Supreme Court Upholds Constructive Res Judicata in Land Dispute: Asgar & Ors. vs. Mohan Varma & Ors. (2019)

Date of the Judgment: 05 February 2019
Citation: 2019 INSC 87
Judges: Dr Dhananjaya Y Chandrachud, J and Hemant Gupta, J.
Can a party raise a claim in a subsequent proceeding that they could have raised in an earlier one? The Supreme Court of India addressed this question in a land dispute, focusing on the principle of constructive res judicata. The Court examined whether a claim for compensation for improvements on land could be raised in a new application after a previous claim for possession was rejected. The bench, comprising Justices Dr. Dhananjaya Y Chandrachud and Hemant Gupta, delivered a unanimous judgment.

Case Background

The dispute involves a property of 914 acres, originally owned by Vengunadu Kovilakam of Kollengode. In 1897, 909 acres were leased to William Espants Watts Esquire for 75 years. The leasehold rights were later transferred to Anglo American Direct Tea Trading Corporation Limited, and subsequently, a 5-acre bungalow site was leased to them for 43 years in 1931. In 1945, Anglo American Corporation assigned its rights to Amalgamated Coffee Estate Limited.

A partition suit was filed by the respondents in 1964, where the appellants were not parties. In 1969, Amalgamated Coffee Estate Limited assigned its rights over 410 acres to Mathew T Marattukulam, 329 acres to Mrs. Annakutty Mathew, and 175 acres to Philomina Thomas. The 1897 lease expired in 1972. Despite this, these individuals assigned their rights to M/s K J Plantations in 1978. In 1990, M S M Haneefa, acting on a Power of Attorney from K J Plantations, executed eight sale deeds in favor of the appellants and M/s South Coast Spices Export Limited. In 1991, K J Plantations filed a suit to set aside the Power of Attorney and the sale deeds.

In 1995, the Subordinate Judge, Palakkad, ordered the property to be divided into 100 shares, with 40 allotted to K J Plantations and 60 to other assignees. The appellants received 274.20 acres. In 2003, the District Judge, Palakkad, passed a final decree in the partition suit. The respondents then filed an execution petition in 2008 for possession of the property, which was obstructed by the appellants.

Timeline

Course of Proceedings

The District Judge, Palakkad, initially ruled in favor of the appellants, stating they had a subsisting interest and were entitled to possession. The respondents appealed to the High Court of Kerala, which overturned the District Judge’s decision, dismissing the appellants’ claim petitions. The High Court held that the appellants, as assignees after the lease expired, did not have any right to remain in possession. The Supreme Court dismissed the Special Leave Petition but allowed the appellants to seek remedy for compensation of improvements. Subsequently, the appellants filed a new application for compensation, which was dismissed by the First Additional District Judge, Palakkad, and upheld by the High Court, citing constructive res judicata.

Legal Framework

The case primarily revolves around the interpretation of Section 11 of the Code of Civil Procedure, 1908 (CPC), specifically Explanation IV, and the Kerala Compensation for Tenants Improvements Act, 1958 (the Act of 1958). Section 11 of the CPC deals with res judicata, preventing courts from retrying issues already decided in previous suits. Explanation IV extends this principle to matters that “might and ought” to have been raised in earlier proceedings. The Act of 1958 provides for compensation to tenants for improvements made on land.

Key provisions include:

• Section 11, CPC:
  “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 IV to Section 11, CPC:
  “Any matter which might and ought to have been made ground of defence or attack in such former suit shall be deemed to have been a matter directly and substantially in issue in such suit.”
• Section 2(b) of the Act of 1958: Defines “improvement” as “any work or product of a work which adds to the value of the holding, is suitable to it and consistent with the purpose for which the holding is let, mortgaged or occupied, but does not include such clearances, embankments, leveling, enclosures, temporary wells and water-channels as are made by the tenant in the ordinary course of cultivation and without any special expenditure or any other benefit accruing to land from the ordinary operations of husbandry:”
• Section 2(d) of the Act of 1958: Defines “tenant” to include various categories of possessors, including those who believe themselves to be lessees or have made improvements in good faith.
  “(d) “tenant” with its grammatical variations and cognate expressions includes-
  (i) a person who, as lessee, sub-lessee, mortgagee or sub-mortgagee or in good faith believing himself to be lessee, sub-lessee, mortgagee of land, is in possession thereof;
  (ii) a person who with the bona fide intention of attorning and paying a reasonable rent to the person entitled to cultivate or let waste-land, but without the permission of such person, brings such land, under cultivation and is in occupation thereof as cultivator; and
  (iii) a person who comes into possession of land belonging to another person and makes improvement thereon in the bona fide belief that he is entitled to make such improvements.”
• Section 4(1) of the Act of 1958: States that a tenant is entitled to compensation for improvements upon eviction and can remain in possession until the compensation is paid.
  “Every tenant shall, on eviction, be entitled to compensation for improvements which were made by him, his predecessor-in-interest or by any person not in occupation at the time of the eviction who derived title from either of them and for which compensation had not already been paid, and every tenant to whom compensation is so due shall, notwithstanding the determination of the tenancy of the payment or tender of the mortgage money or premium, if any, be entitled to remain in possession until eviction in execution of a decree or order of court:”
• Section 5 of the Act of 1958: Mandates that in a suit for eviction, if the defendant establishes a claim for compensation, the court shall determine the amount and pass a decree conditional on payment.
  “(1) In a suit for eviction instituted against a tenant in which the plaintiff succeeds and the defendant establishes a claim for compensation due under section 4 for improvements, the court shall ascertain as provided in section 7 to 16, the amount of the compensation and shall pass a decree declaring the amount so found due and ordering that on payment by the plaintiff into the court of the amount so found due and also the mortgage money or the premium, as the case may be, the defendant shall put the plaintiff into possession of the land with the improvements thereon.”
• Order XXI, Rule 97 of the CPC: Deals with resistance or obstruction to possession of immovable property.
  “Where the holder of a decree for the possession of immovable property or the purchaser of any such property sold in execution of a decree is resisted or obstructed by any person in obtaining possession of the property, he may make an application to the Court complaining of such resistance or obstruction.”
• Order XXI, Rule 99 of the CPC: Deals with dispossession by a decree-holder or purchaser.
  “Where any person other than the judgment debtor is dispossessed of immovable property by the holder of a decree for the possession of such property or, where such property has been sold in execution of a decree, by the purchaser thereof, he may make an application to the Court complaining of such dispossession.”
• Order XXI, Rule 101 of the CPC: States that all questions arising between the parties in proceedings under Rule 97 or 99 shall be determined by the court dealing with the application.
  “All questions (including questions relating to right, title or interest in the property) arising between the parties to a proceeding on an application under rule 97 or rule 99 or their representatives, and relevant to the adjudication of the application, shall be determined by the court dealing with the application, and not by a separate suit and for this purpose, the court shall, notwithstanding anything to the contrary contained in any other law for the time being in force, be deemed to have jurisdiction to decide such questions.”
• Order XXI, Rule 103 of the CPC: Provides that orders made under Rule 98 or 100 shall be treated as decrees.
  “Where any application has been adjudicated upon under rule 98 or rule 100, the order made thereon shall have the same force and be subject to the same conditions as to an appeal or otherwise as if it were a decree.”

Arguments

Appellants’ Submissions:

• The appellants argued that neither the District Court nor the High Court had examined their claim under Section 4(1) of the Act of 1958. They contended that the High Court had previously clarified that it was not addressing the entitlement under this section, focusing only on their leasehold rights.
• They emphasized that the Supreme Court had granted them the liberty to pursue remedies for compensation, implying that the principle of constructive res judicata should not apply.
• The appellants submitted that the expression “might and ought” in Explanation IV of Section 11, CPC, should be interpreted conjunctively. They argued that just because the compensation claim could have been raised earlier does not mean it should have been.
• They contended that the test should be whether allowing the claim would be an abuse of process, and that their claim was not of such a nature.
• They argued that a concession made by their counsel in earlier proceedings, focusing on Section 51 of the Transfer of Property Act, 1882 (TP Act), should not prevent them from raising a claim under the Act of 1958.
• The appellants stated that their second application was of a nature they would have raised if the respondents had filed an application under Order XXI Rule 97 of the CPC.
• They also argued that their claim was not as lessees but as judgment-debtors entitled to retain possession until compensation was paid under Section 4 of the Act of 1958, a distinct juridical character from their earlier claim.

Respondents’ Submissions:

• The respondents argued that the appellants’ earlier application was essentially under Order XXI Rule 97, not Rule 99, of the CPC.
• They submitted that Order XXI Rules 97 to 103 of the CPC constitute a complete code, providing the sole remedy for parties and strangers to a proceeding.
• The respondents contended that the earlier adjudication was a decree under Order XXI Rule 103, and all claims the appellants now seek to urge should have been raised then.
• They argued that the claim under the Act of 1958 should have been raised earlier due to Section 5 of the Act, which requires such claims to be adjudicated before a decree is passed.
• They emphasized the peremptory language of Order XXI Rule 101 and that the High Court’s order was a decree under Order XXI Rule 103.
• The respondents submitted that the compensation claim is intrinsically connected to the claim for possession and should have been addressed when the decree was passed.
• They also argued that the appellants made a conscious decision to only urge the claim under Section 51 of the TP Act and cannot now press a claim under the Act of 1958.

Issues Framed by the Supreme Court

The Supreme Court considered the following issues:

1. Whether the claim advanced by the appellants for the value of improvements was barred by the principle of constructive res judicata.
2. Whether the appellants, not being transferees, were entitled to raise a claim under Section 51 of the TP Act.

Treatment of the Issue by the Court

The following table demonstrates how the Court decided the issues:

Authorities

The Supreme Court considered the following authorities:

Judgment

The Supreme Court upheld the High Court’s decision, ruling that the appellants’ claim for compensation was barred by the principle of constructive res judicata. The Court reasoned that the claim for compensation under Section 4(1) of the Act of 1958 was intrinsically linked to their earlier claim for possession and could have and should have been raised in the initial execution proceedings. The Court emphasized that the provisions of Order XXI Rules 97 to 103 of the CPC form a complete code, providing the sole remedy for parties and strangers to a decree.

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• Shamma Bhatt v T Ramakrishna Bhatt [(1987) 2 SCC 416]:* The Court used this case to emphasize that a claim for compensation under Section 4 of the Act of 1958 must be made and established in order to trigger Section 5.
• Delhi Cloth & General Mills Co. Ltd v Municipal Corporation of Delhi [ILR (1975) II Delhi 174]:* The Court cited this case to support the view that the words “might and ought” in Explanation IV of Section 11, CPC, are cumulative, meaning a matter must be of such a nature that it could have been raised and should have been raised.
• Kameswar Pershad v Rajkumari Ruttun Koer [1892 SCC OnLine PC 16]:* The Court used this case to explain that the “ought” requirement depends on the facts of each case, and that alternative ways of seeking to impose liability should have been made a ground of attack in the former suit.
• Henderson v Henderson [67 E.R. 313]:* The Court referred to this case to highlight that parties must bring forward their whole case and not open the same subject of litigation in respect of a matter which might have been brought forward.
• Greenhalgh v Mallard [(1947) 2 All ER 255]:* The Court used this case to illustrate that res judicata covers issues that could have been raised and that it would be an abuse of process to allow new proceedings in respect of them.
• Johnson v Gore Wood & Co (a firm) [[2001] 2 WLR 72]:* The Court cited this case to explain the public interest in res judicata and the need for finality in litigation, emphasizing that a party should not be twice vexed in the same matter.
• State of U P v Nawab Hussain [(1977) 2 SCC 806]:* The Court referred to this case to highlight that the principles of res judicata and constructive res judicata seek to achieve the common objective of assuring finality to litigation.
• Direct Recruit Class II Engg. Officers’ Assn. v State of Maharashtra [(1990) 2 SCC 715]:* The Court cited this case to support the position that an adjudicationis conclusive not only as to the matter determined but as to every other matter which the parties might and ought to have litigated.
• Forward Construction Co. v Prabhat Mandal (Regd.), Andheri [(1986) 1 SCC 100]:* The Court cited this case to support the position that an adjudication is conclusive not only as to the matter determined but as to every other matter which the parties might and ought to have litigated.
• Brahmdeo Chaudhary v Rishikesh Prasad Jaiswal [(1997) 3 SCC 694]:* The Court referred to this case to explain that a stranger to a decree can agitate their claim for an independent right, title or interest in the decretal property.
• Shreenath v Rajesh [(1998) 4 SCC 543]:* The Court cited this case to explain that the expression “any person” in Order XXI Rule 97 includes all persons resisting the delivery of possession.
• Har Vilas v Mahendra Nath [(2011) 15 SCC 377]:* The Court referred to this case to reiterate that the provisions of Order XXI Rule 99 will not defeat the right of a third person to get their objection decided under Rule 97.
• Nusserwanji E Poonegar v Mrs Shirinbai F Bbesania [AIR 1984 Bom 357]:* The Court cited this case to explain that the powers given to the executing court under Order XXI Rule 101 are plenary, meaning that the court has full power to determine all questions arising in the execution proceedings.

Ratio Decidendi

The ratio decidendi of the case is that a claim for compensation for improvements on land, which could have and should have been raised in earlier proceedings for possession, is barred by the principle of constructive res judicata. The Court emphasized that Explanation IV of Section 11 of the CPC, read with Order XXI Rules 97 to 103, requires parties to raise all available defenses and claims in the initial proceedings, and failure to do so will bar their subsequent assertion.

Ratio Table

Sentiment Analysis

The sentiment of the judgment can be summarized as follows:

Flow Chart of the Case