Cuddalore Land Dispute: When a Government Ban Doesn't Bar a Second Suit


Court: Supreme Court of India.

Case Name: CUDDALORE POWERGEN CORPORATION LTD vs. M/S CHEMPLAST CUDDALORE VINYLS LIMITED AND ANR.

Citation: 2025 INSC 73 (Reportable)

Background of the Dispute

The case involves a property dispute in Tamil Nadu. Chemplast Cuddalore Vinyls Limited (Respondent No. 1) entered into an agreement for sale with an unnamed vendor (Respondent No. 2) on 24.01.2007 for a property in Thiyagavalli village, Cuddalore. They also received an irrevocable Power of Attorney on 26.03.2007 to register the sale deed.

Chemplast attempted to register the sale agreement on 07.09.2007, which was completed. However, efforts to register the sale deed were repeatedly refused by revenue authorities. On 02.11.2007, the vendor revoked the Power of Attorney. There was a subsequent attempt to repay a sum of ₹1,50,000 by the vendor, which was returned by Chemplast.

The refusal to register the sale deed was due to a Government Order (GO) dated 08.08.1986 and a related notification from the Tamil Nadu Electricity Board (TNEB) dated 23.10.2006. These instruments reserved land in Thiyagavalli and Kudikkadu villages for a thermal power station, effectively prohibiting the registration of land transfers to anyone except Cuddalore Powergen (Appellant).

Cuddalore Powergen entered into a sale agreement on 20.02.2007 with the same vendor for the same property, with the sale deed registered on 24.01.2008.

The First and Second Suits

On 16.02.2008, Chemplast filed a suit for a permanent injunction to prevent Cuddalore Powergen and the vendor from interfering with their possession of the property, this is known as the "first suit". A Public Interest Litigation (PIL) challenged the GO. The Madras High Court on 05.03.2008 quashed the GO and the TNEB notification, ordering the registration of all documents that met legal stipulations. The writ petition filed by Chemplast was also disposed of on similar terms on 25.03.2008.

Following the PIL outcome, Chemplast filed a second suit on 02.07.2008. This suit sought specific performance of the 2007 agreement to sell, a declaration that Cuddalore Powergen's sale deed was null and void, and a permanent injunction.

Key Legal Issue: Order II Rule 2 of the CPC

The central legal issue was whether the second suit was barred by Order II Rule 2 of the Code of Civil Procedure (CPC). This rule prevents litigants from splitting their claims into multiple suits if those claims arise from the same cause of action. Cuddalore Powergen argued that Chemplast should have sought all reliefs in the first suit and was therefore barred from filing a second suit.

Arguments Presented

Cuddalore Powergen contended that the cause of action was the same in both suits and that Chemplast was aware of the sale to Cuddalore Powergen when filing the first suit. They argued that Chemplast should have asked for specific performance and cancellation of the sale deed in the first suit itself.

Chemplast argued that the cause of action for the first suit was the imminent threat of dispossession, while for the second suit, it was the vendor's refusal to perform the agreement for sale and the execution of the illegal sale deed in favor of Cuddalore Powergen. They contended that the reliefs sought in the second suit were not available at the time of the first suit due to the government ban.

Legal Analysis and Supreme Court Findings

The Supreme Court emphasized that the "cause of action" means every fact that the plaintiff would have to prove to obtain a judgement. It is the media upon which the plaintiff asks the Court to arrive at a conclusion in their favor. The Court clarified that a "cause of action" does not depend on the defense or the nature of relief requested, but rather on the factual grounds presented in the plaint. The Court stated that the aim of Order II Rule 2 is to prevent the splitting of claims and the multiplicity of suits.

Applying Order II Rule 2

The Court established that the test for applying Order II Rule 2 is whether the claim in the new suit is founded on a cause of action distinct from that of the first suit. The Court noted that Order II Rule 2 applies only to claims that the plaintiff was "entitled to make". The Court stated that for the rule to apply, the relief must not only be something the plaintiff could have claimed but also something they could have obtained.

The Court emphasized that the phrase "any portion of his claim" must be understood to mean any portion of his claim which he is entitled to make.

Effect of the Government Order

The Court recognized that the GO and TNEB notification created an absolute prohibition, preventing landowners from transferring their land to anyone other than Cuddalore Powergen. This created an impossibility for Chemplast to obtain the reliefs they were seeking in the second suit at the time the first suit was filed. The Court noted that these orders effectively suspended the rights of landowners, meaning the remedies sought by Chemplast in its second suit were not 'available' to it when the first suit was filed.

The quashing of the GO in the PIL created a new situation where the relief of specific performance and the declaration regarding the nullity of the sale deed became available to Chemplast, giving rise to a new cause of action.

Supreme Court Decision

The Supreme Court agreed with the High Court’s view that the first suit for an injunction sought to prevent interference with possession. At the time of the first suit, the GO imposed a ban on the registration of sale deeds, creating an impossibility for Chemplast to obtain title. The court ruled that since the relief was not available at the time, the second suit was maintainable.

The court found that at no point did Cuddalore Powergen inform Chemplast of the sale deed in their favor.

The Court upheld the High Court's order restoring the second suit and ordered that both the first and second suits are to be heard and decided on their merits and in accordance with law, by the Trial Court. The Court found that issues relating to whether the agreement for sale could have been entered into by Chemplast in ignorance of the ban, and whether the subsequent sale to Cuddalore Powergen was valid, were matters for the Trial Court to determine.

Rationale, reasoning given by the Judges

The Supreme Court's reasoning emphasized that for Order II Rule 2 to apply, the relief must be not only legally available but also practically attainable. If a remedy is not available due to a practical impediment (like the ban in this case), then a subsequent suit for that remedy is not barred when the impediment has been removed.

The court noted the absolute prohibition created by the GO and TNEB notification prevented land owners from transferring their land to anyone other than Cuddalore Powergen, a violation of the rights of land owners. The Court also highlighted that the government orders had created an impossible situation for Chemplast to obtain the reliefs they were seeking in the second suit at the time the first suit was filed, because the GO prevented Chemplast from registering the sale deed, and thus from obtaining a relief of specific performance.

The court stressed that the cause of action for the second suit was distinct because the ban on registrations made a suit for specific performance practically unavailable to Chemplast at the time of the first suit for injunction. The court also stated that a new cause of action arose when the High Court quashed the Government Order, removing the impediment that prevented Chemplast from obtaining the specific relief in the second suit.

The Supreme Court focused on the intent of Order II Rule 2, which is to prevent vexatious litigation, by noting that the bar would not apply where the specific relief sought was impossible to be obtained on account of a statutory restraint. The Court further stated that the second suit was not barred by Order II Rule 2 as Chemplast was not entitled to the reliefs sought in the second suit at the time the first suit was filed, because the GO prohibited it. The Court upheld the High Court's decision and directed the trial court to decide both the suits together on their own merits.

Excerpt, important quotes from the decision

  • "The correct test in all cases of this kind is, whether the claim in the new suit is, in fact, founded on a cause of action distinct from that which was the foundation of the former suit.”
  • "The phrase “any portion of his claim” must essentially be understood to mean any portion of his claim which he is entitled to make for the simple reason that there cannot be a deliberate or intentional relinquishment of any portion of a claim, if the plaintiff was not entitled to it."
  • "Herein, it was not possible for the plaintiff to obtain the relief of possession which he was otherwise entitled to by virtue of the agreement to sell on account of a decree for ejectment obtained against his vendors."
  • "Therefore, a suit for specific performance could not have been instituted by the respondent no.1 since it would have been nothing but a futile attempt."
  • "In the interests of justice, the decisions dated 05.03.2008 and 25.03.2008 must be held to have given rise to a new cause of action to the respondent no. 1 for the agitating the reliefs in the second suit."
  • "We do not wish to disturb the ultimate conclusion arrived at by the High Court."

Points to Remember

  • Order II Rule 2 CPC: This rule aims to prevent the multiplicity of suits by ensuring that a plaintiff includes their entire claim in one lawsuit.
  • Cause of Action: It means every fact which would be necessary for the plaintiff to prove to support their right to the judgment of the Court and which gives a party the right to seek judicial interference.
  • Availability of Remedy: The Court emphasized that a remedy must be practically attainable, not just legally available, for Order II Rule 2 to apply.
  • Government Restrictions: If a government order or other legal impediment makes a remedy impossible to obtain, a subsequent suit for that remedy is not barred when the impediment is removed.
  • Holistic reading: The plaints should be read as a whole, and not in isolation, to determine the true cause of action.
  • Substance over Technicalities: The court should consider the substance of the claim, not just technicalities, when determining the applicability of Order II Rule 2.
  • New Cause of Action: A new cause of action can arise when a previously unavailable remedy becomes available due to a change in circumstances, such as the quashing of a restrictive government order.
  • The Court’s Role: The Court's role is to ensure justice and access to remedies for aggrieved parties and not to allow technical rules to prevent that.

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