TMI Blog2018 (4) TMI 1901X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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 outcome of the said review petition before deciding whether the judgment dated 27.4.2013 is res judicata? Obviously not. It is clear that a review p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ishek Kaushik, Adv., Mr. Ravi Raghunath, Adv., Mr. Dhanajay B. Ray, Adv., Mr. Siddhant Buxy, Adv. Ms. Vrinda Bhandari, Adv., Mr. Mukunda Rao, Adv., Mr. Dhruv Mehta, Sr. Adv., Mr. Rajesh Kumar-i, AOR, Mr. Gaurav Kumar Singh, Adv., Mr. Anant Gautam, Adv., Mr. Aakash Sehrawat, Adv., Mr. V. Govinda Ramanan, Adv., Mr. Soumu Palit, Adv For the Respondent : Mr. Shanthkumar V. Mahale, Adv., Mr. R.P. Kulkarni, Adv., Mr. Rajesh Mahale, AOR JUDGMENT R.F. Nariman, J. 1. Leave granted. 2. Roma locuta est; causa finita est. Rome has spoken, the cause is ended. Rome spoke through her laws. One of the pillars of Roman law is contained in the maxim res judicata pro veritate accipitur (a thing adjudicated is received as the truth). This maxim of Roman law is based 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. Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anner conclusive upon the same matter, between the same parties, coming incidentally in question in another court for a different purpose . As has been observed by Halsbury, the doctrine of res judicata is not a technical doctrine applicable only to records; it is a fundamental doctrine of all courts that there must be an end of litigation [Halsbury s Laws of England, 3rd Ed., Vol. 15, para. 357, p. 185] . Halsbury also adds that the doctrine applies equally in all courts, and it is immaterial in what court the former proceeding was taken, provided only that it was a Court of competent jurisdiction, or what form the proceeding took, provided it was really for the same cause (p. 187, paragraph 362). Res judicata , it is observed in Corpus Juris, is a rule of universal law 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 pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gal system, though it is stated to belong to the realm of procedural law, being statutorily embodied in Section 11 of the Code of Civil Procedure, 1908. However, it is not a mere technical doctrine, but it is fundamental in our legal system that there be an end to all litigation, this being the public policy of Indian law. The obverse side of this doctrine is that, when applicable, if it is not given full effect to, an abuse of process of the Court takes place. However, there are certain notable exceptions to the application of the doctrine. One well known exception is that the doctrine cannot impart finality to an erroneous decision on the jurisdiction of a Court. Likewise, an erroneous judgment on a question of law, which sanctions something that is illegal, also cannot be allowed 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 gu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years i.e. 1.10.03 to 30.9.13). 6. The Assignee shall be entitled to collect Royalty from the permitted users during the period of validity of assignment (the above said ten years). 7. The period of assignment granted under this deed shall come to an end on the expiry of the period of ten years from the date of this agreement i.e. on 30.9.13 and the agreement shall stand terminated without any notice in relation thereto and the licences, permissions, etc. granted by the Assignee to the third parties in respect of the trade mark of the Assignor Eenadu shall also come to an end simultaneously, without such notice. 6. By a letter dated 27.1.2004, the Chief Manager wrote to respondent No.1 stating that: We have been informed by our higher authorities that as per the Banking Company s Regulation Act, 1949, 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 recov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment. Against the aforesaid review judgment dated 16.3.2015, an appeal was filed by the bank on 4.1.2016 with an application for condoning the delay of 175 days. We are informed that this appeal is still pending. Meanwhile, respondent No.1, on the basis of the assignment deed, filed another suit, being O.S. No.495 of 2008, against the bank for recovery of a sum of ₹ 17,89,915/- with interest for the period 1.4.2004 to 30.4.2007. By a judgment dated 30.10.2015, this suit was decreed on the footing that the earlier judgment dated 27.4.2013, not having been appealed against, was res judicata between the parties. An appeal filed against this judgment met with the same fate in that, by the impugned judgment dated 31.7.2017, the High Court of Karnataka dismissed the appeal filed by the bank on the self-same ground of res judicata. It may be noted that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made accused No.1 in a special criminal case filed by the CBI and respondent Nos. 1 and 2, who were made accused nos. 2 and 3 respectively, were each sentenced to 6 months, three years and two years respectively by the learned Sessions Judge, having been convicted under Sections 120B and 420 of the Indian Penal Code. Accused No.1 was also convicted of an offence under Section 13 of the Prevention of Corruption Act, 1988. According to the learned senior advocate, therefore, the doctrine of res judicata cannot be stretched to allow perpetuation of a fraud committed upon the bank. 12. Shri Shanthakumar Mahale, learned advocate appearing for respondent nos. 1 and 2, on the other hand, defended the judgments of the Courts below. According to the learned counsel, the judgment dated 27.4.2013 was delivered long after the Chief Manager was dismissed and after 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urged by Shri Mehta. He pressed into service the judgment in V. Rajeshwari v. T.C. Saravanabava, (2004) 1 SCC 551 for the proposition that a plea of res judicata not properly raised in the pleadings or put in issue at the stage of trial could not be permitted to be taken. A closer look at the said judgment shows that the judgment dealt with such a plea not being permitted to be raised for the first time at the stage of appeal. In the present case, though an issue as to res judicata was not struck between the parties, both parties argued the matter based upon the pleadings and the judgment contained in the two suits of 2004. It is only after full arguments on both sides that the trial Court in the judgment dated 30.10.2015 accepted the respondent s plea of res judicata. Even before the appellate Court, the point of res judicata was argued by both parties without 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, d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which such issue has been subsequently raised. 16. This Court in Sheodan Singh v. Daryao Kunwar, (1966) 3 SCR 300 (at 304-305) has stated with some felicity the conditions that need to be satisfied in order to constitute a matter as res judicata. This Court held: A plain reading of Section 11 shows that to constitute a matter res judicata, the following conditions must be satisfied, namely- (i) The matter directly and substantially in issuein the subsequent suit or issue must be the same matter which was directly and substantially in issue in the former suit; (ii) The former suit must have been a suitbetween the same parties or between parties under whom they or any of them claim; (iii) The parties must have litigated under thesame title in the former suit; (iv) The court which decided the former suit mustbe a court competent to try the subsequent suit or 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res judicata, are consistent with the interpretation which I place upon Explanation IV of s. 13 of the Code of Civil Procedure in relation to the authority of judgments still liable to appeal. Such judgments are not definitive adjudications. They are only provisional, and not being final cannot operate as res judicata. Such indeed seems to be the view adopted by the learned Judges of the Bombay High Court when they said, in Nilvaru v. Nilvaru [ILR 6 Bom. 110.], We consider that when the judgment of a Court of first instance upon a particular issue is appealed against, that judgment ceases to be res judicata and becomes res sub judice. In this case, therefore, both the Courts below were wrong in law in holding that the previous judgment of the 10th March, 1886, which at the date of the institution of this suit was still liable to appeal, and which at the date of the decision 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, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... para 10 and Venkateswarlu v. Venkata Narasimham AIR 1957 Andhra Pradesh 557 at para 3. 20. In Chengalavala Gurraju v. Madapathy Venkateswara Row Pantulu Garu AIR 1917 Madras 597 at 599-600, a Division Bench of the Madras High Court referred to and relied upon Balkishan (supra). The Court then held: Explanation 4 to Section 13 of the Civil Procedure Code of 1882 which enacted that a decision liable to appeal may be final within the meaning of the Section until the appeal is made has been omitted in the present Code (of 1908) and the omission (which was in all probability made in view of the decision in Bal Kishan v. Kishan Lal (1889) 11 All 148) removes any doubts or difficulties in dealing with the question and it is not necessary to speculate on the class of cases to which this explanation can be applied if a judgment liable to appeal is only held to be provisional and not operative 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 (188 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t round whether he intends to appeal the aforesaid judgment. If the answer is yes, then it would be prudent to first adjourn the second proceeding and then stay the aforesaid proceedings, after the appeal has been filed, to await the outcome of the appeal in the first proceeding. If, however, a sufficiently long period has elapsed after limitation has expired, and no appeal has yet been filed in the first proceeding, the Court hearing the second proceeding would be justified in treating the first proceeding as res judicata. No hard and fast rule can be applied. The entire fact circumstance in each case must be looked at before deciding whether to proceed with the second proceeding on the basis of res judicata or to adjourn and/or stay the second proceeding to await the outcome in the first proceeding. Many factors have to be considered before exercising this discretion for example, the fact that the 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em, even though no question of fact or mixed question of law and fact and relating to the right in dispute between the parties has been determined thereby. A decision of a competent Court on a matter in issue may be res judicata in another proceeding between the same parties: the matter in issue may be an issue of fact, an issue of law, or one of mixed law and fact. An issue of fact or an issue of mixed law and fact decided by a competent Court is finally determined between the parties and cannot be re-opened between them in another proceeding. The previous decision on a matter in issue alone is res judicata: the reasons for the decision are not res judicata. A matter in issue between the parties is the right claimed by one party and denied by the other, and the claim of right from its very nature depends upon proof of facts and application of the relevant law thereto. A pure question of law unrelated 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erpretation of the statute the Court holds that it has no jurisdiction, the question would not, in our judgment, operate as res judicata. Similarly by an erroneous decision if the Court assumes jurisdiction which it does not possess under the statute, the question cannot operate as res judicata between the same parties, whether the cause of action in the subsequent litigation is the same or otherwise. 11. It is true that in determining the application ofthe rule of res judicata the Court is not concerned with the correctness or otherwise of the earlier judgment. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ishna Mukherjee, (1953) SCR 377, which held that even an erroneous decision on a question of law operates as res judicata between parties, and various other Supreme Court judgments, the Full Bench of the Punjab and Haryana High Court, by a majority decision, went on to hold: 17. What exactly then is the ratio decidendi in Mathura Prasad s case? It is manifest that the sole issue in the appeal was as to the jurisdiction of the Court of Small Causes for determining the standard rent of premises constructed in pursuance of a building lease of an open site. Therefore, the authority is a precedent primarily on the limited issue of the jurisdiction of a Court. What directly arose for determination therein and what has been specifically laid down by their Lordships is that a patently erroneous decision (directly contrary to a Supreme Court judgment) in a previous proceeding in regard to the jurisdiction of a Court could not 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded. Consequently what was exactly to be connoted by the expression a pure question of law unrelated to the rights of the parties was itself expounded upon by their Lordships. Without intending to be exhaustive, the Court has indicated specifically the exceptional cases in which special considerations apply for excluding them from the ambit of the general principle of res judicata. The principle of law which their Lordships herein have reiterated is that a pure question of law including the interpretation of a statute will be res judicata in a subsequent proceeding between the same parties. To this salutary rule, four specific exceptions are indicated. Firstly, the obvious one, that when the cause of action is different, the rule of res judicata would not be attracted. Secondly, where the law has, since the earlier decision, been altered by a competent authority. Thirdly, where the earlier decision between the parties related 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 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for condonation of delay. The delay was condoned by this Court in the interest of justice in the special circumstances of this case under Article 142, and the said belated appeal was allowed following Gurdev Singh (supra) and striking down the order of compulsory retirement of the appellant. Despite having so decided, this Court went into the doctrine of constructive res judicata and decided that the constitutionality of a provision of law stands on a different footing from other questions of law. As there is a presumption of constitutionality of all statutes, the might and ought rule of constructive res judicata cannot be applied. Instead what was applied by this Court was that part of the decision in Mathura Prasad (supra) which stated that when the law has, since the earlier decision in the appellant s writ petition, been altered by a competent authority, res judicata cannot apply. The Full Bench of the Punjab High Court was 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 its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and that, therefore, it may be disregarded, is an indefensible form of reasoning. For this purpose, it is not true that a point of law is always open to a party. (2) In India, at all events, a party who takes aplea of res judicata has to show that the matter directly and substantially in issue has been directly and substantially in issue in the former suit and also that it has been heard and finally decided. This phrase matter directly and substantially in issue has to be given a sensible and businesslike meaning, particularly in view of Ex. 4,Section 11, Civil P.C., which contains the expression grounds of defence or attack . Section 11 of the Code says nothing about causes of action, a phrase which always requires careful handling. Nor does the section say anything about points or points of law, or pure points of law. As a rule parties do not join issue upon academic or abstract questions but upon matters of importance to themselves. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11 of the Code of Civil Procedure itself, for the Court which decides the suit has to be a Court competent to try such suit. When read with Explanation (I) to Section 11, it is obvious that both the former as well as the subsequent suit need to be decided in Courts competent to try such suits, for the former suit can be a suit instituted after the first suit, but which has been decided prior to the suit which was instituted earlier. An erroneous decision as to the jurisdiction of a Court cannot clothe that Court with jurisdiction where it has none. Obviously, a Civil Court cannot send a person to jail for an offence committed under the Indian Penal Code. If it does so, such a judgment would not bind a Magistrate and/or Sessions Court in a subsequent proceeding between the same parties, where the Magistrate sentences the same person for the same offence under the Penal Code. Equally, a Civil Court cannot decide a suit between a landlord and 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 j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceeding. This can happen when the issue of law in the second suit or proceeding is based on different facts from the matter directly and substantially in issue in the first suit or proceeding. Equally, where the law is altered by a competent authority since the earlier decision, the matter in issue in the subsequent suit or proceeding is not the same as in the previous suit or proceeding, because the law to be interpreted is different. 34. On the facts of this case, Shri Mehta referred us to the statutory prohibition contained in the Trade Marks Act and the Banking Regulation Act. The relevant provisions are Section 45 of the Trade Marks Act and Sections 6 and 8 of the Banking Regulation Act read with Section 46(4) thereto. The aforesaid statutory provisions are set out hereinbelow: TRADE MARKS ACT, 1999 45. Registration of assignments and transmissions (1) Where a person becomes entitled byassignment or transmission to a registered trade 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 m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransmitting of money and securities; (b) acting as agents for any Government or localauthority or any other person or persons; the carrying on of agency business of any description including the clearing and forwarding of goods, giving of receipts and discharges and otherwise acting as an attorney on behalf of customers, but excluding the business of a Managing Agent or Secretary and Treasurer of a company; (c) contracting for public and private loans andnegotiating and issuing the same; (d) the effecting, insuring, guaranteeing,underwriting, participating in Managing and carrying out of any issue, public or private, of State, municipal or other loans or of shares, stock, debentures, or debenture stock of any company, corporation or association and the lending of money for the purpose of any such issue; (e) carrying on and transacting every kind ofguarantee and indemnity business; (f) Managing, selling and realising any propertywhich may come into the 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 for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods means every kind of movable property, other than actionable claims, stocks, shares, money, bullion and specie, and all instruments referred to in clause (a) of sub-section (1) of section 6. xxx xxx xxx 46. Penalties (1) (3) xxx xxx xxx (4) If any other provision of this Act is contravened or if any default is made in- (i) complying with any requirement of this Act orof any order, rule or direction made or condition imposed there under, or (ii) carrying out the terms of, or the obligationsunder, a scheme sanctioned under sub-section (7) of section 45, by any person, such person shall be punishable with fine which may extend to one crore rupees or twice the amount involved in such contravention or default where such amount is quantifiable, whichever is more, and where a contravention or default is a continuing one, with a further fine which may extend to one lakh rupees for every day, during which the contravention or default continues. 35. Insofar as Section 45 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 expres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of change of user of the Trade Mark and defendant No.1 himself has moved application by paying ₹ 5,000/- D.D. for registering the document. Inspite of that, the Trade Mark Authorities have not registered the Trade Mark and as such, the learned counsel for defendant No.1 vehemently argued that the said Trade Mark Eenadu is not registered in accordance with law and as such, same cannot be considered for any of the purposes. Further, it is contended that the Assignment Deed is not registered in accordance with laws. But when the Assignment Deed has been relied upon in the earlier judgments and parties have accepted the execution of the document, then defendant No.1 cannot again contend that said Assignment Deed is not registered and cannot be considered for any of the purposes, does not hold good. It is nothing but res judicata as contended by the plaintiff in the decisions cited above. 37. The impugned judgment dated 31.7.2017 also records the aforesaid submission and turns it down stating: Indisputably, 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 8, which clearly provides that notwithstanding anything contained in Section 6 or in any contract, no banking company shall directly or indirectly deal in the selling of goods, except in connection with the realisation of security given to or held by it. Also, granting permission to third parties to use the trademark Eenadu and earn royalty upon the same would clearly be outside Section 6(1) and would be interdicted by Section 6(2) which states that no bank shall engage in any form of business other than those referred to in sub-section (1). 41. Shri Shanthakumar Mahale, however, exhorted us to read Sections 6(1)(f) and (g) as permitting the sale of goods under the trademark and/or earning royalty from a sub-assignment thereto. We are of the view that the trademark cannot be said to be property which has come into the possession of the bank in satisfaction or part satisfaction of any of the claims of the bank. We are further of the view that the trademarks are not part of any security for loans or advances that have been made to the first respondent, or connected with the same. It is thus clear that the assignment deed dated 8.10.2003 is clearly hit by Section 6(2) and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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