Supreme Court of India
ALKA GUPTAversusNARENDER KUMAR GUPTA
- Citation
- 2010 INSC 651
- Decided
- 27 September 2010
- Disposal
- Appeal(s) allowed
- Bench
- R V RAVEENDRAN
Holding
A suit cannot be dismissed as barred by Order 2 Rule 2 without a specific plea and issue, and the second suit was not barred by Order 2 Rule 2 or constructive res judicata; dismissal without trial is impermissible.
Summary
Alka Gupta filed a second suit for accounts of a dissolved partnership, after having earlier obtained a decree for the balance price under a sale agreement with Narender Kumar Gupta. The Delhi High Court dismissed the second suit, holding it barred by Order 2 Rule 2 of the CPC, by constructive res judicata, and on the ground that the plaintiff was unscrupulous, also imposing costs. The Supreme Court held that a suit cannot be dismissed under Order 2 Rule 2 unless the defendant specifically pleads the bar and an issue is framed, and that the second suit involved a distinct cause of action unrelated to the first suit, so the bar did not apply. The Court also found no clear plea of constructive res judicata and ruled that a civil suit cannot be summarily dismissed without a trial or an opportunity to lead evidence, nor can costs be levied without statutory basis. Consequently, the appeal was allowed, the High Court orders set aside, and the suit restored for trial.
Issues considered
- Whether a civil suit can be dismissed as barred by Order 2 Rule 2 of the CPC in the absence of a plea by the defendant and an issue framed on that ground.
- Whether the second suit is barred by res judicata or constructive res judicata.
- Whether a suit may be dismissed without trial on the basis of the plaintiff's alleged conduct or unscrupulousness.
- Whether costs may be imposed in the circumstances.
Legislation cited
- Code of Civil Procedure, 1908s. Order 11 Rule 21, s. Order 14 Rule 2(2), s. Order 15 Rule 3, s. Order 23 Rules 1, s. Order 23 Rules 3, s. Order 2 Rule 2, s. Order 7 Rule 11, s. Order 9 Rule 2, s. Order 9 Rule 3, s. Order 9 Rule 5, s. Order 9 Rule 8, s. Section 11 (with Explanations I‑VIII)
- Indian Partnership Act, 1932s. Section 69
Subjects
Order 2 Rule 2Res judicataConstructive res judicataCivil ProcedureSummary dismissalNatural justicePartnershipCause of actionCosts
Judgment
(2010] 11 S.C.R. 756
A ALKA GUPTA
v.
NARENDER KUMAR GUPTA
(Civil Appeal No. 8321 of 2010)
SEPTEMBER 27, 2010
B
[R.V. RAVEENDRAN AND H.L. GOKHALE, JJ.]
CODE OF CIVIL PROCEDURE, 1908:
c 0. 2, r. 2 - HELD: A suit cannot be dismissed as barred
by 0. 2 r.2 in the absence of plea by defendant to that effect
and in the absence of an issue thereon - Besides, in the
instant case, cause of action for the second suit being
completely different from the cause of action for the first suit,
0 the bar under 0. 2, r. 2 was not attracted.
s.11, Explanations Ill and IV- Res-judicata - Principles
explained - Constructive res judicata - HELD: Plea of res
judicata must be clearly established, more particularly, where
the bar is sought on the basis of constructive res-judicata -
E In the instant case, High Court has not stated as to what was
the ground of attack that the plaintiff ought to have raised but
failed to raise in the first suit - The second suit is not barred
by constructive res judicata.
F s.11 and 0.2, r.2 - Concepts of and difference between
- Explained.
0. 15, r.3 - Suit - Dismissal of - HELD: A suit cannot
be dismissed without trial merely because the court feels
G dissatisfied with the conduct of the plaintiff - In the instant
case, High Court recorded factual findings on inference from
plaintiff's conduct and branded her as an unscrupulous person
who abused process of court, without there being a trial and
without affording an opportunity to her to explain her conduct
H 756
ALKA GUPTA v. NARENDER KUMAR GUPTA 757
- Such a procedure is opposed to all principles of natural A
justice embodied in CPC - At all events, alleged weakness
of plaintiff's case or her unscrupulousness are not grounds for
dismissal of suit without trial - There is also no basis for
levying costs of Rs.50,0001- It has been repeatedly stated that
in dealing with civil suits, courts will have to follow the B
provisions of CPC - Principles of natural justice - Costs -
Practice and Procedure.
The plaintiff-appellant and the defendant-respondent,
as per the deed dated 5.4.2000, were the only partners o.f c
a coaching.institute under the name and style of "Takshila
Institute" in premises at Paschim Vihar. On 29.6.2004, the
appellant executed an agreement to sell her undivided
half share in a premises at Rohini - Sector 8 and 50%
share of Mis Takshila Institute which was run in the
0
premises at Rohini - Sector 8, with all rights, titles,
interest, goodwill etc. to the respondent, for a total
consideration of Rs.21,50,000/- and received Rs.7,50,000/
- as advance. The appellant filed a suit (Suit No. 16/2006)
against the respondent in the District Court, Delhi for E
recovery of Rs.12 lakhs, alleging that in pursuance of the
agreement dated 29.6.2004 she had executed a sale deed
in regard to the immovable p· lperty for Rs. 2 lakhs and
the respondent promised to pay the balance of Rs. 12
lakhs in regard to other rights and interest agreed to be
sold under the agreement. That suit was decreed. F
Thereafter, the appellant filed another suit (O.S. No.
302/2007) against the respondent, in the Delhi High Court,
for rendition of accounts for the period 5.4.2000 to
31.7.2000 in regard to the partnership firm of "Takshila G
Institute" at Paschim Vihar, and her share of profit in that
business, pleading that the said partnership was at will
and it was dissolved on 31.7.2004 when the respondent
had filed a suit for injunction against the appellant and
others. H
758 SUPREME COURT REPORTS (2010] 11 S.C.R.
A The respondent resisted the suit on the grounds,
inter alia, that the suit was barred by res judicate, and was
liable to be dismissed for material suppression of facts.
It was contended that by virtue of agreement of sale
dated 29.6.2004, the partnership under the deed dated
B 5.4.2000 was dissolved a.nd the claims of the appellant
. were settled. Issues were framed treating the first issue
of res judicata as the preliminary issue. The trial bench
(single Judge of the High Court) held that the suit was
liable to. be dismissed summarily and acc.ordingly
C dismissed the suit with cost of Rs.50,000/-, inter alia,
holding that (i) the suit was barred by 0.2, r.2 CPC, (ii) the
suit was barred by constructive res judicata and (iii) the
appellant was an unscrupulous person, she had abused
the process of court by filing the suit based on
D falsehoods. The appellate bench of the High Court
affirmed the decision of the single Judge to the effect that
the suit was barred by 0.2, r.2 CPC holding that appellant
had settled her claims under the agreement ofsale dated
29.6.2004. Aggrieved, the plaintiff filed the appeal.
E
Allowing the appeal, the Court
HELD: 1.1 A suit cannot be dismissed as barred by 0. 2,
r.2 of the Code of Civil Procedure, 1908 in the absence of a
plea by the defendant to that effect and in the absence of an
F issue thereon. The object of 0.2, r.2 of the Code is two-
fold. The first is to ensure that no defendant is sued and
vexed twice in regard to the same cause of action. The
second is to prevent a plaintiff from splitting of claims
and remedies based on the same cause of action. The
G effect of 0.2, r.2 is to bar a plaintiff who had earlier claimed
certain remedies in regard to a cause of action, from filing
a second suit in regard to other reliefs based on the same
cause of action. It does not, however, bar a second suit
H
ALKA GUPTA v. NARENDER KUMAR GUPTA 759
based on a different and distinct cause of action. Further, A
unless the defendant pleads the bar under 0.2, r.2 and
an issue is framed thereon, and the plaintiff is afforded
an opportunity, the court can not examine or reject a suit
· on that ground. In the instant case, the respondent did
not contend that the suit was barred by 0.2, r.2, nor was 8
an issue on that question framed. But the High Court
(both the trial bench and the appellate bench) have
erroneously assumed that a plea of res judicata would
include a plea of bar under 0.2, r. 2 CPC. Res judicata
relates to the plaintiffs duty to put forth all the grounds C
of attack in support of his claim, whereas 0.2, r.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 Or.2, r.2, in the abs~nce .of D
any plea by the defendant and in the absence of an issue
in that behalf, is unsustainable. [para 7-9] [767-F; 768-E-
. F; 769-D-G]
Gurbux Singh v. Bhoora Lal 1964 SCR 831 =AIR 1964 E
SC 1810 - relied on.
1.2. The cause of actior for the second suit being
completely different from the cause of action for the first
suit, the bar under 0.2, r.2 of the Code was not attracted.
· The cause of action for the first suit was non-payment of F
price under the agreement of sale dated 29.6.2004,
whereas the cause of action for the second suit was
non-settling of accounts of a dissolved partnership
constituted under deed dated 5.4.2000. The two causes
of action are distinct and different. The agreement dated G
29.6.2004 was not an agreement relating to dissolution of
the firm constituted under the deed of partnership dated
5.4.2000, or settlement of the accounts of the said .
partnership. The agreement of sale made it clear that it
H
760 SUPREME COURT REPORTS [2010] 11 S.C.R.
A related to sale of the undivided 50% share in the property
of Rohiin - sector 8 !n which the business was being run
and 50% share of the business that was being run in that
premises. The second suit was for rendition of accounts
in pursuance of the dissolution of the firm of "Takshila
B Institute" constituted under the deed of partnership
dated 5.4.2000, carrying on business at Paschim Vihar
and for payment of the amounts due on dissolution of the
said firm. The pleadings in the two suits make it clear that
both parties proceeded on the basis that the partnership
C between the appellant and the respondent under the
deed dated 5.4.2000 was only in regard to the business
run under the name and style of "Takshila lnsittue" at
Paschim Vihar and that the property at Rohini - Sector 8
with the business carried therein under the name of "M/
D S Takshila Institute", was not a part of the partnership
business under deed dated 5.4.2000. Order 2, r. 2 of the
Code would come into play only when both suits are
based on the same cause of action and the plaintiff fails
to .seek all the reliefs based on or arising from the cause
E of action in the first suit without leave of the court Merely
because the agreement of sale related to an immovable
property at Rohini - Sector 8 and the business run therein
under the name of "M/s Takshila Institute" and the
second suit referred to a partnership in regard to the
F business run at Paschim Vihar New Delhi, also under the
similar name of "Takshila Institute", it cannot be
assumed that the two suits relate to the same cause of
action. Further, while considering whether a second suit
by a party is barred by 0.2, r.2, all that is required to be
G seen is whether the reliefs claimed in both suits arose
from the same cause of action. The court is not expected
to go into the merits of the claim and decide the validity
of the second claim. The strength of the second case and
the conduct of plaintiff are not relevant for deciding
H
ALKA GUPTA v. NARENDER KUMAR GUPTA 761
whether the second suit is barred by 0.2, r.2. [para 10- A
12) [771-B; 769-G-F; 770-A-F; 771-B-E]
2.1. The second suit was not barred by constructive
res judicata. Plea of res judicata is a restraint on the right
of a plaintiff to have an adjudication of his claim. The plea B
must be clearly established, more particularly, where the
bar sought is on the basis of constructive res judicata.
The plaintiff who is sought to be prevented by the bar of
constructive res judicata should have notice about the
/
·plea and have an opportunity to put forth his contentions c
against the same. In this case, there was no plea of
constructive res judicata, nor had the plaintiff an
opportunity to meet the case based on such plea. But,
both the trial be.nch as also the appellate bench without
assigning any reasons, proceeded on the basis that the. o
suit was barred by principle of constructive res judicata.
-[para 13) [771-F-H; 772-A-C]
2.2 The Code deals with res judicata in section 11,
with eight Explanations. The principle of constructive res
judicata emerges from Explanation IV when read with
E
Explanation Ill, both of which explain the concept of
"matter directly and substantially in issue". Constructive
res judicata deals with grounds of attack and defence
which ought to have been raised; but not raised, whereas
F
0.2, r.2 relates to reliefs which ought to have been
claimed on the same cause of action but not claimed. In .
the ir:istant case, the High Court has not stated what was
the ground of attack that the plaintiff ought to have raised
in the first suit but had failed to raise, which she raised G
in the second suit, to attract the principle of constructive
res judicata,, _The secpnd suit is not barred. by·
constructive resjudicata. [para14-15] [772-C-D; 773-E-F;
77 4-A-B; G-H] \
Direct Recruit Class II Engineering Officers' Association H
762 SUPREME COURT REPORTS [201 O] 11 S.C.R.
A v. State of Maharashtra 1990 (2) SCR 900 =1990(2) SCC
715; Forward Construction Co. v. Prabhat Manda/ 1985 (3)
Suppl. SCR 766 = 1986 (1) sec 100 - relied on.
Greenhalgh v. Mallard 1947 (2) All ER 257 - referred
8 to.
3.1. A suit cannot be dismissed without trial merely
because the court feels dissatisfied with the conduct of
the plaintiff. A civil proceeding governed by the Code will
have to be proceeded with and decided in accordance
C with law and the provisions of the Code, and not on the
whims of the court. There are no short-cuts in the trial of
suits, unless they are provided by law. The Code
enumerates the circumstances in which a civil suit can
be dismissed without trial. It also provides for expeditious
D disposal1n a summary manner. But where the summons
have been issued for settlement of issues, and the suit
is listed for consideration of a preliminary issue, the
court, without a trial, cannot make a roving enquiry into
the alleged conduct of the plaintiff, tenability of the claim,
E the strength and validity and contents of documents, and
on that basis dismiss a suit. A suit cannot be short-
circuited by deciding issues of fact merely on pleadings
and documents produced, without a trial. [para 16-19]
[775-A-D; 776-E; 777-D-E]
F
3.3 In the instant case, the single Judge has
adjudicated and decided questions of fact and rendered
a judgment, without the evidence tested by cross-
examination. The reasonings, findings, assumptions and
G conclusions of the trial bench leading to the dismissal of
the suit while hearing a preliminary issue relating 'to res
judicata, demonstrate assumption of a jurisdiction not
vested in it and also acting in the exercise of its
jurisdiction illegally and with material irregularity. The
H
-.
ALKA GUPTA v. NARENDER KUMAR GUPTA 763
observation of the single Judge that "the facts of this A
case do not require any opportunity for leading evidence
to be given to the plaintiff'' violates 0. 15, r. 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 B
to lead evidence. To render a final decision by denying
such opportunity would be highhanded, arbitrary and
illegal. Even the Division Bench committed the same
error. The High Court recorded factual findings on
inferences from the plaintiff's conduct and without C
holding a trial and without affording an opportunity to the
plaintiff to explain her conduct, branded her as an
unscrupulous person who abuses the process of court
and as a person who utters falsehoods and manipulates
documents. Such a procedure is opposed to all D·
principles of natural justice embodied in the Code. At all
events, the alleged weaknesses of the case of the plaintiff
or her unscrupulousness are not grounds for dismissal
of suit without trial. [Para 19-21) [777-E-F; 780-G-H; 781-
A-B] E
3.4 There is also no basis for levying the costs of
Rs.50, 000/-. The Supreme Court has repeatedly stated
that in dealing with civil suits, courts will have to follow
the provisions of the Code in levying costs. [para 22]
F
[782-F-G]
3.5 The order of the Division Bench of the High Court
affirming the order of the single Judge was set aside and
the suit restored to the file of the High Court with a
direction to decide the same in accordance with law, after G
giving due opportunity to the parties to lead evidence.
[para 24) [783-B-C]
Case Law Reference:
1964 SCR 831 relied on para 9 H
764 SUPREME COURT REPORTS [201 O] 11 S.C.R.
A 1947 (2) All ER 257 referred to para 15
1990 (2) SCR 900 relied on para 15
1985 (3) Suppi. SCR 766 relied on para 15
B CIVIL APPELLATE JURISDICTION : Civil Appeal No.
8321 of 2010.
From the Judgment & Order dated 07.09.2009 of the High
Court of Delhi at New Delhi in RF.A. (OS) 60 of 2009.
c Aman Lekhi, Meenakshi Lekhi, Sachin Jain, Madhur Jain,
Sanjai Kumar Pathak for the Appellant.
P.C. Agarwal, Aditya K. Dubey, Varun Thakur, Ramesh
Babu M.R., Ambuj for the Respondent.
D The order of the Court was delivered by
R.V. RAVEENDRAN, J. 1. Leave granted. Heard. For
convenience the appellant and respondent will also be referred
to by their ranks in the suit, as 'plaintiff' and 'defendant'
E respectively.
2. The appellant and respondent entered into a partnership
as per deed dated 5.4.2000 to run an Institute for preparing
students for competitive examinations, under the name and style
of 'Takshila Institute', at No. F-19, i..SC, Bhera Enclave,
F Paschim Vihar, New Delhi.
3. On 29.6.2004, the appellant entered into an "agreement
to sell" (Bayana Agreement) under which she agreed to sell the
property described as follows:
G
"An undivided half share, second floor (without roof rights)
of built up property bearing No.8, Pocket & Block C9,
Sector-8, Rohini, Delhi - 11 O 085, built on a plot of land
area measuring 158.98 Sq.m and 50% share of M/s
H
ALKA GUPTA v. NARENDER KUMAR GUPTA 765
[R.V. RAVEENDRAN, J.]
Takshila Institute established in the above said property A
which is hereby agreed to be sold includes all rights, titles,
interests, goodwill, electricity equipment, furniture, fixtures
including passages, easements facilities privileges etc.,
which attached thereto or connected therewith."
B
Clause 13 of the said agreement clarified that the property
agreed to be sold included the goodwill of the firm M/s Takshila
Institute, having its office at C-918, Sector 8, Rohini, Delhi-85
in which the first party is also the partner of 50% and included
all rights, interest, claims, title, fittings, furniture, fixtures and all C
equipment.
4. Under the said agreement, the total consideration
agreed was Rs.21,50,000/- and the appellant received
Rs. 750,000/- as advance. The appellant claimed that in
pursuance of the said agreement, she executed a sale deed D
in regard to the immovable property for Rs.200,000/- and that
the respondent promised to pay the balance of Rs.12 lakhs in
regard fo the other rights and interest agreed to be sold under
agreement of sale dated 29.6.2004. She filed Suit No.16/2006
in the District Court, Delhi for recovery of Rs.12 lakhs under the E
said agreement dated 29.6.2004, alleging that respondent had
paid in all Rs.9.5 lakhs towards the agreed price. The said Suit
No.16/2006 was decreed in favour of the appellant on
25.11.2006, directing respondent to pay Rs.12 lakhs with
interest at 7% per annum with effect from 30.8.2004. F
5. Thereafter the appellant filed another suit - C.S.
(O.S.)No.302/2007 - in the Delhi High Court against the
respondent, for rendition of accounts for the period 5.4.2000
to 31.7.2004, in regard to the partnership firm of Takshila
Institute constituted under deed of partnership dated 5.4.2000. G
In that suit, the appellant alleged that the said partnership was
at will and it was dissolved by implication on 31.7.2004, when
respondent filed Suit No. 438/2004 against the appellant (and
others) for an injunction. She also sought a decree against the
respondent for her share of profits in the said partnership and H
766 SUPREME COURT REPORTS [2010] 11 S.C.R.
A for a decree for Rs.25.28 lakhs or higher amount in regard to
the share of plaintiff with interest thereon. The said suit was
resisted by the respondent. Three preliminary grounds of
objections were raised in regard to the maintainability of the
suit: (a) that the suit was barred by res judicata; (b) that the suit
B was barred under Section 69 of the Partnership Act, 1932, as
it related to an unregistered partnership; and (c) that the suit
was liable to be dismissed for material suppression of facts
and approaching the court with unclean hands. It was alleged
that parties were close. relatives and appellant being a
c government servant, was only a sleeping partner. It was
contended that by the agreement of sale dated 29.6.2004, the
partnership under deed dated 5.4.2000 was dissolved and all
claims of appellant were settled.
6. The issues in the said suit were framed on 17.1.2008
D with a direction that the first issue, extracted below, be treated
as a preliminary issue:
"Whether the suit is barred by the principle of res judicata
as issue raised in the Suit has been directly and
E substantially been adjudicated between the plaintiff and the
defendant in suit no.16/2006 titled as Alka Gupta vs.
Narender Kumar Gupta vide an order dated 25.11.2006
by a competent court?
F By order dated 13.3.2009, the trial bench (learned Single Judge
of the High Court) held that the suit was liable to be dismissed
summarily on the following grounds: (i) The appellant had
abused the process of court; (ii) the appellant was an
unscrupulous person and the suit was based on falsehoods;
(iii) the partnership dated 5.4.2000 was illegal and
G unenforceable as appellant was a government servant; (iv) the
suit was barred by Order 2 Rule 2 of the Code of Civil
Procedure ('Code' for short); and (v) the suit was barred by
principle of constructive res judicata. The suit was accordingly
dismissed with costs of Rupees Fifty Thousand. In the preamble
H to the said order, the trial court:ob-served that on 12.1.2009,
ALKA GUPTA v. NARENDER KUMAR GUPTA 767
[RV. RAVEENDRAN, J.]
when arguments were on the preliminary issue, it was clarified A
that arguments were being heard not only on the said
preliminary issue, but also the question as to why independent
of section 11 and Order 2 Rule 2 of the Code, the suit should
not be dismissed summarily on the ground of re-litigation and
abuse of process of court. It is further stated that on 16.1.2009, B
the statement of plaintiff (appellant herein) was recorded and
arguments on various aspects were heard on 16.1.2009 and
21.1.2009.
7. Feeling aggrieved, the appellant filed an appeal. An
appellate bench of the High Court, by the impugned judgment C
dated 7.9.2009, dismissed the 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 D
Agreement dated 29.6.2004, it was not necessary to decide
upon the question as to whethe~ 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 E
Single Judge and the Division Bench which ignore several
basic principles of Code of Civil Procedure cannot be
sustained.
I. A suit cannot be dismissed as barred by Order 2 Rule 2 F
of the Code in the absence of a plea by the defendant to that
effect and in the absence of an issue thereon.
8. We may extract Order 2 Rules 1 and 2 of the Code for
ready reference:
G
"1. Frame of suit: Every suit shall as far as practicable
be framed so as to afford ground for final decision upon
the subject~ in dispute and to prevent further litigation
concerning them.
H
768 SUPREME COURT REPORTS [2010) 11 S.C.R.
A 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.
8
· (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.
. I
c (3) Omission to sue for ont! of several reliefs: A person
entitled to more than one relief 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 all
such reliefs, he shall not after-Wards sue for any relief so
D omitted." ;
The object of Order 2 Rule 2 of the Code is two-fold. First is to
ensure that no defendant is sued and vexed twice in regard to
the same cause of action. Second is to prevent a plaintiff from
E. splitting of claims and remedies based on the same cause of
action. The effect of Order 2 Rule 2 of the Code is to bar a
plaintiff who had earlier claimed certain remedies in regard to
a cause of action, from filing a second suit in regard to other
reliefs based on the same cause of action. It does not however
bar a second suit based on a different and distinct cause of
F action.
9. This Court in Gurbux Singh v. Bhoora Lal [AIR 1964
SC 1810] held :
"In order that a plea of a bar under 0. 2,. R. 2(3), Civil
G
Procedure Code should succeed the defendant who raises
the plea must make out (1) that the second suit was in
respect of the same cause of action as that on which the
previous suit was based; (2) that in respect of that cause
of action the plaintiff was entitled to more than one relief;
H
ALKA GUPTA v. NARENDER KUMAR GUPTA 769
[R.V. RAVEENDRAN, J.]
(3) that being thus entitled to more than one relief the A
plaintiff without leave obtained from the Court omitted to
sue for the relief for which the second suit had been filed.
From this analysis it would be seen that the defendant
·would have to establish primarily and to start with, the
precise cause of action upon which the previous suit was 8
filed for unless there is identity between the cause of
action on which the earlier suit was filed and that on which
the claim in./the latter s.uit is based there woujd be no scope
for the ap~lication of'the bar."
Unless the defendant pleads the bar under Order 2 Rule 2 of C
the Code and an issue is framed focusing the parties on that
bar to the sqit, obviously the court tan not examine or reject a·
suit on that ground. The pleadings in the earlier suit should be·
exhibited or marked by consent or at least admitted by both
parties. The plaintiff should have an opportunity to explain or D
demonstrate that the second suit was based on a different
cause of action. In this case, the respondent did not contend
that the suit was barred by Order 2 Rule 2 of the Code. No issue
was framed as to whether the suit was barred by Order 2 Rule
2 of the1 Code. But the High Court (both the trial bench and E
appellate bench) have erroneously assumed that a plea of res
judicata would include a plea of bar under Order 2 Rule 2 of
the Co~e. Res judicata relates to the plaintiff's duty to put forth
all the ,grounds of attack in support of his claim, whereas Order
2 Rul$ 2 of the Code requires the plaintiff to claim all reliefs F
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 of
the Code, in the absence of any plea by the defendant and in
the absence of an issue in that behalf, is unsustainable. G
!
II. T~e cause of action for the second suit being completely
different from the cause of action for the first suit, the bar under
order 2 Rule 2 of the Code was not attracted.
' .
1,0. The first suit was for recovery of balance price under H
' .
770 SUPREME COURT REPORTS [2010] 11 S.C.R.
A an agreement of sale. The agreement dated 29.6.2004 was not
an agreement relating to dissolution of the firm constituted
under deed of partnership dated 5.4.2000, or settlement of the
accounts of the said partnership. The agreement of sale made
it clear that it related to sale of the undivided half share in the
B second floor at Rohini, 50% (property bearing No.8, Pocket &
Block C-9, Sector-8, Rohini, Delhi-110085) and 50% share of
the business that was being run in that premises, that is
premises at Rohini. The second suit was for rendition of
accounts in pursuance of the dissolution of the firm of Takshila
c Institute constituted under deed of partnership dated 5.4.2000,
carrying on business at Shera Enclave, Paschim Vihar, Oelhi-
110087 and for payment of the amounts due on dissolution of
the said firm.
11. The pleadings in the two suits make it clear that both
D parties proceeded on the basis that the partnership between
appellant and respondent under deed dated 5.4.2000 was only
in regard to the business run under the name and style of
'Takshila lnsittue' at Shera Enclave, Paschim Vihar, Delhi-
110087. The appellant proceeded on the basis that the property
E at Rohini and the business carried therein under the name of
Takshila Institute, was not a part of the partnership business
under deed dated 5.4.2000. Even the respondent in his written
statement in the first suit asserted that the partnership dated
5.4.2000 between appellant and respondent did not extend to
F Takshila Institute at Rohini or other places. In fact appellant
clearly contended that respondent was carrying on business
under the same name of Takshila Institute at Janakpuri, Ashok
Vihar and Kalu Sarai in Delhi and also at Dehradun and
Palampur, but they were not partnership businesses. The
G respondent in his written statement asserted that he alone was
carrying on business at those places under the name of Takshila
Institute. Therefore, the court could not, before trial, assume that
the sale of appellant's share in the immovable property at Rohini
and the goodwill and assets of the business carried on at
H Rohini under the name of Takshila Institute should be taken as
ALKA GUPTA v. NARENDER KUMAR GUPTA 771
[R.V. RAVEENDRAN, J.]
relinquishment or retirement or settlement of share in regard A
to the partnership business of Paschim Vihar Takshila Institute.
12. The cause of action for the first suit was non-payment
of price under the agreement of sale dated 29.6.2004, whereas
the cause of action for the second suit was non-settling of B
accounts of a dissolved partnership constituted under deed
dated 5.4.2000. The two causes of action are distinct and
different. Order 2 Rule 2 of the Code would come into play only
when both suits are based on the same cause of action and
the plaintiff had failed to seek all the reliefs based on or arising C
from the cause of action in the first suit without leave of the
court. Merely because the agreement of sale related to an
immovable property at Rohini and the business run therein
under the name of 'Takshila Institute' and the second suit
referred to a partnership in regard to business run at Pachhim
Vihar, New Delhi, also under the same name of Takshila D
Institute, it cannot be assumed that the two suits relate to the
same cause of action. Further, while considering whether a
second suit by a party is barred by Order 2 Rule 2 of the Code,
all that is required to be seen is whether the reliefs claimed in
both suits arose from the same cause of action. The court is E
not expected to go into the merits of the claim and decide the
validity of the second claim. The strength of the second case
and the conduct of plaintiff are not relevant for deciding whether
the second suit is barred by Order 2 Rule 2 of the Code.
F
Ill. The second suit was not barred by constructive res judicata.
13. The learned trial bench passed the order on 13.3.2009
on the preliminary issue (Issue No.1) relating to res judicata.
But there is absolutely no discussion in the order of the learned
Single Judge in regard to the bar of res judicata except the G
following observation at the end of the order: "Of course it
cannot be said that the present suit is barred by res judicata
inasmuch as the said claims were not decided in that case. But
the principle of constructive res judicata is applicable." This was
not interfered by the appellate bench. Both proceeded on the H
772 SUPREME COURT REPORTS [201 OJ 11 S.C.R.
A basis that the suit was not barred by res judicata, but barred
by principle of constructive res judicata without assigning any
reasons. Plea of res judicata is a restraint on the right of a
plaintiff to have an adjudication of his claim. The plea must be
clearly established, more particularly where the bar sought is
B on the basis of constructive res judicata. The plaintiff who is
sought to be prevented by the bar of constructive res judicata
should have notice about the plea and have an opportunity to
put forth his contentions against the same. In this case, there
was no plea of constructive res judicata, nor had the appellant
c plaintiff an opportunity to meet the case based on such plea.
14. Res judicata means 'a thing aojudicated' that is an
issue that is finally settled by judicial decision. The Code deals
with res judicata in section 11, relevant portion of which is
extracted below (excluding Explanations I to VIII):
D
"11. Res judicata.-No Court shall try any suit or issue in
which the matter directly and substantially in issue has
been directly and substantially in issue in a former suit
between the same parties, or between parties under whom
E they or any of them claim, litigating under the same title,
in a Court competent to try such subsequent suit or the suit
in which such issue has been subsequently raised, and has
been heard and finally decided by such Court"
Section 11 of the Code, on an analysis requires the following
F essential requirements to be fulfilled, to apply the bar of res
judicata to any suit or issue:
(i) The matter must be directly and substantially
in issue in the former suit and in the later suit.
G
(ii) The prior suit should be between the same
parties or persons claiming under them.
(iii) Parties should have litigated under the same
title in the earlier suit.
H
ALKA GUPTA v. NARENDER KUMAR GUPTA 773
[R.V. RAVEENDRAN, J.]
(iv) The matter in issue in the subsequent suit A
must have been heard and finally decided in
the first suit.
(v) The court trying the former suit must have
been competent to try particular issue in 8
question.
To define and clarify the principle contained in Section 11 of
the Code, eight Explanations have been provided. Explanation
I states that the expression 'former suif refers to a suit which
had been decided prior to the suit in question whether or not it C
was instituted prior thereto. Explanation II states that the
competence of a court shall be determined irrespective of
whether any provisions as to a right of appeal from the decision
of such court. Explanation Ill states that the matter directly and
substantially in issue in the former suit, must have been alleged D
by one party or either denied or admitted expressly or impliedly
by the other party. Explanation IV provides that any matter which
might and ought to have been made a ground of defence or
attack in such former suit shall be deemed to have been a
matter directly and substantially in issue in such suit. The E
principle of constructive res judicata emerges from Explanation
IV when read with Explanatir Ill both of which explain the
concept of "matter directly and substantially in issue".
15. Explanation Ill clarifies that a matter is directly and
substantially in issue, when it is alleged by one party and denied
F
or admitted (expressly or impliedly) by the other. Explanation
IV provides that where any matter which might and ought to
have been made a ground of defence or attack in the former
suit, even if was not actually set up as a ground of attack or
defence, shall be deemed and regarded as having been G
constructively in issue directly and substantially in the earlier
suit. Therefore, even though a particular ground of defence or
attack was not actually taken in the earlier suit, if it was capable
of being taken in the earlier suit, it became a bar in regard to
the said issue being taken in the second suit in view of the H
...
774 SUPREME COURT REPORTS [2010] 11 S.C.R.
A principle of constructive res judicata. Constructive res judicata
deals with grounds of attack and defence which ought to have
been raised, but not raised, whereas Order 2 Rule 2 of the
Code relates to reliefs which ought to have been claimed on
the same cause of action but not claimed. The principle
B underlying Explanation IV to Section 11 becomes clear from
Greenhalgh v. Mallard [1947 (2) All ER 257] thus:
" .... it would be accurate to say that res judicata for this
purpose is not confined to the issues which the court is
actually asked to decide, but that it covers issues or facts
c which are so clearly part of the subject matter of the
litigation and so clearly could have been raised that it would
be an abuse of the process of the court to allow a new
proceeding to be started in respect of them.
D (emphasis supplied)
In Direct Recruit Class II Engineering Officers' Association v.
State of Maharashtra [1990 (2) SCC 715], a Constitution Bench
of this Court reiterated the principle of constructive res judicata
E after referring to Forward Construction Co. v. Prabhat Mandal
[1986 (1) sec 1OO) thus:
"an adjudication is conclusive and final not only as to the
actual matter determined but as to every other matter which
the parties might and ought to have litigated and have had
F decided as incidental to or essentially connected with
subject matter of the litigation and every matter coming
into the legitimate purview of the original action both in
respect of the matters of claim and defence."
G In this case the High Court has not stated what was the ground
of attack that plaintiff-appellant ought to have raised in the first
suit but had failed to raise, which she raised in the second suit,
to attract the principle of constructive res judicata. The second
suit is not barred by constructive res judicata.
H
ALKA GUPTA v. NARENDER KUMAR GUPTA. 775
[R.V. RAVEENDRAN, J.]
IV.A suit cannot be dismissed without trial merely because the A
court feels dissatisfied with the conduct of the plaintiff.
16. Code of Civil Procedure is nothing but an exhaustive
compilation-cum-enumeration of the principles of natural justice
with reference to a proceeding in a court of law. The entire
B
1 object of the Code is to ensure that an adjudication is
conducted by a court of law with appropriate opportunities at
appropriate stages. A civil proceeding governed by the Code
will have to be proc('}eded with and decided in accordance with
law and the provisions of the Code, and not on the whims of
the court .. There are no short-cuts in the trial of suits, unless they G
are provided by law. A civil suit has to be decided after framing
issues and trial permitting the parties to lead evidence on the
issues, except in cases where the Code or any other law makes
I
an exception or; provides any exemption.
D
17. The Code enumerates the circumstances in which a
civil suit can be dismissed without trial. We may refer to them
(not exhaustive):· '
(a) Dismissal as a consequence of rejection of plaint under , E
Order 7 Rule 11 of the Code in the following grounds : (i) where
it does not disc.lose a cause of ?r:;tion; (ii) where the relief in
the plaint is und.ervalued and plainutf fails to correct the valuation
within the time fixed; (iii) where the court fee paid is insufficient
and plaintiff fails to make good the deficit within the time fixed
by court: (iv) where the suit appears from the statement in the F
plaint to be barred by law; (v) where it is not filed in duplicate
and where the plaintiff fails to comply with the provisions of
Order 7 Rule 9 of the Code.
(b)Dismissal under Order 9 Rule 2 or Rule 3 or Rule 5 or Rule G
8 for non-service of summary or non-appearance or failure to
apply for fresh summons.
(c)Dismissal under Order 11 Rule 21 for non-compliance with
H
776 SUPREME COURT REPORTS [2010] 11 S.C.R.
A an order to answer interrogatories, or for discovery or
inspection of documents.
(d) Dismissal under Order 14 Rule 2(2) where issues both of
law and fact arise in the same suit and the court is of opinion
that the case or any part thereof may be disposed of on an issue
8
of law only and it tries such issue relating to jurisdiction of the
court or a bar to a suit created by any law for the time being in
force first and dismisses the suit if the decision on such
preliminary issue warrants the same,
C (e)Dismissal under Order 15 Rule 1 of the Code when at the
first hearing of the suit it appears that the parties are not at issue
on any question of law or fact. ·
(f) Dismissal under Order 15 Rule 4 of the Code for failure to
0 produce evidence.
(g)Dismissal under Order 23 Rules 1 and 3 of the Code when
a suit is withdrawn or settled out of court.
18. The following provisions provide for expeditious
E disposal in a summary manner :
(i) Order V Rule 5 oiJhe Code requires the court to
determine, at the time of issuing the summons, whether it
shall be for the settlement of issues only, or for the final
disposal of the suit (and the summons shall have to contain
F
a direction accordingly). In suits to be heard by a court of
small causes, the summons shall be for the final disposal
of the suit.
(ii) Order 15 Rule 3 of the Code provides where the parties
G are at issue on some question of law or of fact, and issues
have been framed by the court as hereinbefore provided,
if the court is ·satisfied that no further argument or evidence
than the parties can at once adduce is required upon such
of the issues as may be sufficient for the decision of the
H
ALKA GUPTA v. NARENDER KUMAR GUPTA 777
[R.V. RAVEENDRAN, J.]
suit, and that no injustice will result from proceeding with A
the suit forthwith, the court may proceed to determine such
issues, and, if the finding thereon is sufficient for the
decision, may pronounce judgment accordingly, whether
the summons has been issued for the settlement of issues
only or for the final disposal of the suit. (But where the B
summons has been issued for the settlement of issues
only, such a summary course could be adopted only where
the parties or their pleaders are present and none of them
objects to such a course).
(iii) Order 37 Rule 1 read with Rules 2& 3 of the relating c
to summary suits.
19. But where the summons have been issued for
settlement of issues, and a suit is listed for consideration of a
preliminary issue, the court cannot make a roving enquiry into D
the alleged conduct of the plaintiff, tenability of the claim, the
strength and validity and contents of documents, without a trial
and on that basis dismiss a suit. A suit cannot be shortcircuited
by deciding issues of fact merely on pleadings and documents
produced without a trial. In this case, the learned Single Judge
E
has adjudicated and decided questions of fact and rendered
a judgment, without evidence tested by cross-examination. We
extract below some of the reasonings, findings, assumptions
and conclusions of the learned Single Judge leading to the
dismissal of the suit when hearing a preliminary issue relating
to res judicata, thereby demonstrating assumption of a F
jurisdiction not vested in it and also acting in the exercise of
its jurisdiction illegally and with material irregularity:
1• "What emerges from the aforesaid is that the plaintiff at
the time of inception of the partnership and till date is a G
government teacher and under the terms of her
employment was not entitled to enter into the partnership
and was not entitled to earn any profits therefrom. Not only
under the terms of her employment, the plaintiff before the
H
778 SUPREME COURT REPORTS [201 OJ 11 S.C.R.
A Service Tax Authorities also represented that she had
only academic interest. It can only mean that she had no
profit interest in the partnership. Though the plaintiff has
denied that she has filed the clearance certificate
aforesaid wi\il the government school in which she is
B employed but the purpose of plaintiff obtaining the said
clearance certificate from the defendant can only be to use
the same in the event of any complaint of breach of terms
of employment being made against her.
xxx xxx xxx
c
The question which arises for adjudication is whether a
litigant can be permitted to take a stand in the court,
diametrically opposite to the stand of that litigant
elsewhere. Can there be different stands before the
D government as employer and before the Taxation
Authorities and before the court. Should the courts permit
such stand to be. taken in the course of judicial proceedings
and should the courts come to the rescue of such a litigant
in recovering dues which that litigant elsewhere has
E represented are not due to her.
The aforesaid circumstances leave no manner of doubt
that the plaintiff in contravention of the terms of her
employment was carrying on business as a partner with
the defendant. The question is of enforcement of such a
F partnership and or the terms thereof by the cowt.
xxx xxx xxx
In the present case the condition in the term of the
G employment of the plaintiff as a government teacher,
admittedly prohibit her from carrying on any business
activity or other vocation for profits. Such condition has
been imposed to ensure that the teachers of the
government school devote their full energy and time to
.H developing the young minds, rather than treating the
ALKA GUPTA v. NARENDER KUMAR GUPTA 779
[R.V. RAVEENDRAN, J.]
government service as a mere source of income and A
utilizing their time and skill in earning/making money
elsewhere. The plaintiff by entering into the agreement of
partnership with the defendant had clearly violated her
terms of employment and this Court cannot come to her
assistance to enable her to earn profits which she B
otherwise is not entitled. The plaintiff has admitted to
having not shown any profits whatsoever in her Income Tax
return. It is inconceivable that the plaintiff who has claimed
to be in partnership since the year 1999 or 2000 would
not have earned any profits from the partnership and/or if c
would not have earned would have sat quietly"° for four
years. The plaintiff cannot be permitted to take, different
stands before different fora. The condition/term of
employment prohibiting the plaintiff from ente,ring into
partnership is found to be in public interest and the action
of the plaintiff of breaching/violating the same is fou"nd to D
be immoral and opposed to public policy. The breach is
not found to be trivial or venial. Further, the conduct of the
plaintiff thereafter also, as noted above is found to be of
subterfuge and plaintiff has _been found to be misstating
facts. The plaintiff is found to ·be an unscrupulous p.erson E
and her case is found to be based on falsehood., This
Court refuses to come to the aid of plaintiff and her case
is liable to be dismissed summarily.
That even on the facts of this case, I have no doubt that F
the plaintiff has abused the process of the court. The
plaintiff in the Bayana Agreement aforesaid had clearly
agreed to the sum of Rs. 21.50 lacs towards her share in
the partnership firm inclusive of the value of the Rohini
property where the partnership business was being carried G
on. As far as the Paschim Vihar property is concerned, the
issue with respect whereto was raised, the same also finds
mention in the said Bayana Agreement and the receipt.
The conduct of the plaintiff also shows that all accounts had
H
780 SUPREME COURT REPORTS (201 OJ 11 S.C.R.
A been settled and no accounts remained to be taken and
for which purpose the suit had been filed. Had the accounts
not been settled, the question of the plaintiff instructing the
bank to delete her name from the account in the name of
the firm and of receiving the original Bayana Agreement
B and of obtaining the clearance certificate aforesaid would
not have arisen. The case set up by the plaintiff is contrary
to all the admitted documents.
xxx xxx xxx
c I find the present case to be clear beyond all reasonable
doubts. The Bayana Agreement and Receipt admittedly
executed by plaintiff and the averments of plaintiff in plaint
in earlier suit instituted by plaintiff, permit of no controversy.
The consideration mentioned therein was in settlement of
D all claims of plaintiff with respect to her share in partnership.
The contemporaneous conduct of plaintiff, of statement on
13th August, 2004 in suit No. 438/2004 instituted by
defendant; of taking clearance certificate dated 13th
August, 2004 from defendant, of having her name as
E signatory deleted from the bank account of firm are also
in consonance with said documents. The facts of this case
do not require any opportunity for leading evidence to be
given to the plaintiff. This Court cannot put a case contrary
to such documents and conduct to be put to trial. The
F explanations now given during arguments do not form the
basis of suit and pleadings."
(emphasis supplied)
The observation of the learned Single Judge that "the facts
G 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
H
ALKA GUPTA v. NARENDER KUMAR GUPTA 781
[R.V. RAVEENDRAN, J.]
of parties to lead evidence. To render a final decision by A
denying such opportunity would be highhanded, arbitrary
and illegal.
20. Even the division bench committed the same error. We
extract below para 14 of the impugned order which shows that 8
the decision was based on assumption without basis and in
the absence of evidence freely referring to and relying upon
unexhibited documents :
"This is not the case of the plaintiff/appellant that the firm
was maintaining separate accounts, one for the business C
being run by it in Rohini and the other for the business
being run in Paschim Vihar. Ordinarily, when there is a
Settlement between the partners of the firm whereby they
agree to part ways, the Settlement effected between them
would cover accounts of the entire business being run by D
them in partnership and it would not be confined only to
one part of the business. This is more so when the
document executed between the parties at the time of
parting ways and setting the disputes does not reserve any
right in favour of the outgoing partner, to receive any further E
payment from the partner who retains the business of the
erstwhile firm. In none of the documents executed
. between the parties, there is an averment that the
accounts of business being run in Paschim Vihar had not
been settled or that the plaintiff/appellant would not, in F
addition to the sum referred in the document, also be
entitled to share of the profit earned by the firm from its
business in Paschim Vihar. Vide endorsement made on
the receipt dated 29.6.2004, the husband of the appellant
recorded that Paschim Vihar Institute Deed would be G
settled in the name of Dr.Rashmi Gupta for the
consideration of Rs.15 lakhs. This is yet another proof of
the fact that the matter relating to Paschim Vihar Institute
had also been finally settled between the parties. During
the course of arguments before us, it was contended by
H
782 SUPREME COURT REPORTS [2010] 11 S.C.R.
A learned counsel for the appellant that the endorsement was
made by the husband of the appellant without authority
from her. Since we noticed a gentleman giving instructions
to the learned counsel for the appellant, during the course
of the hearing before us, we asked her as to who the
B gentleman was and we were told that he was none other
than the husband of the appellant. This leaves no doubt
in our mind that the husband of the appellant was acting
on authority from her when he made endorsements on
the Bayana Agreement and Receipt dated 29. 6. 2004.
c The shifting stands taken before him have been noted in
detail, by the learned Single Judge.
(emphasis supplied)
21. The High Court recorded factual findings on inferences
D fr6m the plaintiffs (appellant) conduct and branded her as an
uhscrupulous 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
E 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 gr9unds for dismissal
without trial.
F 22. We also fail to understand how costs of Rs.50,000/-
could be levied. This Court has repeatedly stated that in dealing
with civil suits, courts will have to follow the provisions of Code
of Civil Procedure in levying costs.
G 23. This order should not be construed as a finding on the
conduct of the appellant one way or the other. We have
exarnined the matter only for the limited purpose of finding out
wh~ther the High Court had proceeded in accordance with law
and the provisions of Code of Civil Procedure. If on evidence,
ALKA GUPTA v. NARENDER KUMAR GUPTA 783
[R.V. RAVEENDRAN, J.]
the conduct of the plaintiff or the defendant is found to be A
unscrupulous or •mbecoming, it is open to the court at that stage
to decide upon the consequences that should be visited upon
her or him.
24. We therefore allow this appeal, set aside the order of
8
the Division Bench of the High Court dated 7.9.2009 affirming
the order dated 13.3.2009 of the learned Single Judge 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.
c
R.P. Appeal allowed.
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