Supreme Court: Fresh suit for specific performance barred under Order II Rule 2 where the first suit sought only an injunction

On the law, the Court first accepted that a suit for specific performance can rest on an oral agreement, relying on Brij Mohan v. Sugra Begum and K. Nanjappa v. R.A. Hameed. But where a plaintiff relies on an oral agreement alone, a heavy burden lies on him to prove consensus ad idem on a concluded agreement, with the vital terms settled orally, and strict proof is the norm, a mere inference being impermissible.

On maintainability, it turned to Order II Rule 2. The Constitution Bench in Gurbux Singh v. Bhooralal requires the defendant to show that the second suit is on the same cause of action as the first, that the plaintiff was entitled to more than one relief on it, and that he omitted a relief without leave of the court. The earlier plaint was on record (it was produced by the plaintiffs themselves), and it listed the same three meetings, the cheque of Rs 5 crore and a refusal on 8 May 2007, accompanied by a challenge that the property would be sold at a higher price. The claim for specific performance was therefore available then, yet only an injunction was sought and no leave was taken. The Court noted that Order II Rule 2(3) lets a plaintiff reserve reliefs only with the leave of the court obtained when the suit is instituted, so a liberty sought at the time of withdrawal does not cure the defect. The pursis could be read as seeking liberty, but that did not help. Order XXIII Rule 1(3) only lets a plaintiff file a fresh suit for the same subject matter, not a new relief such as specific performance. The respondents could have sought an amendment of the first suit but did not. The second suit was barred.

The Court held that the three-Judge Bench decision in Gurinderpal v. Jagmittar Singh, which had inferred a wish to seek specific performance from a withdrawal with liberty, was an impermissible inference contrary to the Constitution Bench, which it was bound to follow. It followed the Constitution Bench in Vurimi Pullarao, and noted Virgo Industries, where the bar had applied. It found Vimlesh Kumari Kulshrestha inapplicable, and noted that in Inbasagaran, Rathnavati, Sucha Singh Sodhi and Cuddalore Powergen the bar did not apply on the facts, because the right to seek specific performance had not yet arisen or was not available when the first suit was filed.

On the merits, the Court found no concluded contract. The pleadings shifted between the first and second plaints and the 2011 amendment (two meetings, then three), no date was pleaded for execution of the agreement, and the Rs 5 crore cheque, said to be an advance, was not shown to have been presented, which itself weighed against a concluded contract. PW1's evidence was interested and uncorroborated. PW2, a former State Minister and later a Governor, was introduced without pleadings, and his account of a telephone conversation was hearsay. His stature had no bearing, as there is no presumption that a person of political status speaks the truth. PW3 had no direct knowledge. The letter of 25 November 2006 merely sent documents, and the person who negotiated, a relative of the person in charge of the company, had no authority over the company's assets. The evasive answers of the defence witnesses could not stand in for proof the plaintiff had to give. The concurrent findings bordered on perversity.

The appeal was allowed, the orders of the Trial Court and the High Court set aside and the suit dismissed. The Court did not decide the authority of the person who dealt with the company's assets, as it was no longer necessary. The parties will bear their own costs.