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TMI Blog2012 (11) TMI 367X X X X Extracts X X X X X X X X Extracts X X X X ..... ief was claimed from defendant nos.1, 2 and 3 of the Original Application and they have been impleaded as respondent nos.3, 4 and 5 in this petition. The Original Application was dismissed by the Tribunal for the reason that the Bank had omitted to claim this relief in Suit No.802 of 2002 which the Bank had earlier filed in the Singapore High Court against respondent nos.3, 4 and 5 of this petition and in view of the provisions of Order 2 Rule 2 (hereinafter referred to as 'O2 R2') of the Code of Civil Procedure, 1908 (hereinafter referred to as the 'CPC'), could not sue afterwards for the relief omitted to be claimed. The respondent-Bank of India has its Head Office at Mumbai and a branch of the Bank is situated at Singapore. Respondent no.3-M/s. Som International Pvt. Ltd., Singapore (hereinafter referred to as the 'Singapore Company'), is a Private Limited Company incorporated at Singapore of which respondent no.4-Som Nath Sood and his wife respondent no.5-Renu Sood are the Directors. The Singapore Company, which is engaged in wholesale import and export of Timber Logs etc., approached the Singapore Branch of the Bank of India for availing banking facilities like Letter of Cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Bank, Gandhidham Branch, which was the agent Bank, for collection of payment from the Indian Company on maturity. The Indian Company accepted the Bill of Exchange for payment but the Indian Company failed to make payment of the amount to the Bank of India by 1st October, 2001 which was the maturity date. On the request of the Bank of India, the Corporation Bank got the bill noted and protested on 14th March, 2002 and thereafter the Bank of India issued the notice calling upon the Indian Company to make the payment of the outstanding amount with interest. The Indian Company, however, failed and neglected to make payment of the amount and the interest mentioned in the Bill of Exchange. The Bank of India then filed Suit No.802 of 2002 before the Singapore High Court on 8th July, 2002 against the Singapore Company (defendant no.1) and the two Directors namely Som Nath Sood and Renu Sood (defendant nos.2 and 3) with the averment that the Bank had agreed to grant banking facilities to the Singapore Company in terms of the sanction letter dated 3rd May, 2001 and the Continuing Guarantee and under the Foreign Bills Purchase Facility an amount of US$486,200.44 was due from the Singapore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r from the 1st Defendants jointly with any other person(s) together with all interest and other bankers' charges including legal charges occasioned by or incident to this; b. that the Guarantee shall be continuing guarantee up to the total principal limit of Singapore Dollars Seven Million Only (S$7,000,000.00) and all interest thereon. c. that the Guarantee shall be in addition to and not in substitution for any other guarantee or other security for the 1st Defendants which the Plaintiffs may at anytime hold. The Plaintiffs shall refer to the said letter of offer and Guarantee for their full terms and effect at the trial or at such other hearing in these proceedings. 6. Under the foreign bills purchase facility granted by the Plaintiffs to the 1st Defendants pursuant to the letter of offer hereinbefore referred to, the sum of US$486,200.44 was due from the 1st Defendants to the Plaintiffs as at 31 March 2002 on which interest is accruing from 31 March 2002 at 2.5% above the Plaintiffs' US dollar prime lending rate. 7. Despite the Plaintiffs' demands and Plaintiffs' solicitors' letters of demand to the Defendants of 21 March 2002, the Defendants have failed refused and/or negl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctober 2001, Defendant no.4 failed to pay the bill. At the request of the Applicant bank, the Agent bank Corporation Bank, Ghandhidham Branch through the Notary Murari R Sharma got the said bill noted and protested on 14.03.2002. The copy of Bills of Exchange duly accepted by the Defendant no 4 and dishonoured as well as copy of certificate of protest from the Notary is annexed and marked as Exhibit. A-14. (xiii) The Applicant further submits that the Applicant bank on 9.09.2002 through its Advocates issued legal recall notice calling upon the Defendant No.4 to make payment of the outstanding amount of the bills plus interest thereof. However, Defendant No.4 has failed and neglected to make the payment of the amount of the said bills and interest thereof. Copy of the said recall notice dated 09.09.02 & postal receipts are marked as Exhibit-A/15 and A/16 respectively. Therefore, the Applicant is constrained to file the present original application to recover its outstanding dues. (xiv) That the Applicant bank respectfully submits that the bills were drawn in favour of the drawee, the Defendant No.4 and which has also taken delivery thereof and as such the present application is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only) due as on 20.9.02 in respect of the aforesaid account. (ii) That this Hon'ble Tribunal be pleased to pass a Decree and issue a certificate for interest on the amount mentioned in prayer (Relief) (i) above @ 9.5% P.A. in the aforesaid account from 21.09.2002 to till date of full and final satisfaction of the entire balance outstanding amount. (iii) That the Hon'ble Tribunal be also pleased to pass a decree and certificate for attachment and sale of the building, plant and machineries, equipments and all raw materials which are available in the factory premises or its godown or anywhere else or in transit of Defendant No.4 and to adjust the sale proceeds thereof against the dues of the Applicant. (iv) That the Hon'ble Tribunal be also pleased to direct the Defendant No.4 to declare their assets so to enable the Applicant to make recoveries therefrom." Various defences were taken by the Indian Company against whom the relief was claimed in the Original Application including that of O2 R2 CPC and it was urged that since the relief claimed in the Original Application could have been claimed by the Bank of India in Suit No.802 of 2002 that had earlier been filed by the Bank of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verred in the suit filed at Hon'ble High Court of Republic of Singapore. ..................... 21. On the basis of above discussions it is obvious that applicant bank has omitted to sue in respect of liability of bill of Exchange against defendant No.4 in the Hon'ble High Court of Republic of Singapore even though there appears no bar to claim relief against defendant No.4. Applicant has deliberately tried to suppress the facts of decree passed by Hon'ble High Court of Republic of Singapore in the original application. In case if defendant would have been exparte or could not be in a position to bring facts of the case of Hon'ble High Court of Republic of Singapore, applicant bank could have got decree by suppressing material facts which shows that applicant has not come with clean hands and for this reason alone applicant is not entitled to claim any relief against defendant No.4. Thus issue No.1 is decided in affirmative." (emphasis supplied) In view of the aforesaid finding on Issue No.1, the Tribunal dismissed the Original Application filed by the Bank. It is against this decision of the Tribunal that the Bank of India filed an appeal before the Appellate Tribunal under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled by the Bank of India in the Singapore High Court against the Singapore Company and its two Directors was based on the financial assistance granted by the Bank through its sanction letter dated 3rd May, 2001, while the Original Application was filed before the Tribunal against the Indian Company to seek payment of the Bill of Exchange dated 20th June, 2001 which was accepted by the Indian Company. In this connection he placed reliance on the decision of Madras High Court in Revathi C.P. Equipments Ltd., Coimbatore Vs. Sangeetha Tubewell Corporation, Madras, 1990 (1) Bank CLR 49. Learned counsel also placed before the Court the provisions of Section 139, 140 and 141 of the Indian Contract Act, 1872 and submitted that the Bank of India had to institute the proceedings against the Indian Company, which was the acceptor of the Bill of Exchange, otherwise the liability of the Singapore Company to pay the amount to the Bank of India in terms of the sanction letter would stand discharged and in support of his connection he has placed reliance on the decision of the Bombay High Court in M/s. M. Ramnarain Pvt. Ltd. & Anr. Vs. State Trading Corporation of India Ltd., 1989 (1) Bank CLR 59 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r passed by the Appellate Tribunal at Allahabad is under challenge in this petition. The petition, therefore, can be entertained in the Allahabad High Court. The Original Application filed by the Bank of India was dismissed by the Tribunal for the reason that the relief claimed in the application should have been claimed by the Bank of India in the earlier suit filed in the Singapore High Court and since it omitted to do so, it could not sue afterwards for the relief so omitted in view of the provisions of O2 R2 CPC. It is, therefore, necessary to examine the provisions of O2 R2 CPC which, as amended in the State, are as follows:- "O.2 R.2. Suit to include the whole claim. - (1) Every suit shall include the whole of the claim which the plaintiff is entitled to make in respect of the cause of action; but a plaintiff may relinquish any portion of his claim in order to bring the suit within the jurisdiction of any Court. (2) Relinquishment of part of claim-Where a plaintiff omits to sue in respect of, or intentionally relinquishes, any portion of his claim he shall not afterwards sue in respect of the portion so omitted or relinquished. (3) Omission to sue for one of several reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied) In Kunjan Nair Sivaraman Nair Vs. Narayanan Nair & Ors., (2004) 3 SCC 277, the Supreme Court also examined the provisions of O2 R2 CPC and made the following observations:- "6. We shall first deal with the question regarding applicability of Order 2 Rule 2 of the Code. The said provision lays down the general principle that suit must include whole claim which the plaintiff is entitled to make in respect of a cause of action, and if he does not do so then he is visited with the consequences indicated therein. It provides that all reliefs arising out of the same cause of action shall be set out in one and the same suit, and further prescribes the consequences if the plaintiff omits to do so. In other words Order 2 Rule 2 centers round one and the same cause of action. .................. 8. A mere look at the provisions shows that once the plaintiff comes to a court of law for getting any redress basing his case on an existing cause of action, he must include in his suit the whole claim pertaining to that cause of action. But if he gives up a part of the claim based on the said cause of action or omits to sue in connection with the same, then he cannot subsequently resurrec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 2 in that the former places emphasis on the plaintiff's duty to exhaust all available grounds in support of his claim, while the latter requires the plaintiff to claim all reliefs emanating from the same cause of action. Order 2 concerns framing of a suit and requires that the plaintiffs shall include whole of his claim in the framing of the suit. Sub-rule (1), inter alia, provides that every suit shall include the whole of the claim which the plaintiff is entitled to make in respect of the very same cause of action. If he relinquishes any claim to bring the suit within the jurisdiction of any Court, he will not be entitled to that relief in any subsequent suit. Further sub-rule (3) provides that the person entitled to more than one reliefs in respect of the same cause of action may sue for all or any of such reliefs: but if he omits, except with the leave of the court to sue for such relief he shall not be afterwards be permitted to sue for relief so omitted. (emphasis supplied) This principle has been reiterated and re-emphasised by the Supreme Court in S. Nazeer Ahmed Vs. State Bank of Mysore & Ors., (2007) 11 SCC 75. In Alka Gupta Vs. Narender Kumar Gupta, (2010) 10 SCC 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause of action and it does not bar a second suit based on a different and distinct cause of action. The Supreme Court has emphasised that it is important for the Court, while considering whether the second suit is barred under O2 R2 CPC, to see whether the reliefs claimed in both the suits arise from the same cause of action. It is, therefore, clear that the main emphasis is on "cause of action" because it is only when the 'cause of action' in the both the suits is same that the defendant can plead bar under O2 R2 CPC. "Cause of action" has been explained by the Supreme Court in Om Prakash Srivastava Vs. Union of India & Anr., (2006) 6 SCC 207, and the observations are:- 9. By "cause of action" it is meant every fact, which, if traversed, it would be necessary for the plaintiff to prove in order to support his right to a judgment of the Court. In other words, a bundle of facts, which it is necessary for the plaintiff to prove in order to succeed in the suit. (See Bloom Dekor Ltd. v. Subhash Himatlal Desai, (1994) 6 SCC 322). 10. In a generic and wide sense (as in Section 20 of the Civil Procedure Code, 1908) "cause of action" means every fact, which it is necessary to establish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dictionary a "cause of action" is stated to be the entire set of facts that gives rise to an enforceable claim; the phrase comprises every fact, which if traversed, the plaintiff must prove in order to obtain judgment. In "Words and Phrases" (4th Edn.) the meaning attributed to the phrase "cause of action" in common legal parlance is existence of those facts, which give a party a right to judicial interference on his behalf. (See Navinchandra N. Majithia v. State of Maharashtra, (2000) 7 SCC 640). 15. In Halsbury's Laws of England (Fourth Edition) it has been stated as follows: " 'Cause of action' has been defined as meaning simply a factual situation the existence of which entitles one person to obtain from the Court a remedy against another person. The phrase has been held from earliest time to include every fact which is material to be proved to entitle the plaintiff to succeed, and every fact which a defendant would have a right to traverse. 'Cause of action' has also been taken to mean that particular act on the part of the defendant which gives the plaintiff his cause of complaint, or the subject matter of grievance founding the action, not merely the technical cause of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y learned counsel for the parties, it will be appropriate to reproduce Section 22 of the Act which is as follows:- 22. Procedure and Powers of the Tribunal and the Appellate Tribunal.--(1) The Tribunal and the Appellate Tribunal shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908 (5 of 1908), but shall be guided by the principles of natural justice and, subject to the other provisions of this Act and of any rules, the Tribunal and the Appellate Tribunal shall have powers to regulate their own procedure including the places at which they shall have their sittings. (2) The Tribunal and the Appellate Tribunal shall have, for the purposes of discharging their functions under this Act, the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908), while trying a suit, in respect of the following matters, namely:-- (a) summoning and enforcing the attendance of any person and examining him on oath; (b) requiring the discovery and production of documents; (c) receiving evidence on affidavits; (d) issuing commissions for the examination of witnesses or documents; (e) reviewing its decisions; (f) dismissing an applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the plaint, was filed by the Bank of India in the Singapore High Court against the Singapore Company and its two Directors with respect to the banking facilities made available to the Singapore Company by the Bank of India in terms of the sanction letter dated 3rd May, 2001 and the stipulations contained therein including the standard terms and conditions, securities and continuing guarantee given by the Singapore Company. The plaint refers to the banking facilities made available to the Singapore Company by the Bank of India by the letter dated 3rd May, 2001 which included the facilities on the Purchase of Foreign Bills upto the extent of 3,000,000.00 Singapore Dollars. The standard terms and conditions of the Bank of India provided that all the facilities granted and/or money lent or advanced shall be repayable on demand. The continuing guarantee dated 3rd May, 2001 also provided that the Directors of the Singapore Company, who had given the guarantee jointly and severally, guarantee the payment of all the sum which shall at any time be owing to the Singapore Company. The plaint further specifically mentions that under the Foreign Bills Purchase Facility granted under the sanct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xchange and collection of payment from Defendant no.4-M/s Trademan International at maturity. The Applicant submits that Defendant 4-Trademan International accepted the bills of exchange and taken delivery of the goods covered by the subject Bills of Lading. Though the bill was accepted to mature for payment on 1st October 2001, Defendant no.4 failed to pay the bill. At the request of the Applicant bank, the Agent bank Corporation Bank, Ghandhidham Branch through the Notary Murari R Sharma got the said bill noted and protested on 14.03.2002. The copy of Bills of Exchange duly accepted by the Defendant no 4 and dishonoured as well as copy of certificate of protest from the Notary is annexed and marked as Exhibit. A-14. ..................... ..................... (xvi) That the Applicant respectfully submits that in respect of the above said bills purchased account there is a total amount of Rs.1,05,57,987.31 (One Crore Five Lacs, Fifty seven thousand, Nine hundred eighty seven and paise thirty one only) which is equivalent to US $ 2,17,690.46 at the present exchange rate, is now due and payable to the Applicant Bank and by the Defendant No.4, herein inclusive of uncharged intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as follows:- "5. "Bill of exchange".--A "bill of exchange" is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order, of a certain person or to the bearer of the instrument. A promise or order to pay is not "conditional" within the meaning of this section and section 4, by reason of the time for payment of the amount or any instalment thereof being expressed to be on the lapse of a certain period after the occurrence of a specified event which, according to the ordinary expectation of mankind, is certain to happen, although the time of its happening may be uncertain. The sum payable may be "certain" within the meaning of this section and section 4, although it includes future interest or is payable at an indicated rate of exchange, or is according to the course of exchange, and although the instrument provides that, on default of payment of an instalment, the balance unpaid shall become due. The person to whom it is clear that the direction is given or that payment is to be made may be a "certain person", within the meaning of this section and section 4, although he is mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessary parties to a Bill of Exchange are: (1) the party giving the order, who must sign it, and who is called the drawer; (2) the party to whom the order is given, who is called the drawee, and who on assenting to the terms of the order and signing it is called the acceptor and (3) the party to whom the money is to be paid, who is called the payee, or, if the bill be expressed to be payable to bearer, the bearer. It is also seen that once the drawee has accepted the Bill of Exchange, he responds to the request of the drawer to take up the instrument, and thus becomes the party primarily liable with the drawer as the surety. The Supreme Court in American Express Bank Ltd. Vs. Calcutta Steel Co. & Ors., (1993) 2 SCC 199 considered the consequences of a drawee accepting the Bill of Exchange and the observations are :- "12. In Halsbury's Laws of England, 4th Edition, Vol. 4 at page 153 in paragraph 352 it is stated that the acceptance of a bill is the signification by the drawee of his assent to the order of the drawer. Thereafter the drawee is called the acceptor. But the drawee, in the absence of any special agreement, is under no obligation to accept a bill. In para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... horised agent, can accept a bill except for need or honour. We have, therefore, no hesitation to hold that no person except a drawee of a bill of exchange can bind himself by acceptance. The drawee of the bill of exchange, in the absence of any contract to the contrary, on acceptance is the acceptor before maturity by the bill of exchange and is bound to pay the amount thereof at maturity to the holder on demand. When the drawee does accept he undertakes that he will pay the bill according to the tenor of the acceptance and he remains primarily liable on the bill of exchange as acceptor." (emphasis supplied) The liability of acceptor of a Bill of Exchange is, therefore, independent and is based on a new contract since an acceptor of Bill of Exchange becomes the debtor and the drawee becomes the surety. This is what was also observed by the Madras High Court in Revathi C.P. Equipments Ltd, Coimbatore (supra) :- "25. In the light of the above pronouncement of the Supreme Court, I find no difficulty in holding that the Bills of Exchange in question accepted by the plaintiff and co-accepted by the second defendant-Bank, formed a separate and independent contract and, therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 (supra) and M/s Bengal Waterproof Limited Vs. M/s Bombay Waterproof Manufacturing Co. & Anr. (supra). From the present plaint, especially Paras 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 titl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f asks the Court to arrive at a conclusion in his favour. Chandkour v. Partab Singh, (ILR 16 Cal. 98 P.C.). This observation was made by Lord Watson in a case under section 43 of the Act of 1882 (corresponding to Order 2 Rule 2), where plaintiff made various claims in the same suit." 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 2 Rule 2 of the Code in view of the earlier suit for recovery of the mid term loan, especially in the context of Order 34 Rule 14 of the Code. The two causes of action are different, though they might have been parts of the same transaction." (emphasis supplied) It will also be useful to refer to the decision of the Supreme Court in State of Maharashtra & Anr. (supra). In 1967, the appellants invited tenders for performing work on the masonry portion of the Paithan Dam. The first respondent, M/s. National Construction Company, Bombay submitted its tender offer for the work which was conditionally accepted by the appellants on 30.3.1967. On 6.1.1968, the second respondent, the Central Bank of India, executed Performance Guarantee No. 57/22 whereby it guara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the cause of action for a suit comprises of all those facts which the plaintiff must aver and, if traversed, prove to support his right to the judgment. 11. It is the contention of the appellants that the two suits are in respect of two separate causes of action. The first suit was filed to enforce the bank guarantee, while the second suit was filed to claim damages for breach of the contract relating to the work. 12. In the plaint of the short cause suit, the foundation of the appellants' claim rested upon the Performance Guarantee No. 57/22. The basis of the appellants' claim was that under the terms of the bank guarantee, the Bank was liable to make good to the appellants all losses that became due by reason of any default on the part of the contractor in the proper performance of the terms of the contract. The appellants annexed particulars and laid out facts to show that the contractor had, by allegedly abandoning the work, failed to observe the terms of the contract. The appellants further alleged that these actions of the contractor had caused them to incur losses of Rs. 76,37,557.76. However, in view of the limitation prescribed in the bank guarantee, the appellants had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Bank was entitled to was the recovery of the term loan that was granted to the appellant. The Supreme Court pointed out that the two causes of action are different though they might have been parts of the same transaction. In view of this decision of the Supreme Court, it is not possible to accept the contention of the learned counsel for the petitioner that since the Bill of Exchange was part of the banking facility made available to the Singapore Company, the Original Application was based on the same cause of action as the Suit filed in the Singapore High Court. Further, the Supreme Court in State of Maharashtra & Anr. (supra), after noticing that the amount claimed in the second Suit was included in the amount claimed in the first Suit, held that O2 R2 CPC would not bar the second Suit since the two suits were based on separate causes of action. The Supreme Court found that the first Suit was filed to enforce the bank guarantee, while the second Suit was filed to claim damages for breach of the contract relating to the work and in the first Suit, the foundation of the claim rested on the performance guarantee while the relief claimed in the second Suit was based on the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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