2010 (9) TMI 1222 - SC - Indian Laws

Maintainability of the suit - Principles of constructive res judicata - barred u/s 69 of the Partnership Act, 1932 - suit is dismissed barred by Order 2 Rule 2 of the Code - the appellant filed an appeal. The appellant bench affirmed the decision of the trial bench. It however held that as it was agreeing with the learned Single Judge that the suit was barred by Order 2 Rule 2 of the Code and that the appellant had settled all her claims with the respondent under the Bayana Agreement dated 29.6.2004, it was not necessary to decide upon the question as to whether the partnership deed dated 5.4.2000 could be enforced in a court or not. The said order is challenged in this appeal by special leave. For the reasons following, we are of the view that the orders of the learned Single Judge and the Division Bench which ignore several basic principles of Code of Civil Procedure cannot be sustained. HELD THAT - In this case, the respondent did not contend that the suit was barred by Order 2 Rule 2. No issue was framed as to whether the suit was barred by Order 2 Rule 2. But the High Court (both the trial bench and appellate bench) have erroneously assumed that a plea of res judicata would include a plea of bar under Order 2 Rule 2. Res judicata relates to the plaintiff s duty to put forth all the grounds of attack in support of his claim, whereas Order 2 Rule 2 requires the plaintiff to claim all reliefs flowing from the same cause of action in a single suit. The two pleas are different and one will not include the other. The dismissal of the suit by the High Court under Order 2 Rule 2, in the absence of any plea by the defendant and in the absence of an issue in that behalf, is unsustainable. The observation of the learned Single Judge that the facts of this case do not require any opportunity for leading evidence to be given to the plaintiff violates Order 15 Rule 3 of the Code. Where summons have been issued for settlement of issues and where issues have been settled, unless the parties agree, the court cannot deny the right of parties to lead evidence. To render a final decision by denying such opportunity would be highhanded, arbitrary and illegal. The High Court recorded factual findings on inferences from the plaintiff s (appellant) conduct and branded her as an unscrupulous person who abuses the process of court and as a person who utters falsehoods and manipulates documents without there being a trial and without there being an opportunity to the plaintiff to explain her conduct. To say the least, such a procedure is opposed to all principles of natural justice embodied in the Code of Civil Procedure. At all events, the alleged weakness of the case of the plaintiff or unscrupulousness of plaintiff are not grounds for dismissal without trial. We therefore allow this appeal, set aside the order and restore the suit to the file of the High Court with a direction to decide the same in accordance with law, after giving due opportunity to the parties to lead evidence.

Issues Involved:
1. Bar under Order 2 Rule 2 of the Code of Civil Procedure (CPC)
2. Constructive Res Judicata
3. Dismissal of Suit without Trial
4. Costs Imposed on Plaintiff

Issue-Wise Detailed Analysis:

I. Bar under Order 2 Rule 2 of the Code of Civil Procedure (CPC):

The Supreme Court emphasized that a suit cannot be dismissed under Order 2 Rule 2 of the CPC without a plea by the defendant and an issue framed on that ground. Order 2 Rule 2 aims to prevent a plaintiff from splitting claims and remedies based on the same cause of action and to ensure no defendant is vexed twice for the same cause. The Court referenced Gurbux Singh v. Bhoora Lal, stating that for the bar under Order 2 Rule 2 to apply, the defendant must establish that the second suit is based on the same cause of action as the first, and that the plaintiff omitted to sue for the relief in the second suit without leave of the court. In this case, the defendant did not plead the bar under Order 2 Rule 2, and no issue was framed on this ground, making the High Court's dismissal of the suit under this rule unsustainable.

II. Different Causes of Action:

The Supreme Court found that the causes of action for the two suits were distinct. The first suit was for the recovery of the balance price under an agreement of sale dated 29.6.2004, while the second suit was for the rendition of accounts following the dissolution of a partnership constituted under a deed dated 5.4.2000. The agreement of sale pertained to the sale of an undivided half share in a property and business at Rohini, whereas the second suit concerned the partnership business at Paschim Vihar. The Court clarified that Order 2 Rule 2 would apply only if both suits were based on the same cause of action, which was not the case here.

III. Constructive Res Judicata:

The Supreme Court noted that the trial bench's order on the preliminary issue of res judicata lacked discussion on the bar of res judicata, merely stating that the principle of constructive res judicata applied. The appellate bench also did not provide reasons for applying constructive res judicata. The Court explained that res judicata requires the matter to be directly and substantially in issue in both suits, which was not established here. Constructive res judicata, which prevents issues that could have been raised in the first suit from being raised in the second, was not applicable as there was no plea or opportunity for the appellant to contest it.

IV. Dismissal of Suit without Trial:

The Supreme Court criticized the High Court for dismissing the suit without trial based on the plaintiff's conduct. The Court emphasized that the CPC ensures adjudication with appropriate opportunities at each stage, and a suit should not be dismissed without trial unless provided by law. The Court listed circumstances under the CPC where a suit can be dismissed without trial, none of which applied here. The High Court's summary dismissal based on assumptions and without evidence was deemed arbitrary and illegal.

V. Costs Imposed on Plaintiff:

The Supreme Court found the imposition of costs of Rs. 50,000 on the plaintiff to be unjustified. The Court reiterated that costs in civil suits should be levied in accordance with the CPC provisions.

Conclusion:

The Supreme Court allowed the appeal, set aside the orders of the Division Bench and the Single Judge of the High Court, and restored the suit to the High Court's file, directing it to decide the case in accordance with the law after giving due opportunity to the parties to lead evidence. The Court clarified that its order should not be construed as a finding on the conduct of the appellant and that the conduct of the parties could be assessed during the trial.

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