L BISHUN DAS Vs. LLAXMI NARAIN

JUDGEMENT

(1.) Of the two adjoining premises situate at the Mall, Kanpur, and bearing municipal Nos. 18/53 and 18/54, the former was being occupied by the defendant- applicant Bishan Das, who carried on the business of selling fresh and dried fruits under the name and style of "Kashmir Fruit Mart", the latter was in the occupation of the plaintiff opposite party, Lakshmi Narain, who carried on the business of a general merchant under the name and style of Messrs. Chotey Lal and Sons. The cent of no, 18/53 was higher than the rent of No. 18/54-the difference between the rent of the two premises being Rs. 15 per month. It appears that the business of Bishan Das prospered and he found no. 18/53 too small for his requirements. Bishan Das, accordingly, shifted to another nearby shop bearing municipal No. 18/169. He then came to know that certain other persons were negotiating with the land-lord of no. 18/53 for taking it on rent with a view to set up a rival business of selling fresh and dried fruits. Bishan Das thought that his custom would be affected to his prejudice, if a rival business was set up in No. 18/53. He, therefore, persuaded plaintiff Lakshmi Narain to take No. l8/53 on rent and occupy it himself for his business. The parties entered into an agreement on 11 April 1935 which was subsequently registered. According to this agreement in consideration of Lakshmi Narain promising: (1) to occupy No. 18/53 as a tenant and to keep it in his occupation for a period of not less than three years; (2) not to carry on the business of selling fresh and dried fruits; and (3) to pay damages to Bishan Das at the rate of Rs. 15 per month for the period during which Lakshmi Narain did not remain in occupation of no. 18/53 during the period of three years from the date of the agreement. Bishan Das agreed to pay Rs. 15 a month to Lakshmi Narain so long as Lakshmi Narain remained in occupation of No. 18/53, to compensate Lakshhmi Narain for the excess rent which Lakshmi Narain would be required to pay on account of shifting from 18/54 to 18/53. Bishan Das continued to pay Rs. 15 a month to Lakshmi Narain in accordance with the agreement up to December 1987, when he stopped the payment. Lakshmi Narain, therefore, brought a suit in the Court of Small Causes at Kanpur, which was registered as suit No. 416 of 1940, for the recovery of the amount payable under the agreement for two years beginning from January 1938, to December 1939. The suit was defended mainly on the ground that there was a novation of the contract dated 11 April 1935, as a result of which the liability for payment of any amount under that contract, after the expiry of three years from the date of the contract, was given up. The Court of first instance found that the novation was proved and, therefore, decreed the suit for a sum of Rs. 45 only, being the amount payable for the period of three months which fell within the period of three years stipulated under the agreement dated n April, 1935. The decree of the Court of first instance was modified by this Court in Civil Revision No. 285 of 1942 on 3rd November 1943, and it was held that evidence of novation was inadmissible and, therefore, novation was not proved. It was further held that the liability of Bishan Das continued even after the expiry of three years. The actual words used in the judgment of this Court were: It has to be conceded that if the terms of the original contract remain intact, the plaintiff would be entitled to the amount claimed by him. Bishan Das again failed to make the payments in accordance with the contract and the suit giving rise to this application in revision was instituted to recover the amount payable, under the agreement for the period of three years preceding the suit. The suit was defended on the ground that the contract was not enforceable for more than three years, and, further, that there was no consideration for the agreement sought to be enforced in respect of the period after the expiry of the stipulated period of three years. Both these pleas have been overruled by the Court below. The Court below has further held that the plea to the effect that the liability under the contract is not enforceable after the expiry of three years is barred by the rule of res judicata in view of the decision in suit No. 416 of 1940. Aggrieved by this decision the defendant Bishan Das has come up in revision to this Court under Section 25, Provincial Small Cause Courts Act.

(2.) The pleas urged in the Court below against the plaintiff's claim have not been repeated before me. Mr. Pearey Lal Bannerji sought to attack the judgment and the decree of the Court below on a fresh ground which was not pleaded nor argued before the learned Small Cause Court Judge. He wanted to contend that the contract was void under Section 27, Contract Act, being in restraint of trade, He began by stating that there was a stumbling block in this way, namely, that this point was not argued in the Court below. I was willing to permit him to raise this point, inasmuch as it related to a pure question of law arising out of admitted facts, if there was no other bar to this plea being put forward. It appeared to me, however, that this plea was barred by the rule of res judicata, and I indicated this to Mr. Banerji. Mr. Banerji contends that the plea is not barred by the rule of res judicata and he relies on a decision of the Calcutta High Courts in Gnanada Govindo Vs. Nalini Bala Debi A.I.R. (13) 1926 Cal. 650 in which it was held that an issue decided for the purposes of determining the liability for the payment of rent for a particular period does not operate as res judicata in a subsequent suit where the liability for the payment of rent for a different period is required to be determined. Mr. Banerji contends that the ratio of this decision applies to the present case. With profound respect to the learned Judges who decided this Calcutta case, I am unable to concur with their views. The judgment of the Court was delivered by Mukerji J. and Suhrawardy J. agreed with it. Mukerji J. stated the rule of res judicataas applicable to such cases in the following words: The essence of the doctrine of res judicata is that where a material issue has been tried and determined between the same parties in a proper suit and in a proper Court as to the status of one of them in relation to the other or as to the right or title claimed by one of them against the other, the same question cannot be agitated by them again in another suit: Krishna Behari Roy V/s. Bunwari Lall 1 Cal. 144. In the case of suits for rent or other recurring liability, the causes of action for suits for successive periods are different. In the case of such suits, for the doctrine to apply, it will have to be shown that the question of right or liability not merely for the period in the previous suit, but that for all times or once for all was directly and substantially in issue and was tried and determined. If a direct issue on the point was raised and decided the decision would be res judicata in respect of any suit for a subsequent period: Nubo V/s. Foyzbuksh 1 Cal. 202; Vishnu V/s. Banding 26 Bom. 25; Natesa V/s. Venkatarama 30 Mad. 510; Dwarka Das V/s. Akhay Singh 30 All. 470. If the decision falls short of that requisite and if the general question was gone into and decided merely for the purpose of deciding the right or liability for the period involved in the suit, then the issue was raised not directly and substantially but collaterally or incidentally. In a suit for rent, no issues need be framed, but where issues are framed the non-existence of a direct issue of this character has to be seriously taken into account in determining whether the question of right of liability for all times was really directly and substantially in issue. The first portion of the statement of the rule is taken from a passage in the judgment of their Lordships of the Judicial Committee in Krishna Behari Roy V/s. Bunwari Lall 1 Cal. 144. It is to be noted in this connection that their Lordships of the Judicial Committee were interpreting Section 2, Civil P.C. of 1859, being Act VIII of 1859; the language of this section materially differs from the language of Section 11 of the present Code of 1908. Under the old Code of 1859, the bar of res judicata depended upon the identity of causes of action, whereas under the present Code the bar depends upon the identity of issues raised in the two cases. Moreover, Section 2 of the old Code did not include the rule of constructive res judicata, whereas Section 11 has been enacted to give a statutory recognition to the rule of constructive res judicata also. Explanation 4 appended to the section provides: Any matter which might and ought to have been made a ground of defence and attack in such former suit shall be deemed to have been directly and substantially in issue in such suit. Mukerji J. appears to have been of the opinion that the applicability of the rule of res judicata depends upon the identity of causes of action and this is the basis of his entire decision. This was so under the old law, but this is not so under the present Code. This decision cannot, therefore, be regarded to contain an authoritative interpretation of Section 11, Civil P.C., whereunder the applicability of the rule depends upon the identity of the issue requiring determination with the issue previously determined, either expressly or constructively. The learned Judge has referred to no authority in support of his observation that if the general question was gone into and decided merely for the purpose of deciding the right or liability for the period involved in the suit, then the issue was raised not directly and substantially but collaterally and incidentally.

(3.) In my judgment, if the general question was decided for the purpose of determining the right or liability, even though only for the period involved in the earlier suit, it cannot be regarded to have been decided merely incidentally and collaterally. The general question would be a matter directly and substantially in issue because its decision would be necessary for determining the right or liability required to be determined in the suit and it would not be possible to determine such right or liability without adjudicating upon the issue relating to the general question. As pointed out by Sir Ashutosh Mookerji J. in Lilabati Misrain V/s. Bishun Chobey 6 C.L.J. 621 at p. 630 an estoppel is not confined to the judgments but extends to all facts involved in it as necessary steps or ground work, and as explained by the learned Judges of the Madras High Court in Narayanan Chetty V/s. Kannammai Achi 28 Mad. 338, a judgment operates by way of estoppel as regards all the findings which are essential to sustain the judgment. This principle has been recognised by their Lordships of the Judicial Committee in Pahalwan Singh V/s. Maharaja Muhessur Buksh 12 Beng. L.R. 391 and by the Supreme Court of the United States in United States V/s. County Court (1886) 122 U.S. 306. The latter case affirmed the view taken In Burbi V/s. Shannon (1868) 99 Mass. 200, that the estoppel is not confined to the judgment but extends to all facts involved in it as necessary steps or the groundwork upon which it must have been founded.