CARR-LAZARUS PHILLIPS Vs. ALFRED ERNEST MITCHELL

JUDGEMENT

(1.) This matter is the sequel to a previous suit (No. 1476 of 1928) between the same parties. In the former suit, the present defendants were the plaintiff's and the present plaintiffs were the defendants. The plaintiffs were suing the defendants upon a certain contract of guarantee and their case was that under that contract, Carr Lazarus Phil-dips, Arrathoon Mackertoom Arrathoon and Arrathoon Theodore Greet were liable to pay to them, as the executors of one Arrathoon Stephen, a total sum of Rs. 18 lakhs, which, by the terms of the contract in question, they had guaranteed to the extent of Its. 6 lakhs, each, in respect of a loan of Rs. 40 lakhs made by Arrathoon Stephen to J. C. Galstaun. Chat loan had been made upon the security of a mortgage of certain properties belonging to the borrower. The case for the plaintiffs in the previous suit was that, by the terms of the contract of guarantee, the guarantors were liable to pay the sum they had respectively agreed to pay, immediately on the borrower making default in payment to the lender. The defendants, on the other hand, contended that, by the terms of the guarantee their liability only came into existence, if and when the mortgage had been enforced and it had been found that there was a deficit in the amount realized upon the sale of the mortgaged properties. The previous case came before Buckland, J,, and he upheld the contentions of the plaintiffs in the suit and made a decree :in their favour. The defendants in that suit, that is to say, the present plaintiffs, thus finding that their contention with regard to the meaning of the terms of the contract of guarantee was not correct, instituted the present suit, in which they say in effect that, as the contract of guarantee has been interpreted in a manner adverse to them, it does not properly represent the real bargain between them and Arrathoon Stephen. They say that they were only induced to give the guarantee embodied in the contract upon a representation made on behalf of the lender, by one Gregory Avietick Arrathoon, that they would only be called upon to provide the sum of Rs. 6 lakhs each, making the total sum of Rs. 18 lakhs, in the last resort, should it ultimately be found that the mortgaged properties did not realize sufficient to satisfy the debt due from J. C. Galstaun to Arrathoon Stephen.

(2.) In other words, they now contend that the real agreement between them, as guarantors, and the lender, Arrathoon Stephen, was that they should only be liable to the extent of any deficit after the mortgaged properties had been sold. They accordingly pray in this suit that the terms of the contract of guarantee should be rectified so as to represent the actual bargain between the parties. This suit was, as I have said, instituted in consequence of the judgment given by Buckland, J. But at the same time, the present plaintiffs appealed against the judgment of Buckland, J., and eventually that judgment was reversed by the appeal Court here consisting of C. C. Ghose, and Page, JJ. As a result of that decision of the appeal Court, the present suit appeared to be unnecessary, as the contentions of the guarantors with regard to the meaning of the contract of guarantee had been upheld by C.C. Ghose., J, and Page, J. The present defendants however carried the other suit to the Judicial Committee of His Majesty's Privy Council, and there the Board reversed the decision of the Court of appeal here and restored the judgment of Buckland, J. Thereupon the present plaintiffs proceeded with the suit with which we are now concerned. Put shortly, the whole matter comes to this that the present plaintiffs, having found it finally decided against them that their construction of the contract of guarantee was not correct, now seek to say that, that being the case, {she contract does not represent the true agreement between them and Arrathoon Stephen. As an answer to the case made by the plaintiffs in the present suit the defendants have traversed the plaintiffs allegations with regard to the actual terms of the agreement, which were ultimately embodied in the written contract of guarantee and they have also set up a plea in bar which is contained in para. 6 of the written statement in these terms: In any event these defendants submit that the present suit is barred by estoppel and res judicata or principles analogous thereto by reason of the plaintiffs conduct and the decision in Suit No. 1476 of 1928. that is to say, the previous suit between the parties to which I have referred. In order that the point raised in that paragraph of the written statement might be disposed of, it was agreed between the parties that it should be determined as a preliminary issue, and the matter accordingly comes before me upon that question and that question alone. It is obvious that if this point is decided in favour of the defendants, that of itself would be sufficient to put an end to the suit. On the other hand, if the defendants are not untitled to rely on the plea contained in para. 6, then the suit must proceed to trial and evidence gone into upon the main question raised by the plaintiffs heroin. It is to be observed at the outset that the doctrine of res judicata is a part of the wider general principle of estoppel. As regards this preliminary point, the defendants are relying mainly on the doctrine of res judicata as a bar to the plaintiffs claim, though they also say hat the defendants are estopped from succeeding in their present claim by reason of their conduct, that is to say, their conduct in connexion with the previous suit. Mr. S.M. Bose, on behalf of the defendants, has argued that the matter is really covered by the provisions of Section 11, Civil P. C, which contains a statutory definition of "res judicata" and gives explanations with regard to the circumstances in which it operates. In particular, Mr. Bose relied upon the provisions of Expl. 4 annexed to Section 11. Section 11 roads as follows: 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 corn-potent 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.

(3.) And Expl. 4 says: Any matter which might and ought to have been made ground of defence or attack in such former suit shall be deemed to have been a matter directly and substantially in issue in such suit.