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Judgment
Devinder Gupta, J.—In order to avoid repetition of some of the facts common in the two suits, these two applications moved in both the suits can conveniently be disposed of by a single order.
OMP 554/92 in Civil Suit 53/92
Defendant No. 1 has by filing this application prayed for rejection of plaint under order VII rule II of the CPC (hereinafter to be called as ''the code'') on the ground that the same does not disclose a cause of action. The application came up for orders on 13th November 1992. Before issuing any notice on this application and calling upon the plaintiff to file reply. I heard Mr. H.L Tikku, Learned Counsel for defendant No.1 applicant and on the submissions made proceed to record my reasons for deciding the application.
The legal submissions made by Mr. Tikku are not capable of any dispute. It cannot be disputed that the plaint which does not disclose a cause of action has to be rejected. Order of rejection can be passed at any stage of the suit, even if the court has issued summonses to the defendant.
Section 26 of the Code, in terms state, that every suit shall be instituted by the presentation of a plaint or in such other manner as may be prescribed. Order VII rule 1 of the Code deals with the particulars which a plaint should contain and, inter alia, provides that the plaint shall contain the facts constituting the cause of action arid when it arose. Rule 2 of Order VI provides that every pleadings (which includes plaint and written statement) shall contain only a statement in a Concise form of material facts on which the party pleadings relies for his claim or defence but not the evidence by which they are to be proved. Particulars are required to be given when necessary as is laid down in rule 4 of Order VI. Further and better statement of particulars can be sought with regard to any matter stated in the pleadings, as is provided for in Order VI rule 6 of the Code. Section 27 of the Code says that where a suit has been duly instituted summones may be issued to the defendant to appear and answer the claim. Before doing so, what can be gathered by reading various provisions contained in Order VII of the Code is that before calling upon the defendant to answer the plaintiff''s claim has to satisfy itself, prima facie, on the basis of the averments made in the plaint and the documents filed therewith that the same is in conformity with law and if not, a duty is enjoined upon it by virtue of rule II of Order VII to reject the plaint in the eventualities enumerated there in. Such a duty of the Court on receipt of the plaint and before issuing summonses has been emphasised by the Supreme Court in T. Arivandandam Vs. T.V. Satyapal and Another, wherein the Plaint presented before the First Munshif''s court Bangalore, was found by the High Court to be flagrant misuse of mercies of law in receiving plaint'' since the claim was held to be founded on false and vexatious allegations. Approving the findings of the High Court, Krishna Iyer, J, in para 5 of the report observed as follows:
From the statement of the facts found in the judgment of the High Court, it is perfectly plain that the suit now pending be fore the First Munshif''s Court Bangalore, is a flagrant misuse of the mercies of the law in receiving plaints. The learned Munshif must remember that if on a meaning - ful - not formal -reading of the plaint it is manifestly vexatious, and meritless, in the sense of not disclosing a clear right to sue, he should exercise his power under o. VII R. 11, C.P.C. taking care to see that the ground mentioned therein is fulfilled. And, if clear drafting has created the illusion of a cause of action, nip it in the bud at the first hearing by examining the party searchingly under O.X.C.P.C. An activist Judge is the answer to irresponsible law suits. The trial Courts would insist imperatively on examining the party at the first hearing so that bogus litigation can be shot down at the earliest stage. The Penal Code, is also resourceful enough to meet such men. (Ch.XI) and must be triggered against them.........
Mr. Tikku also placed reliance upon number of other judgments, wherein the Supreme Court has time and again reiterated that an Election Petition is liable to be dismissed in limine at the initial stage, if it does not disclose any cause of action. In Azhar Hussain Vs. Rajiv Gandhi, it was held that the whole purpose of the conferment of powers to reject a petition disclosing no cash of action is to ensure that the litigation which is meaningless and bound to prove abortive should not be permitted to occupy the time of the court and exercise the mind of the respondent. The sword of Damocles need not be kept hanging over his head unnecessarily without point purpose. In Bhagwati Prasad Dixit ''Ghorewala'' Vs. Rajeev Gandhi, also the same proposition was emphasised by saying that since the provisions of the Code apply for trial of an Election Petition the same must be dismissed in limine at the initial stage, if it does not disclose any cause of action.
A cause of action consists of all facts, which it is essential for a party to allege and establish. In order words, it has been held to be the bundle of facts, which taken with the law applicable to them gives the party a right to some relief against the opposite party. The cause of action has no relation whatsoever to the defence that may be set up by the defendant nor does it depend upon the character of the relief prayed for by the plaintiff. It refers to the media upon which the plaintiff asks the court to arrive at a conclusion in his favour.
Since the obligation of law, namely, Order VII rule 1 of the Code is that the plaint shall contains the facts, constituting the cause of action, by virtue of rule 2 of Order VI, the plaint must contain only a statement in a concise form of the material facts constituting such cause of action. Therefore, in order to ascertain as to whether the plaintiff, in the instant suit, has in a concise form stated the material facts or in other words whether the facts stated in the plaint do give rise to a cause of action enabling the plaintiff to have a verdict in its favour, in case the facts so stated remain unrebutted, it is necessary to examine the same.
The suit is for recovery of Rs. 1,94, 38, 003.23 on account of principal and interest at 18% per annum with quarterly rests from the date of institution of suit till its realisation. Besides, claiming a personal decree, plaintiff: bank has also prayed for a preliminary decree for the sale of the mortgaged property.
It is alleged that defendant No. 1 - Company through its Directors floated a project for manufacture of watches and other products at Jabbar within Solan district, for which purpose it had applie to various financial institutions, like the Himachal Pradesh Financial Corporation; Himachal Pradesh Mineraland Industrial Development Corporation, now known as Himachal Pradesh State Industrial Corporation and the Industrial Financial Corporation of India for term loans. Pending consideration of these proposals, defendant - company approached the plaintiff - bank for a bridge loan so as to get the delivery of some imported machines and to meet its other immediate requirements. Accordingly, on 25th June, 1977, at Shimla, an amount of Rs. 1,10,01,737.00 was advanced by the plaintiff to the defendants. Two agreements were duly signed incorporating therein terms of this financial assistance. Other necessary documents were also duly executed by the defendants, such as a deed of hypothecation and a demand promissory note. Equitable mortgage was also created with respect to its lease - hold rights by defendant No. 1 Particulars of the mortgage have also been stated in pare 6 of the plaint, as required by order XXXIV of the Code.
It is further alleged that Industrial Financial Corporation of India did not advance the agreed term loan of Rs. 60,00,000.00 to the defendants but the other two financial institutions sanctioned and advanced Rs. 30,00,000.00 each. After release of the same to the defendants and its adjustment by the plaintiff, the amount which remained outstanding against the defendants and which they had failed to repay within six month, as agreed in the documents of bride loan, their liability was worked out on 14th June, 1984, as Rs. 2,04,39,148.85, inclusive of interest calculated upto 31st March, 1984, as Rs. 2,04,39,148.85, inclusive of interest calculated upto 31st March, 1984. The Plaintiff made a demand for return of the bridge loan as per terms of the agreement but instead of paying the amount defendants entered into a fresh agreement with the plaintiff for conversion of the part into loan of different categories, namely, term loan of Rs. 1,20,00,000.00 Rs. 15,70,000.00 as funded interest term loan and the balance of Rs. 68,69,148.85, continued to remain as bridge loan.
Accordings to the plaintiff, this amount of bridge loan of Rs. 68,69,148.85 alongwith interest upto 31st December 1984 became Rs. 77, 28,596.00 and was transferred to protested account. Civil Suit No. 53 of 1992 is for recovery of this amount alongwith interest thereon till the filing of the suit. The plaintiff has also made averments that defendants 2 to 5 by executing deeds of guarantee in favour of the plaintiff have guaranteed the repayment of the loan on various dates. Defendant No.6 is also stated to have by executing a separate deed guaranteed the repayment of loan. It is further averred that in the books of account of the plaintiff, interest is not calculated from 1.1.1985 onwards but the defendants are liable to pay the same at the agreed rate-. In para 10 of the plaint, mention of various letter has been made by virtue of which it is alleged that the defendants from time to time have confirmed the balances and acknowledged their liability. In para 17, averments are made that the suit against all the defendants is within time due to the acknowledgements having been duly signed by them. By narrating these facts and stating the suit amount to be due as on 16.3.1992, plaintiff in para 14 has alleged that the defendants have failed to pay the amount despite demands and notices. Statement of account duly certified under the Bankers Books Evidence Act is also alleged'' o have been appended. Number of other documents have also been filed alongwith the plaint.
What would be the material facts in a particular case depends upon facts and circumstances of each case. In case where the bank makes a claim for recovery of the amount as the balance amount due on loan transaction against a customer the same would necessarily be statement of the fact of sanctioning and advancing the loan, the facts of availing of the loan by the customer, the fact that as per the terms of the agreement, the loan which be came due has not been repaid despite demand or after the same had been recalled, as also the facts as to by what instrument (s) the loan amount is evidenced and secured. In case the suit, prima facie, is not within the period of limitation, it would also be necessary for the plaintiff to allege as a part of the material fact, the grounds of exemption from limitation as provided for in Order VII rule 6 of the Code,
On having examined various averments in the plaint, it is apparent that the plaintiff has in so many words clearly stated the date and place when the agreement was entered into, the loan facility having been made available the terms and conditions of the agreement, the date when the amount fell due, the manner in which the outstandings were confirmed and the liability acknowledged, date when the demands were made, the fact that the guarantors by executing the guarantee deeds also agreed to stand guarantee and the particulars of the mortgae.
The Learned Counsel for the applicant was not in a position to pinpoint as to what other facts, which may be termed as material facts have not been stated. The only flaw, if any, as pointed out is that there is no para in the plaint, as to when the cause of action has arisen to the plaintiff. This so calledlacuna in the plaint cannot be fatal in the facts and circumstances of the case, since the plaint when read as a whole, contains necessary facts constituting the cause of action as also the dated when it arose. Reading of the entire plaint does show the facts constituting the cause of action as also narration of various dates of advancing the loan, entering into an agreement, execution of deed of guarantee, confirming the balances as also when the demands were made. The plaint, as such, cannot be said to be deficient in the statement of material facts. Consequently, I do not find any force in the submissions made by the Learned Counsel for the defendant - applicant. Accordingly, the application which has no force is dismissed.
OMP 555/92 in Civil Suit 54/92.
In this application, defendant No. 1 has prayed for dismissal of suit under Order II rule 2 (3) of the Code (shown as Order II rule 3) stating that the plaintiff having failed to obtain the requisite leave of the court, while filing civil suit No. 53 of 1992, as contemplated under Undr Order II rule 2 of the Code is precluded from filing the suit. In the alternative, a prayer has been made that since two of the items in the suit, namely, term loan and funded interest term loan being without any cause of action an order be made releasing defendant No. 1 of all or any of the obligations under the equitable mortgage. Some of the facts have already been stated, while disposing OMP 554/92 in Civil Suit 53 of 1992, and the same need not be reproduced again here.
The instant is a suit for recovery of Rs. 7,41,289,94, being the principal amount, alongwith interest and costs. Besides claiming personal decree, preliminary decree for sale of the mortgaged property has also been claimed.
It is alleged that beside allowing the aforementioned bridge loan facility of Rs. 1,10,01,737.00 certain other loan facilities were allowed and made avilable to the defendants to ment its commercial obligations. Such other finencial loans or limits allowed are as follows:-
(a) Cash Credit hypothecation limit of Rs. 15,00,000.00.
(b) Cash Credit (book debt) limited to the extent of Rs. 10,00,000,00.
(c) Cash credit (pledge facility) limit to the extent of Rs. 15,00,000.00.
(d) Working capital term loan of Rs. 67,05,000.00.
The aforesaid liabilities initially were to the extent mentioned and were enhanced form time to time. It is stated that when the bridge loan facilities and part of it was converted in term loan of Rs. 1,20,00,000,00; R. 15,70.000.00 as funded interest term loan and the remaining Rs. 68.69,148.95 continuing as bridge loan. An agreement was entered on 14th June 1984. For the last of such items, namely, Rs. 68,69,140.85, civil suit No. 53 of 1992 has been filed for recovery of the said amount alongwith the interest accrued thereon. In the instant suit term loan of Rs. 1.20,00,000.00 and iunded interest term loan of Rs. 15,70,000.00 have been included. Working out the interest due on various claims made in this suit, the details of which have been given in para 15 of the plaint is as under :-
a) Cash credit Hypothecation
Rs. 96,31,899.04
b) Hypothecation of Book Dept Account
Rs. 9,69,248.03
c) Cash Credit (Pledge) Account
Rs. 1,98,68,720.48
d) Working Capital Term loan
Rs. 1,07,47,080,00
e) Funded Interest Term Loan
Rs. 6,45,801.20
f) Term loan
Rs. 3,22,56,540.54
Total
Rs. 7,41,19,289.94
The plaintiff has in para 10 of the plaint stated that defendant No 1 through defendant No.2 executed an equitable mortgage with respect to the term loan of Rs. 1,20,00,000.00 by way of collateral security.
It is contended by Mr. Tikku that the cause of action for the instant suit in so far as the enforcement of collateral security is concerned is the same, as that in civil suit No. 53 of 1992, in view of the Explanation to sub - rule (3) of Order II rule 2 of the Code. An obligation and a collateral security for its performance constitute the same cause of action. As such, it was necessary for the plaintiff, at the time of filing civil suit No. 53 of 1992, to have obtained the leave of the court. Having failed to do so, the plaintiff is precluded from filing that suit on the same cause of action. Consequently, an order deserves to be made relieving defendant No. 1 of its obligation under the collateral security as also for dismissal of suit in so far as it relates to the term loan and funded interest term loan.
Arguments of the Learned Counsel for the applicant have been heard at length.
After reviewing the entire case law, the principles culled down in AIR 1949 78 (Privy Council) may be quoted as under.
1) The correct test in Cases falling under o. 2,R. 2 it "Whether the claim in new suit is in fact founded upon a cause of action distinct from that which was the foundation for the former suit
Monshee Buzloor Ruheem v. Shumsunnissa Bequm, (1867 11 M.I.A. 551 : 2Sar. 259 P.C.).
2) The cause of action means every fact which will be necessary for the plaintiff of prove if traversed in order to support his right to the judgment. Read v. Brown'' (1889 22 A.B.D.128. 58 LJ.O.B.120).
4) The causes of action in the two suits may be considered to be the same if in substance they are identical. Brunsden v. Humphrey (1884 14 Q.B.D.141 : 53 LJ.O.B.476).
Considering the legal position, there is no manner of doubt that the expression'' cause of action'' in Order II rule 2 of the Code means the cause of action for which the suit is brought. It is the cause which gives occasion for and forms the foundation of the suit. In order that the cause of action for two suits may be same, it is necessary not only that the facts which would entitle the plaintiff the othe right claimed must be the same, but also that the infringement of his right at the hands of defendant must have arisen, in substance out of the same transaction. When a person is entitled to more than one relief in respect of the same transaction. When a person is is entitled to more than one relief in respect of the same cause of action and omits except with the leave of the court, to sue for all such reliefs, he is precluded afterwards to sue for any of the reliefs so omitted. In Sidramappa Vs. Rajashetty and Others, , the ratio of the judgment in AIR 1922 23 (Privy Council) , was approved and the court held that:
......every suit should include the whole of the claim which the plaintiff is entitle to make in respect of a cause of action. ''Cause of action'' means the cause of action for which the suit was brought.'' It cannot be said that the case of action on which the present suit was brought is the same as that in the previous suit. Cause of action is a cause of action which gives occasion for and forms the foundation of the suit. If that cause of action enables a person to ask for a larger and wider relief than that to which he limits his claim, he cannot afterwards seek to recover the balance by independent proceedings....
In a suit for recovery of the amount, which in civil suit 54/92 is for the two term loans stated in the agreement of 14th June, 1984 and not for the and not for the balance of the amount of bridge loan left out after a part of the same had been converted into a term loan and funded interest term loan, it cannot be said that the cause of action for the recovery of term loan and funded interest term loan is also the same as that of the balance amount of bridge loan. There may be a single document evidencing various loan facilities with different stipulation with respect to each, giving rise to a different causes of action for claiming different items separately. In case agreement dated 14th June, 1984 has spitted the original bridge loan facility by converting part of the same into a term loan and funded interest term loan, it is not understood as to how the causes of action for claiming relief with respect to the balance left over would be the same in a suit for recovery of term loan and funded term loan. There might be different terms and conditions applicable to each. For the term loan, terms and conditions applicable may be different than the one applicable for funded interest term loan. Period of repayment, rate of interest etc. would also be different. Similarly, for the alleged left over balance of bridge loan for which Civil Suit 53/92 has been filed, terms and conditions may be entirely different.
Cause of action in the two suits may be considered to be the same if substance they are identical. As noticed above, the cause of action has no relation whatsoever to the defence that may be set up by the defendant nor does it depend upon the character of the relief prayed for the plaintiff. It refers to the media upon which the plaintiff asks for the court to arrive at a conclusion in his favour. In civil suit 53/92, the entire claim is for the alleged balance of the bridge loan, left out and not converted into a term loan. In civil suit 54/92, besides praying for grant of relief as regards other loan facility, totally unconnected with the bridge loan plaintiff has included therein the two items of term loan. The same cannot be said to be the reliefs available to the plaintiffs while filing suit for the left over balance of the bridge loan. It might be a defence of the defendants that the same at one point of time constituted bridge loan, but having entered into an agreement, as alleged by the plaintiff, and agreed to convert part of the same in a term loan and funded interest term loan, the cause of action are entirely different. Thus it was not necessary for the plaintiff to have obtained leave of the court while filing the civil suit (Civil Suit No. 53 of 1992), Which was also instituted on the same day.
On the basis of the discussion above, the application is liable to be dismissed. But since I find that both these suits have been instituted by the plaintiff, simul taneously, on the same day, to avoid any embarrassment and conflicting decision by applying the principles laid down in Ganesh Ramchandra Thakur Vs. Gopal Lakshman Thakur, , Which was later followed in Harishchandra and Another Vs. Kailashchandra and Another, , in the interests of justice, I direct the consolidation of civil Suit 54/92 with Civil suit 53/92, for the purpose of recording evidence and trial.
The application is dismissed.
Be it stated that any observations made hereinabove will not cause any Prejudice in the defence to be raised by the defendants or on the merits of the claim and will also not preclude the defendants from taking up defence, which has been taken in the two applications ''s which have been disposed by this order.