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TMI Blog2007 (5) TMI 660X X X X Extracts X X X X X X X X Extracts X X X X ..... d for in the suit, for the simple reason that there is no subsisting agreement evidenced by a written document or declared by a Court. If there is no such agreement, there is no question of enforcing clauses 15 and 20 thereof. The appellants ought to have prayed for a declaration that their agreement stood renewed automatically on exercise of option for renewal and only on that basis they could have sought an injunction restraining the respondents from interfering with their possession and operation. Having not done so, they cannot be permitted to camouflage the real issue and claim an order of injunction without establishing the subsistence of a valid agreement. Thus, suit as well they could have sought a declaration that the agreement stood renewed automatically but such a claim would have been barred by limitation since more than 3 years had elapsed after a categoric denial of their right claiming renewal or automatic renewal by the respondents- defendants. We have found that the real foundation for the suit was that the earlier agreement stood renewed automatically containing the same terms and conditions as in the original agreement including the negative covenants. There is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 years from such date. Clause 2.2 of the agreement provided that on the expiry of every 5 years the agreement shall stand renewed for further periods of like duration at the sole option of Hardesh on the same terms and conditions as contained in the original agreement. Hardesh was entitled to exercise its option during the entire period of lease in respect of the said mine and renewals thereafter, and until such time as remaining deposits of ore in the said mine could be economically exploited. Clause 2.3 gave the right to Hardesh to terminate the agreement by giving two calendar months prior notice in writing to the respondent-Hede of its intention to do so. Clause 2.5 of the agreement provided inter alia that in case Hardesh was forced to abandon work in the said mine/land on account of any lawful or legal claim made and/or objection raised by any person including the holder of surface right or on account of any injunction being passed by any Court of Law or on account of any fault of the respondent, the agreement shall not stand terminated but the operation thereof shall stand suspended for such time. In the event such a condition/situation continued to exist for a period excee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing any iron ore from the said mine or selling the ore from the said mine to any third party. (iv) That the Defendant be directed to give effect to the negative covenant contained in clause 15 and 20 of the Extraction Agreement dated 23.10.1996. 5. In the plaint reference was made to the agreements that were entered into between the parties. It was also stated that there were privately owned lands comprised within the said mine and no consent had been obtained from the surface right owners by the respondent and the same was to be obtained subsequently, which necessitated the incorporation of Clause 2.5 in the agreement. The agreement was to commence from January 01, 1997 but on 12.12.1996 in view of an order of the Supreme Court dated 12.12.1996 prohibiting mining operations in the authorised area, mining operations could not be commenced. In view of the situation that arose on account of the order of Supreme Court which necessitated permission being sought from the Central Government for commencing mining operations, as also in view of the fact that the consent of the surface right owners had not been obtained, on the proposal of the respondent, the appellants exercising their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.2003 by the Ministry of Environment and Forest under the Forest Conservation Act, 1980 but the second stage clearance was yet to be obtained without which it was not possible to commence work. 8. In this background the appellant issued a notice dated 27.4.2005 to the respondent requesting them to furnish to the appellant within 15 days of the receipt of the notice the documents evidencing the consent obtained from Salgaonkar sisters. The notice also stated as follows :- "Kindly note that if no documents as aforesaid are furnished to us within a period of 15 days from the receipt of this notice, or if no reply is received from you we shall presume that such consent has been obtained since you are doing the extraction in the area of the captioned mining lease wherein surface rights are held by Salgaonkar sisters, pursuant to the authorization granted to you, in terms of clause 15 of the Extraction Agreement dated 23.10.1996." 9. The said letter was annexed as Exh. 48. The respondent failed to furnish the documents, as requested, and, therefore the appellant issued notice dated 17.5.2005 withdrawing the authorization granted by the appellant under clause 15 of the Extr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. It observed that from a mere perusal of the pleadings contained in paragraphs 47 to 51 of the plaint it appeared that the appellant had asserted that the agreements were specifically enforceable. A reading of the plaint established that the foundation of the appellant's suit was for specific performance of the renewal of the agreement dated 23.10.1996, the cause of action for which arose on 29.12.2001 when they received reply of the respondent denying that the agreement stood renewed. Since the suit was filed much after the expiry of 3 years from that date, it was hopelessly barred by limitation. 12. Aggrieved by the order of the Trial Court the appellants preferred two appeals before the High Court which have been dismissed by the impugned order. Before the High Court it was urged that in deciding an application under Order VII Rule 11 of the CPC the contentions raised in defence or submissions advanced by the respondent-defendant about their case need not be considered and the matter must be decided on the basis of averments in the plaint and the documents annexed with the plaint. The Trial Court had fallen into an error when it referred to the defence of the defendant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of limitation. Accordingly it dismissed the appeals preferred by the appellants. 15. Mr. Soli J. Sorabjee, learned senior counsel appearing on behalf of the appellants in Civil Appeal arising out of SLP(C) No. 106/2007 submitted that in dealing with an application under Order VII Rule 11 the court must go by the averments in the plaint. The plaint must be read as a whole. The mere use of words like "readiness" and "willingness" to perform the agreement by themselves do not make it a case of specific performance of agreement. Those averments in the instant case were necessary for enforcing the negative covenants contained in Clauses 15 and 20 of the agreement. He, therefore, submitted that the trial court was entirely wrong in construing the instant suit as a suit for specific performance of the agreement, whereas it was essentially a suit for perpetual injunction seeking enforcement of the negative covenants contained in the agreement in Clauses 15 and 20 thereof. He further submitted that the question of limitation was a mixed question of law and fact and could be decided only in the suit. 16. Mr. R.F. Nariman, learned senior counsel appearing on behalf of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 747 highlighting the difference between Article 58 and Article 113 of the Limitation Act. He further submitted that Srinivasa Murthy's case (supra) was misapplied since the fact situation in the instant case was different from that in Srinivasa Murthy's case. The High Court fell into an error in looking at the defence of the respondent to come to the conclusion that the suit was barred since there was no valid renewal. Mr. Nariman, however, did not dispute that reference to "law" in Order VII Rule 11 of the CPC included a law relating to limitation such as the Limitation Act. 17. Mr. Mukul Rohtagi, learned senior counsel appearing for the respondent in civil appeal arising out of SLP(C) No. 106/2007 submitted that the High Court was fully justified in coming to the conclusion that the clever drafting of the plaint purporting to be a suit for injunction was merely to camouflage the real issue. He did not dispute that the plaint must be read as a whole and one must look to the substance rather than the form. He submitted that the appellant's case that there was automatic renewal after the original term expired on mere exercise of option by the appellant was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion that the lease deed stood renewed on mere exercise of option without the execution of an indenture evidencing renewal of the lease. Only in such a renewed lease a negative covenant could have been incorporated which could have been enforced. Since such an agreement never came into existence and a suit for declaration stood barred by time, the appellant cannot get over the limitation and seek the remedy of injunction by way of enforcement of the negative covenants in an agreement which never came into existence. In sum and substance he submitted that without first getting a renewed lease deed executed in physical form or getting a declaration from a Court of Law that lease stood renewed as contended by them, the appellant cannot seek a relief by way of injunction by filing a suit for enforcement of negative covenants. He further submitted that the appropriate Article which applied in the facts of this case was Article 54. Since the respondent denied the fact that the lease stood automatically renewed, the limitation commenced from that day and, therefore, a suit for declaration and/or specific performance was barred after 3 years from the date of refusal, i.e., 29.12.2001. Artic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the statement in the plaint to be barred by any law. Mr. Nariman did not dispute that "law" within the meaning of clause (d) of Order VII Rule 11 must include the law of limitation as well. It is well settled that whether a plaint discloses a cause of action 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 whether the averments made in the plaint if taken to be correct in their entirety a decree would be passed. The averments made in the plaint as a whole have to be seen to find out whether clause (d) of Rule 11 of Order VII is applicable. It is not permissible to cull out a sentence or a passage and to read it out of the context in isolation. Although it is the substance and not merely the form that has to be looked into, the pleading has to be construed as it stands without addition or subtraction of words or change of its apparent grammatical sense. As observed earlier, the language of clause (d) is quite clear but if any authority is required, one may usefully refer to the judgments of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioned agreement will stand renewed for the period 1.1.2002 to 31.12.2006. To this the respondent-defendant replied by its letter dated 29.12.2001, the relevant part whereof reads as follows :- "We do not agree with your contention in your letter dated 4/12/1997 that the Agreement in reference stands renewed as alleged from 1/1/2001 to 31/12/2006 or for any other period whatsoever." It is thus apparent that the appellant-plaintiff exercised its right under the agreement to claim a renewal of the term of the lease and the respondent- defendant refuted that claim and denied the assertion that the agreement stood renewed as alleged from 1.1.2001 to 31.12.2006 or for any other period whatsoever. In view of the correspondence exchanged between the parties, clearly a cause of action accrued to the appellant-plaintiff since its right of renewal as a matter of course claimed by it was denied by the respondent-defendant. Whether the denial was justified or not is another matter. In the facts and circumstances of the case, a right accrued to the appellant-plaintiff to sue the respondent-defendant and to get a declaration that the agreement stood automatically renewed for a furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iginal lease. In the case of extension it is not necessary to have a fresh deed of lease executed, as the extension of lease for the term agreed upon shall be a necessary consequence of the clause for extension. However, option for renewal consistently with the covenant for renewal has to be exercised consistently with the terms thereof and, if exercised, a fresh deed of lease shall have to be executed between the parties. Failing the execution of a fresh deed of lease, another lease for a fixed term shall not come into existence though the principal lease in spite of the expiry of the term thereof may continue by holding over for year by year or month by month, as the case may be." 25. Having regard to these decisions we must hold that in order to give effect to the renewal of a lease, a document has to be executed evidencing the renewal of the agreement or lease, as the case may be, and there is no concept of automatic renewal of lease by mere exercise of option by the lessee. It is, therefore, not possible to accept the submission urged on behalf of the appellants-plaintiffs that by mere exercise of option claiming renewal, the lease stood renewed automatically and there w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the respondents were doing the extraction in the area of the captioned mining lease. Since no documents were furnished pursuant to notice dated 27.4.2005, the appellants assumed that such consent had been obtained. It, therefore, withdrew the permission given to the respondents under Clause 15 of the Extraction Agreement so that the appellants could make preparation to start the extraction work. The last paragraph of this letter reads as under:- "We, therefore, give you notice to desist from doing any extraction of ore or doing work of any type in the above mine on the expiry of 30 days from the receipt of this notice failing which we would have no other alternative than to approach the court to get appropriate relief, including specific performance against you." It is not necessary to refer to the correspondence exchanged thereafter. The suits came to be filed on August 04, 2005 in which a prayer for injunction was made with a view to enforce the negative covenants contained in clauses 15 and 20 of the agreement. 27. The respondent sought rejection of the plaint by filing application under Order VII Rule 11 CPC contending that the suit was barred by limitation on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he plaint that their father had incurred some debts and had therefore borrowed a sum of ₹ 2000 from the predecessor in title of the defendants. Only by way of security for the loan advanced, a registered sale deed had been executed on 5.5.1953 with a contemporaneous oral agreement that on return of the borrowed sum with interest payable thereon @ 6% per annum a registered reconveyance deed shall thereafter be executed in favour of the borrower. The case of the plaintiff was that despite the registered sale deed, the plaintiff continued to be in possession of the suit lands. The receipt was obtained on 25.3.1987 from the defendants and the original registered sale deed dated 5.5.1953 was returned to the first plaintiff with an oral promise by the defendants to execute the registered document in favour of the plaintiff/borrower. On reading of all the averments of the plaint, it appeared that the cause of action for obtaining a registered reconveyance deed from the defendants in favour of the plaintiff first arose on 25.3.1987 when the entire loan amount was alleged to have been paid and an oral promise was given by the defendants to reconvey the suit lands. In the mutation proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deed of 1953 which is alleged to be a loan transaction and the alleged oral agreement of reconveyance of the property on return of borrowed amount. This Court went on to observe, "14. After examining the pleadings of the plaint as discussed above, we are clearly of the opinion that by clever drafting of the plaint the civil suit which is hopelessly barred for seeking avoidance of registered sale deed of 5.5.1993, has been instituted by taking recourse to orders passed in mutation proceedings by the Revenue Court. 15. Civil Suit No. 557 of 1990 was pending when the present suit was filed. In the present suit, the relief indirectly claimed is of declaring the sale deed of 5.5.1993 to be not really a sale deed but a loan transaction. Relief of reconveyance of property under alleged oral agreement on return of loan has been deliberately omitted from the relief clause. In our view, the present plaint is liable to rejection, if not on the ground that it does not disclose "cause of action", on the ground that from the averments in the plaint, the suit is apparently barred by law within the meaning of clause (d) of Order 7 Rule 11 of the Code of Civil Procedure." 30. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct ore from the mine with an obligation cast on the respondents-defendants not to interfere with the enjoyment of their rights under the agreement. In the facts of this case, in the suit prayer for injunction based on negative covenants could not be asked for unless it was first established that the agreement continued to subsist. The use of the words "During the subsistence of this agreement" in clause 15, and "during the pendency of this indenture" in clause 20 of the agreement is significant. In the absence of a document renewing the original agreement for a further period of 5 years and in the absence of any declaration from a court of law that the original agreement stood renewed automatically upon the appellants exercising their option for grant of renewal, as is the case of the appellants, they cannot be granted relief of injunction, as prayed for in the suit, for the simple reason that there is no subsisting agreement evidenced by a written document or declared by a Court. If there is no such agreement, there is no question of enforcing clauses 15 and 20 thereof. The appellants ought to have prayed for a declaration that their agreement stood renewed aut ..... X X X X Extracts X X X X X X X X Extracts X X X X
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