Holding

The High Court erred in granting permission to withdraw the suit with leave to file a fresh suit because it did not apply its mind to the statutory requirements of Order XXIII Rule 1(3) CPC.

Summary

The plaintiffs filed a suit for injunction to stop the defendants from operating a flour mill and to claim exclusive user rights over a pathway. The trial court granted an injunction and exclusive user rights; the first appellate court modified the decree, holding the pathway was common. Before the second appeal was admitted, the plaintiffs sought and obtained permission under Order XXIII Rule 1(3) of the CPC to withdraw the suit and file a fresh suit for a declaration of title. The defendants appealed, arguing that the High Court exercised its discretion improperly and prematurely. The Supreme Court held that the High Court failed to satisfy the statutory criteria for granting leave to withdraw, thereby improperly allowing the plaintiffs to evade the earlier decree, and set aside the order, remitting the appeal for proper disposal.

Issues considered

Whether the High Court correctly exercised its discretion under Order XXIII Rule 1(3) CPC to permit withdrawal of the suit with liberty to file a fresh suit at the appellate stage.
Whether the discretion under Order XXIII Rule 1(3) requires the Court to be satisfied about formal defects or sufficient grounds for a fresh suit, and not merely the absence of prejudice.
Whether the application for withdrawal was premature, being filed before the admission of the second appeal and before a substantial question of law was framed.

Legislation cited

Code of Civil Procedure, 1908s. Order II Rule 2, s. Order XXIII Rule 1(3), s. Section 11

Subjects

CPCOrder XXIII Rule 1(3)withdrawal of suitabandonmentdiscretionappealinjunctiondeclaration of titleres judicatapublic policy

Judgment

A K.S. BHOOPATHY AND ORS.
v.
KOKILAAND ORS.

MAY8, 2000

B [A.P. MISRA AND D.P. MOHAPATRA, JJ.]

(
Code of Civil Procedure, 1908 :

Order XXIII, Rule 1(3)-Withdrawal of suit-Suit for injunction.filed to
restrain running offlour mill and use of a pathway-Trial Coun decreed suit
c in favour of respondent and gave them exclusive right of user over pathway-
First Appellate Cou11 quashed the exclusive right of user over pathway-
Respondents sought permission to withdraw suit in second appeal before High
Cou11 in order to file fresh suit with additional prayer for declaration of title
over pathway-High Court allowed the application-On appeal Held, there is
b distinction between withdrawal which is termed as "abandonment" and with-
drawal with permission of Court-Grant of leave is discretion of the Court
which is to be exercised with caution and circumspection-Court should feel
satisfied regarding grounds of granting permission, statutory mandate not
complied by merely stating that such permission will not prejudice defendants-
Grant of leave at such stage would help unsuccessful plaintiff to avoid the
E
decree against him and seek fresh adjudication on a clean slate-Permission
to withdraw granted improperly, matter not-considered in the proper perspec-
tive as it was for the plaintiffs to frame their suit properly at the proper time.

Order II Rule 2 and Section 11-Bar on framing ofsuit and Res Judicata-
F Such bars avoided when liberty to withdraw suit is granted by Cou11 under
Order XXIII Rule 1.

The respondents filed suit for injunction against the appellants to
restrain them from establishing and running a flour mill and using the
pathway lying between their properties. Trial Court decreed suit in favour
G of the respondents and gave them an exclusive right of user over the
pathway. First appellate court modified the decree and held that respond- t
ent did not have an exclusive right of user over the pathway. Respondents
filed the second appeal before the High Court, but before its admission an
application was made under Order XXIII Rule 1(3) CPC seeking permis-
H sion to withdraw the suit with leave to tile a fresh suit as no prayer for
1168
....,,
K.S. BHOOPATHY v. KOKILA 1169
declaration of title over the pathway was made in the plaint. The applica- A
tion was allowed. Hence this appeal.

Appellant contended that the High Court erred in entertaining the
application for withdrawal of the suit before admission of the second
appeal, that no substantial question of laws was formulated during the
second appeal; and that the application was entertained at a premature B
stage.
)
Respondent contended that the application was allowed after hear-
ing both parties; and that High Court had a wide discretion to grant
permission for withdrawal of the suit, which is not liable to be interfered
under Article 136 of the Constitution.
c
Allowing the appeal, the Court

HELD : 1. Order XXIII Rule 1 CPC makes a distinction between
absolute withdrawal which is termed as "abandonment" and withdrawal
D
with the permission of the Court. The law as to withdrawal of suits as
enacted in Order XID Rule 1 may be generally stated in two parts : (a) a
plaintiff can abandon a suit or abandon a part of his claim as a matter of
right without the permission of the Court, in that case he will be precluded
from suing again on the same cause of action. Neither the plaintiff can
abandon a suit or a part of suit reserving to himself a right to bring a fresh E
suit, nor can the defendant insist that the plaintiff must be compelled to
proceed with the suit; and (b) a plaintiff may, in the circumstances men-
tioned in Rule 1(3), be permitted by the Court to withdraw from a suit with
liberty to sue afresh on the same cause of action. Such liberty being
granted by the Court enables the plaintiff to avoid the bar in Order II Rule F
2 and Section 11 CPC. (1174-E-H]
-t
2. The provision in Order XXID Rule 1 CPC is an exception to the
common law principle of non suit. On principle an application by a plain-
tiff under Rule 1(3) cannot be treated on par with an application by him in
exercise of the absolute liberty given to him under Rule 1(1). In the former G
it is actually a prayer for concession from the Court after satisfying the
Court regarding existence of the circumstances justifying the grant of such
+ concession. The grant of leave envisaged in Rule 1(3) is at the discretion of
the Court but such discretion is to be exercised with caution and circum-
spection. The legislative policy in the matter of exercise of discretion is H
1170 SUPREME COURf REPORTS [2000] 3 S.C.R.
A clear from the provisions of Rule 1(3) in which two alternatives are pro-
vided, Rule 1(3)(b) contains a mandate to the Court that it must be satis-
fied about the sufficiency of the grounds for allowing the plaintiff to insti-
tute a fresh suit for the same claim or part of the claim on the same cause
of action. The Court is to discharge the duty mandated under the provision
of the Code on taking into consideration all relevant aspects of the matter
B
including the desirability of permitting the party to start a fresh round of
litigation on the same cause of action. This becomes all the more important
in a case where the application under Order XXIl Rule (1) is filed by the -(

plaintiff at the stage of appeal. Grant of leave in such a case would result in
the unsuccessful plaintiff to avoid the decree or decrees against him and
c seek a fresh adjudication of the controversy on the clean slate. It may also
result in the contesting defendant losing the advantage of adjudication of
the dispute by the Court or courts below. Grant of permission for with-
drawal of a suit with leave to file a fresh suit may also result in annulment
of a right vested in the defendant or even a third party. The appellate/
D second appellate court should apply its mind to the case with a view to
ensure strict compliance with the conditions prescribed in
Order XXIll Rule 1(3) CPC for exercise of the discretionary power in
permitting the suit with leave to file a fresh suit on the same cause of ac-
tion. Another reason in support of this view is that withdrawal of a suit at
the appellant/second appellate stage results in wastage of public time of
E Courts which is of considerable importance in the present time in view of
large accumulation of cases in lower courts and inordinate delay in dis-
posal of cases. (1175-A-H]

Bakhtawar Singh and Another v. Sada Kaur and Another, (1996] 11
p SCC 167 and Executive Officer Arthaneswarar Temple v. R. Sathyamoorthy &
Ors., (1999] 3 SCC 115, relied on.

3. The matter was not considered in the proper perspective while
allowing the prayer to withdraw the suit with leave to file a fresh suit, where
the prayer for declaration of title could also be made. It was for the plain-
G tiffs to frame their suitin any form as advised and if the prayer for declara-
tion of title was felt necessary the same should have been made. The plain-
tiffs had merely sought a decree of injunction permanently restraining the
defendants from disturbing their right of user of the property and later on
realised the weakness of their claim. The application under Order XXIll
H Rule 1(3) CPC was tiled to get over the findings against them. The approach
./

K.S. BHOOPATHY v. KOKILA [MOHAPATRA, J.] 1171
that the interests of the defendants were safeguarded by giving them per- A
mission for user of the pathway till adjudication of the fresh suit to be filed
is clearly erroneous. It is the duty of the Court to feel satisfied that there
exist proper grounds/reasons for granting permission for withdrawal of the
suit leave to file fresh suit and in such a matter the statutory mandate is not
complied by merely stating that grant of permission will not prejudice the B
defendants. If permission is granted at appellate or second appellate stage
prejudice to defendant is writ large as he loses the benefit of the decision in
his favour in the lower court. [1177-F-H; 1178-A-D]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3287 of
2000. c
From the Judgment and Order dated 21.8.98 of the Madras High Cowt
in C.M.P. No. 1985 of 1997 in S.A. No. 807 of 1996.

Y. Prabhakar, Radha Krishnan and Revathy Raghavan for the Appel-
lants. D
S. Sivasubramaniam and R. Nedumaran for the Respondents.

The Judgment of the Court was delivered by

D.P. MOHAPATRA, J. Leave granted.
E
This appeal filed by the defendants is directed against the judgment/
order of the Madras High Court in Second Appeal No. 807 of 1996 and CMP
Nos. 7569/96 and 1085/96, along with the application filed by the respond-
ents 1 & 2 under Order XXIII Rule 1(3) Civil Procedure Code (CPC for short)
seeking permission of the Cowt to withdraw the suit with leave to file a fresh F
suit.

The factual matrix of the case relevant for appreciation of the questions
raised in the appeal may be stated thus : Respondents 1 & 2 herein filed O.S.
No. 197/89 (subsequently re-numbered as 614/89) in the Court of the District
Munsif, Erode arraying the appellants and respondents 3 & 4 as defendants G
in the suit. In the said suit the plaintiffs sought relief inter alia, of injunction
against defendants 1 & 2 restraining them from establishing and running a
tlour mill, on their property and for further injunction restraining them from
disturbing the plaintiffs' exclusive user of the pathway lying between the
properties of the plaintiffs on one side and defendants 1 & 2 on the other. H
1172 SUPREME COURT REPORTS [2000] 3 S.C.R.
A Defendants I & 2 in the suit as owners sold portions of their land by separate
sale deeds dated 10.8.78 executed in favour of plaintiffs 1 & 2 which were
shown in the map attached to the plaint in blue and green colours respectively.
The pathway is similarly shown in red colour in the map. It was the case of
the plaintiffs that establishment of the proposed flour mill by the defendants
B 1 & 2 will act as a nuisance and will seriously prejudice the plaintiffs' user
of their property on which they have constructed a clinic. Regarding the
pathway the case of the plaintiffs is that they have exclusive right of user
of the same and the plaintiffs should not be permitted to interfere with their
right in any manner.

c The defendants 1 and 2 refuted the claims of the plaintiffs in respect
of both the prayers' and contended that the proposed flour mill will in no
way act as a nuisance against user of the property by the plaintiffs and that
the plaintiffs have no exclusive right of user of the pathway which is a
common pathway meant to be used by both the parties.

D The trial court decreed the suit holding inter alia that the plaintiffs
have an exclusive right of user over the pathway. The trial court also
accepted the case of the plaintiffs in respect of the prayer for injuncting
contesting defendants from establishing a flour mill on their property.

On appeal by defendants 1 & 2 the first appellate court modified the
E decree relating to the pathway holding that the plaintiffs have no exclusive
right of user of the pathway and all the parties are entitled to use the same
as it is a common path way.

Being aggrieved by the modification of the decree to the extent noted
F above the plaintiffs filed the second appeal, S.A. No. 807/96, before the High
Court of Madras. Before the said appeal was admitted the ~appellants filed an
t
application under Order XXIII Rule 1(3) CPC seeking permission of the Court
to withdraw the suit with leave to file a fresh suit. It was averred in the
application, inter alia, that no prayer for declaration of plaintiffs' title over
the pathway was made in the plaint and in view of the cloud raised against
G their exclusive title and right of user in the judgment of the lower appellate
court it was necessary to withdraw the suit and file a fresh suit properly
constituted and seeking appropriate relief. The contesting defendants objected
to the prayer in the application on the ground, inter alia, that it was a move
by the plaintiffs to get over the finding that they have no exclusive right of
H user over the suit pathway and that the defendants have also a right of user
K.S. BHOOPATHY v. KOKILA [MOHAPATRA, J.] 1173
of the same since it is a common pathway meant to be used by the parties. A
According to the defendants in the circumstances the permission sought for
withdrawal of the suit with leave to file a fresh suit according to the defend-
ants could not be granted. The application filed by the appellants was allowed
by the High Court in the impugned order.

TI1e main thrust of the arguments of learned senior counsel for the B
appellants was that the High Court en-ed in entertaining the application under
Order XXIII Rule 1(3) CPC at a stage when the second appeal had not. been
admitted. The High Court had not formulated any substantial question of law
which required examination in the second appeal. Elucidating his contention
the learned senior counsel submitted that the provision in section 100 CPC C
makes it mandatory for the Court to formulate the substantial question of law
to be examined in appeal before admitting the same. That having not been
done in the present case the application filed under Order XXIII Rule 1(3)
CPC was premature. -

Learned counsel appearing for the plaintiff-respondents on the other D
hand submitted that the High Court heard both the parties before granting the
application for withdrawal of the suit with leave to file fresh suit, and
therefore, no exception can be taken to the order that it was premature. It was
the further submission of the learned counsel that Order XXIII Rule 1(3) vests
wide discretion in the Court to grant permission for withdrawal of the suit E
with leave to file a fresh suit and such discretion having been exercised by
the High Court in favour of the applicants the order is not liable to be
interfered by this Court in exercise of jurisdiction under Article 136 of the
Constitution.

Order XXIII Rule 1 CPC makes provisions for withdrawal of suit or F
abandonment of part of claim. Relevant portions of the provision arc
extracted hereunder :

Order XXIII
"Withdrawal and Adjustment of Suits
G
(1) At any time after the institution of a suit, the plaintiff may as
against all or any of the defendants abandon his suit or abandon a
part of his claim;

Provided that where the plaintiff is a minor or other person to whom
the provisions contained in rules 1 to 14 of Order XXXII extend, H
1174 SUPREME COURT REPORTS (2000] 3 S.C.R.
• ">\
A neither the suit nor any part of the claim shall be abandoned without
the leave of the Court.

(3) Where the Cou11 is satisfied. -

(a) that a suit must fail by reason of some fotmal defect, or
B (b) that there are sufficient grounds for allowing the plaintiff to
institute a fresh suit for the subject-matter of a suit or part of a claim,
it May, on such tenns as it thinks fit, grant the plaintiff pennission
to withdraw from such suit or such part of the claim with liberty to
institute a fresh suit in respect of the subject-matter of such suit or
such pa11 of the claim.
c
(4) Where the plaintiff -

(a) abandons any suit or part of claim under sub-rule (1); or

(b) withdraws from a suit or part of a claim without the permission
D referred to in sub-rule (3), he shall be liable for such costs as the Court
may award and shall be precluded from instituting any fresh suit in
respect of such subject-matter or such part of the claim."

(Emphasis supplied)
E The present Rule which was introduced in place of the old Rule 1 by
the Amendment Act of 1976 makes a distinction between absolute withdrawal
which is termed as 'adandonment' and withdrawal with the permission of the
Court. This clear distinction is maintained throughout in the substituted
Rule by making appropriate changes in the wording of various sub-rules of
F Rule 1.

The law as to withdrawal of suits as enacted in the present Rule may
be generally stated in two parts: (a) a plaintiff can abandon a suit or abandon
a part of his claim as a matter of right without the permission of the Court,
in that case he will be precluded from suing again on the same cause of
G action. Neither the plaintiff can abandon a suit or a part of the suit reserving
to himself a right to bring a fresh suit, nor can the defendant insist that the
plaintiff must be compelled to proceed with the suit; and (b) a plaintiff may,
in the circumstances mentioned in sub-rule (3), be permitted by the Court to
withdraw from a suit with liberty to sue afresh on the same cause of action.
H Such liberty being granted by the Court enables the plaintiff to avoid the bar
K.S. BHOOPATHY v. KOKILA [MOHAPATRA, J.] 1175

...... )r in Order II Rule 2 and Section 11 CPC. A
Tue provision in Order XXIII Rule 1 CPC is an exception to the
common law principle of non suit. Therefore on principle an application by
a plaintiff under sub-rule 3 cannot be treated on par with an application by
him in exercise of the absolute liberty given to him under sub-rule 1. In the
former it is actually a prayer for concession from the Court after satisfying B
the Court regarding existences of the circumstances justifying the grant of the
such concession. No doubt, the grant of leave envisaged in sub-rule (3) of
Rule 1 is at the discretion of the Court but such discretion is to be exercised
by the Court with caution and circumspection. The legislative policy in the
matter of exercise of discretion is clear from the provisions of sub-rule (3) c
in which two alternatives are provided; (1) where the Court is satisfied that
a suit must fail by reason of some formal defect, and the other where the
Court is satisfied that there are sufficient grounds for allowing the plaintiff
to institute a fresh suit for the subject matter of a suit or part of a claim.
Clause (b) of sub-rule (3) contains the mandate to the Court that it must be
D
satisfied about the sufficiency of the grounds for allowing the plaintiff to
institute a fresh suit for the same claim or part of the claim on the same cause
of action. The Court is to discharge the duty mandated under the provision
of the.Code on taking into consideration all relevant aspects of the matter
including the desirability of permitting the party to start a fresh round of
,j:
litigation on the same cause of action. This becomes all the more important E
in a case where the application under Order XXIII Rule (1) is filed by the
plaintiff at the stage of appeal. Grant of leave in such a case would result
in the unsuccessful plaintiff to avoid the decree or decrees against him and
seek a fresh adjudication of the controversy on a clean slate. It may also result
in the contesting defendant losing the advantage of adjudication of the dispute F
by the Court or courts below. Grant of permission for withdrawal of a suit
with leave to file afresh suit may also result in annulment of a right vested
in the defendant or even a third party. Tue appellate/second appellate court
should apply its mind to the case with a view to ensure strict compliance with
the conditions prescribed in Order XXIII Rule 1(3) CPC for exercise of the
G
discretionary power in permitting the suit with leave to file a fresh suit on
the same cause of action. Yet another reason in support of this view is that
~
withdrawal of a suit at the appellate/second appellate stage results in wastage
of public time of Courts which is of considerable importance in the present
time in view of large accumulation of cases in lower courts and inordinate
delay in disposal of the cases. H
1176 SUPREME COURT REPORTS [2000) 3 S.C.R.
A In Bakhatawar Singh and Another v. Sada Kaur and Another, [1996)
11 SCC 167 the question of grant of permission under clause (3) of Order
XXIII Rule 1 of the CPC was considered wherein it was held :

"In the present case all the courts below including the High Court
concurrently found that the plaintiffs/appellants failed to produce any
B evidence to show that the permission to withdraw the suit was given
on the ground that the suit was bound to fail by reason of some formal
defect or there were sufficient grounds for allowing the plaintiffs to
institute a fresh suit in respect of the same subject-matter. The
plaintiffs had not even produced the application which is said to have
c been filed for withdrawal of the earlier suit with permission to file a
fresh suit on the same cause of action to show as to what was the
formal defect in the earlier suit by reason of which it was sought to
be withdrawn. In these facts and circumstances no case for fresh
institution of suit on the same cause of action and for the same relief
after the withdrawal of the earlier suit was made out by the plaintiffs/
D appellants in accordance with the provisions of clause (3) of Order
23 Rule 1 of the Code."

Recently in the case of Executive Officer Arthaneswarar Temple v. R.
Sathyamoorthy & Ors., [1999] 3 SCC 115 this Court restated the general
E principles for dealing with the applications under Order XXIII Rule 1 CPC
in the following words :

"Various High Courts have rightly held, while dealing with
applications under Order 23 Rule 1 CPC, that if an appeal was
preferred by an unsuccessful plaintiff against the judgment of the trial
F court dismissing the suit and if the appellant-plaintiff wanted to
withdraw not only the appeal but also the suit unconditionally, then
such a permission so far as the withdrawal of the suit was concerned,
can be granted if there was no question of any adjudication on merits
in favour of the defendants by the trial being nullified by such
withdrawal. On the other hand, if any such findings by the trial court
G
in favour of the defendant would get nullified, such permission for
withdrawal of the suit should not be granted."

The question for consideration in the present case is whether the High
Court has exercised the discretion vested under Order XXIII Rule 1(3) CPC
H on consideration of matters relevant for exercise of such power. On perusal
K.S. BHOOPATHY v. KOKILA [MOHAPATRA, J.] 1177

of th.e impugned order it is clear to us that the learned judge has not A
considered the matter in its proper perspective while allowing the prayer of
the plaintiff for permission to withdraw the suit with leave to file a fresh suit.
The order is vitiated on account of non-application of mind to the relevant
aspects of the matter. This position is clear from some observations in the
impugned order which are extracted herein below : B

"But one fact situation has to be remembered in this case, viz., that
it was the appellants who succeeded in the trial court in obtaining a
decree and in the appeal against such decree by the respondents,
which was partly allowed, the appellate court found that the pathway
was common to both the parties, but the right was not gone into, title C
was not determined, in such a situation withdrawal of the suit at the
appellate stage although it may amount to withdrawal or nullification
of the appellate court's order, still not hurt any part other than the
withdrawing plaintiffs, because they are also having the right to use
the common pathway and the decree preventing installation of the D
machinery is nullified. Therefore the contention, that withdrawal will
prejudice the Respondents, has no basis. The apprehended prejudice
can be safeguarded by keeping the right to use the pathway by both
the parties till the disposal of the suit.

......In view of this settled position, it is appropriate to permit E
withdrawal of the suit with a liberty to file a fresh suit for declaration
of title which they ought to have done at the initial stage. By
withdrawal, the Respondents should not be deprived of the benefit of
usage of that passage till the final adjudication. If there are valid
defences, they can raise all such defences."
F
From the above it appears that the approach of the High Court was that
the ph•intiff should have prayed for declaration of title which they had omitted
to include in the plaint. It was for the plaintiffs to frame their suit in any form
as advised. If they felt that there was a cause of action for declaration of their
title to the suit property they could have made a prayer in that regard. If they G
felt that a declaration of their right to exclusive user of the pathway was
necessary they should have framed the suit accordingly. One the other hand
the plaintiffs merely sought a decree of injunction permanently restraining the
defendants from disturbing their right of user of the property. From the facts
and circumstances of the case as emanating from the judgments of the trial H 1
1178 SUPREME COURT REPORTS [2000] 3 S.C.R.
A court and the first appellate court it is clear that the plaintiffs realised the ""' <::._
weakness in the claim of exclusive right of user over the property and in
order to get over the findings against them by the first appellate court they
took recourse of Order XXIII Rule 1(3) CPC and filed the application for
withdrawal of the suit with leave to file fresh suit. The High Court does not
appear to have considered the relevant aspects of the matter. Its approach
B
appears to have been that since the interest of the defendants can be
safeguarded by giving them permission for user of the pathway till adjudi-
cation of the controversy iii the fresh suit to be filed, permis~ion for
withdrawal of the suit as prayed for can be granted. Such an approach is
clearly erroneous. It is the duty of the Court to feel satisfied that there exist
c proper grounds/reasons for granting permission for withdrawal of the suit
with leave to file fresh suit by the plaintiffs and in such a matter the statutory
mandate is not complied by merely stating that grant of permission will not
prejudice the defendants. In case such permission is granted at appellate or t
second appellate stage prejudice to defendant is writ large as he loses the
D benefit of the decision in his favour in the lower court.

For the reasons discussed in the foregoing paragraphs we have no
hesitation to hold that the impugned order is unsustainable. Accordingly the
appeal is allowed with cost. The order of the High Court dated 21.8.1998
granting permission for withdrawal of the suit with permission to file fresh -i.
E suit is set aside. TI1e High Court will now proceed to dispose of the second
appeal in accordance with law.

A.Q. Appeal allowed.