2023 (3) TMI 1589 - SC - Indian Laws

Rejection of plaint for res judicata under Order 7 Rule 11 CPC must be based solely on plaint statements, not external evidence

The SC held that rejection of plaint under Order 7 Rule 11 CPC for res judicata must be determined solely from plaint statements, not external materials. ... Rejection of plaint under the provisions of Order 7 Rule 11 of the Code of Civil Procedure (CPC) on the ground that the second eviction petition was barred by the principles of res judicata - HELD THAT:- Order 7 Rule 11(d) of CPC provides that the plaint shall be rejected “where the suit appears from the statement in the plaint to be barred by any law”. Hence, in order to decide whether the suit is barred by any law, it is the statement in the plaint which will have to be construed. The Court while deciding such an application must have due regard only to the statements in the plaint. Whether the suit is barred by any law must be determined from the statements in the plaint and it is not open to decide the issue on the basis of any other material including the written statement in the case. This Court in the case of V. Rajeshwari [2003 (12) TMI 623 - SUPREME COURT] observed that the rule of res judicata does not strike at the root of the jurisdiction of the Court trying the subsequent suit. It is a rule of estoppal based on the public policy of achieving finality to litigation. The plea of res judicata is founded on proof of certain facts and then applying the law to the facts so found. It is, therefore, necessary that the foundation for the belief must be laid in the pleadings and then the issue must be framed and tried. Order 17 Rule 2 of the CPC provides that where, on any day to which the hearing of the suit is adjourned, the parties or any of them fail to appear, the Court may proceed to dispose of the suit in one of the modes directed in that behalf by order IX or make such other order as it thinks fit - The Explanation appended to Order 17 Rule 2 of the CPC provides that where the evidence or a substantial portion of the evidence of any party has already been recorded and such party fails to appear on any day to which the hearing of the suit is adjourned, the Court may, in its discretion, proceed with the case as if such party was present. The power conferred on Courts under Rule 3 of Order 17 of the CPC to decide the suit on the merits for the default of a party is a drastic power which seriously restricts the remedy of the unsuccessful party for redress. It has to be used only sparingly in exceptional cases. Physical presence without preparedness to co-operate for anything connected with the progress of the case serves no useful purpose in deciding the suit on the merits and it is worse than absence. In any contingency, the discretion is always with the Court to resort to Rule 2 or 3 respectively or to grant an adjournment for deciding the suit in a regular way in spite of default - At the stage of hearing of the case, Order 17 of the CPC, applied. Under that Order on a date of adjourned hearing, if a party was absent, the Court either would act under Order 9 or otherwise as it thought fit; or if a party was present but it did not produce evidence, it would proceed to decide the suit forthwith without benefit of evidence. This last thing tantamounts that the Court was to say whether the suit was or was not proved, either wholly or in part and to pass the decree accordingly. The moot question is whether the eviction petition was dismissed for default which dismissal would certainly bar a fresh suit if instituted on the same cause of action. The words certainly do not mean dismissal either on merits or on default - The order did not purport to be one of dismissal for default or on merits and it cannot be taken to mean other than what it purported to be. It is in ordinary phraseology; not legal phraseology and it cannot be divested of its ordinary meaning. Its ordinary meaning is that the proceeding was closed and the suit would not count as a pending one. The later description would be redundant if the order was one of final disposal of the suit. The order did not purport to be a final disposal of the suit. It merely stopped the proceedings. It did nothing more. This is not final decision of the suit within the meaning of Order 9 Rule 8 and Order 17 Rule 3 reply of the CPC. The impugned judgement and decree is, therefore, set aside - Appeal allowed. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered by the Court are:- Whether the second eviction petition filed under Section 14(1)(a) of the Delhi Rent Control Act, 1958, is barred by the principle of res judicata based on the dismissal of the first eviction petition filed by the predecessor-in-interest.- Whether the order dismissing the first eviction petition dated 27.01.1998 was a decision on merits under Order 17 Rule 3 of the Code of Civil Procedure (CPC), thereby attracting res judicata.- Whether the plaint of the second eviction petition could be rejected under Order 7 Rule 11(d) of the CPC on the ground that the suit is barred by law, specifically res judicata.- The proper interpretation and application of Order 17 Rules 2 and 3 CPC concerning dismissal of suits on default and whether the dismissal in the first eviction petition was under Rule 3 (on merits) or Rule 2 (for default).- The scope and limitations of applying res judicata as a ground for rejection of plaint under Order 7 Rule 11(d) CPC.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Whether the second eviction petition is barred by res judicata based on the dismissal of the first eviction petitionThe legal framework governing res judicata is provided under Section 11 of the CPC, which bars a court from trying any suit or issue that has been directly and substantially in issue in a former suit between the same parties and has been finally decided by a competent court. The principle ensures finality of litigation and prevents vexatious or repetitive suits.The Court referred to authoritative precedents including V. Rajeshwari v. T.C. Saravanabava, which emphasized that for a plea of res judicata to succeed, the prior suit's pleadings, issues, and judgment must be examined to ascertain whether the matter was directly and substantially in issue and finally decided.In the present case, the first eviction petition filed by the predecessor-in-interest was dismissed by the Rent Controller on 27.01.1998 due to the plaintiff's failure to produce evidence establishing the landlord-tenant relationship. No appeal was filed against this order, which attained finality.The respondents contended that the second eviction petition, filed by successors-in-interest, was barred by res judicata as the landlord-tenant relationship was already adjudicated against the plaintiffs in the first petition.The High Court accepted this contention, holding that the dismissal of the first petition was a decision on merits under Order 17 Rule 3 CPC, and thus the second petition was barred by res judicata.The appellants challenged this finding, arguing that the first dismissal was not on merits and therefore did not attract res judicata.Issue 2: Whether the dismissal of the first eviction petition was a decision on merits under Order 17 Rule 3 CPCOrder 17 Rules 2 and 3 CPC govern disposal of suits where parties fail to appear or produce evidence. Rule 2 applies when a party fails to appear on the date fixed for hearing, allowing the court to dispose of the suit as per Order 9 or make other orders. The Explanation to Rule 2 permits the court to treat an absent party as present if substantial evidence has already been recorded.Rule 3 applies when a party, to whom time has been granted to produce evidence or perform acts necessary for suit progression, fails to do so. The court may proceed to decide the suit forthwith, which is considered a dismissal on merits.The Court analyzed the order passed by the Rent Controller on 27.01.1998, which noted that the plaintiff's counsel was present but no witnesses appeared despite multiple adjournments and opportunities. The Rent Controller closed the proceedings and dismissed the petition for failure to establish the landlord-tenant relationship.The High Court held this dismissal to be under Rule 3, i.e., on merits. However, the Supreme Court disagreed, observing that the order did not explicitly state dismissal on merits or default and used ordinary language indicating closure of proceedings rather than final disposal. No evidence had been led by the plaintiff, so the Explanation to Rule 2 (requiring substantial evidence recorded) was not applicable.The Court relied on the Full Bench decision of the Rajasthan High Court in Gopi Kishan v. Ramu, which held that Rules 2 and 3 are mutually exclusive and that Rule 3 requires the presence of some material (not necessarily evidence) to decide the suit on merits. The Court also referred to its own precedent in Prakash Chander Manchanda v. Janki Manchanda, which clarified that where no evidence has been led for the party in default, dismissal must be under Rule 2 and not Rule 3.Applying these principles, the Court concluded that the first eviction petition was dismissed under Rule 2 for default (failure to produce evidence and failure to appear with witnesses), and not under Rule 3 on merits. Therefore, the dismissal was not a decision on merits and did not attract res judicata.Issue 3: Whether the plaint of the second eviction petition could be rejected under Order 7 Rule 11(d) CPC on the ground of res judicataOrder 7 Rule 11(d) CPC empowers the court to reject a plaint if the suit appears from the plaint to be barred by any law. The Court emphasized that while deciding such an application, only the averments in the plaint are to be considered. The court cannot go beyond the plaint to consider the written statement or other evidence at this stage.The Court referred to Kamala & others v. K.T. Eshwara Sa and Soumitra Kumar Sen v. Shyamal Kumar Sen, which clarified that res judicata as a ground for rejection of plaint is limited and can only be invoked if the plaint itself discloses this bar clearly. Since adjudication of res judicata requires examination of pleadings, issues, and judgments of the former suit, it is generally beyond the scope of Order 7 Rule 11(d) CPC.In the present case, the second eviction petition's plaint did not disclose that it was barred by res judicata. The plea was raised only in the written statement and in an application under Order 7 Rule 11 CPC. The Additional Rent Controller had rejected the application, holding that the second petition was based on a fresh cause of action (a fresh notice) and that the first order did not decide the landlord-tenant relationship on merits.The High Court, however, reversed this finding, rejecting the plaint on res judicata grounds. The Supreme Court held this to be erroneous, as the dismissal of the first petition was not on merits and the bar of res judicata could not be inferred from the plaint alone.Issue 4: Interpretation of Order 17 Rules 2 and 3 CPC and their application to the factsThe Court undertook a detailed analysis of the scope and application of Order 17 Rules 2 and 3 CPC, including the Explanation to Rule 2. It relied on the Full Bench decisions of the Madras, Rajasthan, and Bombay High Courts and the Supreme Court's own precedents to elucidate that:Rule 2 applies when a party fails to appear on the adjourned date and no substantial evidence has been recorded; the court may dispose of the suit as per Order 9 or make other orders.The Explanation to Rule 2 allows the court to treat an absent party as present only if substantial evidence has already been recorded.Rule 3 applies when a party has been granted time to produce evidence or do other acts and fails to do so; the court may decide the suit forthwith, which is a dismissal on merits.Rules 2 and 3 are mutually exclusive; the presence of substantial material is a prerequisite for Rule 3 to apply.Dismissal under Rule 3 is a drastic measure restricting remedies and must be exercised sparingly.Applying these principles, the Court concluded that since no evidence was led by the plaintiff in the first eviction petition, the dismissal was under Rule 2 and not Rule 3, and hence not a decision on merits.Issue 5: Scope of res judicata and its applicability when a suit is dismissed for defaultThe Court reiterated the settled principle that res judicata applies only to decisions on merits. Dismissals for procedural defaults such as non-appearance, non-joinder, or undervaluation do not attract res judicata. The Court noted that the first eviction petition was dismissed due to failure to produce evidence and was not a final adjudication on the landlord-tenant relationship merits.Therefore, the second eviction petition could not be barred by res judicata, and the High Court erred in rejecting the plaint on this ground.3. SIGNIFICANT HOLDINGS- 'The rule of res judicata does not strike at the root of the jurisdiction of the court trying the subsequent suit. It is a rule of estoppel by judgment based on the public policy that there should be a finality to litigation and no one should be vexed twice for the same cause.'- 'Order 7 Rule 11(d) of the Code has limited application. It must be shown that the suit is barred under any law. Such a conclusion must be drawn from the averments made in the plaint... For the purpose of invoking Order 7 Rule 11(d) of the Code, no amount of evidence can be looked into. The issues on merit of the matter which may arise between the parties would not be within the realm of the court at that stage.'- 'The power conferred on Courts under Rule 3 of Order 17 of the CPC to decide the suit on the merits for the default of a party is a drastic power which seriously restricts the remedy of the unsuccessful party for redress. It has to be used only sparingly in exceptional cases.'- 'The order did not purport to be a final disposal of the suit. It merely stopped the proceedings. It did nothing more. This is not final decision of the suit within the meaning of Order 9 Rule 8 and Order 17 Rule 3 of the CPC.'- 'Since no evidence was led by the plaintiff, the dismissal was under Rule 2 and not Rule 3, and hence not a decision on merits attracting res judicata.'- 'The High Court committed an error in rejecting the plaint of the second eviction petition on the ground of res judicata.'- 'Nothing stated in this judgment will prevent the concerned defendants from requesting the Court to decide such an issue as a preliminary issue. Such an application would obviously be decided on its merits about which also we expressed no opinion.'