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Gracure Pharmaceuticals Ltd. v. The State Bank Of India And Ors. S
Factual and Procedural Background
The appellant, a customer of State Bank of India, filed an initial suit seeking recovery of Rs. 44,30,994/- based on four distinct heads related to credit facilities and export transactions. The suit alleged negligence by bank officers in realizing dues under letters of credit, resulting in financial loss to the appellant. Following this, a second suit was filed claiming damages of Rs. 3,09,000/- against the bank and specific officers for malicious withdrawal of credit facilities, allegedly due to animosity arising from the appellant's complaint to the Banking Ombudsman.
The second suit was held barred under Order 2 Rule 2 of the Code of Civil Procedure by the Trial Court, which found the cause of action for the second suit had accrued when the first suit was filed and that the plaints contained largely identical factual allegations. This appeal challenges that order.
Legal Issues Presented
- Whether the second suit for damages is barred under Order 2 Rule 2 of the Code of Civil Procedure on the ground of multiplicity of suits arising from the same cause of action.
- Whether distinct causes of action arising from related facts can be pursued in separate suits without contravening the bar under Order 2 Rule 2.
- The correct interpretation and application of Order 2 Rule 2, especially the distinction between cause of action and multiple causes flowing from the same transaction.
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Payana v. Pannalal, 26 IC 228 | Clarification that Order 2 Rule 2 is aimed at exhaustion of relief for a cause of action and not to preclude separate causes of action arising from the same transaction. | The court relied on this precedent to emphasize that different causes of action, even if arising from the same transaction, may be pursued in separate suits and that the rule should be applied with caution. |
Court's Reasoning and Analysis
The court analyzed the legislative intent behind Order 2 Rule 2 of the Code of Civil Procedure, which seeks to prevent multiplicity of suits for the same cause of action to avoid vexation of parties. The court distinguished between the cause of action and multiple causes arising from the same transaction, emphasizing that the rule focuses on the former.
It noted that joinder of causes of action is at the plaintiff's option under Rule 3 of Order 2 and that courts have discretion under Rule 6 of Order 2 to order separate suits if joinder would cause delay or embarrassment. The first suit was based on contractual claims related to bank facilities, whereas the second suit arose from tortious conduct by bank officers motivated by animosity due to the appellant's complaint to the Banking Ombudsman.
The court found that the Trial Judge erred in treating the two suits as barred under Order 2 Rule 2 because the causes of action were distinct, notwithstanding some overlapping facts. Consequently, the Trial Judge's order was set aside, and the second suit was restored for adjudication on merits.
Holding and Implications
The appeal is allowed, and the impugned order dismissing the second suit under Order 2 Rule 2 is set aside.
The suit for damages is restored and will be heard on its merits by the Trial Court. The decision clarifies that Order 2 Rule 2 does not bar suits based on different causes of action even if they arise from the same transaction, thereby permitting plaintiffs the option to pursue separate remedies where appropriate. No new precedent beyond this case's direct effect on the parties is established.
Pradeep Nandrajog, J. (Oral):— Heard learned counsel for the parties.
2. Vide impugned order dated 10.5.2006 suit filed by the appellant seeking damages in sum of Rs. 3,09,000/- has been held to be barred under Order 2 Rule 2 of the Code of Civil Procedure.
3. It is not in dispute that the appellant had filed a suit for recovery of Rs. 44,30,994/- having 4 distinct heads being:—
A.Rs. 31,28,421/-B.Rs. 10,15,955/-C.Rs. 2,64,618/-D.Rs. 22,000/-Total:Rs. 44,30,994/-
4. The material allegations in the said suit were that the appellant was a customer of State Bank of India and was availing various credit facilities from the bank. That two letters of credit were negotiated through the bank for which goods were exported and requisite applications submitted to the bank for realization of the dues. It was alleged that the officers of the bank remained negligent in not realizing the dues covered by the letter of credit resulting in the foreign buyer receiving the consignments and no money flowing to the coffers of the appellant. Stating that after the appellant move the? Banking Ombudsman?, the officers of the bank could recover the money due under only one export transaction; it was stated that money due under the other export consignment in sum of Rs. 31,28,421/- was recoverable by the appellant. Interest on said sum for the pre-suit period was claimed at Rs. 10,15,955/-. Pertaining to the export consignment for which the money was subsequently realized by the bank and credited in the account of the appellant, loss of interest in sum of Rs. 2,64,618/- was claimed. Rs. 22,000/- were claimed as lawyer's fee who served pre-suit notice.
5. A second suit was filed in which after narrating the facts which were pleaded in the earlier suit, as the backdrop facts of the action in the second suit, it was stated that due to the fact that the appellant had approached the? Banking Ombudsman?, the officers of the bank and in particular the Deputy General Manager, Sh. D.S Dass and the Chief Manager Sh. W.V.G Venkata Ramana became inimical towards the appellant resulting in a malicious action on their part to withdraw the facilities granted by the bank to the appellant; stating that the same was a tortuous act, damages were claimed not only against the bank but even against the tort-feasors.
6. The second suit which sought damages in sum of Rs. 3,09,000/- has been held to be barred under Order 2 Rule 2 of the Code of Civil Procedure.
7. The reasoning of the learned Trial Judge is, to quote:—
I find that paragraph no. 1 if these two plaints are identical. Similarly, the contents of para 5, para 6, para 7, para 8, para 9 and para 10 of the present suit are almost identical to para 4, para 10, para 12, para 13, para 16 and para 19 of the suit pending disposal before the Hon'ble High Court. There may be a few minor variations here and there. The facts justifying the filing of the two suits are almost identical. The case of the Plaintiff is that it is a public limited company. It was enjoying cash credit limit vide account no. 01600005374 from the Industrial Finance Branch of Defendant no. 1. In the suit bearing no. 1145/03 which is pending disposal before the Hon'ble High Court, it was alleged by the Plaintiff that? to cover up its negligence, deficiency in private services and failure to perform contractual and professional obligations, the Defendant illegally and wrongfully debited the account of the Plaintiff on 01.05.01 for the amount of Rs. 31,28,421/- and on 14.6.01 for the amount of Rs. 30,91,185/-. Since the Defendant has give the credit of Rs. 30,91,185/-, therefore, it is claiming interest on this amount. The Plaintiff had claimed Rs. 41,44,376/- with interest. In the present suit the Plaintiff is claiming the damages from the Defendants.?
8. Learned Trial Judge has held that a meaningful reading of the two plaints would make it evident that the cause of action for the second suit had accrued when the first suit was filed.
9. Unfortunately, the learned Trial Judge has failed to appreciate the legislative intent under Order 2 Rule 2 of the Code of Civil Procedure.
10. Order 2 Rule 2 is aimed at avoiding multiplicity of suits in respect of the same cause of action. The rule is based on the principle that a party should not be vexed twice for the one and the same cause of action.
11. It is apparent that the emphasis is on the cause of action and not on various causes which may flow from the acts of the parties.
12. As explained by the privy counsel in the decision reported as 26 IC 228 Payana v. Pannalal the rule under Order 2 Rule 2 has to be applied with caution for the reason claims which are otherwise legitimate may result in the same being jettisoned. It was held that the rule is directed to securing the exhaustion of the relief in respect of a cause of action and not to the inclusion in one of the same action, of different causes of action, even though they arise from the same transaction.
13. If one peruses Rule 3 of Order 2, one would notice that it is at the option of the plaintiff to unite in the same suit several causes of action. Meaning thereby that joinder of causes of action is at the option of the plaintiff and not a compulsion of law. Further, where joinder of causes of action may embarrass the trial or delay the same, exercising power under Rule 6 of Order 2, it is open to the Court to order that separate suits would be filed pertaining to different causes of action which may accrue on the same transaction.
14. In this case it is important to note that the earlier suit was founded on a cause of action pertaining to the contract between the parties. The second suit was on an entirely different footing being the malicious action of the officers of the bank to withdraw the credit facilities because of their animus emanating from the action of the appellant to lodge a complaint before the? Ombudsman Banking?.
15. We allow the appeal.
16. Impugned order, which has to be treated as a decree in terms of sub-Section 2 of Section 2 of the Code of Civil Procedure, is set aside.
17. The order is dated 10.5.2006 in suit No. 288/2003-04.
18. The suit is restored.
19. The parties shall appear before the learned District and Sessions Judge at Tis Hazari on 18.12.2008 Successor Court would be identified before whom the parties shall appear. Learned Trial Judge shall decide the suit on merits and in accordance with law.
20. TCR be returned forthwith through a special messenger.
21. No costs.
22. Copy of this order be supplied dasti to learned counsel for the parties.
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