TaxTMI 
TaxTMI 
2021 (9) TMI 1484
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.... judicata E.2.3 Conclusive decision and Res Judicata E.2.3.1 Similarity in issue and Res Judicata E.2.4 Compromise decree and Res Judicata F. The Conclusion 1. A Single Judge of the High Court of Karnataka dismissed a second appeal filed under Section 100 of the Code of Civil Procedure 1908 ["CPC"], affirming the decision of the Trial Court and the First Appellate Court that the suit instituted by the appellant-plaintiff is barred by the principle of res judicata. The appellant moved this court in a Special Leave Petition to challenge the decision of the Single judge. Leave has been granted on 8 December 2014. A. The Facts 2. Described as the Jamia Masjid Gubbi in the cause title, the appellant instituted the suit [2 O.S 149/1998] through its President for seeking the following reliefs: (i) A declaration that the State Wakf Board is the owner in possession of the suit schedule property, being survey No. 2 of Gubbi village admeasuring 2 acres and 4 guntas of non-agricultural land with a cinema building; (ii) A decree for possession against the defendants; (iii) An injunction to restrain the defendants from inter....
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....rty were made against them. The Chairman, D.W.C Tumkur recommended that the suit property be directly managed by the Board under section 43(A) of the Wakf Act 1954. Pursuant to the recommendation, the State Wakf Board passed an order dated 6 April 1983 taking over the management; (vi)H.S. Gururajarao who was in possession of the suit schedule property as a lessee, handed over possession of the cinema building to the Wakf Board on 29 June 1983. Defendants 5 to 9 however executed sale deeds in respect of the property in favour of Defendants 1 to 4. Any alienation by Defendants 5 to 9 is void since the Board did not approve the transaction with a two-thirds majority; and (vii) The cause of action arose on 16 April 1983 when Defendants 1 to 4 together with other defendants interfered with the possession of the plaintiff on the strength of the sale in their favour executed by Defendants 5 to 9. 4. In May 2010, Defendants 2 to 4 filed their written statement raising the defence that: (i) The suit is barred by res judicata: OS 92/1950-51 ["the first suit] was filed by the members of the mosque known as Jamayat Masjid in which Abdul Khuddus (the predecessor of....
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....2 CPC. Abdul Khuddus contended that the suit schedule property was his personal property. The first issue framed in the suit was whether 'the schedule properties belong to the Jamia Mosque, Gubbi as alleged in the plaint'. The plaintiff was held to have 4 'the second suit" 5 "the third suit" failed to prove that two of the suit schedule properties (Sy. No. 2 and 3, of which Sy No. 2 is the suit schedule property in the instant proceedings) belongs to the Jamia Mosque. The High Court on second appeal [R.A. 510/1954] held that the properties in Sy No. 2, 3 and 4 do not belong to the mosque. Thus, the issue with regard to the ownership of the suit schedule property has reached finality in view of the decision of the High Court of Karnataka which was not assailed before this court; (ii) A judgment in a representative suit is binding on all the interested parties in view of Explanation IV to Section 11 CPC. Though the first suit was not filed by the Jamia Masjid in its individual capacity, it was filed by parties interested in the administration of the mosque and thus all parties interested in the mosque are bound by the judgment even if they were not impleaded as a party....
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.... Daluj v. Biswanath Banerhee [AIR 1989 SC 1834] ; Byram Pestonji Gariwala v. Union Bank of India [AIR 1991 SC 2234] ); and (vi) O.S No. 100/1983 was filed by the Wakf Board for seeking an injunction against the defendants. The suit was dismissed by filing a Memo without seeking leave to file the instant suit. The decision in Sarguja Transport Service v. S.T.A.T Gwalior [AIR 1987 SC 88] was relied upon. 7. The High Court by its judgment and order dated 2 July 2008 allowed a Regular Second Appeal and remanded the matter to the Trial Court for disposal in accordance with law. The High Court held that: (i) The present suit is not barred by res judicata since OS 92/1950-51 was instituted under Section 92 of the CPC for settling a scheme. Para 10 of the judgment of the Trial Court noted that the defendant has a prima facie right to the suit property and that if the terms of the grant have not been satisfied by the defendant, the trustees can take steps. Therefore, the question of title was not conclusively decided. The issue that was substantially in issue in OS No 92/1950-51 is not in issue in the instant proceedings. The judgement of the High Court in appeal as wel....
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.... of its limited jurisdiction would not be competent to try the subsequent suit (Sulochana Amma v. Narayanan Nair [(1994) 2 SCC 14)]). 9. The judgment obtained through a consent decree in OS 748/1968 was intended to put the litigation to an end. It would thus operate as res judicata in the subsequent suits. 10. Leave was granted by this Court on 8 December 2014. D. Submissions of the Parties 11. We have heard Ms V Mohana, learned Senior Counsel appearing on behalf of the appellant and Mr Basava Prabhu Patil, learned Senior Counsel with Mr Balaji Srinivasan, learned Counsel for the contesting respondents. 12. On behalf of the appellant, the following submissions have been urged: (i) OS 92/1950-51 o The suit was instituted by Muslims in the locality interested in the proper management of the mosque since Abdul Khuddus was trying to set up his own title to the suit property; o The suit was not for a declaration of title to the suit property and the appellant was not a party to the suit. It was a suit seeking to set up a scheme for the administration of the suit property; o There was no final declaration that the suit property is a priv....
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.... property is constituted as a wakf, it would remain so in that character and no objection to the notification was filed either by Abdul Khuddus or by any person claiming through him; and (vii) Without prejudice to the above submissions, the issue of res judicata raises mixed questions of law and fact and, in any event, ought to have been decided as a comprehensive issue pursuant to a full-fledged trial. 13. Opposing the above submissions, Mr Basava Prabhu Patil, learned Senior Counsel submitted that: (i) In the first suit - 92/1950-51 - there was a specific finding that the suit schedule property was the personal property of Abdul Khuddus. Thus, the court having conclusively decided on the title of the suit property, a subsequent suit raising the same issue is barred by the principles of res judicata; (ii) In the second suit which was instituted by the State Wakf Board, there was a prayer for declaration and possession. A compromise having been arrived at on a portion of the reliefs claimed in the second suit (relating to possession), this would necessarily amount to an abandonment of the other reliefs. Once a compromise is arrived at, Order 23 Rule 3A....
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....cided by a Court of limited jurisdiction, competent to decide such issue, shall operate as res judicata in a subsequent suit, notwithstanding that such Court of limited jurisdiction was not competent to try such subsequent suit or the suit in which such issue has been subsequently raised.]" 17. In order to attract the principles of res judicata, the following ingredients must be fulfilled: (i) The matter must have been directly and substantially in issue in the former suit; (ii) The matter must be heard and finally decided by the Court in the former suit; (iii) The former suit must be between the same parties or between parties under whom they or any of them claim, litigating under the same title; and (iv) The Court in which the former suit was instituted is competent to try the subsequent suit or the suit in which such issue has been subsequently raised. 18. In Syed Mohd. Salie Labbai (dead) by L.Rs v. Mohd. Hanifa (dead) by L.Rs [(1976) 4 SCC 780], Justice S Murtaza Ali speaking for a Bench of two judges observed that before a plea of res judicata can be given effect, the following conditions must be proved: "7... "(1) t....
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....ut there is absolutely no discussion in the order of the learned Single Judge in regard to the bar of res judicata except the following observation at the end of the order: "Of course it cannot be said that the present suit is barred by res judicata inasmuch as the said claims were not decided in that case. But the principle of constructive res judicata is applicable." This was not interfered by the Appellate Bench. Both proceeded on the basis that the suit was not barred by res judicata, but barred by principle of constructive res judicata without assigning any reasons. 20. Plea of res judicata is a restraint on the right of a plaintiff to have an adjudication of his claim. The plea must be clearly established, more particularly where the bar sought is on the basis of constructive res judicata. The plaintiff who is sought to be prevented by the bar of constructive res judicata should have notice about the plea and have an opportunity to put forth his contentions against the same. In this case, there was no plea of constructive res judicata, nor had the appellant-plaintiff an opportunity to meet the case based on such plea. [...] 26. In the instant case, ....
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....sted becomes final and binds the parties or persons claiming under them. Thus, the decision of a competent court over the matter in issue may operate as res judicata in subsequent suit or proceedings or in other proceedings between the same parties and those claiming under them. But the question relating to the interpretation of a statute touching the jurisdiction of a court unrelated to questions of fact or law or mixed questions does not operate as res judicata even between the parties or persons claiming under them. The reason is obvious; a pure question of law unrelated to facts which are the basis or foundation of a right, cannot be deemed to be a matter in issue. The principle of res judicata is a facet of procedure but not of substantive law. The decision on an issue of law founded on fact in issue would operate as res judicata. But when the law has since the earlier decision been altered by a competent authority or when the earlier decision declares a transaction to be valid despite prohibition by law it does not operate as res judicata. Thus a question of jurisdiction of a court or of a procedure or a pure question of law unrelated to the right of the parties founded purel....
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....t res judicata. [...] 11. The matter in issue, if it is one purely of fact, decided in the earlier proceeding by a competent Court must in a subsequent litigation between the same parties be regarded as finally decided and cannot be reopened. A mixed question of law and fact determined in the earlier proceeding between the same parties may not, for the same reason, be questioned 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 orde....
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....ich corresponds to the suit schedule property) is described thus: "2. Dry land bearing Survey No.2, measuring 2 Acre 4 guntas, assessed at Rs.4 /- and situated in Gubbi Village." 26. The issues which were framed by the Trial Court were as follows: "(1) In the schedule properties being to the Jamia Masjid at Gubbi as alleged in the plaint? (2) Is the said Mosque a public religious institution as alleged by the plaintiff? (3) Is it a private institution belonging to the defendant's family? (4) Are the schedule shops built out of defendants private funds? (5) Are plaintiffs persons interested in the Masjid and is !the suit maintainable?. (6) Is the defendant entitled to continue in management of the mosque in question? (7) Is the court-fee is sufficient? (8) To what relief is the plaintiff entitled?" (emphasis supplied) 27. The 1st Additional District Judge decreed the suit in the following terms: "14. ...the suit is decreed directing the settlement of the scheme towards the proper management of the Jamia Masjid in Gubbi and for the due and proper administration suit schedule i....
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....erties which are items 1 and 5." 31. OS 92/1950-51 was a representative suit filed under section 92 CPC, specifically under clause (g), for settling the scheme of administration of the mosque. It has been consistently contended by Abdul Khuddus that item 2 of the suit schedule property was granted to him as a Khazi inam, and is thus not a mosque property. In order to adjudicate on the applicability of the plea of res judicata vis-à-vis the first suit, it is necessary that we decide on the following three issues: A. The scope of the first suit which was instituted under Section 92 of the CPC; B. Whether the parties in the first suit and the instant proceedings are the same; and C. Whether the issue of title over the suit property was conclusively decided in the first suit. E.2.1 Determination of title in a Representative suit 32. In Mahant Pragdasji Guru Bhagwandasji v. Patel Ishwarlalbhai Narsibhai [1 AIR 1952 SC 143], a three judge Bench of this Court explained the ambit of a representative suit under Section 92 of the CPC. In that case, one of the reliefs sought was the declaration of the suit property as the religious and charitab....
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....if the plaintiffs failed to prove the other allegations made in the plaint, they did succeed in proving that the properties were public and charitable trust properties - a fact which the defendant denied. In these circumstances, there was nothing wrong for the court to give the plaintiffs a lesser relief than what they actually claimed. The reply to this is, that in a suit framed under Section 92 of the Civil Procedure Code the only reliefs which the plaintiff can claim and the court can grant are those enumerated specifically in the different clauses of the section. A relief praying for a declaration that the properties in suit are trust properties does not come under any of these clauses. When the defendant denies the existence of a trust, a declaration that the trust does exist might be made as ancillary to the main relief claimed under the section if the plaintiff is held entitled to it; but when the case of the plaintiff fails for want of a cause of action, there is no warrant for giving him a declaratory relief under the provision of Section 92 of the Civil Procedure Code. The finding as to the existence of a public trust in such circumstances would be no more than an obiter ....
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....on 92, it is brought by two or more persons interested in the trust who have taken upon themselves the responsibility of representing all the beneficiaries of the Trust. In such a suit, though all the beneficiaries may not be expressly impleaded, the action is instituted on their behalf and relief is claimed in a representative character. This position immediately attracts the provisions of Explanation VI to Section 11 of the Code. Explanation VI provides that where persons litigate bona fide in respect of a public right or of a private right claimed in common for themselves and others, all persons interested in such right shall, for the purposes of this section, be deemed to claim under the persons so litigating. It is clear that Section 11 read with its Explanation VI leads to the result that a decree passed in suit instituted by persons to which Explanation VI applies will bar further claims by persons interested in the same right in respect of which the prior suit had been instituted. Explanation VI thus illustrates one aspect of constructive res judicata. Where a representative suit is brought under Section 92 and a decree is passed in such a suit, law assumes that all persons....
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.... 36. The locus classicus on the point of determining if an issue was 'directly and substantially' decided in the previous suit is the decision of Justice M Jagannadha Rao (writing for a two judge bench) in Sajjadanashin Syed MD B.E. Edr. (D) by Lrs. v. Musa Dadabhai Ummer. [(2000) 3 SCC 350]. During the course of the judgment, the Court analysed the expression "directly and substantially in issue" in Section 11 and laid down the twin test of essentiality and necessity: "12. It will be noticed that the words used in Section 11 CPC are "directly and substantially in issue". If the matter was in issue directly and substantially in a prior litigation and decided against a party then the decision would be res judicata in a subsequent proceeding. Judicial decisions have however held that if a matter was only "collaterally or incidentally" in issue and decided in an earlier proceeding, the finding therein would not ordinarily be res judicata in a latter proceeding where the matter is directly and substantially in issue." [...] 18. In India, Mulla has referred to similar tests (Mulla, 15th Edn., p. 104). The learned author says: a matter in respect of which relie....
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....ase. 38. In another decision in Gram Panchayat of Village Naulakha v. Ujagar Singh [(2000) 7 SCC 543], it has been held that the decision in an earlier suit for an injunction, where no question of title was adjudicated upon will not be binding on the question of title: "10. We may also add one other important reason which frequently arises under Section 11 CPC. The earlier suit by the respondent against the Panchayat was only a suit for injunction and not one on title. No question of title was gone into or decided. The said decision cannot, therefore, be binding on the question of title. See in this connection Sajjadanashin Sayed v. Musa Dadabhai Ummer [(2000) 3 SCC 350] where this Court, on a detailed consideration of law in India and elsewhere held, that even if, in an earlier suit for injunction, there is an incidental finding on title, the same will not be binding in a later suit or proceeding where title is directly in question, unless it is established that it was "necessary" in the earlier suit to decide the question of title for granting or refusing injunction and that the relief for injunction was founded or based on the finding on title. Even the mere framing ....
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....r suit had conclusively decided on the title of the suit property. On appeal, this court set aside the judgment of the High Court on the ground that the issue of title was not conclusively decided in the former suit. 40. In view of the authorities cited above, the twin test that is used for the identification of whether an issue has been conclusively decided in the previous suit is: A. Whether the adjudication of the issue was 'necessary' for deciding on the principle issue ('the necessity test'); and B. Whether the judgment in the suit is based upon the decision on that issue ('the essentiality test'). On applying the necessity test to the case at hand, we will have to identify if the decision on the principle issue of framing a scheme for the administration of the Mosque could not have been arrived at without adjudication of the title of the suit. The plaint contains two distinct allegations against the defendant, Abdul Khuddus: (i) that he was misappropriating the funds of the mosque; and (ii) that he was setting up his own title to the suit property. The defendant contested that the suit property belonged to him. Therefore, since the title was contested,....
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.... corollary mean that it was the personal property of Khazi Abdul Khuddus over which he possessed an absolute or inalienable right, particularly in view of his deposition that the property was given as an inam to his forefathers for their services a Khazi. There was no discussion on whether the suit property was a personal inam or an inam attached to the office; there was no adjudication in the earlier suit on the terms of the grant. Thus, no adjudication on the absolute title over the suit property was rendered in the former suit. On reading together, the findings which have been arrived at in paragraph 7 and paragraph 10 of the judgment of the trial court in the first suit, it is evident that the District Judge did not enter a conclusive finding that item 2 of the schedule to that suit (which corresponds to the suit schedule property in the present case) was the personal property of Abdul Khuddus. In fact, the use of the expression "prima facie right" in paragraph 10 extracted above clearly indicates that there was no conclusive finding in the judgment of the District Judge. The District Judge also noted it would be open to the trust to take steps as they deem fit in respect of it....
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.... enquiry. A Gazette notification had been issued on 10 July 1965 notifying the suit property as a wakf property; (iv) The cause of action arose on 10 July 1965 when the illegal and forcible occupation of the suit property by the second defendant came to the knowledge of the plaintiff; and (v) The reliefs sought were: a. A declaration that the property constitutes a wakf; b. A decree for possession of the suit property. 45. The second defendant filed a written statement stating that he was prepared to pay rent in the event that the property was held to be wakf property. A compromise petition was filed by the parties under Order 23 Rule 1 CPC on 27 October 1969 which envisaged that the second defendant shall continue to be the lessee of the suit property till the expiry of the period of lease (end of May 1971) for which the lease amount shall to paid to first defendant. In the alternative, if he desired to extend his lease thereafter, he could enter into a fresh agreement of lease with the first defendant, failing which he would vacate after demolition of the building. The suit was decreed on 27 October 1969 in terms of the compromise petition. ....
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....subsequent suit. Chief Justice Bhagwati (as he was then) writing for a three judge bench in Sunderabai observed: "12. The bar of res judicata however, may not in terms be applicable in the present case, as the decree passed in Suit No. 291 of 1937 was a decree in terms of the compromise. The terms of Section 11 of the CPC would not be strictly applicable to the same but the underlying principle of estoppel would still apply. Vide: the commentary of Sir Dinshaw Mulla on Section 11 of the CPC at p. 84 of the 11th Edn. under the caption Consent decree and estoppel: "The present section does not apply in terms to consent decrees; for it cannot be said in the cases of such decrees that the matters in issue between the parties 'have been heard and finally decided' within the meaning of this section. A consent decree, however, has to all intents and purposes the same effect as res judicata as a decree passed in invitum. It raises an estoppel as much as a decree passed in invitum." Since it is the principle of estoppel by conduct that will bar the institution of the subsequent suit, it is pertinent that we refer to the compromise decree to determine if any compromise w....
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.... of which these proceedings arise was instituted for seeking comprehensive reliefs in terms of a declaration of title and a permanent injunction. Therefore, the decision in the third suit does not bar the initiation of the suit out of which the instant proceeding arises. 50. The High Court dismissed the second appeal holding that the courts conclusively decided on the title to the suit property in the first suit (OS 92/1950-51) and that any subsequent suit on the same issue of title would be barred by the principles of res judicata. In view of the discussion above, this finding arrived at by the High Court is erroneous. While holding that the judgment in the first suit has conclusively decided that the title over the suit property belongs to Abdul Khuddus, the High Court has lost sight of the observations in paragraph 7 and 10 of the judgment of the trial court. It has been specifically held there that the suit property was a Khazi service Inam and that Abdul Khuddus has a prima facie right to the suit property. There was no adjudication to the effect that Abdul Khuddus had an absolute title to the suit property. Additionally, the decision of the courts in the first suit was del....
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....y the same issue; (iv) Since the first suit (OS 92 of 1950-51) was filed by members interested in the Jamia Masjid and the suit out of which the instant proceedings arise (OS 149 of 1998) was filed by the President of Jamia Masjid, the formulation in (iii) above is satisfied; (v) There was no adjudication in the first suit (OS 92 of 1950-51) on whether Abdul Khuddus had absolute title to the suit property. There was only a prima facie determination that Items 2 and 3 of the schedule of properties to the first suit belonged to Abdul Khuddus. The matters substantially in issue in OS 92 of 1950-51, which was a suit for administration and management of trust properties and for accounts, are distinct from the issues in the suit out of which the instant proceedings arise. Therefore, OS 149 of 1998 is not barred by res judicata in view of the decision in the first suit; (vi) While a compromise decree in a prior suit will not bar a subsequent suit by virtue of res judicata, the subsequent suit could be barred by estoppel by conduct. However, neither the compromise petition dated 27 October 1969 nor the final decree in the second suit dated 27 October 1969 indicat....