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TMI Blog2007 (5) TMI 660X X X X Extracts X X X X X X X X Extracts X X X X ..... o Industrial Pvt. Ltd. in civil appeal arising out of SLP(C) No. 640/2007 (for short 'Fomento') respectively entered into two agreements with the respondent Hede & Co. (for short 'Hede') on 23.10.1996. The agreement with Hardesh was for extraction of ore from the mine in question whereas the agreement with Fomento was for purchase of minerals extracted from the mine. Both the agreements contained similar terms and conditions. As per Clause 2.1 of the Agreement, the agreement though executed on 23.10.1996 was to come into force from 1.1.1997 and was to remain in force for a period of 5 years from such date. Clause 2.2 of the agreement provided that on the expiry of every 5 years the agreement shall stand renewed for further periods of like duration at the sole option of Hardesh on the same terms and conditions as contained in the original agreement. Hardesh was entitled to exercise its option during the entire period of lease in respect of the said mine and renewals thereafter, and until such time as remaining deposits of ore in the said mine could be economically exploited. Clause 2.3 gave the right to Hardesh to terminate the agreement by giving two calendar months ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities ancillary thereto which the Plaintiff is empowered to do under the 23.10.1996 Extraction Agreement. (ii) The Defendants their agents or representatives be restrained from entering into the mine and doing any work for extracting, raising, removing, loading, transporting, selling or delivering to any other persons iron ore from the said mine either by themselves or through their servants and/or agents. (iii) The Defendants their agents or representatives be restrained from entering into any contract/agreements and/or understanding with third parties for prospecting and/or extracting and/or raising any iron ore from the said mine or selling the ore from the said mine to any third party. (iv) That the Defendant be directed to give effect to the negative covenant contained in clause 15 and 20 of the Extraction Agreement dated 23.10.1996. 5. In the plaint reference was made to the agreements that were entered into between the parties. It was also stated that there were privately owned lands comprised within the said mine and no consent had been obtained from the surface right owners by the respondent and the same was to be obtained subsequently, which necessitated the incorpora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly dated 31.12.2001 has been marked as Exh. 43. 7. The appellant came to learn that the respondent was conducting the extraction in the private area where the surface rights were held by Salgaonkar sisters. This led the appellant to believe that the problem may have been sorted out with the surface right owners, namely, Salgaonkar sisters. If that was so, it was incumbent upon the respondent to inform the appellant so that the appellant could undertake the extraction work itself. The appellant had also come to learn that the first stage clearance had been granted in respect of the said mine on 17.10.2003 by the Ministry of Environment and Forest under the Forest Conservation Act, 1980 but the second stage clearance was yet to be obtained without which it was not possible to commence work. 8. In this background the appellant issued a notice dated 27.4.2005 to the respondent requesting them to furnish to the appellant within 15 days of the receipt of the notice the documents evidencing the consent obtained from Salgaonkar sisters. The notice also stated as follows :- "Kindly note that if no documents as aforesaid are furnished to us within a period of 15 days from the receipt of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly the plea of bar of limitation under the Limitation Act was pressed. It was submitted that Article 54 of the Limitation Act applied and that a suit for specific performance of the contract should have been filed within 3 years from the date the appellant-plaintiff had notice that the renewal of the agreement was refused by the respondent. In the instant case the refusal was communicated on 29.12.2001 and, therefore, the suit should have been filed within 3 years thereafter. 11. The Trial Court by its order of 23.2.2006 allowed the application and dismissed the suit as barred by limitation. It observed that from a mere perusal of the pleadings contained in paragraphs 47 to 51 of the plaint it appeared that the appellant had asserted that the agreements were specifically enforceable. A reading of the plaint established that the foundation of the appellant's suit was for specific performance of the renewal of the agreement dated 23.10.1996, the cause of action for which arose on 29.12.2001 when they received reply of the respondent denying that the agreement stood renewed. Since the suit was filed much after the expiry of 3 years from that date, it was hopelessly barred by lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39; was, in fact, a suit for specific performance for the renewal of the agreement dated 23.10.1996 for which the cause of action had arisen on 29.12.2001. It negatived the contention urged on behalf of the appellants relying on the judgment of this Court in 2006 (5) SCC, 638 Ramesh B. Desai holding that in the instant case without going to the pleadings and the documents filed on behalf of the defence, the plaint itself and the documents annexed therewith showed that in fact it was a suit for specific performance of the agreement between the parties which appeared to be barred by the law of limitation. Accordingly it dismissed the appeals preferred by the appellants. 15. Mr. Soli J. Sorabjee, learned senior counsel appearing on behalf of the appellants in Civil Appeal arising out of SLP(C) No. 106/2007 submitted that in dealing with an application under Order VII Rule 11 the court must go by the averments in the plaint. The plaint must be read as a whole. The mere use of words like "readiness" and "willingness" to perform the agreement by themselves do not make it a case of specific performance of agreement. Those averments in the instant case were necessary for enforcing the neg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he cause of action need not be the first threat. In the instant case the defendant had started mining in the area including the land which were in dispute on account of the fact that the surface right owners had not given them permission to do so. It was in these circumstances that the respondent was called upon to disclose the documents, if any, evidencing grant of permission by the surface right owners. He relied upon a decision of this Court reported in Union of India and Others Vs. West Coast Paper Mills Ltd. and another : 2004 (2) SCC 747 highlighting the difference between Article 58 and Article 113 of the Limitation Act. He further submitted that Srinivasa Murthy's case (supra) was misapplied since the fact situation in the instant case was different from that in Srinivasa Murthy's case. The High Court fell into an error in looking at the defence of the respondent to come to the conclusion that the suit was barred since there was no valid renewal. Mr. Nariman, however, did not dispute that reference to "law" in Order VII Rule 11 of the CPC included a law relating to limitation such as the Limitation Act. 17. Mr. Mukul Rohtagi, learned senior counsel appearing for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide step something which was imperative and which had necessarily to be asked for in the suit, which had not been asked for. Therefore, applying the principle laid down in Srinivasa Murthy's case (supra) the suit must fail because the appellants should have asked for a declaration under Order II Rule 2 to the effect that the agreement stood renewed and the respondent's denial was unlawful. Rather than doing that, the appellants have sought only the end relief which could not be asked for without first asking for a declaration that the lease deed stood renewed on mere exercise of option without the execution of an indenture evidencing renewal of the lease. Only in such a renewed lease a negative covenant could have been incorporated which could have been enforced. Since such an agreement never came into existence and a suit for declaration stood barred by time, the appellant cannot get over the limitation and seek the remedy of injunction by way of enforcement of the negative covenants in an agreement which never came into existence. In sum and substance he submitted that without first getting a renewed lease deed executed in physical form or getting a declaration from a Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... option claiming renewal, the agreement ipso facto stands renewed and there is no need to get a fresh agreement executed. 20. We may observe at the threshold that the question as to whether the agreement required registration is not a question which can be gone into at this stage particularly in view of the fact that the plaint has been rejected on the ground of limitation. 21. The language of Order VII Rule 11 CPC is quite clear and unambiguous. The plaint can be rejected on the ground of limitation only where the suit appears from the statement in the plaint to be barred by any law. Mr. Nariman did not dispute that "law" within the meaning of clause (d) of Order VII Rule 11 must include the law of limitation as well. It is well settled that whether a plaint discloses a cause of action is essentially a question of fact, but whether it does or does not must be found out from reading the plaint itself. For the said purpose the averments made in the plaint in their entirety must be held to be correct. The test is whether the averments made in the plaint if taken to be correct in their entirety a decree would be passed. The averments made in the plaint as a whole have to be seen to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to exercise the option of renewal. The said letter has been annexed to the plaint and marked as Exh. 43. A mere perusal of the letter dated 4.12.2001 addressed by the appellant to the respondent is enought to satisfy the Court that in terms of clause 2.2 of the agreement the appellant exercised its option to renew the captioned agreement for a further period of 5 years commencing from 1.1.2002 on the same terms and conditions as contained in the original agreement. The letter clearly states that after 31.12.2001 the captioned agreement will stand renewed for the period 1.1.2002 to 31.12.2006. To this the respondent-defendant replied by its letter dated 29.12.2001, the relevant part whereof reads as follows :- "We do not agree with your contention in your letter dated 4/12/1997 that the Agreement in reference stands renewed as alleged from 1/1/2001 to 31/12/2006 or for any other period whatsoever." It is thus apparent that the appellant-plaintiff exercised its right under the agreement to claim a renewal of the term of the lease and the respondent- defendant refuted that claim and denied the assertion that the agreement stood renewed as alleged from 1.1.2001 to 31.12.2006 or for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ues in force during additional period by the performance of the stipulated act." The same view was reiterated by this Court in the case of State of U.P. and Others Vs. Lalji Tandon (Dead) through lrs. : (2004) 1 SCC 1 wherein it was observed as under :- "There is a difference between an extension of lease in accordance with the covenant in that regard contained in the principal lease and renewal of lease, again in accordance with the covenant for renewal contained in the original lease. In the case of extension it is not necessary to have a fresh deed of lease executed, as the extension of lease for the term agreed upon shall be a necessary consequence of the clause for extension. However, option for renewal consistently with the covenant for renewal has to be exercised consistently with the terms thereof and, if exercised, a fresh deed of lease shall have to be executed between the parties. Failing the execution of a fresh deed of lease, another lease for a fixed term shall not come into existence though the principal lease in spite of the expiry of the term thereof may continue by holding over for year by year or month by month, as the case may be." 25. Having regard to these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land within the mining area about which no information had been given to the appellants. Therefore, by letter dated 27.4.2005 the respondent were called upon to furnish the documents evidencing consent given by the surface right owners. It was further stated that if no documents, as aforesaid, were furnished within a period of 15 days from the date of receipt of this notice or if no reply was received, the appellants shall presume that such consent had been obtained since the respondents were doing the extraction in the area of the captioned mining lease. Since no documents were furnished pursuant to notice dated 27.4.2005, the appellants assumed that such consent had been obtained. It, therefore, withdrew the permission given to the respondents under Clause 15 of the Extraction Agreement so that the appellants could make preparation to start the extraction work. The last paragraph of this letter reads as under:- "We, therefore, give you notice to desist from doing any extraction of ore or doing work of any type in the above mine on the expiry of 30 days from the receipt of this notice failing which we would have no other alternative than to approach the court to get appropriate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether a real cause of action has been set out in the plaint or something purely illusory has been stated with a view to get out of Order 7 Rule 11 CPC. Clever drafting creating illusions of cause of action are not permitted in law and a clear right to sue should be shown in the plaint. " 28. The respondent strongly relied on the decision of this Court in Srinivasa Murthy's case (supra). That was a case where the plaintiffs alleged in the plaint that their father had incurred some debts and had therefore borrowed a sum of Rs. 2000 from the predecessor in title of the defendants. Only by way of security for the loan advanced, a registered sale deed had been executed on 5.5.1953 with a contemporaneous oral agreement that on return of the borrowed sum with interest payable thereon @ 6% per annum a registered reconveyance deed shall thereafter be executed in favour of the borrower. The case of the plaintiff was that despite the registered sale deed, the plaintiff continued to be in possession of the suit lands. The receipt was obtained on 25.3.1987 from the defendants and the original registered sale deed dated 5.5.1953 was returned to the first plaintiff with an oral promise by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... econveyance deed according to the plaintiffs own averments arose on 25.3.1987 when the plaintiff is claimed to have obtained the entire loan amount and obtained a promise from the defendants to reconvey the property. The mutation proceedings did not furnish any independent or fresh cause of action to seek a declaration of the sale deed of 5.5.1953 to be merely a loan transaction. The foundation of the suit was clearly the registered sale deed of 1953 which is alleged to be a loan transaction and the alleged oral agreement of reconveyance of the property on return of borrowed amount. This Court went on to observe, "14. After examining the pleadings of the plaint as discussed above, we are clearly of the opinion that by clever drafting of the plaint the civil suit which is hopelessly barred for seeking avoidance of registered sale deed of 5.5.1993, has been instituted by taking recourse to orders passed in mutation proceedings by the Revenue Court. 15. Civil Suit No. 557 of 1990 was pending when the present suit was filed. In the present suit, the relief indirectly claimed is of declaring the sale deed of 5.5.1993 to be not really a sale deed but a loan transaction. Relief of recon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reement stood renewed for a further period of 5 years upon the appellants' exercising their option to claim renewal under the original agreement. The appellants-plaintiffs have failed to do so. However, the plaint proceeds on the assumption that the original agreement stood renewed including the negative covenants contained in clauses 15 and 20 of the original agreement which authorised only the appellants to extract ore from the mine with an obligation cast on the respondents-defendants not to interfere with the enjoyment of their rights under the agreement. In the facts of this case, in the suit prayer for injunction based on negative covenants could not be asked for unless it was first established that the agreement continued to subsist. The use of the words "During the subsistence of this agreement" in clause 15, and "during the pendency of this indenture" in clause 20 of the agreement is significant. In the absence of a document renewing the original agreement for a further period of 5 years and in the absence of any declaration from a court of law that the original agreement stood renewed automatically upon the appellants exercising their option for grant of renewal, as i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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