Order II Rule 2 CPC Must Not Be Applied Hyper-Technically Where Relief Was Impossible To Claim In Earlier Suit: Bombay High Court
The Court observed that principles governing Order II Rule 2 of the CPC cannot be interpreted in a manner “bogged down by mere technicalities”, particularly in situations where the relief subsequently claimed was not available or could not have been sought at the time of institution of the earlier proceedings.
The Bombay High Court has held that the bar under Order II Rule 2 of the Code of Civil Procedure, 1908, cannot be mechanically or hyper-technically invoked in situations where the relief subsequently sought by a plaintiff was either unavailable or impossible to claim at the time of institution of the earlier suit.
The Court was dealing with applications filed under Order VII Rule 11 CPC seeking rejection of a commercial suit instituted by developers alleging fraud, collusion and conspiracy in their removal from a slum rehabilitation project and appointment of a new developer under the Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act, 1971.
A Bench of Justice Gauri Godse, while referring to the Apex Court's ruling in Cuddalore Powergen Corporation Vs Chemplast Cuddalore Vinyls Limited (2025), observed: “There may arise a situation where the plaintiff may be entitled to a relief but such a relief was not available at a certain point in time. In other words, that obtaining such a relief was impossible due to the circumstances which existed during the institution of the first suit. It is our opinion that, in such scenarios, Courts must give such an interpretation to the principles under Order II Rule 2 that is not bogged down by mere technicalities.”
"... the true import of the bar under Order II Rule 2 must be that it operates to preclude a plaintiff from instituting a second suit, on the same cause of action, for a claim, any portion of a claim, or reliefs, which the plaintiff was entitled to avail at the time of filing of the first suit", the Bench added.
Advocate Rohan Savant appeared for the plaintiffs, while Senior Advocates Pravin Samdani and Simil Purohit appeared for the defendants.
Background
The suit was instituted by the plaintiffs, claiming that they were originally appointed as developers for certain slum rehabilitation schemes and had undertaken substantial construction and rehabilitation work before they were allegedly removed as developers through a fraudulent and collusive process orchestrated by private parties along with officials connected to the Slum Rehabilitation Authority (SRA).
According to the plaintiffs, they had constructed rehabilitation buildings, accommodated slum dwellers, and undertaken significant infrastructure development under the project before notices terminating their status as developers were issued under the Slum Act.
The plaintiffs alleged that false reports were prepared and manipulated to facilitate their removal and the appointment of another developer, including entities allegedly connected with blacklisted developers. The plaintiff further alleged collusion, fraud and conspiracy among several defendants in the process of substitution of the original developer.
Multiple defendants thereafter filed applications under Order VII Rule 11 CPC seeking rejection of the plaint principally on the grounds of limitation, bar under Section 42 of the Slum Act, non-compliance with Section 12A of the Commercial Courts Act, and the prohibition contained in Order II Rule 2 CPC.
Court’s Observations
The High Court extensively examined the averments in the plaint and held that the plaintiffs had pleaded exhaustive particulars concerning fraud, conspiracy, malice and collusion amongst the defendants.
The Court noted that the plaint contained detailed pleadings regarding the nexus between various defendants, alleged manipulation of reports, participation in the selection process of the substitute developer, execution of agreements between entities connected with the project and alleged collusive conduct leading to removal of the plaintiffs as developers.
The Court observed: “The exhaustive and substantial pleadings in the plaint show that all particulars of the allegations of fraud, malice and collusion are pleaded.”
The Court held that the allegations raised substantial triable issues requiring adjudication by a civil court and therefore the plaint could not be rejected at the threshold stage under Order VII Rule 11 CPC.
The Court further observed: “When viewed in the light of the aforesaid legal principles, the substantial pleadings in the present case, as discussed in the above paragraphs regarding fraud, malice and collusion, raise triable issues to be adjudicated by the civil court.”
While examining the objection regarding the bar of jurisdiction under Section 42 of the Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act, 1971, the Court held that the statutory bar is not absolute and does not extend to allegations involving fraud, mala fide exercise of power, or acts not done in good faith.
The Court observed that the plaintiffs had already exhausted statutory remedies available under the Slum Act, but the present suit was founded upon allegations of fraud, malice and conspiracy which were not the subject matter of adjudication under the statutory mechanism.
Referring to the settled principles concerning exclusion of civil court jurisdiction, the Court reiterated: “Whether the allegations pleaded in the plaint would constitute an action vitiated by malice in fact and lack good faith and is motivated by personal bias, grudge, oblique or improper motive or ulterior purpose raises triable issues and would fall within the civil court’s jurisdiction.”
Accordingly, the Court held that the plaint could not be rejected on the ground of bar under Section 42 of the Slum Act.
The High Court also rejected the contention that the suit was barred by limitation.
The Court noted that the plaintiffs had specifically pleaded the date on which knowledge regarding alleged fraud and conspiracy was acquired, including subsequent knowledge of reports and materials obtained after proceedings before the Supreme Court and through applications made under the Right to Information Act, 2005.
The Court observed: “The pleadings on the cause of action would raise a triable issue for considering the issue of limitation and cannot be decided at the preliminary stage.”
The Court further examined the Supreme Court’s orders extending limitation during the Covid-19 pandemic period and held that the actual balance period of limitation available to the plaintiffs after 1 March 2022 exceeded ninety days and therefore the suit instituted on 11 September 2023 was within limitation.
On the objection relating to Section 12A of the Commercial Courts Act, the Court noted the plaintiffs’ contention that urgent interim reliefs were necessary since ongoing construction activities allegedly caused continuing prejudice and loss to the plaintiffs.
The Court observed that the plaintiffs had specifically pleaded urgency in relation to the protection of their alleged rights, appointment of a Court Receiver and the grant of injunctions. The Court further noted the settled legal position that while examining compliance with Section 12A, commercial courts are required to undertake only a limited examination to determine whether urgent interim relief is genuinely contemplated or merely pleaded to circumvent mandatory pre-institution mediation.
While dealing with the objection raised under Order II Rule 2 CPC, the Court held that a rigid and technical application of the provision would be impermissible where the subsequent relief claimed was not available or could not have been sought earlier due to existing circumstances.
The Court observed that the cause of action pleaded in the earlier counterclaim was based on contractual disputes, whereas the present suit was founded upon allegations of fraud and conspiracy. The Court further noted that the plaintiffs had pleaded subsequent discovery of material relating to the alleged fraud and conspiracy.
The Court observed: “There may arise a situation where the plaintiff may be entitled to a relief, but such a relief was not available at a certain point in time. In other words, that obtaining such a relief was impossible due to the circumstances which existed during the institution of the first suit.”
The Court held that in such circumstances, the principles governing Order II Rule 2 CPC must receive a purposive and justice-oriented interpretation.
Conclusion
The Bombay High Court held that the plaint could not be rejected under Order VII Rule 11(a) or (d) CPC either on the ground of alleged non-compliance with Section 12A of the Commercial Courts Act, 2015, based on the statutory bar contained under Section 42 of the Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act, 1971, or on the ground that no cause of action was disclosed.
The Court held that the plaint disclosed substantial triable issues concerning allegations of fraud, malice and collusion which required adjudication in trial.
The Court further expressed concern that despite well-settled legal principles governing Section 12A of the Commercial Courts Act, Order VII Rule 11 CPC and the objections raised in the applications, the defendants pursued prolonged arguments by citing numerous judgments and filing extensive written submissions, thereby defeating the very object of the Commercial Courts Act relating to speedy disposal of commercial disputes and unnecessarily consuming judicial time.
Accordingly, the Court imposed costs of ₹2,00,000 per application upon the applicants, payable to the plaintiffs within two weeks, and dismissed all the interim applications.
Cause Title: L&T Asian Realty Project LLP (Now Known As Elevated Avenue Realty LLP) & Anr. v. K.S. Chamankar Enterprises & Ors.
Appearances
Plaintiffs: Advocates Rohan Savant, Ish Jain, Vinayak Siraskar, Duj Jain, Soham Bhagwat, Agam Mehta and Aman Saraf i/b. Kiran Jain & Co.
Defendants: Advocate Aparna D. Vhatkar; Advocates Yashesh Kamdar, Brian Noronha and Amisha Upadhyay i/b. India Law LLP; Senior Advocate Simil Purohit with Advocates Shrikant Seegarla and Shraddha Achliya i/b. Law Associates; Senior Advocate Pravin Samdani with Advocates Aditya Shiralkar, Disha Shetty and Jyoti Tated i/b. Wadia Gandhy and Co; Advocates Dushyant Purekar, Rajat Dedhia and Esther Mathew; Advocates Mayur Khandeparkar, Jagdish G. Aradwad and Abhijit Patil; AGP Himanshu Takke; Advocates Priyanka Fadia and Shashank Fadia.