DHURWAS M VENKATACHALAPATHI IYER, LAKSHMANA IYER SONS Vs. CITY CINEMA CO LTD, THROUGH MANAGING DIRECTOR JCRAJAGOPALA IYER

JUDGEMENT

(1.) This appeal is concerned with the lease of a site in Madura by the plaintiff to a Cinematograph Company and with the liability of the latter to pay certain Municipal taxes. Plaintiff claims refund of certain taxes paid on the ground that the liability to pay them rests upon defendant. The agreement between the parties is contained in a lease deed of 4th November 1927. On an interpretation of the terms of this agreement, the two Courts below have come to different conclusions, the learned District Judge holding against the plaintiff. In view of the discussion which is to follow, it is unnecessary for me to discuss this point in detail or to say more than that I agree with the interpretation given by the learned District Judge. A much more important point however follows and that is a plea of res judicata raised by plaintiff. This plea was accepted by the learned District Munsif but rejected by the learned District Judge. The facts are as follows: A previous suit was filed by plaintiff against defendant in August 1928. In that suit plaintiff claimed arrears of rent with interest and also refund of Municipal taxes paid by him on defendant's account for the years 1925-26, 1926-27, 1927-28 again with interest. In the particulars given regarding the latter claim, it is shown that payment of tax for 1927-28 was made on 28 April 1928, the tax receipt being duly filed with the plaint. In para. 4 of the plaint specific reference is made to the agreement, and to defendant's liability to pay "all the taxes relating to the said plot."

(2.) To this plaint, defendant filed a written statement. In that written statement ha denied nothing, but complained that plain, tiff had rushed prematurely to Court without observing his promise to receive "the arrears" in installments of Rs. 100 over and above the rent as it fell currently due. No reference at all was made to the Municipal taxes. The only contest raised was regarding the liability to pay interest and the Court was asked to pass a decree directing payment of the principal either in installments or at a year's interval. On this pleading, the suit did not proceed to trial, but by consent a decree was passed for the plaintiff for the amount claimed, with costs, payment to be made at the rate of Rs. 400 a month. On these facts plaintiff claims that liability to pay the Municipal taxes is res judicata. The learned District Judge dismisses this plea in two short sentences: I do not think this decision will operate as res judicata, for it was a consent decree and the question of liability for taxes was not put in issue by the defendant. It is possible that the defendant may have agreed to pay these taxes for the sake of peace.

(3.) It seems to me that this is to deal with the matter far too summarily. It is well known that consent decrees cannot, merely because they are consent decrees, prevent the application of the doctrine of res judicata. Very often, no doubt, they do prevent it, but that is because there is nothing to show that the parties in consenting to a decree, really intended that the decree should be the final decision of their disputes. See Appalanarasiah Chetty V/s. Chittavadu where a ryot consented to a decree in return for the plaintiff's promise to release his crops from attachment. In that case the ryot had filed no written statement and had already succeeded in two Courts on the question at issue the rate of rent. But what are the facts here? The plaintiff asserts in his plaint that the defendant has agreed to pay the taxes. The defendant does not deny that fact. Under Order 8, Rule 5 therefore, defendant must be deemed to have admitted it. He does not put the matter in issue because he has no contention to raise. When he consents to a decree, he is thinking no doubt only of the relief of installments, but he has already decided at the stage of presenting his written statement that the dispute so far as it regards liability to pay the principal amount of the taxes is to be settled in plaintiff's favour without any contest. It is impossible, I think, in these circumstances to hold that defendant did not intend the decree to decide that dispute once for all in plaintiff's favour. It was argued by Mr. Rajah Iyer that defendant ought not to be allowed to take advantage of the fact that the Court did not itself adjudicate this question of liability to raise it in the second suit though he did not raise it in the first. The best answer to this argument is given in the words of the Privy Council in Hoystead V/s. Commissioner of Taxation (1926) A.C. 155 at page 165 : It is settled, first that the admission of a fact fundamental to the decision arrived at cannot be withdrawn and a fresh litigation started, with a view of obtaining another judgment upon a different assumption of fact; secondly, the same principle applies not only to an erroneous admission of a fundamental fact, but to an erroneous assumption as to the legal quality of that fact. Parties are not permitted to begin fresh litigations because of new view they may entertain of the law of the case, or new versions which they present as to what should be a proper apprehension by the Court of the legal result, either of the construction of the documents or the weight of certain circumstances. If this were permitted, litigation would have no end, except when legal ingenuity is exhausted. It is a principle of law that this cannot be permitted, and there is abundant authority reiterating that principle. Thirdly, the same principle, namely that of setting to rest rights of litigants, applies to the case where a point, fundamental to the decision, taken or assumed by the plaintiff, and traversable by the defendant has not been traversed. In that case also, a defendant is bound by the judgment, although it may be true enough that subsequent light or ingenuity might suggest some traverse which had not been taken. The same principle of setting parties rights to rest applies, and estoppel occurs.