Hardesh Ores Pvt. Ltd vs M/S. Hede And Company 

Hardesh Ores Pvt. Ltd vs M/S. Hede And Company 

Citation: 2007 AIR SCW 3456 

Bench: B.P. Singh, Harjit Singh Bedi 

Facts of the Case:

Hardesh, is the appellant and Sociedade de Fomento Industrial Pvt. Ltd. entered into two agreements with the respondent Hede & Co. The agreement with appellant ores was for extraction of ore from the mine whereas the agreement with Fomento was for the purchase of minerals extracted from the mine. 

Both agreements had similar terms and conditions. As per Clause 2.1 of the Agreement,  the agreement was to come into force from 1.1.1997 and was to remain in force for 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 at the option of Hardesh on the same terms and conditions. 

Under Clause 2.3 appellant was given the right to terminate the agreement by giving two calendar months prior notice in writing to the respondent. 

ISSUES: 

(i) Whether the suit filed is barred by law of limitation or not? 

The agreement was to commence on January 01, 1997, but on 12.12.1996 but an order of the  Supreme Court dated 12.12.1996 prohibited mining operations in the authorized area, so mining operations could not be commenced.

Given the situation that arose on account of the order of the Supreme Court which necessitated permission being sought from the Central  Government for commencing mining operations. It is the case of the appellant that the appellant had taken possession of the mine immediately after coming into effect of the contract on  1.1.1997.  

JUDGEMENT: 

TRIAL COURT 

The plaint states that the extraction agreement was made for five years from  1.1.1997 with a right of renewal at the option of the appellant on the same terms and conditions.  So, the period of 5 years came to an end on 31.12.2001, and the appellant exercised his option to renew the said agreement for a further period of 5 years.

This was conveyed to the respondent vide a letter dated 4.12.2001 which was received by it on 7.12.2001. However, the appellant received a letter dated 29.12.2001 from the respondent alleging that the appellant was not entitled to exercise the option for renewal.  

An application was filed by the respondent under Order VII Rule 11 of the Code of Civil  Procedure stating that there was the absence of cause of action and the plant was barred by limitation.

It was submitted before the court that Article 54 of the Limitation Act applied to the current case and that a suit for specific performance of the contract should have been filed within 3  years from the date the appellant had notice that the renewal of the agreement was refused by the respondent.

In the present case, the refusal was communicated on 29.12.2001 and thus, the suit should have been filed within 3 years thereafter. 

The Trial Court allowed the application but dismissed the suit and held that it is barred by limitation. The cause of action arose on 29.12.2001 when they received the reply of the respondent denying that the agreement stood renewed. The suit was filed much after the expiry of 3 years from that date, it was barred by limitation. 

HIGH COURT 

The counsel for the appellant pleaded that the Trial Court made an error when it referred to the defense of the defendant to determine whether the plaint was liable to be rejected as barred by limitation. It also noticed the submission urged on behalf of the appellant that the question of limitation was a mixed question of law and fact. 

On the other counsel, the appellants supported its argument by citing the case covered by the ratio laid down by this Court in the case of N.V. Srinivasa Murthy and Others Vs. Maruyama and Others. 

The High Court found that the suit for injunction was nothing but a camouflage to get over the bar of limitation, which showed that specific performance was implicit in the pleadings contained in the plaint. The High Court held that the plaint filed under Order VII Rule 11 CPC is to be rejected 

SUPREME COURT 

The Supreme court held that the respondent was right in contending that enforcement of the negative covenants presupposes the existence of a subsisting agreement between the parties concerned. The renewal of an agreement or lease requires the execution of a document by law evidencing it.

The grant of renewal is also a fresh grant. In the instant case, the appellant-plaintiff did exercise their option and claimed renewal. The respondents denied their right to claim renewal in express terms and also unequivocally stated that the agreement did not stand renewed as contended by the appellants.  

The cause of action arose when the rights of the appellant of renewal were denied by the respondents.  It happened in 2001 thus within three years from that date appellant must have taken proceedings to get their right of renewal declared and enforced by a court of law to get a  declaration the agreement was renewed for a further period of 5 years but the appellants failed to do. 

The appellants in their plaint ought to have prayed for a declaration that the agreement stood renewed automatically on the exercise of an option for renewal and only on that basis they could have sought an injunction restraining the respondents from interfering. In the present suit they could  have sought a declaration that the agreement stood renewed automatically but such a claim but it will be barred by limitation since more than 3 years have elapsed. 

The Supreme Court was satisfied that the Trial Court as well as the High Court were in holding that the plant ought to be rejected under Order VII Rule 11 CPC since the suit appeared from the statements to be barred under Limitation Act. So court granted a decision in favor of the respondent.

LEGAL PRINCIPLE OF LAW INVOLVED: 

The plaint is filed for the institution of the suit in the Civil/Commercial Courts. A court dealing with civil matters will be governed by the provisions of the Code. Order VII of the  Code of Civil Procedure is envisaged with the provisions of the rejection of the plaint by the  Court.

The article shall discuss the provisions, the grounds of rejection, the limitation period after rejection within which the plant needs to be re-filed, and also other informative things.  This rule is merely a procedural rule which ensures nothing but the proper application of the Court Fees Act 1870. 

Rejection of Plaint 

Order VII Rule 11 of the Code of Civil Procedure elaborates on the rejection of plants in certain circumstances. It has mentioned certain grounds based on which the plants are rejected by the courts. One of them is not mentioning the cause of action that the plaintiff seeks against the respondent. 

The Court must analyze the plant altogether and decide whether the plaint ought to be accepted or sent back for offering some reparation to it. In any case, the plant will undoubtedly be dismissed by the Court in the accompanying conditions – 

1)Order VII Rule 11 (a) - When the cause of action is not mentioned in the plaint 

Cause for Action has been referenced under plenty of provisions in the CPC. It is a set of claims or actualities which compensate for the grounds for accepting a civil suit. One instance of the cause of action is under Order II Rule 2 of CPC. In that, it has been expressed that to establish a lawsuit, the reason should be unequivocally referenced in the plaint. 

2) Joint Cause of action 

Order II Rule 4 of CPC sets out the circumstances in which the cause of action would not be joined or heard together except if the Court has permitted doing such. Following are the exemptions to the preceding – 

Cases for claiming mesne benefit or amount outstanding of the lease regarding the claimed  property or any part thereof; 

Cases for claiming damages or harms for breach of any agreement under which the property or any part thereof is held. 

3) Misjoinder of Cause of Action 

At the point when the different cause of actions is being brought together in the suit which cannot be combined, there can be no such joinder. All complaints concerning the misjoinder of a cause of action should be tended to as early as could be possible. 

4)Insufficient Stamps Under the Court Fee Act, 1870

5)Undervalued relief claimed in the suit 6)Order 7 rule 11 – Locus Standi

The Relief Afforded Under CPC 

Relief must be explicitly expressed in the plaint. Rule 7 of Order VII of CPC necessitates that a plant needs to contain the recourse that the offended party claims. It very well may be anything, for example, harm, a directive, revelation, arrangement of a collector, and so on.