Civil Appeal No. 8321 of 2010 (Arising out of SLP (C) No. 11328/2010). Case: Alka Gupta Vs Narender Kumar Gupta. Supreme Court (India)

Case NumberCivil Appeal No. 8321 of 2010 (Arising out of SLP (C) No. 11328/2010)
JudgesR.V. Raveendran and H.L. Gokhale, JJ.
IssuePartnership Act, 1932 - Section 69; Civil Procedure Code (CPC) - Section 11 - Order 2, Rules 1 and 2 - Order 5, Rule 5 - Order 7, Rules 9 and 11 - Order 9, Rules 2, 3, 5 and 8 - Order 11, Rule 21 - Order 14, Rule 2(2) - Order 15, Rules 1, 3 and 4 - Order 23, Rules 1 and 3 - Order 37, Rules 1, 2 and 3
CitationAIR 2011 SC 9 , 2011 (2) ALD 1 (SC) , 2011 (1) ALT 7 , 2011 2 AWC 1245 SC , 111 (2011) CLT 300 (SC) , JT 2010 (11) SC 178 , 2011 1 LW 193 , 2011 (1) MahLJ 711 , 2011 (1) OLR (SC) 305 , RLW 2011 (1) SC 751 , (2010) 10 SCC 141
Judgement DateSeptember 27, 2010
CourtSupreme Court (India)

Order:

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' 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, LSC, Bhera Enclave, 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:

    An undivided half share, second floor (without roof rights) of built up property bearing No. 8, Pocket & Block C9, Sector-8, Rohini, Delhi - 110 085, built on a plot of land area measuring 158.98 Sq.m and 50% share of M/s Takshila Institute established in the above said property 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.

    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-9/8, 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 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 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 to 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 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.

  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. 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 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 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 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 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 substantially been adjudicated between the plaintiff and the defendant in suit No. 16/2006 titled as Alka Gupta v. Narender Kumar Gupta vide an order dated 25.11.2006 by a competent court?

    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 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 to the said order, the trial court observed that on 12.1.2009, when arguments were on the preliminary issue, it was clarified 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, 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 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 Agreement dated 29.6.2004, it was not necessary to decide upon the question as to whether 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 Single Judge and the Division Bench which ignore several basic principles of Code of Civil Procedure cannot be sustained.

    1. A suit cannot be dismissed as barred by Order 2, Rule 2 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:

  9. Frame of suit: Every suit shall as far as practicable be framed so as to afford ground for final decision upon the subjects in dispute and to prevent further litigation concerning them.

  10. 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.

    (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 relief so 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...

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