Supreme Court: For Principle of Res Judicata to Apply, the Suit must have been decided on Merits and Attained Finality

Supreme Court: For Principle of Res Judicata to Apply, the Suit must have been decided on Merits and Attained Finality

The Supreme Court, by its coram comprising of Justices Sudhanshu Dhulia and J.B. Pardiwala, while setting a new precedent, explaining the principle of ‘Res Judicata’, was pleased to observe that for res judicata to apply, the matter directly and substantially in issue in the subsequent suit must be the same matter which was directly and substantially in issue in the former suit. Further, the suit should have been decided on merits and the decision should have attained finality.

In the present case the father of the appellants (landlord) filed an eviction petition on 21 May, 1996 under Section 14(1)(a) of the Delhi Rent Control Act, 1958 (the Act of 1958) against the respondents (tenants) alleging that arrears of the rent were not cleared.

In the said eviction petition, the respondents denied the relationship of landlord and tenant.

However, plaintiffs-appellants failed to appear before the Rent Controller and also failed to lead any evidence for the purpose of establishing the relationship of landlord and tenant between the parties. The plaintiffs were granted numerous opportunities to adduce evidence to establish the relationship of landlord and tenant, last such opportunity was given on 1 November, 1997.

The Rent Controller passed an order dated 27 January, 1998 dismissing the eviction petition.

It was pertinent to note that during the lifetime of original plaintiff, no appeal or fresh eviction petition was filed. After the demise of the original plaintiff, the appellants claiming as successors in interest filed another eviction petition in the year 2001 against the respondents under Section 14(1)(a) of the Act 1958 claiming arrears of rent from 1 March, 1993 till the date of issuance of notice i.e., till 18 May, 2001.

The respondents filed the written statement and an application under the provisions of Order 7 Rule 11 of the Code of Civil Procedure, 1908 (CPC) stating that the said eviction petition of 2001 was barred by the principles of res judicata and the plaint shall be rejected accordingly.

However, the Additional Rent Controller declined to reject the plaint vide order dated July 23, 2002 on the ground that the second eviction petition filed in was based on a fresh notice dated May 18, 2001 on separate cause of action and that there was no finding on merits as regards the relationship of landlord and tenant between the parties in the order dated 27 January, 1998.

The respondents/tenants approached the Delhi High Court in a civil revision petition challenging the impugned order dated July 23, 2022 which was allowed and plaint of the eviction petition of 2001 was rejected by the High Court on the ground that the same was hit by the principles of res judicata.

Aggrieved by the same, the appellants moved before the Supreme Court assailing the impugned judgment of Delhi High Court.

The question that came up for consideration before the bench was whether the High Court was justified in rejecting the plaint of the eviction petition on the ground that the second eviction petition was barred by the principles of res judicata.

In this regard, the Court noted that Order 7 Rule 11(d) of CPC provides that the plaint shall be rejected “where the suit appears from the statement in the plaint to be barred by any law”. Hence, in order to decide whether the suit is barred by any law, it is the statement in the plaint which will have to be construed.

The Court highlighted that while deciding with such an application, the Court must have due regard only to the statements in the plaint. Whether the suit is barred by any law must be determined from the statements in the plaint and it is not open to decide the issue on the basis of any other material including the written statement in the case.

The bench elucidated that, “the general principle of res judicata under Section 11 of the CPC contain rules of conclusiveness of judgment, but for res judicata to apply, the matter directly and substantially in issue in the subsequent suit must be the same matter which was directly and substantially in issue in the former suit. Further, the suit should have been decided on merits and the decision should have attained finality.”

In this context, the bench noted that the exact words used by the Rent Controller in the order dated 27 January, 1998 were: “the PE is thus closed. In the second part of the order, the Rent Controller, thereafter, proceeds to observe that since the relationship of Landlord-Tenant is under dispute and the plaintiff has failed to produce any evidence to establish such relationship, he did not find any good reason to fix the case further for recording of evidence. In such circumstances, he dismissed the eviction petition, as the plaintiff could be said to have failed to establish his case. In the last, he observed that the file be consigned.”

The Court asserted that the above order does not mean dismissal either on merits or on default.

The Court pertinently elucidated and summarized the guiding principles for deciding an application under Order 7 Rule 11(d) of the CPC as follows:

(i) To reject a plaint on the ground that the suit is barred by any law, only the averments in the plaint will have to be referred to;

(ii) The defense made by the defendant in the suit must not be considered while deciding the merits of the application;

(iii) To determine whether a suit is barred by res judicata, it is necessary that (i) the ‘previous suit’ is decided, (ii) the issues in the subsequent suit were directly and substantially in issue in the former suit; (iii) the former suit was between the same parties or parties through whom they claim, litigating under the same title; and (iv) that these issues were adjudicated and finally decided by a court competent to try the subsequent suit; and

(iv) Since an adjudication of the plea of res judicata requires consideration of the pleadings, issues and decision in the ‘previous suit’, such a plea will be beyond the scope of Order 7 Rule 11 (d), where only the statements in the plaint will have to be perused.

Consequently, the Court opined that the High Court had committed an error in taking the view that the order passed by the Additional Rent Controller could be said to be one passed in exercise of powers under Rule 3 of Order 17 of the CPC.

The Court accordingly, allowed the appeal.