Repeatedly re-litigating Bonai mining and shareholding dispute through unrelated plaintiffs is abuse of process, Orissa HC holds

M/s. Bonai Industrial Co. Ltd., Defendant No.8 in C.S. No.396 of 2016, challenged the order dated 20 May 2024 by which the learned 2nd Additional Civil Judge (Senior Division), Bhubaneswar rejected its application under Section 151 CPC seeking dismissal of the suit as an abuse of process.

The suit concerned the management and shareholding of Bonai Industrial Co. Ltd., the alleged displacement of the rights of late Kumar Harishchandra Deo, and mining leases operated by the Company. The plaintiffs sought rendition of accounts for mineral operations from 2005–2014, recovery of alleged wrongful gains, and injunctions against the Company and State authorities.

The petitioner relied upon several earlier proceedings concerning substantially the same controversy, including C.S. No.6816 of 2014, C.S. No.18 of 2015, C.S. No.2 of 2016, W.P.(C) No.9693 of 2017, successive PILs, and W.P.(C) No.2811 of 2020.

The trial court declined to dismiss the suit principally because the parties and reliefs were not identical and issues had not yet been framed.

Whether the application under Section 151 CPC seeking dismissal of the suit for abuse of process ought to have been allowed?

Whether continuation of C.S. No.396 of 2016 amounted to an abuse of the process of the Court?

Whether the plaintiffs possessed the requisite locus standi to maintain the proceedings, including in a representative capacity under Order I Rule 8 CPC?

Whether the impugned order warranted interference under Article 227 of the Constitution?

Section 151 CPC preserves the inherent power of a civil court to pass orders necessary to secure the ends of justice and prevent abuse of its process; although exceptional, the power may extend to terminating a suit where its continuation has become oppressive, purposeless, or abusive.

In Shipping Corporation of India Ltd. v. Machado Brothers, (2004) 11 SCC 168, the Supreme Court recognised that proceedings may be terminated under Section 151 where their continuation would amount to an abuse of process.

Under K.K. Modi v. K.N. Modi, (1998) 3 SCC 573, re-litigation and repeated presentation of substantially the same controversy in altered forms may constitute abuse of process even where the strict requirements of res judicata are not satisfied.

The Court also applied the Henderson v. Henderson principle against piecemeal litigation, requiring parties to bring forward the whole of their case in the proceeding where the controversy is properly before the court.

Order I Rule 8 CPC is procedural and does not create a substantive cause of action or confer standing on persons lacking an independent legal interest.

Article 227 permits supervisory interference where the subordinate court fails to exercise jurisdiction vested in it or proceeds on an erroneous legal basis, though it is not an appellate jurisdiction.

The High Court held that the trial court addressed the wrong question by focusing narrowly on the identity of parties, the difference in prayers, and the absence of framed issues, rather than examining whether the suit was a continuation of a repeatedly litigated controversy.

The earlier proceedings and subsequent writ and PIL litigation concerned the same essential allegations regarding late Kumar Harishchandra Deo’s shareholding, the constitution and management of the Company, and the authority to operate the mines.

The claim for rendition of accounts was not independent; it depended upon the assertion that the Company’s management lacked lawful authority because the alleged rights of late Kumar Harishchandra Deo had been unlawfully displaced.

The Court further found that the plaintiffs did not claim to be shareholders, successors, legal representatives, or persons having an independent proprietary or contractual interest in the Company or the mining leases.

Their reliance on public interest and Order I Rule 8 CPC could not substitute for the substantive legal interest necessary to seek accounts, recovery, and injunctions concerning private corporate and proprietary rights.

The non-disclosure of C.S. No.6816 of 2014—instituted by the father of Plaintiff No.3 and concerning the same Company and mining interests—was material because it concealed the litigation history relevant to maintainability and abuse of process.

Although the plaintiffs were not parties to every earlier proceeding, the Court clarified that it was not mechanically applying res judicata. The decisive consideration was that they sought to reopen the same substantive controversy without demonstrating an independent cause of action or legal right.

Cumulatively, the repeated litigation, similarity of the underlying controversy, lack of locus, suppression of material proceedings, and attempt to pursue the dispute through a differently framed action established abuse of process.

It allowed the petitioner’s application under Section 151 CPC, holding that continuation of C.S. No.396 of 2016 against Bonai Industrial Co. Ltd. would amount to an abuse of the process of the Court.

Accordingly, the suit was dismissed qua the petitioner/Defendant No.8.

Pending applications were disposed of, with no order as to costs, and any interim order was vacated.