DOCTRINE OF RES JUDICATA IN TAXATION

[Dr. Sanjiv Agarwal]

According to Craigh’s Constitutional Interpretation, res judicata means a matter adjudged; the legal principle that prevents interminable relitigation of the merits of a case by foreclosing other than the pertinent appellate tribunals from deciding the merits of a case once a Court of competent jurisdiction has rendered judgment (CRAIG R. DUCAT- Constitutional Interpretation).

Meaning of Res Judicata

Res judicata is used as a general term referring to all of the ways in which one judgment will have a binding effect on another. That usage is and doubtless will continue to be common, but it lumps under a single name two quite different effects of judgments. The first is the effect of foreclosing any litigation of matters that never have been litigated, because of the determination that they should have been advanced in an determination that they should have been advanced in an earlier suit. The second is the effect of foreclosing relitigation of matters that have once been litigated and decided. The first of these, preclusion of matters that were never litigated, has gone under the name true res judicata, or the names, merger and bar. The second doctrine, preclusion of matters that have once been deiced, has usually been called collateral estoppels.

It means a final judgment already decided between the same parties or their privies on the same question by legally constituted court having jurisdiction is conclusive between the parties, and the issue cannot be raised again.

A case or suit already decided.

The literal meaning of 'res judicata' is a matter adjudged; thing judicially acted upon or decided; a thing or matter settled by judgment. Section 11 of CPC engrafts this doctrine with purpose that a judgment rendered by a Court of competent jurisdiction on the merits is conclusive as to the rights of the parties and their privies and, as to them, Constitutes an absolute bar to a subsequent action involving the same claim, demand or cause of action. All principles of 'res judicata' contained in Section 11 of the Code cannot be strictly and rigorously made applicable to ceiling proceedings. ESCORTS FARMS LTD., PREVIOUSLY KNOWN AS M/S. ESCORTS FARMS (RAM GARH) LTD. VERSUS THE COMMISSIONER, KUMAON DIVISION, NAINITAL, U.P. AND ORS. - 2004 (2) TMI 683 - SUPREME COURT .

Interpretation

Following interpretations as compiled in P. Ramanatha Aiyar’s Advance Law Lexicon explain the concept and doctrine of res judicata:

The rule of 'res judicata' is founded on the considerations of public policy and that it is in the interest of the public at large that a finality should attach to the binding decisions pronounced by Courts of competent jurisdiction and that it is also in the public interest that individuals should not be vexed twice over with the same kind of litigation. [CHURCH OF SOUTH INDIA TRUST ASSOCIATION VERSUS TELUGU CHURCH COUNCIL - 1996 (1) TMI 460 - SUPREME COURT See also DARYAO VERSUS STATE OF UP. - 1961 (3) TMI 91 - SUPREME COURT] .

The principle of 'res judicata' is conceived in the larger public interest which requires that all litigation must, sooner than later, come to an end. The principle is also founded on equity, justice and good conscience which require that a party which has once succeeded on an issue should not be permitted to be harassed by a multiplicity of proceedings involving determination of the same issue. The Section II of the Code is not exhaustive and this principle can be extended to cases which do not fall strictly within the letter of the law. [LAL CHAND (DEAD) BY LRS. AND ORS. VERSUS RADHA KRISHAN - 1976 (12) TMI 195 - SUPREME COURT] .

The Supreme Court has explained the concept of res judicata in SULOCHANA AMMA VERSUS NARAYANAN NAIR - 1993 (9) TMI 130 - SUPREME COURT. The principle operates as a bar to try the same issue once over. It aims to prevent multiplicity of proceedings and accords finality to an issue, which directly and substantially had arisen in the former suit between the same parties or their privies, decided and became final, so that parties are not vexed twice over; vexatious litigation is put an end to and the valuable time of the Court is saved. It is based on public policy as well as private justice. The principle would apply, therefore, to all judicial proceedings whether civil or otherwise. It equally applies to quasi-judicial proceedings of the tribunals other than the civil Courts.

The principle of res judicata would be applicable only when an issue arose directly and substantially in an earlier suit, a finding regarding an incident or collateral question reached for the purpose of arriving at the final decision would not constitute 'res judicata'. [BISHWANATH PRASAD SINGH VERSUS RAJENDRA PRASAD - 2006 (2) TMI 669 - SUPREME COURT].

'Res judicata' is a doctrine based on the larger public interest and is founded on two grounds: one being the maxim 'nemo debet bis vexari pro una et eadem causa (no one ought to be twice vexed for the same cause) and second, public policy that there ought to be an end to the same litigation. The main purpose of the doctrine is that once a matter has been determined in a former proceeding, it should not be open to parties to reagitate the matter again. Section 11 of the Code recognised this principle. [STATE OF KARNATAKA & ANR. VERSUS ALL INDIA MANUFACTURERS ORGANIZATION & ORS. - 2006 (4) TMI 515 - SUPREME COURT] .

The doctrine of res judicata is not merely a technical doctrine. It is directly founded on the general rule that 'a man shall not be twice vexed for the same cause'. It is a fundamental doctrine based on the principle of conclusiveness of judgments and fmality of litigation. BHAGWAN SAHAI VERSUS DARYAO KUNWAR AND ORS. - 1962 (11) TMI 89 - ALLAHABAD HIGH COURT.

Res judicata means nothing more than that a person shall not be heard to say the same thing twice over in successive litigations. Cassamally v. Currembhoy, 36 Bombay Series 214 and Bhaishankar v. Moroji, 36 Bombay Series 283. A decision will not cease to be res judicata merely because the view of the law on which it is based ceases to represent the correct law owing to a later judicial decision or legislative enactment. TARINI CHARAN BHATTACHARJEE AND ORS. VERSUS KEDAR NATH HALDAR - 1928 (9) TMI 3 - CALCUTTA HIGH COURT

The doctrine of res judicata is based on two principles. Firstly, there should be an end to litigation and secondly, that no man should be vexed twice over the same cause. DEEPAL AND ORS. VERSUS PARSHWANATH DIGAMBER JAIN VIDYALAYA MAHA MANTRI SHRI GULABCHAND - 1955 (10) TMI 50 - RAJASTHAN HIGH COURT.

The principle of 'res judicata' is embodied in Section II of the Code. The rule castes an obligation upon the party agitating to raise all the grounds of defence or attack available in a particular proceeding, if the party fails to do so, he should be precluded from raising such grounds of defence or attack in any other proceeding. [REITER MACHINE WORKS LTD. VERSUS COMMISSIONER OF INCOME-TAX AND ANOTHER - 1997 (8) TMI 17 - MADRAS HIGH COURT/ COIMBATORE COTTON MILLS LIMITED VERSUS COMMISSIONER OF INCOME-TAX AND ANOTHER - 1994 (3) TMI 33 - MADRAS HIGH COURT

Principle of 'res judicata' can be very well considered even before filing written statement. AMBIKA PRASAD BAKSHI VERSUS PRABHUDAYAL MALI AND ORS. - 2004 (2) TMI 738 - MADHYA PRADESH HIGH COURT .

The principle of res judicata is a procedural provision. A jurisdictional question if wrongly decided would not attract the principle of res judicata. It is not applicable when an order is a nullity due to lack of jurisdiction. ASHOK LEYLAND LTD. VERSUS STATE OF TAMIL NADU AND ANOTHER (AND OTHER APPEALS AND A WRIT PETITION) - 2004 (1) TMI 365 - SUPREME COURT.

The principle of 'res judicata' belongs to the domain of procedure. When the decision relates to the jurisdiction of a Court to try an earlier proceeding, the principle of res judicata would not come into play. [MANGT. OF M/S SONEPAT COOP. SUGAR MILLS LTD. VERSUS AJIT SINGH - 2005 (2) TMI 895 - SUPREME COURT].