A decree which is passed ex parte is as
good and effective as a decree passed after
contest. Before the ex parte decree is passed,
the court has to hold that the averments in the
plaint and the claim in the suit have been
proved. It is, therefore, difficult to endorse the
observation made by the Principal District
Munsif that such a decree cannot be considered
to be a decree passed on merits. It is
undoubtedly a decree which is passed without
contest; but it is only after the merits of the
claim of the plaintiff have been proved to the
satisfaction of the trial court, that an occasion
to pass an ex parte decree can arise.
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 11005 OF 2013
(Arising out of SLP (Civil) No. 25369 of 2010)
Erach Boman Khavar ... Appellant
Versus
Tukaram Shridhar Bhat and another ...Respondents
Read original judgment here;click here
2. This appeal, by special leave, is directed against the
judgment and order dated 23.6.2010 passed by the
Division Bench of the High Court of Judicature at
Bombay in Appeal No. 262 of 2007 reversing the
judgment and order passed by the learned single
Judge in Company Application No. 720 of 2006 in
Company Petition No. 201 of 1994 whereby the
Page 2
learned single Judge had granted leave to the
appellant to institute a suit for eviction against the
respondent therein.
3. The broad essential facts giving rise to the present
appeal are that on 17.6.1975 the father of the
appellant entered into an agreement of leave and
licence with respondent No. 2 – Company, namely
M/s. Poysha Industrial Co. Ltd. in respect of a flat
owned by him. As put forth by the appellant, the
licence expired by efflux of time but the respondent
No. 2 continued to pay the licence fee and the same
was accepted by the father of the appellant without
prejudice. In the year 1990 a suit for eviction was
instituted by the predecessor-in-interest of the
appellant against respondent No. 2 and the subtenant
under the Bombay Rent Act, 1947. On
4.3.1997 the sub-tenant, the first respondent herein,
filed an application for impleading himself as a party
in the suit contending that he was the sub-tenant. It
is apt to note here that he was the Managing Director
of the respondent No. 2 - company. On 17.6.1997
the Small Causes Court allowed the application and
impleaded the respondent No. 1 as a defendant.
While the suit was in progress, on 9.1.1998 in a
separate proceeding the learned Company Judge
passed a winding up order against the respondent
No. 2 – Company. At that stage, the landlord filed CA
No. 731 of 1999 before the High Court seeking
possession of the flat. On 14.2.2000, the learned
single Judge rejected the application opining that
before the premises could be returned, the rights of
the person to occupy the premises are required to be
determined. It was observed that it was only in the
clear case where there is no valid or legal subsisting
tenancy or sub-tenancy that the premises could be
returned to the landlord. The said order was assailed
before the Division Bench which by order dated
22.8.2000 accepted the reasoning ascribed by the
learned single Judge and dismissed the appeal.
4. As the factual matrix would further undrape, the
father of the appellant filed an application for
amendment of the plaint in the suit for incorporation
of the certain other grounds including the unlawful
subletting by the respondent-company to the first
respondent and the said amendment was sought to
be made in terms of Section 3(1)(b) of the Bombay
Rent Act, 1947. Eventually, by order dated
9.11.2000 the said application for amendment was
rejected on the ground that the Bombay Rent Act had
been repealed on 31.3.2000. Thereafter, Suit No.
226/336 of 2001 was instituted in the Small Causes
Court for eviction on the ground of illegal subletting.
As set forth, the said suit was filed after obtaining
leave from the Companies Court under Section 446
of the Companies Act, 1956 (for short “the 1956
Act”). On 2.1.2002 as the original plaintiff, the father
of the present appellant expired, an application for
substitution was filed and thereafter the legal
representatives including the appellant were brought
on record vide order dated 28.3.2002. As the factual
matrix would unveil, the said suit was withdrawn on
12.7.2004.
5. On 21.9.2005 the appellant terminated the tenancy
and thereafter on 18.10.2005 filed CA No. 45 of 2006
before the learned Company Judge under Section 446
of the 1956 Act seeking permission to file eviction
suit in the Small Causes Court as the respondent –
Company was not entitled to protection under
Maharashtra Rent Control Act, 1999 (for brevity “the
1999 Act”) in view of Section 3(1)(b) of the said Act.
6. The learned Company Judge on 23.2.2006, on the
basis of a statement made by the contesting
respondent, granted permission for filing an
amendment subject to the rights and contentions of
respondent No. 3 therein on merits. However, the
Court observed that it was not necessary to present
Judge’s Summons and granted liberty to file
application, if necessary. Though such an order was
passed, the appellant did not file an application for
amendment on the legal advice and keeping in view
the liberty granted by the learned single Judge, filed
CA No. 720 of 2006 for grant of leave to file the
eviction suit in terms of the provisions contained in
the 1999 Act. The learned single Judge vide order
dated 27.7.2006 passed the following order: -
“Perused the affidavit in support. Since the
applicant has instituted a Suit against the
Company in Liquidation, seeking its eviction
from the premises, more particularly, described
in the affidavit in support and the
Suit/Application is pending. Company
Application is made absolute in terms of prayer
clause (a).
This order is passed without prejudice to
the rights and contentions of the Official
Liquidator and it would be open for the
Liquidator to raise all such contentions as are
permissible in law.”
7. Thereafter, an application for recall was filed
contending, inter alia, that the court was misguided
as the order indicated that the court was under an
impression that the suit had already been instituted
earlier. The learned Company Judge, on perusal of
the Company Application No. 720 of 2006, found that
the court was not misguided as the said suit was
mentioned as proposed suit in the affidavit in support
of the application. Being of this view, he opined that
the order dated 27.7.2006 did not require to be
interfered with. He further observed that as no
provision of law had been shown under which the
proposed defendants to the suit were required to be
heard before leave was granted under Section 446 of
the 1956 Act. He also took note of the fact that the
official liquidator in the earlier proceedings had made
a statement to the court that the suit premises were
not required by the liquidator for effective
management of the winding up proceedings and the
order was passed without prejudice to the rights and
contentions of the official liquidator and further it was
observed that it would be open for the official
liquidator to raise all such contentions as permissible
in law. The learned Company Judge also took note of
the fact that the tenancy right of the company had
not been disputed by the plaintiff and no decree
could be passed without a full-fledged trial in the suit.
Being of this view, he dismissed the application.
8. The said order came to be assailed in appeal No. 779
of 2006 before the Division Bench which by order
dated 7.11.2006, upon adumbration of all the facts
and delineation of the impugned orders, set aside the
orders dated 27.7.2006 and 28.9.2006 as the learned
Company Judge had not kept himself alive to Rule
117 of the Companies (Court) Rules, 1959 which
envisages that an application under Section 446(1)
for leave of the Court to commence or continue in
suit or proceedings against the company shall be
made upon notice to the official liquidator and the
parties to the suit or proceedings sought to be
commenced or continued and, accordingly, remitted
the matter to the learned Company Judge to hear and
decide the application afresh in accordance with law
after affording opportunity to the sub-tenant also.
9. After the remit, the learned Company Judge vide
order dated 5.3.2007, adverting to the submissions
raised at the bar, came to hold that the objection as
regards the maintainability of the application raised
by the counsel on behalf of the sub-tenant that
failure to obtain leave prior to institution of the suit
would debar the court from granting leave was
devoid of any substance; that the contention to the
effect that the order passed on 23.2.2006 debarred
the applicant from moving and prosecuting another
application for grant of leave to file a fresh suit under
Section 41 of the Presidency Small Causes Court Act
being hit by principle analogous to doctrine of res
judicata was untenable inasmuch as on an earlier
occasion the question of grant of leave had not been
decided on merits and further liberty was reserved in
favour of the applicant to apply; that the object
behind Section 446 of the 1956 Act is to save the
company which is being wound up from unnecessary
litigation and to protect the assets for equitable
distribution among its creditors and shareholders and
the court, while dealing with the question of grant of
leave has to necessarily consider the interest of the
company and ordinarily leave should be granted
where the question at issue in such a situation
cannot be gone into and decided in the winding up
proceedings as in the case at hand, the tenancy
rights of the company in the tenanted premises are
not the assets for the purpose of liquidation
proceedings and merely because the company is in
liquidation and liquidator has been appointed, the
rights of the company vis-à-vis the landlord or
tenants did not go through any change; and that the
official liquidator had no objection for releasing the
premises in favour of the landlord and as the subtenant
was the only contesting party, and
accordingly granted leave. Be it noted, the learned
Company Judge while granting leave has opined thus:
-
“The issues involved in the suit and the reliefs
claimed cannot be adjudicated upon or decided
by this Court in exercise of company
jurisdiction. That jurisdiction shall be with the
court trying the suit. The interest of the
company in liquidation is not at all involved in
the said suit as already recorded hereinabove
for the reasons stated. Therefore, the question
of invocation of jurisdiction of the Small Causes
Court either under Section 28 of the Bombay
Rent Act or under Section 33 of the Maharashtra
Rent Act or under Section 41 of the Presidency
Small Causes Court Act is not relevant for the
purpose of grant of leave because the question
of jurisdiction of the court will have to be
decided on the basis of the plaint pleadings.
The small Causes Court would be well
within its right to decide its own jurisdiction. In
the event; it comes to the conclusion that it has
no jurisdiction to try a suit under the Presidency
Small Causes Court Act, in that event, it would
be open for that Court either to return or reject
the plaint or permit the conversion of the suit.
All these conflicting questions need not be gone
into and adjudicated upon by this Court at the
stage of grant of leave. Only this Court has to
consider that the suit is not a frivolous suit, that
the suit is not such which is bound to fail for the
reasons apparent on the face of the record and
the same is not going to create strain on the
resources of the Official Liquidator. At any stage
the question raised in the suit is arguable one.”
[Underlining is ours]
10. The legal substantiality of the aforesaid order was
challenged in Appeal no. 262 of 2007 and before the
Division Bench it was contended that the application
for grant of leave had already been disposed by
refusing it vide order dated 23.2.2006 and granting
permission to file an application for amendment in
the plaint in the Small Causes Court and the
concession given by the appellant not to oppose the
same was not availed of and hence, a second
application seeking grant of the same relief was not
maintainable. It was further urged that TER Suit No.
111/127 of 2006, the second suit, was instituted
pursuant to leave granted by the learned Company
Judge vide order dated 27.7.2006 which was revoked
by order of the Division Bench in appeal and,
therefore, the learned Company Judge could not have
granted leave to continue the said suit. The grant of
leave by the learned Company Judge was criticized
further on the ground that the earlier order dated
23.3.2006 was only for the limited purpose for
seeking clarification of the order and not for filing a
fresh application seeking grant of leave. The
aforesaid submissions were resisted by the present
appellant on many a score including the
interpretation of the earlier order and how it would
not operate as res judicata.
11. The Division Bench placed reliance on Arjun Singh
v. Mohindra Kumar and others1 and came to hold
that when the second application for leave was filed,
there was no change in the circumstances and in the
absence of any changed circumstances, the second
application for leave was not maintainable as it was
barred by principles of res judicata being a
successive application in the same court on selfsame
facts. It was further opined that it is open to
the appellant to file an application for review or to file
an appeal against the said order and as long as the
1 AIR 1964 SC 993
said order remained alive, a fresh application could
not have been entertained by the learned Company
Judge. To interpret the term “grant of liberty” the
Division Bench held that on the basis of the grant of
liberty the case could not have been reopened. For
the said conclusion reliance was placed on Kewal
Chand Mimani v. S.K. Sen and others2. The
Division Bench, however, clarified that the
respondent No. 3 therein would be entitled to make
an application for grant of leave for instituting a fresh
suit after taking recourse to such remedy for
annulment of the order dated 23.2.2006 passed in
Company Application No. 45 of 2006.
12. We have heard Mr. Shyam Divan, learned senior
counsel appearing for the appellant and Mr. Shekhar
Naphade, learned senior counsel appearing for the
respondents.
13. The central issues that seems to be cemented by the
verdict of the Division Bench are that the order dated
23.2.2006 passed by the learned single Judge in
2 (2001) 6 SCC 512
Company Application No. 45 of 2006 in Company
Petition No. 201 of 1994 operates as res judicata
debarring the appellant to file an application for
grant of leave and further the observation “liberty to
applicant to apply” does not enable the appellant to
get out from that legal labyrinth because it does not
confer a right on a party to re-agitate the matter.
14. To appreciate the heart of the controversy, it is
necessary to reproduce the order dated 23.2.2006 in
entirety: -
“Leave to amend the title in respect of
Respondent No. 2 to read “The Official
Liquidator of M/s. Poysha Industrial Company
Limited”. Amendment to be carried out within
two weeks from today.
2. Mr. Thakkar, the learned Senior Counsel
appearing on behalf of Respondent No. 3
states that in the event of the Petitioner
making an Application for amendment of
the plaint in R.A.E. suit No. 228/336 of
2001 on the basis of the averments made
in the present Judges Summons,
Respondent No. 3 will not oppose the
same. In view thereof, it is not necessary
to grant the present Judges’ Summons.
3. Liberty to the Applicants to apply, if
necessary. The amendment, if granted,
will however be subject to the rights and
14
Page 15
contentions of Respondent No. 3 on
merits.”
15. Criticizing the analysis and the conclusion of the
Division Bench Mr. Shyam Divan, learned senior
counsel for the appellant, has submitted that the said
order goes against the spirit of Section 446 of the
1956 Act and further it would not remotely attract
the doctrine of res judicata in its conceptual
essentiality, for none of the ingredients on which the
edifice of the said principle is built are attracted to
the facts of the case. It is his further submission that
when there had been no adjudication on merits by
the learned Company Judge with regard to grant or
refusal of leave on earlier occasion, the principles set
out in the case of Arjun Singh (supra) would not be
attracted. That apart, contends Mr. Divan, that the
words “liberty to the applicants to apply, if
necessary” are to be contextually understood and
regard being had to the backdrop of the application
and the delineation by the learned Company Judge
and not to be put in a straight-jacket formula and, in
15
Page 16
any case, the decision in Kewal Chand Mimani
(supra) is not applicable.
16. Mr. Nephade, learned senior counsel for the
respondents, per contra, would contend with
emphasis that the order dated 23.2.2006 has been
appositely understood by the Division Bench and it
has justifiably been held to operate as res judicata
debarring a party from filing a successive application
on self-same facts and hence, no fault can be found
with the decision rendered in appeal. He would
further submit that the learned Judges of the Division
Bench have correctly understood the observation of
the learned Company Judge “liberty to applicant to
apply” and in law, no benefit did accrue to the
appellant to file another application in the said
proceeding for grant of leave. That apart, the
appellant chose not to file amendment in the pending
suit which was conceded not to be opposed by the
respondents but, on some pretext or other he filed
another application for grant of leave to institute a
suit under another enactment and, therefore, the
16
Page 17
Division Bench has rightly unsettled and dislodged
the order passed by the learned Company Judge.
17. To appreciate the submissions in their proper
perspective, we may refer to Section 446 of the 1956
Act which reads as follows: -
“446. Suits stayed on winding up order.
– (1) When a winding up order has been made
or the Official Liquidator has been appointed as
provisional liquidator, no suit or other legal
proceeding shall be commenced, or if pending
at the date of the winding up order, shall be
proceeded with, against the company, except
by leave of the Tribunal and subject to such
terms as the Tribunal may impose.
(2) Tribunal shall, notwithstanding anything
contained in any other law for the time being in
force, have jurisdiction to entertain, or dispose
of-
(a) any suit or proceeding by or against the
company;
(b) any claim made by or against the company
(including claims by or against any of its
branches in India);
(c) any application made under section 391 by
or in respect of the company;
(d) any question of priorities or any other
question whatsoever, whether of law or
fact, which may relate to or rise in course
of the winding up of the company,
whether such suit or proceeding has been
instituted or is instituted or such claim or
17
Page 18
question has arisen or arises or such application
has been made or is made before or after the
order for the winding up of the company, or
before or after the commencement of the
Companies (Amendment) Act, 1960 (65 of
1960).
3. (omitted by Act 11 of 2003, sec. 61)
4. Nothing in sub-section (1) or sub-section
(3) shall apply to any proceeding pending in
appeal before the Supreme Court or a High
Court.”
18. Reflecting on the said provision, this Court in
Central Bank of India v. M/s. Elmot Engineering
Company and others3 has ruled that it aims at
safeguarding the assets of a company in winding up
against wasteful or expensive litigation as far as
matters which could be expeditiously and cheaply
decided by the company court are concerned. In
granting leave under the said provision, the court
always takes into consideration whether the
company is likely to be exposed to unnecessary
litigation and cost.
19. In Ammonia Supplies Corporation (P) Ltd. v.
Modern Plastic Containers Pvt. Ltd. and
others4, while dealing with power under Section
3 (1994) 4 SCC 159
4 (1998) 7 SCC 105
18
Page 19
446(1) of the 1956 Act, it has been observed that in
the said sub-section the words used would indicate
that the discretion to exercise such power is with the
company court.
20. In State of J&K v. UCO Bank and others5, while
interpreting Section 446(1) of the 1956 Act, the Court
opined that a suit cannot be instituted once a
winding-up order is passed except by leave of the
court. The two-Judge Bench referred to the earlier
decision rendered in Bansidhar Shankarlal v.
Mohd. Ibrahim6, wherein the leave had been
obtained at the time of filing of the suit and the
question was whether fresh leave ought to be
obtained before proceeding under Section 446(1) of
the 1956 Act before institution of execution
proceedings. The Court considered the contrary
views expressed by different High Courts on the
effect and purport of Section 446(1) of the 1956 Act
and came to the conclusion that the view that failure
to obtain leave prior to institution of suit would not
5 (2005) 10 SCC 331
6 (1970) 3 SCC 900
19
Page 20
debar the court from granting such leave
subsequently and that the only consequence of the
same would be that the proceedings would be
regarded as having been instituted on the date on
which the leave was obtained from the High Court.
21. We have referred to the aforesaid decisions solely for
the two purposes. First, grant of leave of the court is
not a condition precedent for initiation of a civil
action or the legal proceedings. It is because the
Section does not expressly provide for annulment of
a proceeding that is undertaken without the leave of
the court. There can be no shadow of doubt that
leave of the winding up court can be obtained even
after initiation of the proceeding. The second, the
seminal object behind engrafting of the said provision
is to see that the interest of the company is
safeguarded so that it does not face deprivation of its
right and claims are adjudicated without the
knowledge of the company court and further the
court has a discretion to see whether leave should be
granted and, if so, with what conditions or no
20
Page 21
condition. That apart, the court may grant leave if it
felt that the company should not enter into
unnecessary litigation and incur avoidable
expenditure.
22. In the case at hand, the official liquidator had clearly
stated that the suit property was not the property of
the company and, therefore, the company should not
enter into that kind of litigation. The learned
Company Judge has taken note of it and further
granting all protection to the official liquidator, has
allowed the application for seeking leave. However,
as is seen, the Division Bench had dislodged the
order of the learned single Judge solely on the ground
that the earlier order dated 23.2.2006 stared at the
face of the appellant and operates as res judicata.
23. Presently we shall address to the issue whether the
order which has been construed operating as res
judicata by the Division Bench, does really come
within the ambit and sweep of the principles of res
judicata or not.
24. In Satyadhyan Ghosal and others v. Smt.
Deorajin Debi and another7, a three-Judge Bench
adverted to the principle of res judicata and its
application as between two stages in the same
litigation and opined that when a Court at an earlier
stage decided the matter in one way will not allow
the parties to re-agitate the matter again at a
subsequent stage of the same proceeding. The facts
in the said case are that the appellant-landlord who
had obtained a decree for ejectment against the
tenant had not yet been able to get possession in
execution of the decree. The decree was obtained on
February 10, 1949 and soon thereafter the Calcutta
Thika Tenancy Act, 1949 came on the statute book
on March 3, 1949. The tenants made an application
under Order IX, Rule 13 of the Code of Civil
Procedure for setting aside the decree. The said
application was dismissed on July 16, 1949. On
9.9.1949, an application was made by the tenant
under Section 28 of the Calcutta Thika Tenancy Act
alleging that they were Thika tenants and hence, the
7 AIR 1960 SC 941
decree made against them may be rescinded. After
contest, the learned Munsif came to hold that
applicants were not Thika tenants within the meaning
of Thika Tenancy Act and accordingly declined to
rescind the decree. The aforesaid order was
challenged in a revision under Section 115 of the
Code of Civil Procedure. At the time when the
revision application was taken up for hearing, the
Calcutta Thika Tenancy Ordinance had come into
force on October 21, 1952 and thereafter the
Calcutta Thika Tenancy (Amendment) Act, 1953
came into force. The Amendment Act omitted
Section 28 of the original Act. In order to decide
whether the application under Section 28 was still
alive, the High Court had to consider the effect of
Section 1(2) of the Amendment Act. The learned
Single Judge on interpretation of the provisions came
to hold that Section 1(2) of the Amendment Act did
not affect the operation of Section 28 of the original
Act to the proceeding and on that basis disposed of
the application holding that Section 28 was
23
Page 24
applicable. The High Court had also held that in view
of the amended provision of Section 28 of the Thika
Act and the Ordinance which was recorded by the
learned Munsif, the revisionists before the High Court
were Thika tenants. Being of this view, he allowed
the revision and set aside the order of the Munsif by
which he dismissed the application under Section 28
and remanded the case to the Court of Munsif for
disposal in accordance with law. After the remand,
the Munsif rescinded the decree. The landlord
preferred a revision under Section 115 of the Code of
Civil Procedure contending that Section 28 of the Act
was not applicable but the said submission was
repelled by the learned Single Judge holding that the
said issue having been decided earlier was res
judicata between the parties. The said order passed
in the revision was the subject matter of appeal
before this Court by special leave. This Court stated
the principle of res judicata which is based on the
need of giving finality to judicial decisions. The
learned Judges opined once a res is judicata, it shall
24
Page 25
not be adjudged again and it primarily applies
between past litigations and future litigations.
Further elucidating it was stated that when in a
matter – whether a question of fact or a question of
law had been decided between the parities in one
suit or proceeding and the decision is final, either
because of an appeal was taken to a higher court or
an appeal was dismissed, or when no appeal lies,
neither party will be allowed in a future suit or
proceeding between the same parties to canvass the
matter again. In that context, the Court addressed
the applicability of the principle of res judicata
between two stages in the same litigation and,
eventually, ruled thus:-
“The principle of res judicata applies also
as between two stages in the same
litigation to this extent that a court,
whether the trial court or a higher court
having at an earlier stage decided a
matter in one way will not allow the
parties to re-agitate the matter again at
a subsequent stage of the same
proceedings.”
25. After discussing the law in the field it was ruled that
there was no reason to hold that the appellant was
25
Page 26
precluded from raising before this Court the question
about the applicability of Section 28 of the 1953 Act
merely because he had not appealed from the High
Court’s order of remand, taking the view against him
the Section was applicable.
26. In the case of Arjun Singh (supra) the defendant
had approached this Court as his application under
Order IX Rule 13 of the Code to set aside an ex parte
decree passed against him had been dismissed as
barred by res judicata. The question that basically
arose before this Court was when an application is
made under Order IX Rule 7 of the Code and the
Court considers that there is not any good cause for
the previous non-appearance and proceeds further
with the suits and ultimately results in an ex parte
decree, can a court in dealing with applications to set
aside the ex parte decree under Order IX Rule 13
reconsider the question as to whether the defendant
had a sufficient cause for non-appearance on the day
in regard to which the application under Order IX
Rule 7 had been filed. The Court referred to the
26
Page 27
decision in Satyadhyan Ghosal (supra) and quoted
a passage from the said decision and thereafter took
note of two submissions advanced by the learned
counsel for the respondents therein which were to
the effect that (1) an issue of fact or law decided
even in an interlocutory proceeding could operate as
res judicata in a later proceeding, and (2) in order to
attract the principle of res judicata the order or
decision first rendered and which is pleaded as res
judicata need not be capable of being appealed
against. Dealing with the same the Court observed
thus: -
“We agree that generally speaking these
propositions are not open to objection. If the
court which rendered the first decision was
competent to entertain the suit or other
proceeding, and had therefore competency to
decide the issue or matter, the circumstance
that it is a tribunal of exclusive jurisdiction or
one from whose decision no appeal lay would
not by themselves negative the finding on the
issue by it being res judicata in later
proceedings. Similarly, as stated already,
though S. 11 of the Civil Procedure Code clearly
contemplates the existence of two suits and the
findings in the first being res judicata in the
later suit, it is well established that the principle
underlying it is equally applicable to the case of
decisions rendered at successive stages of the
same suit or proceeding. But where the
27
Page 28
principle of res judicata is invoked in the case of
the different stages of proceedings in the same
suit, the nature of the proceedings, the scope of
the enquiry which the adjectival law provides
for the decision being reached, as well as the
specific provisions made on matters touching
such decision are some of the material and
relevant factors to be considered before the
principle is held applicable.”
27. After so stating the three-Judge Bench proceeded to
deal with different kinds of interlocutory orders and,
in that context, observed that interlocutory orders
are of various kinds; some like orders of stay,
injunction or receiver are designed to preserve the
status quo pending the litigation and to ensure that
the parties might not be prejudiced by the normal
delay which the proceedings before the court usually
take. They do not, in that sense, decide in any
manner the merits of the controversy in issue in the
suit and do not, of course, put an end to it even in
part. Such orders are certainly capable of being
altered or varied by subsequent applications for the
same relief, though normally only on proof of new
facts or new situations which subsequently emerge.
As they do not impinge upon the legal rights of
parties to the litigation the principle of res judicata
28
Page 29
does not apply to the findings on which these orders
are based, though if applications were made for relief
on the same basis after the same has once been
disposed of the court would be justified in rejecting
the same as an abuse of the process of Court. There
are other orders which are also interlocutory, but
would fall into a different category. These are not
directed to preserve the property pending the final
adjudication, but are designed to ensure the just,
smooth, orderly and expeditious disposal of the suit.
They are interlocutory in the sense that they do not
decide any matter in issue arising in the suit, nor put
an end to the litigation.
28. In Prahlad Singh v. Col. Sukhdev Singh8 an exparte
decree passed in a petition for eviction based
on ground of default in payment of rent was set
aside on the finding that the landlord had agreed to
withdraw the petition and accept rent from the
tenant. After the decree was set aside the petition
for eviction was once again ordered on the ground of
8 AIR 1987 SC 1145
29
Page 30
default of payment of rent for the same period. The
submission of the tenant that the eviction petition
could not be allowed to continue and deserved to be
dismissed on the finding of the court in the
proceeding for setting aside the ex parte order was
negatived by the High Court on the ground that
those findings were made in the context of setting
aside the ex parte order and not in the context of
deciding the main petition for eviction. This Court, in
appeal by special leave preferred by the tenant,
observed that the view of the High Court was not
right, for the decision given by a court at earlier
stage of a case is binding at a later stage and for the
said purpose reliance was placed on the
pronouncement in Satyadhyan Ghosal (supra).
While dislodging the order of the High Court this
Court stated thus: -
“In the present case, in the proceeding to be set
aside an ex parte order, the Court recorded an
express finding that the landlord had agreed to
withdraw the suit and receive the rent from the
tenant. That was a finding which was binding
on the landlord at later stages of the
proceeding. He could have questioned the
finding before the appellate authority and the
30
Page 31
High Court in the appeals preferred by the
tenant. He did not choose to do so. In fact he
could not do so as he had earlier thought it
prudent not to enter the witness box though he
put the question in issue in the proceeding to
set aside the ex parte order by contesting the
statement of the tenant.”
29. We have referred to the said decision for the purpose
that the Court took note of the express finding
recorded by the trial court while passing the ex parte
decree. There was an expression of an opinion.
30. In C.V. Rajendran and another v. N.M.
Muhammed Kunhi9 the question arose for
consideration whether the order of remand passed
by the Rent Control Appellate Authority, Payyannur,
dated November 25, 1988, holding that the second
eviction petition (R.C.P. No. 13/87) filed by the
respondent against the appellants under sub-section
(3) of Section 11 of the Kerala Buildings (Lease and
Rent Control) Act, 1965, is not barred by Section 15
of the Act, can be permitted to re-agitate in a
proceeding arising from the order passed by the Rent
Controller pursuant to the order of remand. Be it
noted, in the said case, learned Rent Controller had
9 AIR 2003 SC 649
31
Page 32
declined to grant relief to the respondent on the
ground that under Section 15(3) of the Act the
eviction petition was not maintainable. On appeal
being preferred the appellate authority remanded
the matter to the Rent Controller for fresh disposal.
After remand, the Rent Controller found that the
need of the respondent was bona fide and
alternative accommodation in the area was available
and, accordingly, allowed the eviction petition. The
same was affirmed by the Rent Control Appellate
Authority. On a civil revision being preferred the
High Court opined that the earlier order of the
appellate authority holding that Section 15 of the Act
does not bar the eviction proceeding against the
tenant, had become final and could not be reagitated.
However, the High Court recorded a
finding that Section 15 of the Act did not bar the
subsequent eviction petition and being of that view
dismissed the revision petition. A contention was
raised before this Court that order passed by the
appellate authority holding that the eviction petition
32
Page 33
was maintainable and Section 15 of the Act was not
a bar, does not operate as res judicata. In that
context, this Court observed as follows: -
“In the light of the above discussion we hold
that as the question whether S. 15 of the Act
bars the present eviction petition, was decided
against the appellants by the appellate
authority at the earlier stage of the suit and it
was allowed to become final, it is not open to
the appellants to reagitate the same at the
subsequent stage of the suit. In this view of the
matter, we do not find any illegality in the order
under appeal to warrant any interference.”
31. From the aforesaid decision it is clear that this Court
concurred with the view of the High Court as a
finding was returned that the proceeding was not
barred by Section 15 of the Kerala Buildings (Lease
and Rent Control) Act, 1965 and thereafter the
matter was remanded by the appellate court. Thus,
on earlier occasion there was an expression of an
opinion. In this context, we may fruitfully reproduce
a passage from Arukkani Ammal v. Guruswamy10:
-
“It is also difficult to appreciate the view taken
by the District Munsif that ex parte decree
cannot be considered to be ‘full decree on
10 (1987) 100 LW 707
merits’. A decree which is passed ex parte is as
good and effective as a decree passed after
contest. Before the ex parte decree is passed,
the court has to hold that the averments in the
plaint and the claim in the suit have been
proved. It is, therefore, difficult to endorse the
observation made by the Principal District
Munsif that such a decree cannot be considered
to be a decree passed on merits. It is
undoubtedly a decree which is passed without
contest; but it is only after the merits of the
claim of the plaintiff have been proved to the
satisfaction of the trial court, that an occasion
to pass an ex parte decree can arise.”
32. The aforesaid passage was approved by this Court in
Saroja v. Chinnusamy (Dead) by LRs and
another11. The purpose of citing the said authority
is that though an ex parte decree is passed without
contest but it is passed only after the merits of the
claim of the plaintiff have been proved to the
satisfaction of the trial court.
33. In this regard, the pronouncement in Y.B. Patil and
others v. Y.L. Patil12 is worth referring to. In that
case the High Court in the writ petition preferred on
earlier point of time had recorded a finding and gave
directions to the tribunal not to reopen the question
of fact in revision and the tribunal complied with
11 (2007) 8 SCC 329
12 (1976) 4 SCC 66
34
Page 35
those directions of the High Court. This Court opined
that the appellants therein were bound by the
judgment of the High Court and it was not open to
them to go behind the judgment earlier passed by
the High Court as they had not preferred any appeal
against the said judgment and it had attained
finality. The Court observed that it is well settled
that principle of res judicata can be invoked not only
in separate subsequent proceedings, they also got
attracted in subsequent stage of the same
proceeding. The aforesaid decision has noted the
fact that in the earlier writ petition the High Court
has clearly stated that the tribunal shall not reopen
the question of fact in revision. It is manifest that,
this Court has taken note of the fact that there was
an expression of opinion by the High Court that facts
need not be adverted to again by the tribunal and
that attracted the principle of res judicata.
34. From the aforesaid authorities it is clear as crystal
that to attract the doctrine of res judicata it must be
manifest that there has been conscious adjudication
35
Page 36
of an issue. A plea of res judicata cannot be taken
aid of unless there is an expression of an opinion on
the merits. It is well settled in law that principle of
res judicata is applicable between the two stages of
the same litigation but the question or issue involved
must have been decided at earlier stage of the same
litigation. In the case at hand, as the order dated
23.2.2006 would show that a statement was made
by the counsel for the third respondent that in the
event of the petitioner’s making an application for
amendment of the plaint in the pending suit on the
basis of the averments made in the summons issued,
he would not oppose the same. The learned
Company Judge recorded the same and opined that it
is not necessary to grant the present Judge’s
Summons. Thereafter, the learned Company Judge
has observed “liberty to applicant to apply, if
necessary”. The Division Bench, after relying on the
decision in Kewal Chand Mimani’s case, has
opined that grant of liberty is adopted by the court to
obliterate any confusion or any difficulty being
36
Page 37
experienced in the matter but the said grant of
liberty does not confer any right on the party to
agitate the matter further nor does it confer any
jurisdiction on the court to further probe the
correctness of the decision arrived at. To appreciate
the correctness of the said conclusion it is imperative
to appreciate the verdict in Kewal Chand Mimani
(supra). In the said case, an appeal was preferred
against an order passed by the learned single Judge
in the writ petition. The appeal was heard from time
to time and the hearing was concluded but before
the judgment could be pronounced, one of the
Judges hearing the appeal was transferred as a
consequence of which the judgment could not be
pronounced. At that stage, the respondents 7 to 10,
after expiry of about 9 years, filed an application for
being transposed as appellants to conduct the
pending appeal and the Division Bench allowed the
application for transposition, however, stating that
the said transposition was without prejudice to the
rights of the complainant to contest the appeal as
37
Page 38
appellant. Subsequently, the appeal was reheard by
a reconstituted Division Bench of the High Court and
the judgment was reserved by the Bench. During the
pendency of the pronouncement of the judgment the
appellant therein moved this Court under Article 136
against the order of transposition and this Court had
passed an order to the following effect: -
“The order against which the SLP has been filed
is an order on transposition as appellants. The
order itself indicates that the petitioners are at
liberty to raise all the objections. We see that
even including the transposition and their right
to contest in the capacity as appellants also is
left open.
The petitioners are at liberty to have the
matter adjudicated.”
35. Thereafter, the High Court decided the appeal by
delivering a judgment on 21.5.1997. A direction was
issued to the State Government and the Municipal
Corporation to restore the possession of the property
to the owner and/or the occupier, as the case may
be, within seven days from the date of the judgment.
However, the Division Bench had stated “liberty to
38
Page 39
mention” the matter. Shortly thereafter, the matter
was taken up by the concerned Collector to which
certain objections were raised. In the said case, as
the factual matrix would unfurl, on 23.5.1997 the
matter was mentioned before the Appellate Bench by
the learned advocate for the State arguing for
extension of time for making over possession in
terms of the order and the High Court thereupon
extended the time. However, it directed the matter
to appear on a particular day. Subsequently, a
formal application was filed by the owners for a
direction to restore the possession of the premises in
question to the owners as the appellants, as alleged,
were not the owners. It was on the state of facts the
second judgment was pronounced by the Appellate
Bench which directed making over of possession to
the owners without prejudice to the rights and
contentions of the parties and without prejudice to
the rights of the lessee to file a suit for appropriate
proceedings for recovery or otherwise and/or to
enforce an agreement for purchase of the properties
39
Page 40
in accordance with law. The High Court allowed 48
hours time from the date of the communication of
the order and by reason wherefor a notice was sent
to the owners requiring them to be present to
receive the possession of the land. The Mimanis
being grieved by the said order moved this Court and
maintenance of status quo was directed without
creation of any third party interest. The Court, apart
from other issues, addressed to the submission as
raised by the learned counsel for the appellants
therein to the effect of liberty granted to mention the
matter after the judgment was delivered. It was
urged that by the judgment directions were issued
and it connoted a final disposal and specifically
determined the issue raised in the matter. It was
canvassed that when the High Court had recorded
that though many other points were argued and
several case laws were cited, but it was not
necessary for deciding those points as the appeal
succeeded on the point of order of requisition not
been continued on the basis of a lapsed statute and
40
Page 41
the appeal got disposed of, shelter or aid could not
have been taken to “liberty to mention” for
reopening the whole issue. In that context, this
Court observed thus: -
“Be it noted, however, that the words “liberty to
mention” have been as a matter of fact a
phraseology which did not come through judicial
process without any definite legal sanction for
the purpose of clarification, if needed, but not
otherwise. It is a legal process which has been
evolved for convenience and for shortening the
litigation so that the parties are not dragged
into further and further course of litigation, and
it is in this context that the submissions of Mr.
Gupta, that the Court has no jurisdiction to
reopen the issue on the ground of availability of
the legal phraseology of liberty to mention
cannot be brushed aside. As noticed
hereinbefore, the insertion of the above-noted
legal phraseology is to obliterate any confusion
or any difficulty being experienced in the matter
– it does not give the right anew to the party to
agitate the matter further nor does it confer
jurisdiction on the court itself to further probe
the correctness of the decision arrived at:
review of a judgment cannot be had on the
basis of this liberty. The circumstances under
which review can be had are provided under
Order 47 of the Code of Civil Procedure. In any
event, law is well settled on this score that the
power to review is not any inherent power and
it must be conferred by law either specifically or
by necessary implication.”
36. After so stating the Court referred to the decision in
State of U.P. v. Brahm Datt Sharma13 wherein it
has been held that when proceedings stand
terminated by final disposal of writ petition it is not
open to the court to reopen the proceedings by
means of a miscellaneous application in respect of a
matter which provided a fresh cause of action, for if
the said principle is not followed, there would be
confusion and chaos and the finality of the
proceedings would cease to have any meaning.
37. Coming to the case at hand, the Division Bench, after
reproducing paragraph 19 of the judgment in Kewal
Chand Mimani’s case, held that the liberty granted
by the learned single Judge to file an application was
not maintainable, for the liberty granted by the
learned single Judge cannot be used to seek from
13 (1987) 2 SCC 179
42
Page 43
him orders which are contrary to his principal order
rejecting the company application for grant of leave.
On a studied scrutiny of the order passed by the
learned single Judge on 23.2.2006, we find that the
Division Bench has committed three fundamental
errors, namely (i) that the learned single Judge had
rejected the application; (ii) that liberty granted
could only mean the parties to seek further direction
pursuant to the said order; and (iii) that the liberty
granted by the learned single Judge could not be
used to seek from him any relief which is contrary to
the main order.
38. It is clear to us that the learned single Judge had not
dealt with the application for grant of leave on
merits; that the application was disposed of on the
basis of a submission made by the third respondent
that if an application for amendment is filed in the
pending suit, he would not oppose the same; that the
learned Company Judge on the basis of the
statement recorded that it was not necessary to
grant the present Judge’s Summons; and that liberty
43
Page 44
was granted to the applicant to apply if necessary.
The Division Bench, we are disposed to think, has
erroneously opined that the learned single Judge in
the main part of the order having rejected the
application could not have granted liberty to apply
for filing of another application. As we notice, the
Division Bench has not appositely appreciated the
ratio laid down in Kewal Chand Mimani (supra)
wherein the High Court had pronounced a judgment
and, as a matter of practice, has stated “liberty to
mention” and in that context, this Court stated that
that did not confer jurisdiction on the High Court to
dwell upon a different issue in a disposed of case. In
fact, in the said case the order passed by this Court
on earlier occasion has been reproduced wherein
liberty was granted to get the matter adjudicated
which, in the context, simply conveyed that as the
controversy relating to transposition therein was
pending before the High Court and the order
indicated that the applicants were at liberty to raise
all objections including the transposition and the
44
Page 45
right to contest in the capacity as appellants. When
this Court said “liberty was granted to get the matter
adjudicated”, it meant that it was open to the
petitioner in the SLP to raise all contentions before
the High Court as the High Court itself had granted
liberty in the order which was the subject-matter of
challenge and the matter was sub-judice. We are
only analyzing on this score to highlight that words,
namely, “grant of liberty” are to be understood,
regard being had to the context in which they are
used. Context is really material. Had the learned
Company Judge adjudicated the matter on merits,
the matter would have been absolutely different. He
had, in fact, on the basis of a statement made by the
learned counsel for the third respondent, had not
dwelled upon the merits and, in that context, had
granted liberty to applicant to apply, if necessary. It
is eminently so because the learned Judge has also
stated “it is not necessary to grant the present
Judge’s Summons”. Thus, the application for grant of
leave was really not dealt with on merits and on the
45
Page 46
basis of a statement of respondent No. 3 the learned
Company Judge opined that it was not necessary for
the present and in that context liberty was granted.
The principles stated in Arjun Singh (supra),
Satyadhyan Ghosal (supra) and the other
authorities clearly spell out that principle of res
judicata operates at the successive stages in the
same litigation but, the basic foundation of res
judicata rests on delineation of merits and it has at
least an expression of an opinion for rejection of an
application. As is evident, there has been no
advertence on merits and further the learned
Company Judge has guardedly stated two facets,
namely, “not necessary to grant present Judge’s
Summons” and “liberty to applicant to apply, if
necessary”. On a seemly reading of the order we
have no shadow of doubt that the same could not
have been treated to have operated as res judicata
as has been held by the Division Bench. Therefore,
the irresistible conclusion is that the Division Bench
has fallen into serious error in dislodging the order
46
Page 47
granting leave by the learned Company Judge to file
a fresh suit.
39. In view of the aforesaid analysis, we allow the
appeal, set aside the order passed by the Division
Bench and restore that of the learned Company
Judge. The first respondent is directed to pay
Rs.50,000/- to the appellant towards costs of the
appeal.
……………………………….J.
[Anil R. Dave]
……………………………….J.
[Dipak Misra]
New Delhi;
December 12, 2013.
Print Page
good and effective as a decree passed after
contest. Before the ex parte decree is passed,
the court has to hold that the averments in the
plaint and the claim in the suit have been
proved. It is, therefore, difficult to endorse the
observation made by the Principal District
Munsif that such a decree cannot be considered
to be a decree passed on merits. It is
undoubtedly a decree which is passed without
contest; but it is only after the merits of the
claim of the plaintiff have been proved to the
satisfaction of the trial court, that an occasion
to pass an ex parte decree can arise.
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 11005 OF 2013
(Arising out of SLP (Civil) No. 25369 of 2010)
Erach Boman Khavar ... Appellant
Versus
Tukaram Shridhar Bhat and another ...Respondents
Read original judgment here;click here
2. This appeal, by special leave, is directed against the
judgment and order dated 23.6.2010 passed by the
Division Bench of the High Court of Judicature at
Bombay in Appeal No. 262 of 2007 reversing the
judgment and order passed by the learned single
Judge in Company Application No. 720 of 2006 in
Company Petition No. 201 of 1994 whereby the
Page 2
learned single Judge had granted leave to the
appellant to institute a suit for eviction against the
respondent therein.
3. The broad essential facts giving rise to the present
appeal are that on 17.6.1975 the father of the
appellant entered into an agreement of leave and
licence with respondent No. 2 – Company, namely
M/s. Poysha Industrial Co. Ltd. in respect of a flat
owned by him. As put forth by the appellant, the
licence expired by efflux of time but the respondent
No. 2 continued to pay the licence fee and the same
was accepted by the father of the appellant without
prejudice. In the year 1990 a suit for eviction was
instituted by the predecessor-in-interest of the
appellant against respondent No. 2 and the subtenant
under the Bombay Rent Act, 1947. On
4.3.1997 the sub-tenant, the first respondent herein,
filed an application for impleading himself as a party
in the suit contending that he was the sub-tenant. It
is apt to note here that he was the Managing Director
of the respondent No. 2 - company. On 17.6.1997
the Small Causes Court allowed the application and
impleaded the respondent No. 1 as a defendant.
While the suit was in progress, on 9.1.1998 in a
separate proceeding the learned Company Judge
passed a winding up order against the respondent
No. 2 – Company. At that stage, the landlord filed CA
No. 731 of 1999 before the High Court seeking
possession of the flat. On 14.2.2000, the learned
single Judge rejected the application opining that
before the premises could be returned, the rights of
the person to occupy the premises are required to be
determined. It was observed that it was only in the
clear case where there is no valid or legal subsisting
tenancy or sub-tenancy that the premises could be
returned to the landlord. The said order was assailed
before the Division Bench which by order dated
22.8.2000 accepted the reasoning ascribed by the
learned single Judge and dismissed the appeal.
4. As the factual matrix would further undrape, the
father of the appellant filed an application for
amendment of the plaint in the suit for incorporation
of the certain other grounds including the unlawful
subletting by the respondent-company to the first
respondent and the said amendment was sought to
be made in terms of Section 3(1)(b) of the Bombay
Rent Act, 1947. Eventually, by order dated
9.11.2000 the said application for amendment was
rejected on the ground that the Bombay Rent Act had
been repealed on 31.3.2000. Thereafter, Suit No.
226/336 of 2001 was instituted in the Small Causes
Court for eviction on the ground of illegal subletting.
As set forth, the said suit was filed after obtaining
leave from the Companies Court under Section 446
of the Companies Act, 1956 (for short “the 1956
Act”). On 2.1.2002 as the original plaintiff, the father
of the present appellant expired, an application for
substitution was filed and thereafter the legal
representatives including the appellant were brought
on record vide order dated 28.3.2002. As the factual
matrix would unveil, the said suit was withdrawn on
12.7.2004.
5. On 21.9.2005 the appellant terminated the tenancy
and thereafter on 18.10.2005 filed CA No. 45 of 2006
before the learned Company Judge under Section 446
of the 1956 Act seeking permission to file eviction
suit in the Small Causes Court as the respondent –
Company was not entitled to protection under
Maharashtra Rent Control Act, 1999 (for brevity “the
1999 Act”) in view of Section 3(1)(b) of the said Act.
6. The learned Company Judge on 23.2.2006, on the
basis of a statement made by the contesting
respondent, granted permission for filing an
amendment subject to the rights and contentions of
respondent No. 3 therein on merits. However, the
Court observed that it was not necessary to present
Judge’s Summons and granted liberty to file
application, if necessary. Though such an order was
passed, the appellant did not file an application for
amendment on the legal advice and keeping in view
the liberty granted by the learned single Judge, filed
CA No. 720 of 2006 for grant of leave to file the
eviction suit in terms of the provisions contained in
the 1999 Act. The learned single Judge vide order
dated 27.7.2006 passed the following order: -
“Perused the affidavit in support. Since the
applicant has instituted a Suit against the
Company in Liquidation, seeking its eviction
from the premises, more particularly, described
in the affidavit in support and the
Suit/Application is pending. Company
Application is made absolute in terms of prayer
clause (a).
This order is passed without prejudice to
the rights and contentions of the Official
Liquidator and it would be open for the
Liquidator to raise all such contentions as are
permissible in law.”
7. Thereafter, an application for recall was filed
contending, inter alia, that the court was misguided
as the order indicated that the court was under an
impression that the suit had already been instituted
earlier. The learned Company Judge, on perusal of
the Company Application No. 720 of 2006, found that
the court was not misguided as the said suit was
mentioned as proposed suit in the affidavit in support
of the application. Being of this view, he opined that
the order dated 27.7.2006 did not require to be
interfered with. He further observed that as no
provision of law had been shown under which the
proposed defendants to the suit were required to be
heard before leave was granted under Section 446 of
the 1956 Act. He also took note of the fact that the
official liquidator in the earlier proceedings had made
a statement to the court that the suit premises were
not required by the liquidator for effective
management of the winding up proceedings and the
order was passed without prejudice to the rights and
contentions of the official liquidator and further it was
observed that it would be open for the official
liquidator to raise all such contentions as permissible
in law. The learned Company Judge also took note of
the fact that the tenancy right of the company had
not been disputed by the plaintiff and no decree
could be passed without a full-fledged trial in the suit.
Being of this view, he dismissed the application.
8. The said order came to be assailed in appeal No. 779
of 2006 before the Division Bench which by order
dated 7.11.2006, upon adumbration of all the facts
and delineation of the impugned orders, set aside the
orders dated 27.7.2006 and 28.9.2006 as the learned
Company Judge had not kept himself alive to Rule
117 of the Companies (Court) Rules, 1959 which
envisages that an application under Section 446(1)
for leave of the Court to commence or continue in
suit or proceedings against the company shall be
made upon notice to the official liquidator and the
parties to the suit or proceedings sought to be
commenced or continued and, accordingly, remitted
the matter to the learned Company Judge to hear and
decide the application afresh in accordance with law
after affording opportunity to the sub-tenant also.
9. After the remit, the learned Company Judge vide
order dated 5.3.2007, adverting to the submissions
raised at the bar, came to hold that the objection as
regards the maintainability of the application raised
by the counsel on behalf of the sub-tenant that
failure to obtain leave prior to institution of the suit
would debar the court from granting leave was
devoid of any substance; that the contention to the
effect that the order passed on 23.2.2006 debarred
the applicant from moving and prosecuting another
application for grant of leave to file a fresh suit under
Section 41 of the Presidency Small Causes Court Act
being hit by principle analogous to doctrine of res
judicata was untenable inasmuch as on an earlier
occasion the question of grant of leave had not been
decided on merits and further liberty was reserved in
favour of the applicant to apply; that the object
behind Section 446 of the 1956 Act is to save the
company which is being wound up from unnecessary
litigation and to protect the assets for equitable
distribution among its creditors and shareholders and
the court, while dealing with the question of grant of
leave has to necessarily consider the interest of the
company and ordinarily leave should be granted
where the question at issue in such a situation
cannot be gone into and decided in the winding up
proceedings as in the case at hand, the tenancy
rights of the company in the tenanted premises are
not the assets for the purpose of liquidation
proceedings and merely because the company is in
liquidation and liquidator has been appointed, the
rights of the company vis-à-vis the landlord or
tenants did not go through any change; and that the
official liquidator had no objection for releasing the
premises in favour of the landlord and as the subtenant
was the only contesting party, and
accordingly granted leave. Be it noted, the learned
Company Judge while granting leave has opined thus:
-
“The issues involved in the suit and the reliefs
claimed cannot be adjudicated upon or decided
by this Court in exercise of company
jurisdiction. That jurisdiction shall be with the
court trying the suit. The interest of the
company in liquidation is not at all involved in
the said suit as already recorded hereinabove
for the reasons stated. Therefore, the question
of invocation of jurisdiction of the Small Causes
Court either under Section 28 of the Bombay
Rent Act or under Section 33 of the Maharashtra
Rent Act or under Section 41 of the Presidency
Small Causes Court Act is not relevant for the
purpose of grant of leave because the question
of jurisdiction of the court will have to be
decided on the basis of the plaint pleadings.
The small Causes Court would be well
within its right to decide its own jurisdiction. In
the event; it comes to the conclusion that it has
no jurisdiction to try a suit under the Presidency
Small Causes Court Act, in that event, it would
be open for that Court either to return or reject
the plaint or permit the conversion of the suit.
All these conflicting questions need not be gone
into and adjudicated upon by this Court at the
stage of grant of leave. Only this Court has to
consider that the suit is not a frivolous suit, that
the suit is not such which is bound to fail for the
reasons apparent on the face of the record and
the same is not going to create strain on the
resources of the Official Liquidator. At any stage
the question raised in the suit is arguable one.”
[Underlining is ours]
10. The legal substantiality of the aforesaid order was
challenged in Appeal no. 262 of 2007 and before the
Division Bench it was contended that the application
for grant of leave had already been disposed by
refusing it vide order dated 23.2.2006 and granting
permission to file an application for amendment in
the plaint in the Small Causes Court and the
concession given by the appellant not to oppose the
same was not availed of and hence, a second
application seeking grant of the same relief was not
maintainable. It was further urged that TER Suit No.
111/127 of 2006, the second suit, was instituted
pursuant to leave granted by the learned Company
Judge vide order dated 27.7.2006 which was revoked
by order of the Division Bench in appeal and,
therefore, the learned Company Judge could not have
granted leave to continue the said suit. The grant of
leave by the learned Company Judge was criticized
further on the ground that the earlier order dated
23.3.2006 was only for the limited purpose for
seeking clarification of the order and not for filing a
fresh application seeking grant of leave. The
aforesaid submissions were resisted by the present
appellant on many a score including the
interpretation of the earlier order and how it would
not operate as res judicata.
11. The Division Bench placed reliance on Arjun Singh
v. Mohindra Kumar and others1 and came to hold
that when the second application for leave was filed,
there was no change in the circumstances and in the
absence of any changed circumstances, the second
application for leave was not maintainable as it was
barred by principles of res judicata being a
successive application in the same court on selfsame
facts. It was further opined that it is open to
the appellant to file an application for review or to file
an appeal against the said order and as long as the
1 AIR 1964 SC 993
said order remained alive, a fresh application could
not have been entertained by the learned Company
Judge. To interpret the term “grant of liberty” the
Division Bench held that on the basis of the grant of
liberty the case could not have been reopened. For
the said conclusion reliance was placed on Kewal
Chand Mimani v. S.K. Sen and others2. The
Division Bench, however, clarified that the
respondent No. 3 therein would be entitled to make
an application for grant of leave for instituting a fresh
suit after taking recourse to such remedy for
annulment of the order dated 23.2.2006 passed in
Company Application No. 45 of 2006.
12. We have heard Mr. Shyam Divan, learned senior
counsel appearing for the appellant and Mr. Shekhar
Naphade, learned senior counsel appearing for the
respondents.
13. The central issues that seems to be cemented by the
verdict of the Division Bench are that the order dated
23.2.2006 passed by the learned single Judge in
2 (2001) 6 SCC 512
Company Application No. 45 of 2006 in Company
Petition No. 201 of 1994 operates as res judicata
debarring the appellant to file an application for
grant of leave and further the observation “liberty to
applicant to apply” does not enable the appellant to
get out from that legal labyrinth because it does not
confer a right on a party to re-agitate the matter.
14. To appreciate the heart of the controversy, it is
necessary to reproduce the order dated 23.2.2006 in
entirety: -
“Leave to amend the title in respect of
Respondent No. 2 to read “The Official
Liquidator of M/s. Poysha Industrial Company
Limited”. Amendment to be carried out within
two weeks from today.
2. Mr. Thakkar, the learned Senior Counsel
appearing on behalf of Respondent No. 3
states that in the event of the Petitioner
making an Application for amendment of
the plaint in R.A.E. suit No. 228/336 of
2001 on the basis of the averments made
in the present Judges Summons,
Respondent No. 3 will not oppose the
same. In view thereof, it is not necessary
to grant the present Judges’ Summons.
3. Liberty to the Applicants to apply, if
necessary. The amendment, if granted,
will however be subject to the rights and
14
Page 15
contentions of Respondent No. 3 on
merits.”
15. Criticizing the analysis and the conclusion of the
Division Bench Mr. Shyam Divan, learned senior
counsel for the appellant, has submitted that the said
order goes against the spirit of Section 446 of the
1956 Act and further it would not remotely attract
the doctrine of res judicata in its conceptual
essentiality, for none of the ingredients on which the
edifice of the said principle is built are attracted to
the facts of the case. It is his further submission that
when there had been no adjudication on merits by
the learned Company Judge with regard to grant or
refusal of leave on earlier occasion, the principles set
out in the case of Arjun Singh (supra) would not be
attracted. That apart, contends Mr. Divan, that the
words “liberty to the applicants to apply, if
necessary” are to be contextually understood and
regard being had to the backdrop of the application
and the delineation by the learned Company Judge
and not to be put in a straight-jacket formula and, in
15
Page 16
any case, the decision in Kewal Chand Mimani
(supra) is not applicable.
16. Mr. Nephade, learned senior counsel for the
respondents, per contra, would contend with
emphasis that the order dated 23.2.2006 has been
appositely understood by the Division Bench and it
has justifiably been held to operate as res judicata
debarring a party from filing a successive application
on self-same facts and hence, no fault can be found
with the decision rendered in appeal. He would
further submit that the learned Judges of the Division
Bench have correctly understood the observation of
the learned Company Judge “liberty to applicant to
apply” and in law, no benefit did accrue to the
appellant to file another application in the said
proceeding for grant of leave. That apart, the
appellant chose not to file amendment in the pending
suit which was conceded not to be opposed by the
respondents but, on some pretext or other he filed
another application for grant of leave to institute a
suit under another enactment and, therefore, the
16
Page 17
Division Bench has rightly unsettled and dislodged
the order passed by the learned Company Judge.
17. To appreciate the submissions in their proper
perspective, we may refer to Section 446 of the 1956
Act which reads as follows: -
“446. Suits stayed on winding up order.
– (1) When a winding up order has been made
or the Official Liquidator has been appointed as
provisional liquidator, no suit or other legal
proceeding shall be commenced, or if pending
at the date of the winding up order, shall be
proceeded with, against the company, except
by leave of the Tribunal and subject to such
terms as the Tribunal may impose.
(2) Tribunal shall, notwithstanding anything
contained in any other law for the time being in
force, have jurisdiction to entertain, or dispose
of-
(a) any suit or proceeding by or against the
company;
(b) any claim made by or against the company
(including claims by or against any of its
branches in India);
(c) any application made under section 391 by
or in respect of the company;
(d) any question of priorities or any other
question whatsoever, whether of law or
fact, which may relate to or rise in course
of the winding up of the company,
whether such suit or proceeding has been
instituted or is instituted or such claim or
17
Page 18
question has arisen or arises or such application
has been made or is made before or after the
order for the winding up of the company, or
before or after the commencement of the
Companies (Amendment) Act, 1960 (65 of
1960).
3. (omitted by Act 11 of 2003, sec. 61)
4. Nothing in sub-section (1) or sub-section
(3) shall apply to any proceeding pending in
appeal before the Supreme Court or a High
Court.”
18. Reflecting on the said provision, this Court in
Central Bank of India v. M/s. Elmot Engineering
Company and others3 has ruled that it aims at
safeguarding the assets of a company in winding up
against wasteful or expensive litigation as far as
matters which could be expeditiously and cheaply
decided by the company court are concerned. In
granting leave under the said provision, the court
always takes into consideration whether the
company is likely to be exposed to unnecessary
litigation and cost.
19. In Ammonia Supplies Corporation (P) Ltd. v.
Modern Plastic Containers Pvt. Ltd. and
others4, while dealing with power under Section
3 (1994) 4 SCC 159
4 (1998) 7 SCC 105
18
Page 19
446(1) of the 1956 Act, it has been observed that in
the said sub-section the words used would indicate
that the discretion to exercise such power is with the
company court.
20. In State of J&K v. UCO Bank and others5, while
interpreting Section 446(1) of the 1956 Act, the Court
opined that a suit cannot be instituted once a
winding-up order is passed except by leave of the
court. The two-Judge Bench referred to the earlier
decision rendered in Bansidhar Shankarlal v.
Mohd. Ibrahim6, wherein the leave had been
obtained at the time of filing of the suit and the
question was whether fresh leave ought to be
obtained before proceeding under Section 446(1) of
the 1956 Act before institution of execution
proceedings. The Court considered the contrary
views expressed by different High Courts on the
effect and purport of Section 446(1) of the 1956 Act
and came to the conclusion that the view that failure
to obtain leave prior to institution of suit would not
5 (2005) 10 SCC 331
6 (1970) 3 SCC 900
19
Page 20
debar the court from granting such leave
subsequently and that the only consequence of the
same would be that the proceedings would be
regarded as having been instituted on the date on
which the leave was obtained from the High Court.
21. We have referred to the aforesaid decisions solely for
the two purposes. First, grant of leave of the court is
not a condition precedent for initiation of a civil
action or the legal proceedings. It is because the
Section does not expressly provide for annulment of
a proceeding that is undertaken without the leave of
the court. There can be no shadow of doubt that
leave of the winding up court can be obtained even
after initiation of the proceeding. The second, the
seminal object behind engrafting of the said provision
is to see that the interest of the company is
safeguarded so that it does not face deprivation of its
right and claims are adjudicated without the
knowledge of the company court and further the
court has a discretion to see whether leave should be
granted and, if so, with what conditions or no
20
Page 21
condition. That apart, the court may grant leave if it
felt that the company should not enter into
unnecessary litigation and incur avoidable
expenditure.
22. In the case at hand, the official liquidator had clearly
stated that the suit property was not the property of
the company and, therefore, the company should not
enter into that kind of litigation. The learned
Company Judge has taken note of it and further
granting all protection to the official liquidator, has
allowed the application for seeking leave. However,
as is seen, the Division Bench had dislodged the
order of the learned single Judge solely on the ground
that the earlier order dated 23.2.2006 stared at the
face of the appellant and operates as res judicata.
23. Presently we shall address to the issue whether the
order which has been construed operating as res
judicata by the Division Bench, does really come
within the ambit and sweep of the principles of res
judicata or not.
24. In Satyadhyan Ghosal and others v. Smt.
Deorajin Debi and another7, a three-Judge Bench
adverted to the principle of res judicata and its
application as between two stages in the same
litigation and opined that when a Court at an earlier
stage decided the matter in one way will not allow
the parties to re-agitate the matter again at a
subsequent stage of the same proceeding. The facts
in the said case are that the appellant-landlord who
had obtained a decree for ejectment against the
tenant had not yet been able to get possession in
execution of the decree. The decree was obtained on
February 10, 1949 and soon thereafter the Calcutta
Thika Tenancy Act, 1949 came on the statute book
on March 3, 1949. The tenants made an application
under Order IX, Rule 13 of the Code of Civil
Procedure for setting aside the decree. The said
application was dismissed on July 16, 1949. On
9.9.1949, an application was made by the tenant
under Section 28 of the Calcutta Thika Tenancy Act
alleging that they were Thika tenants and hence, the
7 AIR 1960 SC 941
decree made against them may be rescinded. After
contest, the learned Munsif came to hold that
applicants were not Thika tenants within the meaning
of Thika Tenancy Act and accordingly declined to
rescind the decree. The aforesaid order was
challenged in a revision under Section 115 of the
Code of Civil Procedure. At the time when the
revision application was taken up for hearing, the
Calcutta Thika Tenancy Ordinance had come into
force on October 21, 1952 and thereafter the
Calcutta Thika Tenancy (Amendment) Act, 1953
came into force. The Amendment Act omitted
Section 28 of the original Act. In order to decide
whether the application under Section 28 was still
alive, the High Court had to consider the effect of
Section 1(2) of the Amendment Act. The learned
Single Judge on interpretation of the provisions came
to hold that Section 1(2) of the Amendment Act did
not affect the operation of Section 28 of the original
Act to the proceeding and on that basis disposed of
the application holding that Section 28 was
23
Page 24
applicable. The High Court had also held that in view
of the amended provision of Section 28 of the Thika
Act and the Ordinance which was recorded by the
learned Munsif, the revisionists before the High Court
were Thika tenants. Being of this view, he allowed
the revision and set aside the order of the Munsif by
which he dismissed the application under Section 28
and remanded the case to the Court of Munsif for
disposal in accordance with law. After the remand,
the Munsif rescinded the decree. The landlord
preferred a revision under Section 115 of the Code of
Civil Procedure contending that Section 28 of the Act
was not applicable but the said submission was
repelled by the learned Single Judge holding that the
said issue having been decided earlier was res
judicata between the parties. The said order passed
in the revision was the subject matter of appeal
before this Court by special leave. This Court stated
the principle of res judicata which is based on the
need of giving finality to judicial decisions. The
learned Judges opined once a res is judicata, it shall
24
Page 25
not be adjudged again and it primarily applies
between past litigations and future litigations.
Further elucidating it was stated that when in a
matter – whether a question of fact or a question of
law had been decided between the parities in one
suit or proceeding and the decision is final, either
because of an appeal was taken to a higher court or
an appeal was dismissed, or when no appeal lies,
neither party will be allowed in a future suit or
proceeding between the same parties to canvass the
matter again. In that context, the Court addressed
the applicability of the principle of res judicata
between two stages in the same litigation and,
eventually, ruled thus:-
“The principle of res judicata applies also
as between two stages in the same
litigation to this extent that a court,
whether the trial court or a higher court
having at an earlier stage decided a
matter in one way will not allow the
parties to re-agitate the matter again at
a subsequent stage of the same
proceedings.”
25. After discussing the law in the field it was ruled that
there was no reason to hold that the appellant was
25
Page 26
precluded from raising before this Court the question
about the applicability of Section 28 of the 1953 Act
merely because he had not appealed from the High
Court’s order of remand, taking the view against him
the Section was applicable.
26. In the case of Arjun Singh (supra) the defendant
had approached this Court as his application under
Order IX Rule 13 of the Code to set aside an ex parte
decree passed against him had been dismissed as
barred by res judicata. The question that basically
arose before this Court was when an application is
made under Order IX Rule 7 of the Code and the
Court considers that there is not any good cause for
the previous non-appearance and proceeds further
with the suits and ultimately results in an ex parte
decree, can a court in dealing with applications to set
aside the ex parte decree under Order IX Rule 13
reconsider the question as to whether the defendant
had a sufficient cause for non-appearance on the day
in regard to which the application under Order IX
Rule 7 had been filed. The Court referred to the
26
Page 27
decision in Satyadhyan Ghosal (supra) and quoted
a passage from the said decision and thereafter took
note of two submissions advanced by the learned
counsel for the respondents therein which were to
the effect that (1) an issue of fact or law decided
even in an interlocutory proceeding could operate as
res judicata in a later proceeding, and (2) in order to
attract the principle of res judicata the order or
decision first rendered and which is pleaded as res
judicata need not be capable of being appealed
against. Dealing with the same the Court observed
thus: -
“We agree that generally speaking these
propositions are not open to objection. If the
court which rendered the first decision was
competent to entertain the suit or other
proceeding, and had therefore competency to
decide the issue or matter, the circumstance
that it is a tribunal of exclusive jurisdiction or
one from whose decision no appeal lay would
not by themselves negative the finding on the
issue by it being res judicata in later
proceedings. Similarly, as stated already,
though S. 11 of the Civil Procedure Code clearly
contemplates the existence of two suits and the
findings in the first being res judicata in the
later suit, it is well established that the principle
underlying it is equally applicable to the case of
decisions rendered at successive stages of the
same suit or proceeding. But where the
27
Page 28
principle of res judicata is invoked in the case of
the different stages of proceedings in the same
suit, the nature of the proceedings, the scope of
the enquiry which the adjectival law provides
for the decision being reached, as well as the
specific provisions made on matters touching
such decision are some of the material and
relevant factors to be considered before the
principle is held applicable.”
27. After so stating the three-Judge Bench proceeded to
deal with different kinds of interlocutory orders and,
in that context, observed that interlocutory orders
are of various kinds; some like orders of stay,
injunction or receiver are designed to preserve the
status quo pending the litigation and to ensure that
the parties might not be prejudiced by the normal
delay which the proceedings before the court usually
take. They do not, in that sense, decide in any
manner the merits of the controversy in issue in the
suit and do not, of course, put an end to it even in
part. Such orders are certainly capable of being
altered or varied by subsequent applications for the
same relief, though normally only on proof of new
facts or new situations which subsequently emerge.
As they do not impinge upon the legal rights of
parties to the litigation the principle of res judicata
28
Page 29
does not apply to the findings on which these orders
are based, though if applications were made for relief
on the same basis after the same has once been
disposed of the court would be justified in rejecting
the same as an abuse of the process of Court. There
are other orders which are also interlocutory, but
would fall into a different category. These are not
directed to preserve the property pending the final
adjudication, but are designed to ensure the just,
smooth, orderly and expeditious disposal of the suit.
They are interlocutory in the sense that they do not
decide any matter in issue arising in the suit, nor put
an end to the litigation.
28. In Prahlad Singh v. Col. Sukhdev Singh8 an exparte
decree passed in a petition for eviction based
on ground of default in payment of rent was set
aside on the finding that the landlord had agreed to
withdraw the petition and accept rent from the
tenant. After the decree was set aside the petition
for eviction was once again ordered on the ground of
8 AIR 1987 SC 1145
29
Page 30
default of payment of rent for the same period. The
submission of the tenant that the eviction petition
could not be allowed to continue and deserved to be
dismissed on the finding of the court in the
proceeding for setting aside the ex parte order was
negatived by the High Court on the ground that
those findings were made in the context of setting
aside the ex parte order and not in the context of
deciding the main petition for eviction. This Court, in
appeal by special leave preferred by the tenant,
observed that the view of the High Court was not
right, for the decision given by a court at earlier
stage of a case is binding at a later stage and for the
said purpose reliance was placed on the
pronouncement in Satyadhyan Ghosal (supra).
While dislodging the order of the High Court this
Court stated thus: -
“In the present case, in the proceeding to be set
aside an ex parte order, the Court recorded an
express finding that the landlord had agreed to
withdraw the suit and receive the rent from the
tenant. That was a finding which was binding
on the landlord at later stages of the
proceeding. He could have questioned the
finding before the appellate authority and the
30
Page 31
High Court in the appeals preferred by the
tenant. He did not choose to do so. In fact he
could not do so as he had earlier thought it
prudent not to enter the witness box though he
put the question in issue in the proceeding to
set aside the ex parte order by contesting the
statement of the tenant.”
29. We have referred to the said decision for the purpose
that the Court took note of the express finding
recorded by the trial court while passing the ex parte
decree. There was an expression of an opinion.
30. In C.V. Rajendran and another v. N.M.
Muhammed Kunhi9 the question arose for
consideration whether the order of remand passed
by the Rent Control Appellate Authority, Payyannur,
dated November 25, 1988, holding that the second
eviction petition (R.C.P. No. 13/87) filed by the
respondent against the appellants under sub-section
(3) of Section 11 of the Kerala Buildings (Lease and
Rent Control) Act, 1965, is not barred by Section 15
of the Act, can be permitted to re-agitate in a
proceeding arising from the order passed by the Rent
Controller pursuant to the order of remand. Be it
noted, in the said case, learned Rent Controller had
9 AIR 2003 SC 649
31
Page 32
declined to grant relief to the respondent on the
ground that under Section 15(3) of the Act the
eviction petition was not maintainable. On appeal
being preferred the appellate authority remanded
the matter to the Rent Controller for fresh disposal.
After remand, the Rent Controller found that the
need of the respondent was bona fide and
alternative accommodation in the area was available
and, accordingly, allowed the eviction petition. The
same was affirmed by the Rent Control Appellate
Authority. On a civil revision being preferred the
High Court opined that the earlier order of the
appellate authority holding that Section 15 of the Act
does not bar the eviction proceeding against the
tenant, had become final and could not be reagitated.
However, the High Court recorded a
finding that Section 15 of the Act did not bar the
subsequent eviction petition and being of that view
dismissed the revision petition. A contention was
raised before this Court that order passed by the
appellate authority holding that the eviction petition
32
Page 33
was maintainable and Section 15 of the Act was not
a bar, does not operate as res judicata. In that
context, this Court observed as follows: -
“In the light of the above discussion we hold
that as the question whether S. 15 of the Act
bars the present eviction petition, was decided
against the appellants by the appellate
authority at the earlier stage of the suit and it
was allowed to become final, it is not open to
the appellants to reagitate the same at the
subsequent stage of the suit. In this view of the
matter, we do not find any illegality in the order
under appeal to warrant any interference.”
31. From the aforesaid decision it is clear that this Court
concurred with the view of the High Court as a
finding was returned that the proceeding was not
barred by Section 15 of the Kerala Buildings (Lease
and Rent Control) Act, 1965 and thereafter the
matter was remanded by the appellate court. Thus,
on earlier occasion there was an expression of an
opinion. In this context, we may fruitfully reproduce
a passage from Arukkani Ammal v. Guruswamy10:
-
“It is also difficult to appreciate the view taken
by the District Munsif that ex parte decree
cannot be considered to be ‘full decree on
10 (1987) 100 LW 707
merits’. A decree which is passed ex parte is as
good and effective as a decree passed after
contest. Before the ex parte decree is passed,
the court has to hold that the averments in the
plaint and the claim in the suit have been
proved. It is, therefore, difficult to endorse the
observation made by the Principal District
Munsif that such a decree cannot be considered
to be a decree passed on merits. It is
undoubtedly a decree which is passed without
contest; but it is only after the merits of the
claim of the plaintiff have been proved to the
satisfaction of the trial court, that an occasion
to pass an ex parte decree can arise.”
32. The aforesaid passage was approved by this Court in
Saroja v. Chinnusamy (Dead) by LRs and
another11. The purpose of citing the said authority
is that though an ex parte decree is passed without
contest but it is passed only after the merits of the
claim of the plaintiff have been proved to the
satisfaction of the trial court.
33. In this regard, the pronouncement in Y.B. Patil and
others v. Y.L. Patil12 is worth referring to. In that
case the High Court in the writ petition preferred on
earlier point of time had recorded a finding and gave
directions to the tribunal not to reopen the question
of fact in revision and the tribunal complied with
11 (2007) 8 SCC 329
12 (1976) 4 SCC 66
34
Page 35
those directions of the High Court. This Court opined
that the appellants therein were bound by the
judgment of the High Court and it was not open to
them to go behind the judgment earlier passed by
the High Court as they had not preferred any appeal
against the said judgment and it had attained
finality. The Court observed that it is well settled
that principle of res judicata can be invoked not only
in separate subsequent proceedings, they also got
attracted in subsequent stage of the same
proceeding. The aforesaid decision has noted the
fact that in the earlier writ petition the High Court
has clearly stated that the tribunal shall not reopen
the question of fact in revision. It is manifest that,
this Court has taken note of the fact that there was
an expression of opinion by the High Court that facts
need not be adverted to again by the tribunal and
that attracted the principle of res judicata.
34. From the aforesaid authorities it is clear as crystal
that to attract the doctrine of res judicata it must be
manifest that there has been conscious adjudication
35
Page 36
of an issue. A plea of res judicata cannot be taken
aid of unless there is an expression of an opinion on
the merits. It is well settled in law that principle of
res judicata is applicable between the two stages of
the same litigation but the question or issue involved
must have been decided at earlier stage of the same
litigation. In the case at hand, as the order dated
23.2.2006 would show that a statement was made
by the counsel for the third respondent that in the
event of the petitioner’s making an application for
amendment of the plaint in the pending suit on the
basis of the averments made in the summons issued,
he would not oppose the same. The learned
Company Judge recorded the same and opined that it
is not necessary to grant the present Judge’s
Summons. Thereafter, the learned Company Judge
has observed “liberty to applicant to apply, if
necessary”. The Division Bench, after relying on the
decision in Kewal Chand Mimani’s case, has
opined that grant of liberty is adopted by the court to
obliterate any confusion or any difficulty being
36
Page 37
experienced in the matter but the said grant of
liberty does not confer any right on the party to
agitate the matter further nor does it confer any
jurisdiction on the court to further probe the
correctness of the decision arrived at. To appreciate
the correctness of the said conclusion it is imperative
to appreciate the verdict in Kewal Chand Mimani
(supra). In the said case, an appeal was preferred
against an order passed by the learned single Judge
in the writ petition. The appeal was heard from time
to time and the hearing was concluded but before
the judgment could be pronounced, one of the
Judges hearing the appeal was transferred as a
consequence of which the judgment could not be
pronounced. At that stage, the respondents 7 to 10,
after expiry of about 9 years, filed an application for
being transposed as appellants to conduct the
pending appeal and the Division Bench allowed the
application for transposition, however, stating that
the said transposition was without prejudice to the
rights of the complainant to contest the appeal as
37
Page 38
appellant. Subsequently, the appeal was reheard by
a reconstituted Division Bench of the High Court and
the judgment was reserved by the Bench. During the
pendency of the pronouncement of the judgment the
appellant therein moved this Court under Article 136
against the order of transposition and this Court had
passed an order to the following effect: -
“The order against which the SLP has been filed
is an order on transposition as appellants. The
order itself indicates that the petitioners are at
liberty to raise all the objections. We see that
even including the transposition and their right
to contest in the capacity as appellants also is
left open.
The petitioners are at liberty to have the
matter adjudicated.”
35. Thereafter, the High Court decided the appeal by
delivering a judgment on 21.5.1997. A direction was
issued to the State Government and the Municipal
Corporation to restore the possession of the property
to the owner and/or the occupier, as the case may
be, within seven days from the date of the judgment.
However, the Division Bench had stated “liberty to
38
Page 39
mention” the matter. Shortly thereafter, the matter
was taken up by the concerned Collector to which
certain objections were raised. In the said case, as
the factual matrix would unfurl, on 23.5.1997 the
matter was mentioned before the Appellate Bench by
the learned advocate for the State arguing for
extension of time for making over possession in
terms of the order and the High Court thereupon
extended the time. However, it directed the matter
to appear on a particular day. Subsequently, a
formal application was filed by the owners for a
direction to restore the possession of the premises in
question to the owners as the appellants, as alleged,
were not the owners. It was on the state of facts the
second judgment was pronounced by the Appellate
Bench which directed making over of possession to
the owners without prejudice to the rights and
contentions of the parties and without prejudice to
the rights of the lessee to file a suit for appropriate
proceedings for recovery or otherwise and/or to
enforce an agreement for purchase of the properties
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in accordance with law. The High Court allowed 48
hours time from the date of the communication of
the order and by reason wherefor a notice was sent
to the owners requiring them to be present to
receive the possession of the land. The Mimanis
being grieved by the said order moved this Court and
maintenance of status quo was directed without
creation of any third party interest. The Court, apart
from other issues, addressed to the submission as
raised by the learned counsel for the appellants
therein to the effect of liberty granted to mention the
matter after the judgment was delivered. It was
urged that by the judgment directions were issued
and it connoted a final disposal and specifically
determined the issue raised in the matter. It was
canvassed that when the High Court had recorded
that though many other points were argued and
several case laws were cited, but it was not
necessary for deciding those points as the appeal
succeeded on the point of order of requisition not
been continued on the basis of a lapsed statute and
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Page 41
the appeal got disposed of, shelter or aid could not
have been taken to “liberty to mention” for
reopening the whole issue. In that context, this
Court observed thus: -
“Be it noted, however, that the words “liberty to
mention” have been as a matter of fact a
phraseology which did not come through judicial
process without any definite legal sanction for
the purpose of clarification, if needed, but not
otherwise. It is a legal process which has been
evolved for convenience and for shortening the
litigation so that the parties are not dragged
into further and further course of litigation, and
it is in this context that the submissions of Mr.
Gupta, that the Court has no jurisdiction to
reopen the issue on the ground of availability of
the legal phraseology of liberty to mention
cannot be brushed aside. As noticed
hereinbefore, the insertion of the above-noted
legal phraseology is to obliterate any confusion
or any difficulty being experienced in the matter
– it does not give the right anew to the party to
agitate the matter further nor does it confer
jurisdiction on the court itself to further probe
the correctness of the decision arrived at:
review of a judgment cannot be had on the
basis of this liberty. The circumstances under
which review can be had are provided under
Order 47 of the Code of Civil Procedure. In any
event, law is well settled on this score that the
power to review is not any inherent power and
it must be conferred by law either specifically or
by necessary implication.”
36. After so stating the Court referred to the decision in
State of U.P. v. Brahm Datt Sharma13 wherein it
has been held that when proceedings stand
terminated by final disposal of writ petition it is not
open to the court to reopen the proceedings by
means of a miscellaneous application in respect of a
matter which provided a fresh cause of action, for if
the said principle is not followed, there would be
confusion and chaos and the finality of the
proceedings would cease to have any meaning.
37. Coming to the case at hand, the Division Bench, after
reproducing paragraph 19 of the judgment in Kewal
Chand Mimani’s case, held that the liberty granted
by the learned single Judge to file an application was
not maintainable, for the liberty granted by the
learned single Judge cannot be used to seek from
13 (1987) 2 SCC 179
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him orders which are contrary to his principal order
rejecting the company application for grant of leave.
On a studied scrutiny of the order passed by the
learned single Judge on 23.2.2006, we find that the
Division Bench has committed three fundamental
errors, namely (i) that the learned single Judge had
rejected the application; (ii) that liberty granted
could only mean the parties to seek further direction
pursuant to the said order; and (iii) that the liberty
granted by the learned single Judge could not be
used to seek from him any relief which is contrary to
the main order.
38. It is clear to us that the learned single Judge had not
dealt with the application for grant of leave on
merits; that the application was disposed of on the
basis of a submission made by the third respondent
that if an application for amendment is filed in the
pending suit, he would not oppose the same; that the
learned Company Judge on the basis of the
statement recorded that it was not necessary to
grant the present Judge’s Summons; and that liberty
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was granted to the applicant to apply if necessary.
The Division Bench, we are disposed to think, has
erroneously opined that the learned single Judge in
the main part of the order having rejected the
application could not have granted liberty to apply
for filing of another application. As we notice, the
Division Bench has not appositely appreciated the
ratio laid down in Kewal Chand Mimani (supra)
wherein the High Court had pronounced a judgment
and, as a matter of practice, has stated “liberty to
mention” and in that context, this Court stated that
that did not confer jurisdiction on the High Court to
dwell upon a different issue in a disposed of case. In
fact, in the said case the order passed by this Court
on earlier occasion has been reproduced wherein
liberty was granted to get the matter adjudicated
which, in the context, simply conveyed that as the
controversy relating to transposition therein was
pending before the High Court and the order
indicated that the applicants were at liberty to raise
all objections including the transposition and the
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right to contest in the capacity as appellants. When
this Court said “liberty was granted to get the matter
adjudicated”, it meant that it was open to the
petitioner in the SLP to raise all contentions before
the High Court as the High Court itself had granted
liberty in the order which was the subject-matter of
challenge and the matter was sub-judice. We are
only analyzing on this score to highlight that words,
namely, “grant of liberty” are to be understood,
regard being had to the context in which they are
used. Context is really material. Had the learned
Company Judge adjudicated the matter on merits,
the matter would have been absolutely different. He
had, in fact, on the basis of a statement made by the
learned counsel for the third respondent, had not
dwelled upon the merits and, in that context, had
granted liberty to applicant to apply, if necessary. It
is eminently so because the learned Judge has also
stated “it is not necessary to grant the present
Judge’s Summons”. Thus, the application for grant of
leave was really not dealt with on merits and on the
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basis of a statement of respondent No. 3 the learned
Company Judge opined that it was not necessary for
the present and in that context liberty was granted.
The principles stated in Arjun Singh (supra),
Satyadhyan Ghosal (supra) and the other
authorities clearly spell out that principle of res
judicata operates at the successive stages in the
same litigation but, the basic foundation of res
judicata rests on delineation of merits and it has at
least an expression of an opinion for rejection of an
application. As is evident, there has been no
advertence on merits and further the learned
Company Judge has guardedly stated two facets,
namely, “not necessary to grant present Judge’s
Summons” and “liberty to applicant to apply, if
necessary”. On a seemly reading of the order we
have no shadow of doubt that the same could not
have been treated to have operated as res judicata
as has been held by the Division Bench. Therefore,
the irresistible conclusion is that the Division Bench
has fallen into serious error in dislodging the order
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granting leave by the learned Company Judge to file
a fresh suit.
39. In view of the aforesaid analysis, we allow the
appeal, set aside the order passed by the Division
Bench and restore that of the learned Company
Judge. The first respondent is directed to pay
Rs.50,000/- to the appellant towards costs of the
appeal.
……………………………….J.
[Anil R. Dave]
……………………………….J.
[Dipak Misra]
New Delhi;
December 12, 2013.
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