Suit Cannot Be Dismissed On Res Judicata Without Hearing The Party | Bombay High Court Slams Trial Court For Breach Of Natural Justice
Sanchayita Lahkar
The High Court of Judicature at Bombay Division Bench of Justice M.S. Sonak and Justice Jitendra Jain has set aside the judgment and decree of a learned Single Judge that dismissed a civil suit on the ground of res judicata without the issue being raised in the written statement or framed during the trial. The Division Bench found that the appellant was denied an adequate opportunity to contest the additional issue of res judicata, which was introduced only at the stage of final judgment. The Bench held that "since we are satisfied that the procedure adopted was not entirely consistent with the principles of natural justice, the impugned judgment and decree are liable to be set aside and are hereby set aside."
In its final direction, the Division Bench remanded the matter to the learned Single Judge for a fresh decision in accordance with law. The Bench noted that while the Single Judge may formulate an issue relating to res judicata, both parties must be provided a fair opportunity to address it. The appeal was accordingly allowed without any costs.
The appellant, M/s. Unique Integrated Transport & Management Consultancies Pvt. Ltd., filed Suit No. 1165 of 1996 against Mahanagar Telephone Nigam Ltd. and others, raising monetary claims under four separate contracts. The respondents/defendants initially failed to appoint arbitrators under the terms of the contracts. Eventually, arbitration proceedings were conducted, and four arbitral awards were rendered on 18 July 1994, 12 May 1995, 22 February 2000, and 23 February 2000.
The appellant filed the present suit seeking recovery of amounts related to the contracts, including alleged wrongful encashment of bank guarantees, denial and delay in payments of arbitral awards, and other associated claims. In response, the respondents filed a written statement dated 24 January 1997. Among the preliminary objections raised was that the suit was not maintainable under the summary procedure of Order XXXVII of the Code of Civil Procedure, 1908 (CPC). However, the written statement did not plead res judicata or any analogous principle as a ground for rejecting the suit.
Subsequently, based on the draft issues submitted by the plaintiff’s counsel, the learned Single Judge framed issues on 14 January 2011. The issues concerned allegations of wrongful denial of arbitration, coercion to extend expired guarantees, fraudulent procurement of bank guarantee extensions, concealment of payment facts, and claims for compensation, pain, and suffering caused to the plaintiff and its directors. Notably, no issue of res judicata was included in the framed issues.
The trial proceeded with oral and documentary evidence on the framed issues. At the stage of final judgment, however, the learned Single Judge observed that "the most important issue not having been framed" was the bar of res judicata under Section 11 of the CPC. Citing Order XIV Rule 5 of the CPC, the Court framed an additional issue on maintainability of the suit due to res judicata and proceeded to dismiss the suit by invoking this doctrine.
The appellant's counsel, Dr. K.K. Khanna, argued before the Division Bench that the invocation of res judicata was procedurally flawed. He pointed out that no plea of res judicata had been raised in the written statement, nor had any issue on it been framed prior to trial. Dr. Khanna further submitted that the suit had been dismissed without affording the plaintiff an opportunity to contest or lead evidence on the additional issue.
On the other hand, Mr. Niranjan Shimpi, appearing for the respondents, contended that the claims raised in the suit had already been adjudicated in the four arbitral proceedings and were therefore barred by res judicata or analogous principles. He argued that the learned Single Judge had correctly dismissed the suit after detailed consideration of this aspect.
The Division Bench considered the arguments and examined the relevant record, including the pleadings, issues framed, and the impugned judgment and decree dated 26 September 2012. The Bench found that the issue of res judicata was never raised in the pleadings nor brought up during the framing of issues. Despite this, the Single Judge introduced the issue only in the final judgment, thereby denying the appellant a chance to respond to it.
"No issue of res judicata was framed because such an issue was never raised in the written statement or otherwise urged at the stage of settlement of issues." The Division Bench observed that the parties, including the appellant, had no notice that res judicata would be invoked and therefore had no opportunity to address it.
The Bench referred to Order XIV Rule 3 and Rule 5 of the CPC to state the Court's power to frame additional issues at any time before passing a decree. "While the Court unquestionably has the power to frame additional issues... it is equally imperative that the parties be provided with a sufficient opportunity to address these new or altered issues." The judgment stressed that procedural fairness must be followed.
Quoting the Supreme Court's observations in V Rajeshwari v. T.C. Saravanabava, the Bench noted: "It is, therefore, necessary that the foundation for the plea must be laid in the pleadings, and then an issue must be framed and tried." The Bench held that raising the issue for the first time in judgment was improper.
The Division Bench further referred to Prem Kishore v. Brahm Prakash, stating that "res judicata does not strike at the root of jurisdiction... it is a rule of estoppel by judgment based on public policy." Therefore, due process requires that the affected party be given an opportunity to contest the plea.
The Court reiterated that the plea of res judicata depends on identity of cause of action in two suits, and hence, "such pleas cannot be left to be determined by mere speculation or inferring by a process of deduction." The Bench criticized the approach of the Single Judge in relying solely on the arbitral awards without full procedural compliance.
It was also recorded that "the appellant/plaintiff was caught by surprise... No opportunity was given to the appellant to address this issue or to produce any evidence." This, the Court held, was inconsistent with the principles of natural justice.
The Court concluded by holding: "Since we are satisfied that the procedure adopted was not entirely consistent with the principles of natural justice, the impugned judgment and decree are liable to be set aside and are hereby set aside." The appeal was allowed.
Further, the Bench directed that the matter be remanded to the learned Single Judge for fresh adjudication in accordance with law. "The matter is remanded to the learned Single Judge for deciding the Suit No. 1165 of 1996 afresh in accordance with law and on its own merits."
The Court clarified that the learned Single Judge may, if appropriate, frame an issue on res judicata as outlined earlier. However, "even after framing such an issue, both parties must be afforded adequate opportunity to address it." The discretion to confine further evidence to that issue was left with the Single Judge.
The operative order stated: "The impugned judgment and decree are set aside, and the matter is remanded for the decision of the learned Single Judge." The Court added that all contentions on merits were left open for the parties to argue.
In disposing of the appeal, the Division Bench recorded: "This appeal is allowed in the above terms without any costs for the order."
Advocates Representing the Parties:
For the Petitioners: Dr. K.K. Khanna, Advocate
For the Respondents: Mr. Niranjan Shimpi, Advocate
Case Title: M/s Unique Integrated Transport & Management Consultancies Pvt. Ltd. v. Mahanagar Telephone Nigam Ltd. & Ors.
Neutral Citation: 2025: BHC-OS:10200-DB
Case Number: Appeal No. 39 of 2013 in Suit No. 1165 of 1996
Bench: Justice M.S. Sonak and Justice Jitendra Jain
