TaxTMI 
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2018 (4) TMI 1901
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....sed upon two other fundamental maxims of Roman law, namely, interest reipublicae ut sit finis litium (it concerns the State that there be an end to law suits) and nemo debet bis vexari pro una at eadem causa (no man should be vexed twice over for the same cause). Indeed, that this maxim is almost universal in all ancient laws, including ancient Hindu texts, was discussed by Sir Lawrence Jenkins in Sheoparsan Singh v. Ramnandan Singh, AIR 1916 PC 78 at 80-81 as follows: "There has been much discussion at the Bar as to the application of the plea of res judicata as a bar to this suit. In the view their Lordships take, the case has not reached the stage at which an examination of this plea and this discussion would become relevant. But in view of the arguments addressed to them, their Lordships desire to emphasise that the rule of res judicata, while founded on ancient precedent, is dictated by a wisdom which is for all time. "It has been well said," declared Lord Coke, "interest reipublicae ut sit finis litium, otherwise great oppression might be done under colour and pretence of law": (6 Coke, 9a). Though, the rule of the Code may be traced to an English source, it embodies a doct....
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....aw pervading every well regulated system of jurisprudence, and is put upon two grounds, embodied in various maxims of the common law; the one, public policy and necessity, which makes it to the interest of the State that there should be an end to litigation - interest republicae ut sit finis litium; the other, the hardship on the individual that he should be vexed twice for the same cause - nemo debet bis vexari pro eadem causa" [Corpus Juris, Vol. 34, p. 743]. In this sense the recognised basis of the rule of res judicata is different from that of technical estoppel. "Estoppel rests on equitable principles and res judicata rests on maxims which are taken from the Roman Law" [Ibid p. 745]. Therefore, the argument that res judicata is a technical rule and as such is irrelevant in dealing with petitions under Article 32 cannot be accepted." 4. The link between the doctrine of res judicata and the prevention of abuse of process is very felicitously stated in Virgin Atlantic Airways Ltd. v. Zodiac Seats UK Ltd. [2013] 4 All ER 715 (at 730-731) as follows: "The principle in Henderson v Henderson has always been thought to be directed against the abuse of process involved in seeking t....
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....llowed to operate as res judicata. This case is concerned with the application of the last mentioned exception to the rule of res judicata. The brief facts necessary to appreciate the applicability of the said exception to the doctrine of res judicata are as follows. In the present case, respondent No.1 availed a credit facility from the petitioner bank sometime in 2001. Respondent No.2, his son, stood as a guarantor for repayment of the said facility. As respondent No.1 defaulted in repayment of a sum of Rs. 53,49,970.22, the petitioner bank filed O.A. No. 440 of 2002 before the DRT Bangalore, against respondent Nos.1 and 2. Respondent No.1, in order to repay the dues of the bank, signed an assignment deed dated 8.10.2003 with the Chief Manager, Basavanagudi Branch, Bangalore for assignment of the trademark "EENADU" in respect of agarbathies (incense sticks) on certain terms and conditions. Clauses 1 to 7 of the aforesaid assignment are set out hereunder: "NOW THIS DEED OF ASSIGNMENT OF TRADE MARK "EENADU" WITNESSETH AS FOLLOWS: 1. The Assignor hereby grant, transfer and assign upon the Assignee upon the terms and conditions mentioned hereunder, the exclusive use and all benef....
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....9, the bank cannot be "patent right holder". Hence, please note that we are not interested in holding the patent right of Eenadu and as such by this letter, we are cancelling the above assignment deed dated 8-10-2003." 7. On 15.4.2004, respondent No.1 filed O.S. No.2832 of 2004 against the bank challenging the cancellation of the said assignment deed and for recovery of Rs. 2,16,000/- with interest thereon for the period 1.10.2003 to 31.3.2004. On 17.9.2004, the petitioner bank filed O.S. No.7018 of 2004 for a declaration that the assignment deed entered into between it and respondent No.1 is vitiated by mistake, undue influence and fraud and that, therefore, the said deed is unenforceable in the eye of law. 8. Meanwhile, the Chief Manager who signed the assignment deed on behalf of the bank, namely, one N.V. Narayana Rao, was dismissed from service pursuant to disciplinary proceedings taken against him on 26.5.2005. 9. The two suits as aforestated were consolidated and disposed of by a common judgment. Issues were framed separately in both suits and it was found that the assignment deed was not vitiated by fraud, misrepresentation or undue influence. Consequently, the bank ha....
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....hat on 14.7.2017, the hearing of the appeal, which culminated in the impugned judgment, was concluded and judgment was reserved. It was only after this that the petitioner bank, for the first time on 26.7.2017, filed a review petition against the judgment dated 27.4.2013 with a condonation of delay application of 1548 days. This review petition is also stated to be pending. 11. Shri Dhruv Mehta, learned senior advocate appearing onbehalf of the petitioner bank, has argued that no issue was struck as to res judicata as the same had not specifically been pleaded in the plaint of the suit of 2008. Indeed, the judgment dated 27.4.2013 came long after the pleading in the second suit, and no amendment of the plaint was sought so as to incorporate the plea of res judicata. No issue having been raised, it was impermissible, according to the learned senior advocate, to have gone into this plea at all. It was also argued that on the assumption that the said plea could be gone into, there were two statutory bars to relief, namely, Section 45 of the Trade Marks Act, 1999 and Sections 6 and 8 read with Section 46(4) of the Banking Regulation Act, 1949. The first statutory bar made it clear tha....
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....er the Sessions Judge's judgment dated 29.1.2011 convicting respondent Nos. 1 and 2. This judgment specifically held that there was no fraud played, that the bank itself sought the assignment from respondent Nos. 1 and 2, and that since there was no misrepresentation, undue influence etc., the assignment deed was valid in law, the cancellation of the said deed being illegal. This judgment is final between the parties and has never been challenged, except by way of a review which was filed belatedly after hearing both parties in the appeal. The said review petition, which is obviously an abuse of process with huge delay, could not possibly render the res sub judice so as to affect the judgments of the Courts below. According to the learned counsel, neither Section 45 of the Trade Marks Act nor Sections 6 and 8 of the Banking Regulation Act are capable of only one obvious interpretation so that, on their application, the assignment deed becomes illegal in law. 13. We had appointed Shri K.V. Viswanathan, learned senior counsel, as Amicus Curiae to guide us in this matter. He has referred to a large number of judgments and has rendered invaluable assistance to this Court in order that....
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....hout adverting to the aforesaid objection. It is obvious, therefore, that this ground raised for the first time before this Court, cannot non-suit the respondents. 15. The doctrine of res judicata is contained in Section 11 of the Code of Civil Procedure, 1908, which, though not exhaustive of all the facets of the doctrine, delineates what exactly the doctrine of res judicata is in the Indian context. Section 11 reads as under: "11. Res judicata - No Court shall try any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties, or between parties under whom they or any of them claim, litigating under the same title, in a Court competent to try such subsequent suit or the suit in which such issue has been subsequently raised, and has been heard and finally decided by such Court. Explanation I.-The expression "former suit" shall denote a suit which has been decided prior to the suit in question whether or not it was instituted prior thereto. Explanation II.-For the purposes of this section, the competence of a Court shall be determined irrespective of any provisions as to a right....
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.... the suit in which such issue is subsequently raised; and (v) The matter directly and substantially in issuein the subsequent suit must have been heard and finally decided by the court in the first suit. Further Explanation I shows that it is not the date on which the suit is filed that matters but the date on which the suit is decided, so that even if a suit was filed later, it will be a former suit if it has been decided earlier. In order therefore that the decision in the earlier two appeals dismissed by the High Court operates as res judicata it will have to be seen whether all the five conditions mentioned above have been satisfied." 17. As to what happens when an appeal is filed against a judgment in the first proceeding, a Full Bench of the Allahabad High Court in Balkishan v. Kishan Lal, (1888) ILR 11 All 148 (at 159-161), is most instructive. Mahmood, J., speaking for the Full Bench, referred to Explanation IV to Section 13 of the Code of Civil Procedure, as it then stood. The learned Judge referred to the said explanation in the following terms: "The latter part of the Explanation IV of that section has been framed in somewhat unspecific language, and runs as follows....
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....of this suit by the first Court, as also at the date of the decision by the lower appellate Court, was the subject of a second appeal pending in this Court (S.A. No. 973 of 1886) could operate as res judicata in favour of the plaintiff in regard to his title as to the malikana." 18. The Privy Council, in an early judgment in S.P.A. Annamalay Chetty v. B.A. Thornhill AIR 1931 PC 263 (at 264), was faced with the question as to whether the filing of an appeal would by itself take away the res judicata effect or whether a matter heard and finally decided by the first Court was res judicata until it was set aside on appeal. The Privy Council held: "Section 207 of the Civil Procedure Code, 1889, provides as follows: "All decrees passed by the Court shall, subject to appeal, when an appeal is allowed, be final between the parties; and no plaintiff shall be non-suited." The appellant maintained that, under this provision, no decree, from which an appeal lies and has in fact been taken, is final between the parties so as to form res judicata, while the respondent contended that such a decree was final between the parties and formed res adjudicata until it was set aside on appeal. In ....
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.... as res judicata. In dealing with Section 52 of the Transfer of Property Act it has been held that a person who purchases property between the date of the disposal of the suit and the filing of the appeal would be bound by the rule of lis pendens: Gobind Chunder Roy v. Guru Churn Kurmokar (1888) 15 Cal. 94, Dinonath Ghose v. Shama Bibi (1901) 28 Cal. 23, Sukhdeo Prasad v. Jamna (1901) 23 All 60, Settappa Gounden v. Muthia Gounden (1908) 31 Mad. 268. If the appeal is only a continuation of the original proceedings and the suit is, for the purpose of Section 52 of the Transfer of Property Act, regarded as pending between the date of the decree and that of the filing of an appeal, it is difficult to see why the same rule should not apply when dealing with Section 11 of the Civil Procedure Code. xxx xxx xxx As regards appeals filed out of time and after independent rights between the parties have ripened, it is unlikely that courts would excuse the delay, if during the interval other rights come into existence, which would render it inequitable that questions disposed of should be re-opened at the instance of a party who seeks the indulgence of the court: Esdaile v. Payne (1889) ....
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....he appeal against the first judgment is grossly belated; or that the said appeal would, in the ordinary course, be heard after many years in the first proceeding; or, the fact that third party rights have intervened, thereby making it unlikely that delay would be condoned in the appeal in the first proceeding. As has been stated, the judicious use of the weapon of stay would, in many cases, obviate a Court of first instance in the second proceeding treating a matter as res judicata only to find that by the time the appeal has reached the hearing stage against the said judgment in the second proceeding, the res becomes sub judice again because of condonation of delay and the consequent hearing of the appeal in the first proceeding. This would result in setting aside the trial Court judgment in the second proceeding, and a de novo hearing on merits in the second proceeding commencing on remand, thereby wasting the Court's time and dragging the parties into a second round of litigation on the merits of the case. 24. In the present case, a belated review petition was filed after arguments were heard and judgment reserved by the appellate Court. Would this Court have to await the outco....
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....to facts which give rise to a right, cannot be deemed to be a matter in issue. When it is said that a previous decision is res judicata, it is meant that the right claimed has been adjudicated upon and cannot again be placed in contest between the same parties. A previous decision of a competent Court on facts which are the foundation of the right and the relevant law applicable to the determination of the transaction which is the source of the right is res judicata. A previous decision on a matter in issue is a composite decision: the decision on law cannot be dissociated from the decision on facts on which the right is founded. A decision on an issue of law will be as res judicata in a subsequent proceeding between the same parties, if the cause of action of the subsequent proceeding be the same as in the previous proceeding, but not when the cause of action is different, nor when the law has since the earlier decision been altered by a competent authority, nor when the decision relates to the jurisdiction of the Court to try the earlier proceeding, nor when the earlier decision declares valid a transaction which is prohibited by law. xxx xxx xxx 7. Where the law is altered s....
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....ned in a subsequent proceeding between the same parties. But, where the decision is on a question of law i.e. the interpretation of a statute, it will be res judicata in a subsequent proceeding between the same parties where the cause of action is the same, for the expression "the matter in issue" in Section 11 of the Code of Civil Procedure means the right litigated between the parties i.e. the facts on which the right is claimed or denied and the law applicable to the determination of that issue. Where, however, the question is one purely of law and it relates to the jurisdiction of the Court or a decision of the Court sanctioning something which is illegal, by resort to the rule of res judicata a party affected by the decision will not be precluded from challenging the validity of that order under the rule of res judicata, for a rule of procedure cannot supersede the law of the land." [Emphasis Supplied] (at pages 617-619) 26. Ultimately, the Court held that since the decision of the Civil Judge that he had no jurisdiction to entertain the application of standard rent, in view of the judgment of the Supreme Court, was plainly erroneous, the decision in the previous proceedings....
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....t becomes res judicata between the parties. The weighty reason for so holding was that such a result would create a special rule of law applicable to the parties in relation to the jurisdiction of the Court in violation of rule of law declared by the legislature. It is manifest that this enunciation was an engrafted exception to the general principle noticed in the judgment itself, i.e., a question of law including the interpretation of a statute would be res judicata between the same parties where the cause of action is the same. I am inclined to the view that it is unprofitable and indeed unwarranted to extract an observation and a sentence here and there from the judgment and to build upon it on the ground that certain results logically follow therefrom. Such a use of precedent was disapproved by the Earl of Halsbury L. C. in Quinn v. Leathem 1901 AC 405. Approving that view and quoting extensively therefrom their Lordships of the Supreme Court in State of Orissa v. Sudhansu Sekhar Misra AIR 1968 SC 647 have categorically observed as follows: "A decision is only an authority for what it actually decides. What is of the essence in a decision is its ratio and not every observa....
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....lated to the jurisdiction of the Court to try the earlier proceedings, the same would not be allowed to assume the status of a special rule of law applicable to the parties and therefore, the matter would not be res judicata. Fourthly, where the earlier decision declared valid a transaction which is patently prohibited by law, that is to say, it sanctifies a glaring illegality." On facts, the majority judgment of the Full Bench held that the earlier decision inter parties was res judicata as it was on a question of law which was not unrelated to the rights of the parties. Sharma, J. dissented with this view, and held that the decision rendered in the earlier case was erroneous and related to the jurisdiction of the Court. Since a wrong decision on a point of jurisdiction could not operate as res judicata, the learned Judge dissented. 29. An appeal from the Division Bench judgment pursuant to the Full Bench decision resulted in the decision in Nand Kishore v. State of Punjab, (1995) 6 SCC 614. A brief resume of the facts show that the appellant had been compulsorily retired, having completed only ten years' qualifying service in pursuance of Rule 5.32(b) of the Punjab Civil Servic....
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....as expressly overruled on the point that a "competent authority" can also be a Court. Hence, a changed declaration of law would also fall within an earlier decision being altered by a competent authority. This Court, therefore, held that since this Court itself had altered the law when it declared the pari materia rule as unconstitutional, the doctrine of res judicata could not apply. 30. In Allahabad Development Authority v. Nasiruzzaman (1996) 6 SCC 424, this Court held that when the previous decision was found to be erroneous on its face, such judgment cannot operate as res judicata, as to give effect to such judgment would be to counter a statutory prohibition. On the facts of that case, it was held that in a land acquisition case, after vesting has taken place in favour of the State, obviously, the lapse of a notification under Section 6 of the Land Acquisition Act, 1894 could not possibly arise. 31. In Shakuntla Devi v. Kamla (2005) 5 SCC 390, this Court held that in view of the changed position in law consequent to a contrary interpretation put on Section 14 of the Hindu Succession Act, 1956 by V.Tulasamma vs. V.Sesha Reddy (1977) 3 SCC 99, the earlier decree based on judg....
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....elves. The section requires that the doctrine be restricted to matters in issue and of these to matters which are directly as well as substantially in issue. (3) Questions of law are of all kinds and cannotbe dealt with as though they were all the same. Questions of procedure, questions affecting jurisdiction, questions of limitation, may all be questions of law. In such questions the rights of parties are not the only matter for consideration. The Court and the public have an interest. When plea of res judicata is raised with reference to such matters, it is at least a question whether special considerations do not apply. (4) In any case in which it is found that the matterdirectly and substantially in issue has been directly and substantially in issue in the former suit and has been heard and finally decided by such Court, the principle of res judicata is not to be ignored merely on the ground that the reasoning, whether in law or otherwise of the previous decision can be attacked on a particular point. On the other hand it is plain from the terms of Section 11 of the Code that what is made conclusive between the parties is the decision of the Court and that the reasoning of ....
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.... a tenant arising out of the rights claimed under a Rent Act, where the Rent Act clothes a special Court with jurisdiction to decide such suits. As an example, under Section 28 of the Bombay Rent Act, 1947, the Small Causes Court has exclusive jurisdiction to hear and decide proceedings between a landlord and a tenant in respect of rights which arise out of the Bombay Rent Act, and no other Court has jurisdiction to embark upon the same. In this case, even though the Civil Court, in the absence of the statutory bar created by the Rent Act, would have jurisdiction to decide such suits, it is the statutory bar created by the Rent Act that must be given effect to as a matter of public policy. (See, Natraj Studios (P) Ltd. v. Navrang Studios & Anr., (1981) 2 SCR 466 at 482). An erroneous decision clothing the Civil Court with jurisdiction to embark upon a suit filed by a landlord against a tenant, in respect of rights claimed under the Bombay Rent Act, would, therefore, not operate as res judicata in a subsequent suit filed before the Small Causes Court between the same parties in respect of the same matter directly and substantially in issue in the former suit. (ii) An issue of law ....
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....rade mark, he shall apply in the prescribed manner to the Registrar to register his title, and the Registrar shall, on receipt of the application and on proof of title to his satisfaction, register him as the proprietor of the trade mark in respect of the goods or services in respect of which the assignment or transmission has effect, and shall cause particulars of the assignment or transmission to be entered on the register. Provided that where the validity of an assignment or transmission is in dispute between the parties, the Registrar may refuse to register the assignment or transmission until the rights of the parties have been determined by a competent court. (2) Except for the purpose of an applicationbefore the Registrar under sub-section (1) or an appeal from an order thereon, or an application under section 57 or an appeal from an order thereon, a document or instrument in respect of which no entry has been made in the register in accordance with sub-section (1), shall not be admitted in evidence by the Registrar or the Appellate Board or any court in proof of title to the trade mark by assignment or transmission unless the Registrar or the Appellate Board or the Court,....
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....possession of the company in satisfaction or part satisfaction of any of its claims; (g) acquiring and holding and generally dealingwith any property or any right, title or interest in any such property which may form the security or part of the security for any loans or advances or which may be connected with any such security; (h) undertaking and executing trusts; (i) undertaking the administration of estates asexecutor, trustee or otherwise; (j) establishing and supporting or aiding in theestablishment and support of associations, institutions, funds, trusts and conveniences calculated to benefit employees or ex-employees of the company or the dependents or connections of such persons; granting pensions and allowances and making payments towards insurance; subscribing to or guaranteeing moneys for charitable or benevolent objects or for any exhibition or for any public, general or useful object; (k) the acquisition, construction, maintenanceand alteration of any building or works necessary or convenient for the purposes of the company; (l) selling, improving, managing, developing,exchanging, leasing, mortgaging, disposing of or turning into account or otherwise deali....
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....5 of the Trade Marks Act is concerned, it is clear that this plea was raised throughout both the proceedings. Insofar as the suits of 2004 were concerned, the judgment dated 27.4.2013 expressly recorded the aforesaid plea taken on behalf of the bank, but turned it down in paragraphs 44 and 56 as follows: "44. The bank has also taken further steps by virtue of the assignment deed dated 8.10.2003 obtained by them from N.G. Subbaraya Setty and filed an application to the Trademark Registry as per Ex.D2, seeking for registration of the assignment of the trademark obtained by them from N. Subbaraya Setty, the registered owner of the trademark, and the bank has also paid Rs. 5,000-00 towards the registration fee. But the Trademark Registry returned the said application contending that, deficit registration fee is payable by the assignee and the assignor/registered owner of the trademark has to file an affidavit confirming the assignment of the trademark in favour of the bank. Subsequently, it appears no further steps have been taken by the bank to comply with the objections raised by the Trademark Registry, and hence the said assignment of the trademark in favour of the bank, could not....
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....isputably, the grounds regarding insufficiently stamped assignment deed and non-registration of the trade mark were argued by the Bank which were considered and addressed by the trial Court in O.S. No.2832/2004 and O.S. No.7018/2004. In such circumstances, raising the very same grounds in the second round of proceedings, the issue in which the matter directly and substantially has been heard and finally decided in a former suit between the same parties, litigating under the same title amounts to res judicata. Defendant No.1-Bank is precluded from raising the same objection in the present proceedings which is finally decided holding the assignment deed as legal and binding on the defendant No.1-Bank..." 38. We are of the opinion that both the trial Court and the first appellate Court were entirely wrong in treating the statutory prohibition contained in Section 45(2) of the Trade Marks Act as res judicata. It is obvious that neither Court has bothered to advert to Section 45 and/or interpret the same. The second proceeding contained in O.S. No.495 of 2008 prayed for payment of a sum of Rs. 17,89,915/- along with interest thereon for the period 1.4.2004 to 30.4.2007. Paragraph 8 of ....