This article is written by Yash Kapadia. The Hon’ble Supreme Court in Srihari Hanumandas Totala vs Hemanth Vithal Kamat & Ors. dealt with the above question at length and pronounced its judgement on 9th August 2021 while our nation’s courts have started opening up after months of lockdown. 

Introduction

The Hon’ble Supreme Court’s Division bench comprising Justice Shri Dr. D.Y. Chandrachud and Justice Shri M.R. Shah upheld an order passed by the Karnataka High Court dismissing an application filed under Order 7 Rule 11 of the Civil Procedure Code, 1908 (‘CPC’). 

Background and facts of Srihari Hanumandas Totala v. Hemanth Vithal Kamat & Ors.

Ms. Leela Vithal Kamat was the original holder of the title of a property which is in dispute. On 16 May 1996, after Ms Leela’s death, the suit property was mutated in the name of her legal heirs i.e. the first respondent in this case and his brother. 

The first respondent and his brother availed a loan from Karnataka State Finance Corporation (“KSFC”) and mortgaged the said suit property as security for the purpose of repaying the loan amount. However, as the loan taken could not be repaid by them, KSFC decided to auction the property.

The third respondent herein, being the predecessor-in-interest of the appellant, furnished the highest successful bid of Rs. 15,00,000/- after which a sale deed dated 8th August 2006 of the suit property was executed in favour of the third respondent. Undeterred by the sale deed being executed, the first respondent and his brother did not hand over the possession of the said suit property. 

2007 suit filed (OS No. 103/2007)

Under those circumstances, a suit dated 13th March 2007 (“2007 suit’) for possession was filed by the third respondent who could not get possession of the suit property despite a successful bid. The first respondent, who was the second defendant, filed a written statement raising his defences. He stated through his written statement that KSFC had no authority whatsoever to keep the suit property on sale. The first respondent in this case (and second in the case we speak about) did not in any way avail a loan or had any sort of deal or transaction with KFSC. No documents were executed or signed keeping the suit property as security.

2008 suit filed (OS No. 138/2008)

Another suit was filed in 2008 (“2008 suit”), for declaration, partition, possession, and for a consequential relief of injunction. The sale deed which was executed by KSFC in favour of the third respondent was challenged on the ground that KSFC had no right to hold a sale for the said suit property. 

It was prayed by him that the suit property must be divided and possession of his share must be given to him. In the plaint, it was asserted that the suit property was mortgaged with KFSc without consent of all parties and no due diligence was carried out to ascertain who the title of the property belonged to. Even then, KSFC accepted the suit property as a security for the loan availed. 

The first respondent also never consented to mortgage the property. In fact, only when he appeared in the 2007 suit (OS No. 103/2007) filed by the third respondent, it was learnt that a sale deed was executed between KSFC and the third respondent. 

On 26th February 2009, the trial court Judge passed a judgement that the 2007 suit (OS No. 103/2007) instituted by the third respondent and passed directions that the defendants therein (i.e. the first respondent herein and his brother) should hand over quiet, vacant and peaceful possession of the suit property to the Plaintiff.

Appeal in Karnataka High Court

The first respondent appealed against the aforesaid judgement before the High Court of Karnataka. The third respondent filed an application under Section 10 of the CPC for staying the suit proceedings of 2008 on the grounds that the issues involved in the 2008 suit were directly similar to the issues in the 2007 suit. The trial judge also held that the main issues involved in the 2007 suit filed for declaration of possession by the first respondent were directly and substantially the same. Hence, the appeal stood dismissed and the Court upheld the trial court judgement.

A suit under Order 7 Rule 11

After the Hon’ble High Court passed its judgement, the appellant who purchased the suit property filed an application under Order 7 Rule 11 of the Civil Procedure Code, 1908 by stating that there was non-payment of court fee, cause of action was not disclosed and the suit had to be rejected as it barred by res judicata because the submissions relating to the validity of the sale deed and the issue of the title were raised in the 2007 suit. The said application was also dismissed.

Revision petition

The appellant filed a revision petition before the High Court. The High Court dismissed the appeal upholding the reasoning of the Trial Court on all the three grounds raised in the Order 7 Rule 11 application.

It is pertinent to note that the High Court placed reliance on Supreme Court’s decision in Soumitra Kumar Sen v. Shyamal Kumar Sen and observed that the learned Trial Judge was of the opinion that the application filed under Order 7 Rule 11(d) on the ground of res judicata cannot be decided by perusing into the averments in the plaint. 

Any plaint can be rejected under Order 7 Rule 11 only if it was not maintainable on the basis of the averments the plaint consisted of. Hence, after the High Court dismissed the appellant’s revision petition, he approached the Supreme Court to challenge the order of the High Court. 

Submission by the Appellant

The Appellant stated in his appeal that the issue that concerns the title of the property stood adjudicated in favour of the third respondent in the 2007 suit and the decree for possession was upheld by the High Court. Hence, the 2008 suit frames similar issues and challenges the same sale deed is not deemed to be maintainable and is thereby barred by following the principles of res judicata. 

Moreover, it was also stated that the appellant raised the issue of the sale deed executed between KSFC and the third respondent as invalid. The submission is that the original sale deed executed by KSFC is of 8 August 2006.

Issue

Whether res judicata can be the basis or ground for rejection of the plaint?

Judgement 

The Hon’ble Supreme Court interpreted the law laid down in Order 7 Rule 11 and the concept of res judicata.   

Order 7 Rule 11(d) of CPC states that a plaint shall be rejected “where the suit appears from the statement in the plaint to be barred by any law”. Therefore, to ascertain if a suit is barred by any law, it is the statement in a plaint that has to be analyzed and interpreted. Any Court while deciding such applications under Order 7 Rule 11(d) must be mindful only to the averments in the plaint. Whether a particular suit is barred by any law must be ascertained from the statements in a plaint and not on the foundation of any other submission before the court, including the written statement in the case.

The court further referred to Section 11 of the CPC which is pasted below: 

“11. Res judicata.—No Court shall try any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties, or between parties under whom they or any of them claim, litigating under the same title, in a Court competent to try such subsequent suit or the suit in which such issue has been subsequently raised, and has been heard and finally decided by such Court.”

The Supreme Court further relied upon the judgement of V. Rajeshwari v. T.C. Saravanabava, wherein the Supreme Court opined on the plea of res judicata and the requisites that would be necessary in order to prove the plea. It was held in this case that it is an utmost requisite and obligatory to make reference to the issues, pleadings and the judgment of the ‘former suit’ whilst adjudicating on a plea of res judicata.

In summary, after relying on the landmark judgements like Kamala v. KT Eshwara Sa and Church of Christ Charitable Trust & Educational Charitable Society v. Ponniamman Educational Trust, the Supreme Court held that the following are the guidelines/ approach to be taken in such a scenario: 

• • “In order to reject a plaint on the grounds that the particular suit is barred by any law, the averments and only that in the plaint would have to be referred;

• While deciding the merits of the application the defence of the Defendant shall not be taken into consideration;

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

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

The Court further stated that at the time of the 2008 suit being filed by the first respondent there was no final order or judgement passed in the 2007 suit. The issues that were raised in the 2007 suit had not been adjudicated at that time. 

Hence, the plaint did not in whatsoever manner reveal any fact that would let the court conclude that it deserved to be rejected on the ground that it is barred by principles of res judicata. The lower courts were right in holding that they would have to go beyond the averments of the plaint and peruse the pleadings and judgment and decree in the 2007 suit to take the arguments raised by the appellant into consideration. 

The Supreme Court opined that a court should not try any suit or issue in which the matter that is directly in issue has been directly or indirectly heard and decided in a ‘former suit’. Therefore, for the purpose of adjudicating on the issue of res judicata it is necessary that the same issue (that is already raised in the suit) has been adjudicated in the former suit.

Conclusion

The Supreme court opined that an Order 7 Rule 11 application must be decided within the four corners of the plaint and nothing beyond that. It was therefore held that the Trial and High Court were correct in rejecting the application and therefore the appeal filed before it stood dismissed. 

The Supreme Court has yet again interpreted the scope of rejection under Order 7 Rule 11(d) relying on various minute aspects laid down through various judicial precedents which can be referred to in the order copy of this judgement here. 

Lastly, the bench of Justice Dr. D.Y. Chandrachud and Justice M.R. Shah gave a strong negatory response in matters where the court posed a question of whether the plea of res judicata is a valid ground to reject a plaint under an Order 7 Rule 11(d) application. It is also pertinent to mention here that the Hon’ble Supreme Court granted liberty to the appellant who claimed to be the assignee of the purchaser of the suit property to put forth the issue of maintainability of the 2008 suit (filed before the Additional Civil Judge, Belgaum in OS No. 138/2008) which was directed to be decided within 3 months from the date of submission of preliminary issues. 

LawSikho has created a telegram group for exchanging legal knowledge, referrals, and various opportunities. You can click on this link and join:

https://t.me/joinchat/J_0YrBa4IBSHdpuTfQO_sA

Follow us on Instagram and subscribe to our YouTube channel for more amazing legal content.