2014 (10) TMI 941 - SC - Indian Laws

Application of res judicata - Held that - It is an inescapable conclusion that an appeal ought to have been filed by the Tenant even in respect of O.S. 5/78, for fear of inviting the rigours of res judicata as also for correcting the dismissal order. In our opinion, the Tenant had been completely non-suited once it was held that no cause of action had arisen in its favour and the suit was dismissed . Ignoring that finding and allowing it to become final makes that conclusion impervious to change. The raison d etre and public policy on which Res judicata is predicated is that the party who has raised any aspect in a litigation and has had an Issue cast thereon, has lead evidence in that regard, and has argued on the point, remains bound by the curial conclusions once they attain finality. No party must be vexed twice for the same cause; it is in the interest of the State that there should be an end to litigation; a judicial decision must be accepted as correct in the absence of a challenge. The aspect of law which now remains to be considered is whether filing of an Appeal against a common Judgment in one case, tantamounts to filing an appeal in all the matters. The application of res judicata, so very often, conjures up controversies, as is evident from the fact that even in this Court divergent opinions were expressed by the two Judge Bench, leading to the necessity of referring the appeal to a Larger Bench. It was for this reason that we thought it appropriate to deal with the dispute in detail. It seems to us that had the decisions of the three Judge Bench in Lonankutty 1976 (4) TMI 216 - Supreme Court Of India and Prabhu 1977 (1) TMI 163 - SUPREME COURT been brought to the attention of our Learned and Esteemed Brothers on the earlier occasion when this appeal was heard by two Judge Bench, the dichotomy in opinion would not have arisen. The outcome of the appeal before the High Court would have also shared a similar fate. On the foregoing analysis, especially the previous enunciation of law by three Co-ordinate Benches, we are in agreement with the opinion of our Learned Brother Asok Kumar Ganguly that the appeal calls to be allowed. We are of the opinion that having failed or neglected or concertedly avoided filing appeals against the decrees in O.S.5/78 and O.S.7/78 the cause of the Respondents/Tenants was permanently sealed and foreclosed since res judicata applied against them.

Summary

Issues Involved:
1. Application of the principle of res judicata.
2. Interpretation and application of Order II Rule 2 of the Code of Civil Procedure (CPC).
3. Ownership and transferability of the demised property.
4. Estoppel under Section 116 of the Evidence Act.
5. Validity of the sale of trust property.
6. Necessity of filing appeals against decrees in connected suits.

Detailed Analysis:

1. Application of the Principle of Res Judicata:
The central issue revolved around whether the principle of res judicata barred the Respondents/Tenants from challenging the Trial Court's findings, particularly regarding the Trust's ownership of the demised property. The Supreme Court concluded that res judicata applied because the Tenants did not appeal the decrees in O.S.5/78 and O.S.7/78, which had common issues and were decided by a common judgment. The Court cited previous decisions, including Premier Tyres Limited vs. Kerala State Road Transport Corporation and Lonankutty vs. Thomman, to emphasize that the non-filing of an appeal against a decree results in its finality, thereby invoking res judicata.

2. Interpretation and Application of Order II Rule 2 CPC:
Order II Rule 2 CPC was discussed in the context of whether the Tenants could raise issues in O.S.6/78 that they had not raised in O.S.5/78. The Court held that since the Tenants had already laid the foundation for challenging the title of the Transferees in O.S.5/78, they were barred by Order II Rule 2 from raising the same issues in subsequent suits.

3. Ownership and Transferability of the Demised Property:
The ownership of the demised property was a contentious issue. The Trial Court had found that the property was privately owned by Sethurama Chettiar and not a public trust, thus validating the sale to the Transferees. The Supreme Court upheld this finding, noting that the Tenants were estopped from challenging the title due to their failure to appeal the relevant decrees.

4. Estoppel under Section 116 of the Evidence Act:
Section 116 of the Evidence Act precludes a tenant from denying the landlord's title at the beginning of the tenancy. The Court affirmed that the Tenants could not challenge the Trust's title, as they had been put in possession by the Trust. This estoppel was applicable to the period before the transfer of the property to the Transferees.

5. Validity of the Sale of Trust Property:
The Tenants contended that the sale of the trust property was invalid under Section 26 of the Hindu Religious Institutions Act, 1972. However, the Trial Court and the Supreme Court found that the Trust was a private entity and not governed by the Act, thereby validating the sale to the Transferees.

6. Necessity of Filing Appeals Against Decrees in Connected Suits:
The Supreme Court emphasized the necessity of filing appeals against decrees in all connected suits when common issues are decided by a common judgment. The failure to appeal against O.S.5/78 and O.S.7/78 rendered the Tenants' challenge in O.S.6/78 unsustainable due to the principle of res judicata. The Court referred to the decision in Sheodan Singh vs. Daryao Kunwar, which outlined the essential elements of res judicata and underscored the importance of appealing all related decrees to avoid conflicting judgments.

Conclusion:
The Supreme Court allowed the appeal, holding that the principles of res judicata barred the Tenants from challenging the findings of the Trial Court. The Court declined to make any order as to costs, considering the varying verdicts in the connected suits.