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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOs. 10531-10532  OF 2013 (@ Special Leave Petition (C) Nos.5945-5946 of 2009)

State Bank of India       … Appellant

Versus

Gracure Pharmaceuticals Ltd.  … Respondents

J U D G M E N T

K.S. Radhakrishnan, J.

Leave granted.

2. We  are,  in  this  case,  concerned  with  the  

applicability of Order 2 Rule 2 of the Code of Civil  

Procedure  (for  short  “the  CPC”)  in  respect  of  two  

suits filed by the respondent, one in the Original side  

of  the  Delhi  High  Court  and  another  before  the  

District Court, Delhi.  Original Suit No.1145 of 2003  

was filed by the respondent herein on 15.05.2003 for

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recovery of an amount of Rs.44,30,994 against the  

appellant bank and its officers towards the amount of  

Letter of Credit issued by Credit Du Nord, Paris (CDN)  

and  towards  interest  for  the  delay  in  receipt  of  

payment  from  BNP  –  Paribas  S.A.,  Ivry-Sur-Scine  

(BNP) with cost  pendente lite and future interest @  

18% per annum.   

3. Suit No.288/03/04 of 2003 was also filed by the  

respondent  on  21.05.2003  claiming  damages  of  

Rs.3,09,000/- with cost and pendente lite and future  

interest  @  18%  per  annum  against  bank  and  its  

officers for withdrawing credit facility on 23.03.2002.  

Notice was issued to the bank and its officers by the  

District Court, Delhi.

4. The  bank  and  its  officers  then  filed  an  

application  under  Order  7  Rule  11  CPC  in  Suit  

No.288/03/04 of 2003 before the District Court, Delhi  

for rejection of the plaint in the suit for damages on  

the ground that the same is barred by the provisions  

of Order 2 Rule 2 CPC.  The District Court elaborately

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heard  the  matter  and  after  perusing  the  plaints,  

averments  in  both  the  suits  as  well  as  the  reliefs  

sought for, came to the conclusion that the cause of  

action  in  both  the  suits  was  same  and  the  relief  

sought for in Suit No.288/03/04 of 2003 could have  

been claimed by the plaintiff in the Suit No.1145 of  

2003  filed  before  the  Delhi  High  Court.   The  

application  under  Order  7  Rule  11  was,  therefore,  

allowed, holding that the latter suit was barred under  

Order  2  Rule  2,  CPC  and  plaint  was  accordingly  

rejected.   

5. The  respondent,  aggrieved  by  the  said  order,  

filed RFA No.490 of 2006 before the Delhi High Court.  

The High  Court  took  the  view that  the  earlier  suit  

No.1145  of  2003  was  founded  on  cause  of  action  

pertaining to the contract between the parties and  

the second Suit No.288/03/04 of 2003 was on entirely  

different  footing,  being  the malicious  action  of  the  

officers  of  the  bank  to  withdraw the  credit  facility  

because of their animus emanating from the action

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of  the respondent to  lodge a complaint  before the  

Ombudsman Banking.   Holding so, the appeal was  

allowed  and  the  order  dated  10.05.2006  of  the  

District Court was set aside.  Challenging the above-

mentioned order  these appeals  have been filed by  

the State Bank of India.   

6. Shri  C.U.  Singh,  learned  senior  counsel  

appearing for the bank submitted that the High Court  

has failed to consider the scope of Order 2 Rule 2,  

CPC  and  committed  a  mistake  in  holding  that  the  

respondent  could  not  have  claimed  the  relief  of  

damages  in  Suit  No.1145  of  2003,  the  earlier  suit  

filed before the High Court.   Learned senior counsel  

submitted that the respondent, on the date of filing  

of  the  earlier  suit,  was  aware  that  the  bank  had  

declined to  grant  any  further  credit  facility,  in  the  

event  of  which,  the  respondent  could  have sought  

the  relief  for  damages  against  the  bank  and  its  

officers  in  the earlier  suit.   Learned senior  counsel  

submitted that, having omitted to claim such a relief

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in the earlier suit, the Court ought to have held that  

the  respondent  had  relinquished  its  claim  and  is  

estopped from preferring a second suit in view of the  

provisions of Order 2 Rule 2,  CPC.  Learned senior  

counsel  also  submitted,  what  is  required  is,  that  

every suit shall hold whole of the claim arising out of  

one  and  the  same  cause  of  action  and  it  was  

obligatory on the part of the respondent to raise the  

whole claim at the time of institution of the first suit.  

Learned  senior  counsel  placed  reliance  on  the  

Judgments of this Court in Deva Ram and another  

v.  Ishwar Chand and another (1995) 6 SCC 733  

and  Sandeep  Polymers  (P)  Ltd. v.  Bajaj  Auto  

Ltd. and others  (2007) 7 SCC 148.

7. The respondent filed a detailed counter affidavit  

before this Court explaining its stand.  It was pointed  

out that the cause of action to file the first suit arose  

much prior to the subsequent suit since on the basis  

of wrongful debits made by the bank to the account  

of the respondent on 01.05.2001 and 14.06.2001 for

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the amounts of two Letters of Credit,  one of which  

the  bank  could  not  recover  and  second  was  

recovered later  from the foreign  bank.   Further,  it  

was also pointed out that the facts on the basis of  

which two suits have been filed and respective reliefs  

sought for, are absolutely distinct and separate and  

cause of action subsequently arose because of the  

wrongful acts of the bank depriving the respondent of  

various banking facilities. Further, it was also pointed  

out that the damages claimed in the subsequent suit  

have no link or nexus to the cause of action with the  

previous one.  Consequently, it was pointed out that  

the High Court has rightly allowed the appeal which  

calls for no interference by this Court under Article  

136 of the Constitution of India.

8. We may, before examining the rival contentions,  

extract the relevant provisions of Order 2 Rule 2, CPC  

for easy reference which reads as under:

“2.    Suit to include the whole claim.— (1)  Every suit shall include the whole of the claim  which  the  plaintiff  be  entitled  to  make  in  respect of the cause of action; but a plaintiff

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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   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 afterwards  sue for any reliefs so omitted.”

9. The  scope  of  the  above-mentioned  provisions  

came  up  for  consideration  before  this  Court  in  

several  cases.   The earliest one dealt  by the Privy  

Council  was  reported  in  Naba  Kumar  Hazra v.  

Radhashyam Mahish AIR 1931 PC 229 wherein the  

Privy  Council  held  that  the  plaintiff  cannot  be  

permitted to draw the defendant to court twice for  

the same cause by splitting up the claim and suing,  

in the first instance, in respect of a part of claim only.  

In Sidramappa v. Rajashetty and Others (1970) 1  

SCC 186 this Court held that if the cause of action on

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the  basis  of  which  the  previous  suit  was  brought,  

does not form the foundation of subsequent suit and  

in the earlier suit the plaintiff could not have claimed  

the relief which he sought in the subsequent suit, the  

latter, namely, the subsequent suit, will not be barred  

by  the  rule  contained in  Order  2  Rule  2,  CPC.   In  

Gurbux Singh v.  Bhooralal AIR 1964 SC 1810 the  

scope of the above-mentioned provision was further  

explained as under:

“In order that a plea of a Bar under Order 2 Rule  2(3) of the Civil Procedure Code should succeed the  defendant who raises the plea must make out; (i)  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; (3)  that being thus entitled to more than one relief the  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 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 suit is based there would be no scope for  the application of the bar.”

10. In Sandeep Polymers (P) Ltd.’s case (supra),  

the above-mentioned principles were reiterated and  

this Court held as under:

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“Under  Order  2  Rule  1  of  the  Code  which  contains provisions of mandatory nature, the  requirement  is  that  the  plaintiffs  are  duty- bound to claim the entire relief. The suit has  to be so framed as to afford ground for final  decision upon the subjects in dispute and to  prevent  further  litigation  concerning  them.  Rule  2  further  enjoins  on  the  plaintiff  to  include  the  whole  of  the  claim  which  the  plaintiff is entitled to make in respect of the  cause of action. If the plaintiff omits to sue or  intentionally  relinquishes  any  portion  of  his  claim, it is not permissible for him to sue in  respect  of  the  portion  so  omitted  or  relinquished afterwards.  

11. The above-mentioned decisions categorically lay  

down the  law  that  if  a  plaintiff  is  entitled  to  seek  

reliefs against the defendant in respect of the same  

cause of action, the plaintiff cannot split up the claim  

so as to omit one part to the claim and sue for the  

other.  If the cause of action is same, the plaintiff has  

to place all his claims before the Court in one suit, as  

Order 2 Rule 2, CPC is based on the cardinal principle  

that  defendant  should  not  be  vexed  twice  for  the  

same cause.

12. Order  2  Rule  2,  CPC,  therefore,  requires  the  

unity of all claims based on the same cause of action

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in one suit, it does not contemplate unity of distinct  

and  separate  cause  of  action.   On  the  above-

mentioned  legal  principle,  let  us  examine  whether  

the  High  Court  has  correctly  applied  the  legal  

principle in the instant case.   

13. We  have  gone  through  the  plaints  and  the  

averments contained in both the suits in extenso and  

also  the  reliefs  claimed  in  both  the  suits.  

Respondents  had availed of  various credit  facilities  

from the State Bank of India.  It had an export order  

from  M/s  Medipharma  Company,  France  who  had  

opened  two  Letters  of  Credit.   The  first  Letter  of  

Credit  was opened with  CDN and second Letter  of  

Credit was opened with BNP.  The date of issue of  

first Letter of Credit by CDN was 16.01.2001 and it  

was  to  expire  on  10.04.2001.   Similarly,  second  

Letter  of  Credit  opened  with  BNP  was  issued  on  

16.01.2001 and was to  expire  on 30.04.2001.   On  

20.03.2001, proceeds of the export deal were paid by  

the bank honouring the bills of exchange against the

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Letter of Credit  opened with CDN and credited the  

same  to  the  account  of  the  respondent  on  the  

understanding that in case the relevant documents  

were accepted by the opening owner/issuing bank for  

any reason whatsoever, the respondent was liable to  

repay to  the bank,  without  demur  or  demand,  the  

amount  of  the  bills/documents  along  with  overdue  

interest and other charges.  Other clauses were also  

incorporated so as to safeguard the interest of the  

bank.  On 28.03.2001, the bank honoured the bills of  

exchange against the LC opened with BNP subject to  

the various conditions.  The amount was credited to  

the account of the respondent subject to realization  

of LC.  Since the amount of the LC was not received  

with the issuing bank on 01.05.2001, the amount was  

debited to the account of the respondent on account  

of non-receipt of LC from CDN.  Similarly, the amount  

of LC having not received from the issuing bank by  

14.06.2001, the amount was debited to the account  

of the respondent for non-receipt of LC from BNP.  

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14. The bank sent various letters to the respondent  

to regularize the accounts.  Since the accounts were  

not regularized, the bank decided not to grant further  

facility.   The  respondent  then  on  receipt  of  the  

payment from the foreign buyer and having failed to  

take any steps to realize the payment from the buyer  

or issuing bank, filed a complaint on 30.09.2001 with  

the  Banking  Ombudsman  against  the  bank  on  

account  of  reversing  the  entry  on  non-receipt  of  

payment  of  LCs.   The  complaint  filed  by  the  

respondent  was,  however,  later  withdrawn.   The  

bank’s stand is that closure of account was done on  

20.03.2002  due  to  the  fault  of  the  respondent  on  

non-regularization  of  their  accounts  i.e.  after  non-

receipt  of  payment  of  LC,  the  amount  became  

irregular and remained so continuously.  Let us now  

examine the averments contained in paragraph 37 of  

the  subsequent  suit  No.288/03/04  of  2003  in  the  

above  perspective.   Paragraph  37  is  extracted  

hereinbelow for easy reference:

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“37.     That the cause of action to file the  present suit accrued in favour of the plaintiff  and  against  the  Defendants  on  all  those  occasions when the Defendants wrote various  letters to the Plaintiff  threatening initiate or  actually initiating action against the Plaintiff  in  relation  to  various  credit  facilities  which  were  being  enjoyed  by  the  Plaintiff.   The  cause  of  action  to  file  the  present  suit  accrued further in favour of the Plaintiff and  against the Defendants on all those occasions  when the Defendants actually initiated action  against  the  Plaintiff  in  relation  to  various  credit facilities, which were being enjoyed by  the plaintiff and thereby did not provide the  said facilities  to  the Plaintiff.   The cause of  action further accrued when the Defendants  wrote letter dated 20.03.2002 to the Plaintiff  conveying  their  decision  to  unilaterally  and  illegally  rescind  and  contract  between  the  parties  and  thereby  stopping  all  credit  facilities to the Plaintiff.  The cause of action  accrued  further  when  on  26.3.2002,  the  general  Manager  (Commercial)  of  the  Defendant No.1 did not intervene to stop the  arbitrary and illegal action of the concerned  officers of the Industrial Finance Branch.  The  cause of action accrued further when prior to  filing  of  the  suit,  the  Plaintiff  through  its  counsel,  issued  and  served  upon  the  Defendants a legal notice dated 24.12.2002.  The  cause  of  action  is  still  continuing  and  subsisting.”

  15. When  we  go  through  the  above  quoted  

paragraph it  is clear that the facts on the basis of  

which subsequent suit was filed, existed on the date  

on which the earlier suit was filed.  The earlier suit

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was  filed  on  15.03.2003  and  subsequent  suit  was  

filed on 21.05.2003.  No fresh cause of action arose  

in between the first suit and the second suit.   The  

closure  of  account,  as  already  indicated,  was  

intimated on 20.03.2002 due to the alleged fault of  

the respondent in not regularizing their accounts i.e.  

after  non-receipt  of  payment  of  LC,  the  account  

became irregular.  When the first suit for recovery of  

dues was filed i.e. on 15.03.2001 for alleged relief,  

damages  sought  for  in  the  subsequent  suit  could  

have also been sought for.  Order 2 Rule 2 provides  

that every suit shall include the whole of the claim  

which the plaintiff  is entitled to make in respect of  

the same cause of action.  Respondent is not entitled  

to  split  the  cause  of  action  into  parts  by  filing  

separate  suits.   We find,  as  such,  that  respondent  

had omitted certain reliefs which were available to it  

at the time of filing of the first suit and after having  

relinquished the same, it cannot file a separate suit  

in view of the provisions of sub-rule 2 of Order 2 Rule  

2,  CPC.   The object  of  Order  2  Rule  2  is  to  avoid

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multiplicity of proceedings and not to vex the parties  

over  and  again  in  a  litigative  process.  The  object  

enunciated in Order 2 Rule 2, CPC is laudable and it  

has  a  larger  public  purpose  to  achieve  by  not  

burdening the court with repeated suits.   

16. We  are,  therefore,  of  the  view  that  the  High  

Court has committed an error in reversing the order  

dated  10.05.2005,  passed  by  the  District  Court,  

allowing the application under Order 7 Rule 11, CPC.  

The  appeals  are  accordingly  allowed  and  the  

judgment of the High Court is set aside.  However,  

there will be no order as to costs.

  ..………………………J.    (K.S. Radhakrishnan)

  ………………………..J.    (A.K. Sikri)

New Delhi November 22, 2013