Civil Procedure Law

Virgo Industries (Eng.) Pvt. Ltd. v. Venturetech Solutions Pvt. Ltd.

(2013) 1 SCC 625

Facts

The plaintiff entered into agreements for purchase of immovable properties from the defendants.
The agreements fixed obligations concerning execution of the sale deeds.
Before filing the first set of suits, the plaintiff alleged that the defendants had refused or failed to honour the agreements and were attempting to alienate the properties.
It filed suits seeking permanent injunctions restraining the defendants from transferring the properties to third parties.
At that stage, the plaintiff did not seek specific performance of the sale agreements.
It also did not obtain leave under Order II Rule 2(3) to reserve the specific-performance relief.
Later, it instituted fresh suits seeking specific performance of the same agreements.
The defendants applied for rejection of the later plaints, arguing that:
The refusal to perform was already known when the injunction suits were filed;
The specific-performance relief was then available; and
Its omission without leave barred the later suits.
The High Court declined to reject the suits, leading to an appeal before the Supreme Court.

Whether the injunction and specific-performance suits arose from the same cause of action.
Whether the later relief was available when the earlier suits were instituted.
Whether the absence of leave under Order II Rule 2 barred the subsequent suits.

The plaintiff must include the whole claim arising from one cause of action.
If several reliefs are available on that cause of action, omission of one relief bars a later suit for it unless leave is obtained.
The decisive questions are:
What material facts existed when the first suit was filed?
Had the defendant already denied or threatened the plaintiff’s contractual right?
Was the omitted relief then legally available?
A plaintiff cannot avoid Order II Rule 2 by:
Seeking only an injunction first;
Waiting; and
Later seeking specific performance on the same existing refusal.
A fresh suit remains permissible where the later relief arises from:
A subsequent breach;
A later refusal;
Expiry of a performance period; or
New material facts not existing when the first suit was filed.
The substance of the causes of action, not the form of prayers, governs the inquiry.

The first suits themselves alleged that the defendants had:
Failed to honour the agreements;
Threatened the plaintiff’s contractual rights; and
Attempted to deal with the properties inconsistently with the sale agreements.
Those allegations showed that the plaintiff’s right to demand performance had already been denied.
Therefore, the plaintiff could have sought:
Specific performance;
Injunction as an ancillary remedy; and
Other consequential reliefs in the first proceedings.
The later suits did not depend upon any materially new refusal.
They relied on the same agreements and substantially the same conduct already pleaded.
The plaintiff’s decision to seek only protective injunctions was therefore an omission of an available relief.
No leave had been sought from the first court.
Allowing the later suits would permit fragmented litigation:
One suit to preserve the property;
Another to enforce the same contract;
Potentially further suits for consequential claims.
Order II Rule 2 was enacted to prevent precisely that multiplication.
Unlike cases where the contractual performance date had not arrived during the first suit, the pleaded refusal here made the enforcement relief immediately available.

The Supreme Court allowed the appeals and held that the later specific-performance suits were barred by Order II Rule 2.
The plaints were liable to be rejected because the omitted relief was available when the first injunction suits were filed and no leave had been obtained.
Use this case for: A plaintiff who already knows of contractual refusal cannot first sue only for injunction and later sue for specific performance.