GAUTAM MOHANTY[1]
In arbitration proceedings, a question which regularly presents itself is about the influence of Civil Procedure Code, 1908 on arbitration proceedings. Despite the presence of Section 19 in the Arbitration and Conciliation Act, 1996, which categorically postulates that the CPC, 1908 will not influence arbitration proceedings, arbitral tribunals do infact tend to rely on CPC, 1908 to a larger extent when intricate and complex interpretation and procedural issues arise. One such issue which recently arose was whether the term ‘cause of action’ as envisaged in Order II Rule 2 could be understood as ‘cause of arbitration’. In this post, I will primarily address three issues: (1) What is the bar under Order II Rule 2 and how does it impact arbitration proceedings (2) What are the necessary constituents of ‘cause of action’ and (3) Whether ‘cause of action’ denotes ‘cause of arbitration’ also.
BAR UNDER ORDER II RULE 2 OF THE CIVIL PROCEDURE CODE, 1908
Before proceeding, it would be worthwhile to note the provision contained in Order II Rule 2 of CPC which provides that;
2. 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 provisions of Order II Rule 2 indicate that if a plaintiff is entitled to several reliefs against the defendant in respect of the same cause of action, he cannot split up the claim so as to omit one part of the claim and sue for the other. If the cause of action is the same, the plaintiff has to place all his claims before the Court in one suit as Order II Rule 2 is based on the cardinal principle that the defendant should not be vexed twice for the same cause.[2] One of the objects of Order II Rule 2 is to avoid multiplicity of petitions.[3]
The Rule postulated under Order II Rule 2 does not mandate that when several causes of action arise from one transaction, the plaintiff should sue for all of them in one suit. In fact, what the rule lays down is that where there is one entire cause of action, the plaintiff cannot split the cause of action into parts so as to bring separate suits in respect of those parts.
A plea of bar under Order II Rule 2 is a highly technical plea. It tends to defeat justice and to deprive the party of a legitimate right. Therefore, care must be taken to see that complete identity of cause of action is established.[4] Where the essential requirement for the applicability of Order II Rule 2, namely, the identity of cause of action in the previous suit and the subsequent suit was not established, the subsequent suit could not be said to be barred under Order II Rule 2.[5]
The law relating to bar created under Order II Rule 2 of the CPC is to be noted. The Apex Court in the case of Deva Ram vs. Ishwar Chand[6] has set out the underlying principle for application of Order II Rule 2. Relevant extract is reproduced:
“12 ....a bare perusal of the above provisions would indicate that if a Plaintiff is entitled to several reliefs against the Defendant in respect of the same cause of action, he cannot split up the claim so as to omit one part of the claim and sue for the other. If the cause of action is the same, the Plaintiff has to place all his claims before the Court in one suit as Order II, Rule 2 is based on the cardinal principle that the Defendant should not be vexed twice for the same cause”.
15. In Sidramappa v. Rajashetty and Ors. MANU/SC/0396/1969 : [1970] 3 SCR 319, it was laid down that if the cause of action on the basis of which the previous suit was brought, does not form the foundation of the 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 II Rule 2, CPC. In Gurbux Singh v. Bhura Lal MANU/SC/0241/1964 : [1964]7SCR831, it was observed :
In order that a plea of a bar under Order 2 Rule 2(3), Civil Procedure Code should succeed the defendant who raises the plea must make out (1) 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 later suit is based there would be no scope for the application of the bar.
16. In view of the above, what is to be seen in the instant case is whether the cause of action on the basis of which the previous suit was filed, is identical to the cause of action on which the subsequent suit giving rise to the present appeal, was filed. If the identity of causes of action is established, the rule would immediately become applicable and it will have to be held that since the relief claimed in the subsequent suit was omitted to be claimed in the earlier suit, without the leave of the court in which the previous suit was originally filed, the subsequent suit for possession is liable to be dismissed as the appellants, being the defendants in both the suits, cannot be vexed twice by two separate suits in respect of the same cause of action.”
(Emphasis Supplied)
Generally stated, “cause of action” means every fact which is necessary to establish to support a right or obtain judgement. Another shade of meaning is that a cause of action means every fact which will be necessary for the plaintiff to prove.[7]
To constitute a bar to fresh suit under Order II Rule 2(3) of CPC three, elements are required to be proved. Firstly, it must be established that the second suit was in respect of the same cause of action as that on which the previous suit was based; secondly, in respect of that cause of action the plaintiff is entitled to more than one relief; and lastly, that being so, the plaintiff, without Leave obtained from the Court, omitted to sue for the relief for which the second suit has been filed.
The cause of action for the purpose of this rule means all the essential facts constituting the right and its infringement.[8] In other words, a cause of action consists of all facts which are essential for the plaintiff to allege and to establish, if denied or controverted. It is pertinent to note that in the case of Mahommad Khalil Khan vs. Mahboob Ali Mian[9], the Privy Council, thus summed up the principles underlying this rule:
1) The correct test in cases falling under Order II Rule 2, is “whether the claim in the new suit is in fact founded upon a cause of action distinct from that which was the foundation for the former suit”.[10]
2) The cause of action means every fact, which will be necessary for the plaintiff to prove if traversed in order to support his right to the judgement.[11]
3) If the evidence to support the two claims is different, then the causes of action are also different.[12]
4) The causes of action in the two suits may be considered to be the same, if in substance they are identical.[13]
5) 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.[14]
Thus, in order to test whether the arbitration proceedings are barred for want of Leave for omitting to sue under Order II Rule 2, the commonality of causes of action between the claim which is first in point of time and the subsequent claims, has to be established. If it is shown that the cause of action, in two proceedings are same and a party has sought to claim reliefs arising out of the same cause of action in parts, without first obtaining Leave for omitting to sue the entire claim in the first proceeding, the subsequent proceedings based on the same cause of action is barred.
A. LAW PERTAINING TO CAUSE OF ACTION:
The term “cause of action”, as has been defined in Aiyar’s[15] is as below:
“Cause of action” in legal parlance is existence of those facts which give a party a right to judicial interference on his behalf… The elements of a cause of action are: first, the breach of duty owing by one person to another; second the damage resulting to the other from the breach. The commission or omission of an act by the defendant, and damage to the plaintiff in consequence thereof, must unite to give a good cause of action. No one of these facts by itself is a cause of action.”
Further, the phrase “cause of action” in Halsbury’s Law of England (4th Edn.) as cited in Kunyan Nair Sivaraman Nair vs. Naryanan Nair,[16] has been explained as below:
“Cause of action” has been defined as meaning simply a factual situation the existence of which entitles one person to obtain from the Court a remedy against another person. The phrase has been held from earliest time to include every fact which is material to be proved to entitle the plaintiff to succeed, and every fact which a defendant would have a right to traverse. Cause of action has also been taken to mean that particular act on the part of the defendant which gives the plaintiff his cause of complaint, or the subject matter of the grievance founding the action, not merely the technical cause of action.”
Notably, in the case of Navin Chandra N. Majithia vs. State of Maharashtra[17] the Hon’ble Supreme Court after placing reliance on Stroud’s Judicial Dictionary as defined the term “cause of action” as below:
“…In legal parlance the expression “cause of action" is generally understood to mean a situation or state of facts that entitles a party to maintain an action in a Court or a Tribunal, a group of operative facts giving rise to one or more bases for suing; a factual situation that entitles ...one person to obtain a remedy in Court from another person (Black's Law Dictionary).
…
a “cause of action” is stated to be the entire set of facts that gives rise to an enforceable claim; the phrase comprises every fact, which if, traversed, the plaintiff must prove in order to obtain judgement…”
In reference to arbitration proceedings, the expression, “cause of action” must be read as “cause of arbitration”.[18] Pertinently, the cause of action has no relation whatsoever to the defence which may be set up by the defendant nor does it entirely depend upon the character of the relief prayed for by the plaintiff. It refers to the ground set forth in the plaint as the cause of action, or in other words, to the media upon which the plaintiff asks the Court to arrive at a conclusion in his favour.[19] Additionally, the causes of action in the two suits are the same if in substance they are identical[20] and it is not limited to the actual infringement of the right sued on, but includes all the material facts on which it is founded.[21]
In the case of Kunjan Nair Sivaraman Nair vs. Narayanan Nair and Ors.[22], the Hon’ble Apex Court has opined that:
“Order 2 Rule 2, Sub-rule (3) requires that the cause of action in the earlier suit must be the same on which the subsequent suit is based. Therefore, there must be identical cause of action in both the suits, to attract the bar of Order II Sub-rule (3)…The salutary principle behind Order II Rule 2 is that a Defendant or Defendants should not be vexed time and against for the same cause by splitting the claim and the reliefs for being indicated in successive litigations. It is, therefore, provided that the Plaintiff must not abandon any part of the claim without the leave of the Court and must claim the whole relief or entire bundle of reliefs available to him in respect of that very same cause of action. He will thereafter be precluded from so doing in any subsequent litigation that he may commence if he has not obtained the prior permission of the Court.”
Interestingly, in the case of Balbir Singh vs. Atma Ram Srivastava[23], cause of action has been understood as a set of facts, which establish or give rise to a right of action. The Hon’ble Allahabad High Court, in the aforesaid case, has differentiated between the terms “cause of action” and the “right of action”. It is in the aforementioned context; the following Paras of the above judgement need to be taken into due consideration:
“48…There is, however, a 'distinction between “cause of action” and the “right of action”. These terms are not synonymous and interchangeable. A right of action is a right to presently enforce a cause of action a remedial right affording redress, for the infringement of a legal right belonging' to some definite person; a cause of action is the operative facts which give rise to such right of action. The right of action does not arise until the performance of all conditions precedent to the action, and may be taken away by the running of the statute of limitations, through an estopped, or by other circumstances which do not affect the cause of action. There may be several rights of action and one cause of action and rights may accrue at different times from the same cause.
…
49. A cause of action arises when that which ought to have been done is not done or that which ought not to have been done is done. The essential elements of a cause of action are thus the existence of a legal right in the plaintiff with a corresponding legal duty in the defendant, and a violation or breach of that "right or duty" with consequential injury or damage to the plaintiff for which he may maintain an action for appropriate relief or reliefs. The right to maintain an action depends upon the existence of a cause of action which involves a combination of a right on the part of the plaintiff and the violation of such right by the defendant...
51. Rule 2 of Order II, Civil Procedure Code however, prohibits splitting up of a cause of action. No precise rule can, however, be formulated for determinating what makes the entire cause of action; it depends upon the facts of a particular case. However, one of the principal tests of identity of causes is said to be the identity of essential facts; if the same evidence will support both actions there is deemed to be but one cause of action. There would be no identity of causes if some of the evidence is the same in both action but the subject-matter is essentially different. Whether the case falls within or out of the rule against splitting depends upon whether the wrong for which redress is sought is the same in both actions and not upon whether different grounds of relief for the same wrong are set forth. Thus, even where the plaintiff is entitled to several forms and kinds of relief there may be only one cause of action. The rule, however, does not require that distinct causes of actions, each of which would authorise independent relief be presented in a single suit.”
Therefore, it emanates from the above discussion that the scheme of Order II of the Code of Civil Procedure is of such nature that the provision of Rule 2 is applicable to a given state of facts, wherefrom the plaintiff seeks different kind of reliefs but all of which kinds of relief spring from the same state of facts and, therefore, are connected with the same subject of action.
[1] Gautam Mohanty has completed his BBA.LLB(Hons.) from National Law University Odisha in 2015 and has a Master of Laws (LLM) from Central European University, Hungary in 2017. He is currently working as an Arbitration Associate in the office of Justice Deepak Verma, Former Judge Supreme Court of India.
[2] Deva Ram vs. Ishwar Chand, (1995) 6 SCC 733.
[3] Swatantra Kumar Agarwal vs. Managing Director, UPFC Kanpur, AIR 1994 All 187 (DB).
[4] Narashatti Kenpanna vs. Narasappa, AIR 1989 Kant 50.
[5] Deva Ram vs. Ishwar Chand, (1995) 6 SCC 733.
[6] Deva Ram vs. Ishwar Chand, (1995) 6 SCC 733 (737).
[7] Mulla, The Code of Civil Procedure, 1908, 18th Edn. 2016 at Pg. 1569.
[8] Sher Ali vs. Torap Ali, AIR 1942 Cal 407.
[9] Mahommad Khalil Khan vs. Mahboob Ali Mian, AIR 1949 PC 78.
[10] Moonshee Bazloor Ruheem vs. Shumsoonnissa Begum, (1867) 11 MIA 551.
[11] Read vs. Brown, (1888) LR 22 QBD 128.
[12] Brunsden vs. Humphrey, (1884) 14 QBD 141. See also, Haryana Co-op. Sugar Mills vs. G.D. Supply Co., AIR 1976 P&H 117.
[13] Brunsden vs. Humphrey, (1884) 14 QBD 141.
[14] Chand Kaur vs. Partap Singh 1889 ILR 16 Cal 98, (PC): 15 IA 156.
[15] P Ramanatha Aiyar’s Advanced Law Lexicon, Lexis Nexis; 2017 Fifth edition (23 December 2016).
[16] Kunyan Nair Sivaraman Nair vs. Naryanan Nair, (2004) 3 SCC 277, 286, Para 17. See also, Liverpool & London S.P. & I. Assn. Ltd. vs. M.V. Sea Success 1, (2004) 9 SCC 512, 562, Para 140.
[17] Navin Chandra N. Majithia vs. State of Maharashtra, (2000) 7 SCC 640, 647, Para 19. See also, State of Rajasthan vs. Swaika Properties, AIR 1985 SC 1289, Hari Shankar Jain vs. Sonia Gandhi, (2001) 8 SCC 233, Para 23, Chand Kaur vs. Partab Singh, ILR 16 Cal 98 (PC) and National Textile Corpn. Ltd. vs. Haribox Swalram, (2004) 9 SCC 786, 796, Para 10.
[18] Andrew McGee: Limitation Periods, 4th Edn., 2002, c.16, Para 16.004, Pg.281.
[19] Lord Watson in Chand Kaur vs. Partab Singh, (1889) 16 Calcutta 98. See also, Sterling Agro Industries vs. Union of India, AIR 2011 Del 174, Para 6.
[20] Praphullachandra vs. Rajbhai, AIR 1964 MP 129.
[21] The Indian Plywood Manufacturing Company Limited vs. Orissa Timber Products Limited, (1977) (1) CWR 318.
[22] Kunyan Nair Sivaraman Nair vs. Naryanan Nair, (2004) 3 SCC 277
[23] Balbir Singh vs. Atma Ram Srivastava, AIR 1977 All 211.