cannot be any dispute that the
Respondent No.1 to 4 had themselves masked their identity at the
time of the execution of the Agreement. It is also not disputed that
Respondent No. 3 has executed the Agreement and that pursuant to
the Agreement, transactions between the parties took place for
several years and that the Appellant terminated the Agreement.
22.1 A cursory examination of the Agreement shows that the Agreement
is on the letter head of REHAU United Polymer Solutions, it has in
its footer the name REHAU Polymers Pvt. Ltd. (the Appellant). The
Agreement also refers to M/s Mantralaya Impex Pvt. Ltd.
(Respondent No.1) as its party in the recitals. However, the
Agreement is executed by Respondent No. 4 as the proprietor of
Respondent No.3 at the end of the Agreement.
23. The Courts at Pune allowed the Application under Order XXIII
Rule 1(3) of the CPC being satisfied that there was a formal defect
in the Plaint and permitted the Appellant to withdraw the Pune Suit.
The plea of formal defect could not have been taken by the
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Respondent for the Delhi Suit.
23.1 The meaning of formal defect under Order XXIII Rule 1(3) of the
CPC has been explained by the Supreme Court in the judgment of
V. Rajendran & Anr. v. Annasamy Pandian Thr. LR Karthyayani
Natchiar5. The Supreme Court has held that a “formal defect”
under Order XXIII Rule 1(3)(a) of the CPC refers to procedural
deficiencies that do not affect the substantive merits of a case.
These defects include issues such as insufficient court fees,
improper valuation of the suit, misjoinder or non-joinder of parties,
failure to issue statutory notices (like those required under Section
80 of the CPC), confusion in identifying the suit property, or the
absence of a disclosed cause of action. The Court emphasized that
this term must be interpreted broadly to include procedural
shortcomings that hinder the proper conduct of the suit without
impacting the core legal or factual claims. Importantly, while the
plaintiff has the right to seek withdrawal of a suit on grounds of a
formal defect, this right is not absolute and must not be exercised in
a manner that prejudices the legitimate interests of the defendant or
results in the misuse of judicial process. The Court must ensure that
such defects genuinely justify the withdrawal of the suit and grant
permission only after being convinced that the procedural
irregularity warrants fresh litigation. The relevant extract of the V.
Rajendran case reads as follows:
“10. In K.S. Bhoopathy v. Kokila [K.S. Bhoopathy v. Kokila, (2000)
5 SCC 458], it has been held that it is the duty of the Court to be
satisfied about the existence of “formal defect” or “sufficient5
(2017) 5 SCC 63
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grounds” before granting permission to withdraw the suit with
liberty to file a fresh suit under the same cause of action. Though,
liberty may lie with the plaintiff in a suit to withdraw the suit at any
time after the institution of suit on establishing the “formal defect”
or “sufficient grounds”, such right cannot be considered to be so
absolute as to permit or encourage abuse of process of court. The
fact that the plaintiff is entitled to abandon or withdraw the suit or
part of the claim by itself, is no licence to the plaintiff to claim or
to do so to the detriment of legitimate right of the defendant. When
an application is filed under Order 23 Rule 1(3) CPC, the Court
must be satisfied about the “formal defect” or “sufficient
grounds”. “Formal defect” is a defect of form prescribed by the
rules of procedure such as, want of notice under Section 80 CPC,
improper valuation of the suit, insufficient court fee, confusion
regarding identification of the suit property, misjoinder of
parties, failure to disclose a cause of action, etc. “Formal defect”
must be given a liberal meaning which connotes various kinds of
defects not affecting the merits of the plea raised by either of the
parties.”
[Emphasis supplied]
24. Order XXIII Rule 1(3) of the CPC and its applicability has also
been explained in the N.D. Tiwari case by a Division Bench of this
Court. It has been held that liberty granted to a plaintiff is to allow
such plaintiff to institute a fresh suit in respect of the subject matter
of the previously instituted suit or part of the claims in such suit. It
was held that the term “subject matter” is much wider than the term
“cause of action” and thus, under Order XXIII Rule 1(3) of the
CPC, what is permitted to be withdrawn and subsequently
instituted, is a fresh suit in respect of the same subject matter. The
relevant extract of the N.D. Tiwari case is reproduced below:
“8. Thus in terms of Order XXIII Rule 3 liberty is granted to the
Plaintiff to institute a fresh suit in respect of the subject matter of
such suit or a part of the claim thereof. He would be further
precluded from instituting any fresh suit in respect of such
subject matter or such part of the claim as regards which no
liberty is granted. In terms of Order II Rule 2 if the Plaintiff
relinquishes a portion of his claim or omits to sue for one orSignature Not Verified
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more of the reliefs in respect of same cause of action then it is
precluded from bringing a fresh suit as regards the claim or the
relief relinquished or omitted. In the present case the Respondent
No. 1 moved an Application under Order XXIII Rule 3 read with
Section 151 CPC to withdraw the said suit with liberty to institute
a fresh suit for the same cause of action incorporating the factum
of notice issued under Article 361(4) of the Constitution of India.
Vide Order dated 24th March, 2008 this Court allowing the
Application observed as under:–
xxx xxx xxx
9. Under Order XXIII Rule 1(3) CPC, what is permitted to be
withdrawn and subsequently instituted, is a fresh suit in respect
of the same subject matter. Undoubtedly the term “subject
matter” is of a wider amplitude than the term “cause of action”.
The bar in terms of Order II Rule 2, if any, to file a fresh suit
with fresh cause of action on the same subject matter would not
apply in the present case…”
[Emphasis supplied]
25. The judgment in the N.D. Tiwari case squarely applies to the facts
of the present case. The subject matter of the two suits is the same
for the recovery of monies due to the Appellant under the same
Agreement. Both prayers seek the recovery of money from the
Respondent(s). It is apposite to extract the prayer clause in the Pune
Suit and the Delhi Suit which is reproduced below:
Prayer in Pune Suit:
“a. The Defendant be ordered and directed to pay an amount of
Rs.13,27,968/-(Rs. Thirteen Lacs Twenty Seven Thousand Nine
Hundred and Sixty Eight only) to the Plaintiff.
b. The Plaintiff be awarded interest on the amount of
Rs.13,27,968/- (Rs. Thirteen Lacs Twenty Seven Thousand Nine
Hundred only) at the rate of 18% p.a. from 21.04.2015, till the
actual date of recovery of the amount…”
Prayer in the Delhi Suit:
“a. Pass a decree for the recovery of a sum of Rs.22,45,071/-
(Rupees Twenty Two Lakhs Forty Five Thousand and Seventy One
only) along with interest @ 18% p. a. till the date of realization inSignature Not Verified
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favour of the Plaintiff to be paid by the Defendants, jointly or
severally;…”
26. Thus, relying on the V. Rajendran case and N.D. Tiwari case, it
cannot at this stage, be concluded that the plaint is barred under the
provisions of Order XXIII Rule 1(3) of the CPC.
27. Although the Impugned Order does not advert to plea of Order II
Rule 2(2) of the CPC, this Court has examined this plea as well.
The contention of the Respondents Nos. 1 to 4 (in its Application
under Order VII Rule 11 CPC) that the Plaint is barred by the
provisions of Order II Rule 2 of the CPC, is without merit. The bar
would be applicable only when the plaintiff fails to seek liberty
from the Court to file a fresh suit. In the present case liberty was
sought by filing and Application/Pursis for withdrawal and granted
by the Pune Court.
28. The Supreme Court in Gurinderpal v. Jagmittar Singh6 has
explained the applicability of this provision. It has been held that the
bar under Order II Rule 2 of the CPC applies only when a plaintiff
fails to obtain express liberty to file a fresh suit. The liberty can also
be inferred when the Court’s order and the plaintiff’s statement
collectively indicate the intent to withdraw and file afresh. The Court
also clarified that the provisions of Order II Rule 2 of the CPC must
be strictly construed. The relevant extract of the Gurinderpal case is
reproduced below:
“6. Having heard the learned counsel for the parties, we are
satisfied that the judgment of the High Court as also of the first
appellate court cannot be sustained to the extent to which the bar6
(2004) 11 SCC 219
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enacted under Order 2 Rule 2 CPC has been applied. The
provisions of Order 2 Rule 2 CPC bar the remedy of the plaintiff-
appellant and, therefore, must be strictly construed. The order of
the trial court dated 15-6-1994 passed in the earlier suit, extracted
and reproduced hereinabove, has to be read in the light of the
statement of the plaintiff-appellant recorded by the court on that
very date. The plaintiff-appellant had clearly stated that he was
seeking leave to withdraw the suit with the liberty of filing a fresh
suit. The trial court recorded that the suit was being dismissed as
withdrawn “in view of the statement of the plaintiff”. A conjoint
reading of the order of the court and the statement of the
plaintiff, clearly suggests that the suit was dismissed as
withdrawn because the plaintiff wanted to file a fresh suit,
obviously wherein the plaintiff would seek the decree of specific
performance and not of a mere injunction as was prayed for in
the suit which was sought to be withdrawn. In the subsequent
suit, the first appellate court was not right in forming an opinion
that liberty to file the fresh suit was not given to the plaintiff in
the order dated 15-6-1994. That finding of the first appellate
court ought not to have been sustained by the High Court.”
[Emphasis supplied]
29. The record shows that the Courts at Pune had examined the case
and granted conditional leave to defend to the Respondents subject
to deposit of a sum of Rs. 6 lakhs. The Order passed by the Pune
Court allowing the withdrawal of the first suit dated 07.03.2018,
also shows that the Pune Court granted the liberty to the Appellant
to file afresh without any restrictions. It further sets out that an
Application (pursis) for such withdrawal was filed. The Order
dated 07.03.2018 being brief is extracted below:
“The plaintiff company wants to withdraw the suit with a liberty to
file a fresh suit, so they have filed withdrawal pursis at Exh.40. In
view of the order thereon, the plaintiff company is permitted to
withdraw the suit with a liberty to file a fresh suit and the suit is
disposed off as withdrawn. Court fee refunded as per rules to the
plaintiff.”
[Emphasis supplied]
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30. Therefore, in the present case, clear and unequivocal permission
was granted to the Appellant by the Pune Court to file a fresh suit.
The suit was subsequently filed in Delhi. In these circumstances,
the bar as set out in Order II Rule 2(2) of the CPC fails to apply to
the plaint in the Delhi Suit.
31. The principles to be followed when an Application under Order VII
Rule 11 of the CPC is filed have been set out by the Supreme Court
in the case of Geetha D/o Late Krishna & Ors. v. Nanjundaswamy
& Ors.7. While relying on the principles enunciated in the case of
Dahiben v. Arvindbhai Kalyanji Bhanusali8, it has been
emphasised that this provision is in the nature of a summary
provision where a case is decided without any evidence or trial. It
has also been held that power conferred by the provision is a drastic
one and can be invoked only if one of the specific grounds specified
in Clauses (a) to (e) of Order VII Rule 11 of the CPC is established.
The relevant paragraphs of the Geetha case are extracted below:
“6. Before considering the legality of the approach adopted by the
High Court, it is necessary to consider Order VII Rule
11, CPC and the precedents on the subject. The relevant principles
have been succinctly explained in a recent decision of this Court in
Dahiben v. Arvindbhai Kalyanji Bhanusali, as follows:
“23.2. The remedy under Order 7 Rule 11 is an independent
and special remedy, wherein the Court is empowered to
summarily dismiss a suit at the threshold, without proceeding
to record evidence, and conducting a trial, on the basis of the
evidence adduced, if it is satisfied that the action should be
terminated on any of the grounds contained in this provision.
7
2023 SCC OnLine SC 1407
8
(2020) 7 SCC 366
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23.3. The underlying object of Order 7 Rule 11(a) is that if in a
suit, no cause of action is disclosed, or the suit is barred by
limitation under Rule 11(d), the court would not permit the
plaintiff to unnecessarily protract the proceedings in the suit.
In such a case, it would be necessary to put an end to the sham
litigation, so that further judicial time is not wasted.
23.4. In Azhar Hussain v. Rajiv Gandhi [Azhar Hussain v.
Rajiv Gandhi, 1986 Supp SCC 315. Followed in
Manvendrasinhji Ranjitsinhji Jadeja v. Vijaykunverba, 1998
SCC OnLine Guj 28 1: (1998) 2 GLH 823] this Court held that
the whole purpose of conferment of powers under this
provision is to ensure that a litigation which is meaningless,
and bound to prove abortive, should not be permitted to waste
judicial time of the court, in the following words: (SCC p. 324,
para 12)
“12. …The whole purpose of conferment of such
powers is to ensure that a litigation which is
meaningless, and bound to prove abortive should not
be permitted to occupy the time of the court, and
exercise the mind of the respondent. The sword of
Damocles need not be kept hanging over his head
unnecessarily without point or purpose. Even in an
ordinary civil litigation, the court readily exercises the
power to reject a plaint, if it does not disclose any
cause of action.”
23.5. The power conferred on the court to terminate a civil
action is, however, a drastic one, and the conditions
enumerated in Order 7 Rule 11 are required to be strictly
adhered to.
23.6. Under Order 7 Rule 11, a duty is cast on the court to
determine whether the plaint discloses a cause of action by
scrutinising the averments in the plaint [Liverpool & London
S.P. & I Assn. Ltd. v. M.V. Sea Success I, (2004) 9 SCC 512],
read in conjunction with the documents relied upon, or
whether the suit is barred by any law.
xxx xxx xxx
23.9. In exercise of power under this provision, the court
would determine if the assertions made in the plaint are
contrary to statutory law, or judicial dicta, for deciding
whether a case for rejecting the plaint at the threshold is
made out.
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23.10. At this stage, the pleas taken by the defendant in the
written statement and application for rejection of the plaint on
the merits, would be irrelevant, and cannot be adverted to, or
taken into consideration. [Sopan Sukhdeo Sable v. Charity
Commr., (2004) 3 SCC 137]
23.11. The test for exercising the power under Order 7 Rule
11 is that if the averments made in the plaint are taken in
entirety, in conjunction with the documents relied upon,
would the same result in a decree being passed. This test was
laid down in Liverpool & London S.P. & I Assn. Ltd. v. M.V.
Sea Success I [Liverpool & London S.P. & I Assn.
Ltd. v. M.V. Sea Success I, (2004) 9 SCC 512] which reads as
: (SCC p. 562, para 139)
“139. Whether a plaint discloses a cause of action or
not is essentially a question of fact. But whether it
does or does not must be found out from reading the
plaint itself. For the said purpose, the averments made
in the plaint in their entirety must be held to be
correct. The test is as to whether if the averments
made in the plaint are taken to be correct in their
entirety, a decree would be passed….”
[Emphasis supplied]
32. The powers under Order VII Rule 11 of the CPC are drastic in
nature and have the effect of dismissal of a suit at the threshold.
The power has to be exercised where the plaint fails to disclose
any cause of action or is barred by law. The power has to be
exercised strictly in terms Rules 11 (a) to (d) of Order VII of the
CPC only. Unless the Court finds that the plaint is barred by any
law, the said power cannot be exercised.
33. The pleas taken by the Respondents in the Application filed have
been examined by the Court and been found to be devoid of any
merit. The Respondent No.1 was only incorporated on 23.01.2015
and thereafter it changed its name to Respondent No.2. Thus
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Respondent No. 1 ceased to exist. The filing of a suit in the name of
an entity which doesn’t exist would be an exercise in futility. The
authorised representative of Respondent No.2 is one Mr. Arjun
Srinivasan who is the son of Ms. Vandana Srinivasan. Ms Vandana
Srinivasan is Respondent No.4 who is the sole proprietor of
Respondent No.3. Respondent No. 4 is the executant of the
Agreement with the Appellant, as sole proprietor of Respondent
No.3. Clearly, therefore the contention of the Appellant that
Respondent Nos.1 to 4 are all inter-related is correct. The prayers in
both plaints as is set out above also shows that the relief is for
recovery of monies pursuant to the Agreement. In these
circumstances it cannot be said that by the addition of these parties,
the nature or subject matter of the suit was being changed so as to
fall within the provisions of Order XXIII Rule 1(3) of the CPC, to
be barred by the provisions of Order VII Rule 11(d) of the CPC.
34. The pleas raised by Respondent Nos. 1 to 4 would thus have
required to be examined by the adducing of evidence and could not
have led to a dismissal of the suit at the threshold stage as has been
done by the learned Trial Court.
35. In view of the aforegoing discussions, the Impugned Order is set
aside. The parties are directed to appear before the learned District
Judge on 21.01.2025. The District Judge shall also undertake an
examination as to whether the suit is to be placed before the
Commercial Division.
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36. The parties shall act based on the digitally signed copy of the
judgment.
TARA VITASTA GANJU, J
JANUARY 07, 2025/r/ha
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