Withdrawn Injunction Suit Cannot Resurrect Omitted Specific Performance Claim: Supreme Court Clarifies Order II Rule 2 and Oral Contract Proof Standards

Overview of the Dispute

The Supreme Court of India, in Bombay Garage Ahmedabad Limited & Ors. Vs J P Iscon Private Ltd. & Anr., delivered a significant ruling addressing two intertwined legal issues: first, whether a fresh suit for specific performance is maintainable after an earlier injunction suit is withdrawn without proper leave; and second, whether an oral agreement for sale of immovable property was conclusively established on the facts presented. The Court answered both questions against the purchaser and set aside concurrent decrees passed by the Trial Court and the High Court, ultimately dismissing the specific performance suit.

Background Facts

The dispute revolved around an alleged oral agreement for the purchase of company-owned immovable property. The purchaser claimed that several rounds of negotiations culminated in a final agreed consideration of ₹20,50,00,000/-, with a token cash advance of ₹5,11,000/- and a cheque of ₹5,00,00,000/- allegedly handed over on 11.01.2007. The purchaser further alleged that, on 08.05.2007, the proposed sellers refused to honour the agreement and indicated their intention to sell the property at a higher price to another party.

Following this alleged refusal, the purchaser filed a suit seeking only a permanent injunction restraining the proposed sellers from alienating or otherwise dealing with the property. This injunction suit was subsequently withdrawn — purportedly on the ground of ongoing settlement discussions — with a prayer to file a fresh suit. A second suit was then filed claiming specific performance of the alleged oral agreement.

The Trial Court decreed the specific performance suit in favour of the purchaser. The High Court upheld this decree. The sellers approached the Supreme Court by way of appeal.

The Supreme Court examined two distinct questions:

  1. Was the second suit for specific performance barred by Order II Rule 2 of the Code of Civil Procedure, 1908, given that the earlier injunction suit had not sought that relief and no leave had been obtained?

  2. Had the purchaser discharged the heavy burden of proving the existence of a concluded oral contract for sale of immovable property?

Part I — Maintainability: The Bar Under Order II Rule 2

The Governing Principle

Order II Rule 2 of the Code of Civil Procedure, 1908 mandates that every suit must include the entirety of the claim that the plaintiff is entitled to assert on the cause of action pleaded. Where a plaintiff is entitled to multiple reliefs arising from the same cause of action, but chooses to confine the suit to only some of those reliefs, leave of the Court must be obtained to pursue the omitted reliefs in subsequent proceedings. Without such leave, the omitted relief is deemed to have been relinquished and cannot form the basis of a later suit.

Constitution Bench Authority: Gurbux Singh v. Bhooralal

The Court applied the controlling principles laid down by the Constitution Bench in Gurbux Singh v. Bhooralal, 1964 SCC OnLine SC 101, which identified three cumulative conditions that must be established before the bar under Order II Rule 2(3) operates:

"(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."

The Constitution Bench had further held that this determination requires examination of the earlier plaint itself and cannot be arrived at through inference or speculation.

Application to the Present Case

In the present case, the earlier plaint was not merely referenced — it was produced by the plaintiff itself as part of the record in the second suit (Annexure P19). The first plaint expressly pleaded three meetings, the alleged negotiations, the advance payments, and — critically — the refusal by the proposed sellers on 08.05.2007 to honour the agreement, with the additional declaration that they would sell the property for a higher price.

The Court reasoned as follows: since the first plaint itself disclosed a clear and unequivocal refusal to perform, the cause of action for specific performance had already crystallised at the time the injunction suit was filed. The purchaser was, therefore, entitled to seek specific performance in that very suit. Having chosen to seek only an injunction, and having obtained no leave from the Court to reserve the relief of specific performance, the omission attracted the deemed relinquishment under Order II Rule 2.

The Withdrawal Pursis Did Not Cure the Defect

The purchaser argued that since the first suit was withdrawn on the basis of a pursis (written application) seeking liberty to file a fresh suit, and since the withdrawal order was passed on that basis, the liberty must be inferred and the second suit should be treated as maintainable.