REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.  1500  OF 2019 (@SLP(C) No. 1216 OF 2016)

ASGAR & ORS.                         Appellant(s)

                                VERSUS

MOHAN VARMA & ORS.                             RESPONDENT(s)

J U D G M E N T

Dr Dhananjaya Y Chandrachud, J.

1 Leave granted.

2 This  appeal  arises  from  a  judgment  of  the  Kerala  High  Court  dated  11

December 2015. Dismissing a petition instituted by the appellants under Article 227

of the Constitution, the High Court held that the claim set up by the appellants before

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the executing court for the value of the improvements alleged to have been made by

them  on  the  land  in  dispute  under  the  Kerala  Compensation  for  Tenants

Improvements Act 19581 was barred by the principle of constructive  res judicata.

The High Court upheld the finding of the executing court that the appellants are not

entitled  to claim compensation under  Section 51 of  the Transfer  of  Property  Act

18822.  

3 The  genesis  of  the  dispute  needs  to  be  explained.  The  property

encompassing an extent of 914 acres originally belonged to Vengunadu Kovilakam

of Kollengode. True to the bounties of nature, it  comprised of coffee, cardamom,

orange and pepper plantations. On 25 November 1897, 909 acres of the property

came to be leased out to William Espants Watts Esquire for a period of 75 years. By

a subsequent transfer, the leasehold rights were transferred to and vested in Anglo

American Direct Tea Trading Corporation Limited (“Anglo American Corporation”).

On 17 October 1931, an area admeasuring 5 acres of what is described as the

bungalow site was leased out in favour of Anglo American Corporation for a period

of  43  years.  In  1945,  Anglo  American  Corporation  assigned  its  rights  over  the

property to Amalgamated Coffee Estate Limited.

4 A suit  for  partition3 was  instituted  by  the  respondents  before  the  District

Judge, Palakkad in respect of some portions of the property. The petitioners and

their predecessors-in-interest were not parties. A preliminary decree for partition was

1 “The Act of 1958” 2 The TP Act  3 (O S No. 1 of 1964)  

2

passed by the District Judge, Palakkad on 30 November 1965.

5 On 7 August 1969, Amalgamated Coffee Estate Limited assigned its rights

over 410 acres of the land to Mathew T Marattukulam, 329 acres in favour of Mrs

Annakutty Mathew and 175 acres in favour of Philomina Thomas.  

6 The lease deed of 1897 expired by efflux of time in 1972.  In spite of the fact

that the tenure of lease had ended, the above three persons assigned their rights in

respect of the property on 28 August 1978 in favour of M/s K J Plantations. On 23

June  1990,  acting  in  pursuance  of  a  Power  of  Attorney  alleged  to  have  been

executed by K J Plantations in favour of M S M Haneefa, the latter executed eight

sale deeds in favour of the petitioners and M/s South Coast Spices Export Limited.

In  1991,  M/s  K  J  Plantations  instituted  a  suit4 before  the  Subordinate  Judge,

Palakkad seeking  inter alia the setting aside of the Power of Attorney executed in

favour of M S M Haneefa and the eight sale deeds.

7 On 27 May 1995, the Subordinate Judge, Palakkad ordered the property to be

divided into a hundred equal shares of which forty were to be allotted to M/s K J

Plantations and sixty to the other assignees. An area admeasuring 274.20 acres had

been assigned to the petitioners.

8 On 21 February 2003, the District Judge, Palakkad passed a final decree in

the suit for partition. The respondents instituted Execution Petition No. 7 of 2002 in

4 O S No. 553 of 1991

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OS No. 1 of 1964 on 17 November 2008 for delivery of possession of Schedule ‘B’

property. When the Amin came to effect delivery, the appellants and other similarly

situated persons raised an obstruction.  

9 On 31 August 2009, several execution applications were filed in Execution

Petition No. 7 of 2008. Among them were execution applications 33 of 2009 (filed by

National Spices Company), 38 of 2009 (filed by the petitioners) and 41 of 2009 (filed

by  K J Plantations) under Order XXI Rule 99 of the Code of Civil Procedure 1908 5.

In their applications, the applicants  inter alia  sought a declaration that they were

entitled  to  possession  of  the  property  as  lessees  and  were  not  liable  to  be

dispossessed.  

10 The District Judge, Palakkad allowed execution applications 33, 38 and 41 of

2009  by  a  judgment  dated  6  January  2010.  The  District  Judge  held  that  the

appellants  had  established  that  they  had  a  subsisting  interest  and  were  in

possession of the property as a consequence of which the respondents were not

entitled  to delivery  of  possession.  In  view of  the order  of  the District  Court,  the

respondents, as decree holders, were held not to be entitled to the delivery of actual

physical  possession  of  the  property  and  their  remedy  would  be  to  file  a  suit

impleading the appellants as parties.

 11 Aggrieved  by  the  order  of  the  District  Judge,  Palakkad,  the  respondents

moved the High Court of Kerala in a proceeding described as Execution First Appeal

5 The CPC

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No. 12 of 2010. By its judgment dated 29 June 2012, the High Court allowed the

appeal  and,  while  upholding  the submissions  of  the respondents,  dismissed the

claim petitions filed by the appellants.  

12 On 25  July  2014,  a  Special  Leave  Petition  filed  under  Article  136  of  the

Constitution was dismissed by this Court in the following terms:  

“Heard learned senior  counsel  and learned counsel  for  the parties.  Special leave petitions are dismissed.  No order needs to be passed in Interlocutory Application No. 5 of 2014 made by the applicants - Ravi Varma Thampan and Sarada  Thampatty  -  for  impleadment  in  S.L.P.  (Civil)  No. 27268 of 2012 in view of dismissal of special leave petition and application is disposed of as such.  In so far as question of compensation of improvements made by the petitioners is concerned, petitioners are free to pursue appropriate  remedy  for  redressal  of  their  grievance  in accordance with law.”

13 On 24 October 2014, the appellants instituted fresh proceedings, numbered

as EA No. 414 of 2014 in EP No. 7 of 2008 seeking  inter alia  a direction for the

payment to them of the value of improvements over the property, before an order for

delivery  of  possession  was  made.  The  respondents,  in  reply  opposing  the

application, contended that the claim was barred by the principle of constructive res

judicata under Explanation IV of Section 11 of the CPC.  

14 By a judgment and order dated 26 June 2015, the First  Additional District

Judge dismissed the application filed by the appellants on the ground that they were

not transferees of the property and were hence disentitled to seek the value of the

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improvements alleged to have been made by them, under Section 51 of the TP Act.

During the course of the proceedings before the ADJ, it was only the claim under

Section 51 which was pressed. The claim under the Act of 1958 was not advanced.

The ADJ rejected the submission of the respondents that the claim in execution was

barred by the principle of  constructive  res judicata.  However,  on merits  the ADJ

came to the conclusion that the claim was not maintainable under Section 51 of the

TP Act.

15 A Writ Petition under Article 227 of the Constitution was instituted before the

High Court of Kerala on 3 September 20156. By its judgment and order dated 11

December 2015, the High Court dismissed the writ petition, holding inter alia that:

 (i) The  claims  advanced by  the  appellants  for  the  value  of  the  improvements

alleged to have been made on the property were barred by the principle of

constructive res judicata; and

(ii) The appellants, not being transferees, were in any event not entitled to raise

the claim under Section 51 of the TP Act.

16 Assailing the judgment of the High Court, Mr V Giri, learned Senior Counsel

urged that:

(i) Neither the District Court nor the High Court have enquired into the merits of

the claim advanced by the appellants under Section 4(1) of the Act of 1958;

6 Writ Petition (c) No. 2125 of 2015

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(ii) By the judgment of a Division Bench of the High Court in the earlier proceed-

ings, it was clarified that the court was not going into the entitlement of the ap-

pellants under Section 4(1) of the Act 1958 since “it is not a question which

arises from the order on the claim petitions”. The High Court clarified that it

was only holding that the claim of the appellants to possess leasehold rights

was without merit; (iii) When the case travelled to this Court, the appellants were granted liberty to

pursue an appropriate remedy for the redressal of their grievance in regard to

the payment of compensation for the improvements made by them, in accor-

dance with law; (iv) Once the High Court had declined to enquire into the claim of compensation

under the Act of 1958 and this Court had specifically kept open the right of re-

course to remedies under law, the principle of constructive res judicata would

have no application; (v) In Explanation IV to Section 11 of the CPC, the expression “might and ought”

has to be conjunctively construed. Hence, merely because the claim for com-

pensation under the Act of 1958 could have been raised in the earlier pro-

ceedings in the execution application, that does not debar the appellants from

filing a fresh application; (vi) The test should be whether allowing the claim to be raised could be construed

as an abuse of the process and it is only when the claim is of a nature that

might have been urged and ought to have been urged in the earlier proceed-

ings, that the bar of constructive res judicata would be attracted; (vii) The concession made by Counsel in the earlier proceedings asserting only

the claim under Section 51 of the TP Act, would not operate as an estoppel

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against the appellants from raising the claim for improvements under Section

4 of the Act of 1958; (viii) The second application moved by the appellants was of a nature which they

would have raised if the respondents had filed an application under Order XXI

Rule 97 of the CPC. Since the respondents did not file any application under

Order XXI Rule 97, but it was the appellants who had filed an application un-

der Order XXI Rule 99, the bar of constructive  res judicata  is not attracted;

and (ix) The claim of the appellants at the present stage is not in the character of

lessees (since their claim as lessees was rejected earlier) but as a judgment-

debtor who is entitled to retain possession until the value of the improvements

made by them on the land is paid under Section 4 of the Act of 1958. The ju-

ridical character in which the claim is asserted under Section 4 is hence dis-

tinct from their earlier claim as lessees entitled to possession of the land.

17 Opposing  these  submissions,  Mr  Gourab  Banerji,  learned  Senior  Counsel

submitted that:  

(i) Execution Application No. 38 of 2009 was in essence not an application under

Order XXI Rule 99 but under Order XXI Rule 97 of the CPC; (ii) Order XXI Rule 97 has been broadly interpreted by this Court to allow even a

third party to move the executing court before dispossession in pursuance of

a decree takes place; (iii) The provisions of Rules 97 to 103 of Order XXI constitute a complete code.

They provide the sole remedy for parties and for strangers to a proceeding

which has ended in a decree of the civil court;

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(iv) The adjudication which followed upon the earlier proceedings was in the na-

ture of a decree under Order XXI Rule 103. All claims that the appellants seek

to urge presently could have been and ought to have been raised in the ear-

lier proceedings. The appellants, having failed to do so, the bar of constructive

res judicata is squarely attracted; (v) The claim under the Act of 1958 ought to have been raised in the earlier pro-

ceedings because of the provisions of Section 5 of the Act of 1958. Section 5

postulates that every such claim has to be raised and adjudicated upon be-

fore the decree is passed. Hence the defence of being entitled to possession,

unless the value of the improvements is paid, should have been raised in the

earlier proceedings; (vi) The language of Order XXI Rule 101 is peremptory. The order by the High

Court constitutes a decree under Order XXI Rule 103; (vii) The question of compensation under the Act of 1958 is intrinsically connected

to the claim of the appellants to retain possession until the value of the im-

provements alleged to have been made is paid. In the previous round of pro-

ceedings, the prayer was for the retention of possession and hence the claim

could have been raised and ought to have been addressed when the decree

was passed; and (viii) The second application before the ADJ was under Section 151 of the CPC. A

conscious decision was taken by counsel representing the appellants to only

urge the claim under Section 51 of the TP Act. Once that claim was rejected, it

is not open to the appellants to press the claim under the Act of 1958 in a

fresh round of proceedings. If the issue was raised earlier, the respondents

would have been entitled to maintain a claim for a set-off under the Act of

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1958. Once the issue of possession stands concluded, it is not open to the

appellants to protect their possession, albeit on the basis of a claim for com-

pensation under the Act of 1958.          

18 The rival submissions now fall for consideration.

19 We must begin our analysis of the controversy in this appeal with a reference

to the decision rendered on 29 June 2012 by a Division Bench of the Kerala High

Court.  The First  Appeal in  execution before the Kerala High Court  arose from a

judgment of the District Judge in execution proceedings holding that the appellants

had established a subsisting interest, entitling them to continue in possession of the

property.  The appellants made the claim under a purported assignment after the

expiration of the original deed of lease in 1972. Justice K M Joseph (as the learned

Judge then was), speaking for the Division Bench held that a tenant “at sufferance”

is only entitled to protection against unlawful eviction. As assignees, the tenants at

sufferance were not entitled to any estate or property and the right to remain in

possession could not have been assigned. Consequently, the Division Bench of the

High Court held:

“56.  We need not  consider the case that  the transfers are fraudulent.  We take  the  view  that  there  was  no  estate  or property  which  could  have  been  transferred  either  by  the assignors  in  Ext.  A6 or  subsequent  assignors  on  the  said basis. Possession by itself may be treated as being changed hands unaccompanied by any legal right.”    

Concluding its discussion, the High Court observed that:

“59.  The  upshot  of  the  above  discussion  is  that  we  are

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inclined to reverse the findings and the decision rendered by the court below. We hold that the respondents cannot claim as tenants by holding over. Nor can they claim any right as tenants at sufferance. The result is that while they may have possession, it is unaccompanied by any right…”  

20 Now in  this  background,  it  is  necessary  to advert  to  the reliefs  that  were

sought by the appellants in Execution Application 38 of 2009 instituted by them in

Execution Petition 7 of 2008. The reliefs which they sought were in the following

terms:

“A) Establishing and declaring the claim of the petitioners for possession  as  lessees  over  274.20  acres  of  property included in the schedule hereunder and also included in the schedule to the execution petition;

B) Declaring  the  respondents  1  to  6  are  not  entitled  to dispossess  the  petitioners  from  the  properties  in  their possession and take actual delivery of the same;”

 21 Clearly, what the appellants sought was a declaration that their possession

was entitled to protection in their character as lessees over 274.20 acres of the land.

No claim was set  up in  the execution application on the basis  of  the provisions

contained in Section 4(1) of the Act of 1958. When the proceedings were before the

High Court, the appellants sought to urge that “it may be borne in mind” that they

would be entitled to compensation under the Act of 1958. Besides, they also invoked

Section 51 of the TP Act.  The respondents objected on the ground, as the High

Court recorded, “that such a case is not there in the claims and they cannot raise

such a claim”. Adverting to the submission of the appellants that they had a claim

under the Act of 1958, the High Court observed that:

“62. We feel that we need not go into this question, as it is not a question which arises from the order on the claim petitions.

11

In fact, whether the respondents /claimants can raise the said issue, are all matters which we will not pronounce on…”  

22 The above observations of the High Court indicate that the reason why it did

not go into the question was because it did not arise from the order on the claim

petitions. In fact, the High Court also observed that it would not pronounce judgment

on whether  the appellants were entitled to raise the issue.  While  dismissing the

Special Leave Petition against the judgment of the High Court, this Court in its order

dated  25  July  2014 observed that  “insofar  as  the  question  of  compensation  for

improvements made by the appellants is concerned, the appellants were free to

pursue an appropriate remedy for the redressal of their grievances in accordance

with law.”  These observations as contained in  the order  of  this  Court  cannot  be

construed to mean that the respondents would be deprived of their right to set up a

plea of constructive  res judicata  if the appellants were to raise such a claim. The

appellants were, as this Court observed, free to pursue the “appropriate remedy for

redressal  of  their  grievances  in  accordance  with  law.”  This  must  necessarily  be

construed to mean that all defences of the respondents upon the invocation of a

remedy by the appellants were kept open for decision. The liberty granted by this

Court was not one-sided. It encompasses both the ability of the appellants to take

recourse and of the respondents to raise necessary defences to the invocation of

the remedy. Therefore, we do not find any merit in the submission urged on behalf of

the appellants that the earlier judgment of the Kerala High Court and the order of

this Court preclude the respondents from raising the bar of constructive res judicata.

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23 Having  cleared  this  ground,  we  now  proceed  to  analyse  the  provisions

contained in the Act of 1958. The Act, as its long title indicates, has been enacted “to

make  provisions  for  payment  of  compensation  for  improvements  made  by  the

tenants in the State of Kerala”. Section 2(b) defines the expression “improvement” in

the following terms:

“(b)  "improvement"  means any work or   product  of  a work which adds to the value of the holding, is suitable to it and consistent  with  the  purpose  for  which  the  holding  is  let, mortgaged  or  occupied,  but  does  not  include  such clearances,  embankments,  leveling,  enclosures,  temporary wells and water-channels as are made by the tenant in the ordinary  course  of  cultivation  and  without  any  special expenditure or  any  other  benefit  accruing to  land from the ordinary operations of husbandry:”

Section 2(d) defines the expression “tenant” as follows:

“(d)  "tenant"  with  its  grammatical  variations  and  cognate expressions includes-  (i) a person who, as lessee, sub-lessee, mortgagee or sub- mortgagee or  in  good faith  believing  himself  to  be  lessee, sub-lessee, mortgagee of land, is in possession thereof;  (ii) a person who with the bona fide intention of attorning and paying a reasonable rent to the person entitled to cultivate or let  waste-land,  but  without  the  permission  of  such person, brings  such  land,  under  cultivation  and  is  in  occupation thereof as cultivator; and  (iii) a person who comes into possession of land belonging to another person and makes improvement thereon in the bona fide belief that he is entitled to make such improvements.”

24 The  expression  “tenant”  in  Section  2(d)  is  defined  in  a  broad  sense.  It

includes for instance, a person who in good faith, believing himself to be a lessee,

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sub-lessee or mortgagee of land, is in possession. Similarly, it  includes a person

who without the permission of a person entitled to cultivate or let waste-land brings

the  land  under  cultivation  and is  in  occupation  under  the  bona fide intention  of

attorning to and paying a reasonable rent to the person entitled to cultivate. The

definition includes a person who comes into possession of land belonging to another

and makes improvements in the  bona fide  belief that he is entitled to make those

improvements.  Similarly,  Section 3  defines certain  work  or  the products  of  work

which shall be presumed to be improvements for the purposes of the Act. Section 3

is in the following terms:  

“3.  What  are  presumed  to  be  improvements.-  Until  the contrary is shown, the following works or the products of such works  shall  be  presumed  to  be  improvements  for  the purposes of this Act:-  (a)  the  erection  of  dwelling  houses,  buildings  appurtenant there to and farm buildings;  (b) the construction of tanks, wells, channels, dams and other works for  the storage or  supply  of  water  for  agricultural  or domestic purposes;  (c) the preparation of land for irrigation;  (d) the conversion of one-crop into two-crop land; (e) the drainage, reclamation from reverse or other waters or protection from floods or  from erosion or  other damage by water, of land used for agricultural purposes, or of waste-land which is culturable;  (f)  the  reclamation,  clearance,  enclosure  or  permanent improvement of land for agricultural purposes;  (g)  the  renewal  or  reconstruction  of  any  of  the  foregoing works or alterations therein or additions thereto; and  (h) the planting or protection and maintenance of fruit trees, timber trees and other useful trees and, plants.”

25 Sections 4 and 5 have a material bearing on the present controversy and are

hence extracted below:  

14

“4.  Tenant  entitled  to  compensation  for  improvements.-(1) Every tenant shall, on eviction, be entitled to compensation for improvements which were made by him, his predecessor- in-interest or by any person not in occupation at the time of the  eviction  who  derived  title  from  either  of  them and  for which compensation had not  already been paid,  and every tenant  to  whom  compensation  is  so  due  shall, notwithstanding  the  determination  of  the  tenancy  of  the payment or tender of the mortgage money or premium, if any, be entitled to remain in possession until eviction in execution of a decree or order of court:  Provided that nothing herein contained shall be construed as affecting the provisions of the Kerala Land Conservancy Act, 1957:  Provided further that  this section shall  not  apply to tenants holding lands under the Government,  (2)  A tenant so continuing in possession shall,  during such continuance, hold as a tenant subject to the terms of his lease or mortgage, if any.  5.  Decree  in  eviction  to  be  conditional  on  payment  of compensation.- (1) In a suit  for eviction instituted against a tenant  in  which  the  plaintiff  succeeds  and  the  defendant establishes a claim for compensation due under section 4 for improvements, the court shall ascertain as provided in section 7 to 16, the amount of the compensation and shall  pass a decree declaring the amount so found due and ordering that on payment by the plaintiff  into the court of the amount so found due and also the mortgage money or the premium, as the  case may be,  the  defendant  shall  put  the  plaintiff  into possession of the land with the improvements thereon.  (2) If in such suit the court finds any sum of money due by the defendant to the plaintiff  for rent, or otherwise in respect of the tenancy, the court shall set off such sum against the sum found due under sub section (1),  and shall  pass a decree declaring  as  the  amount  payable  to  him  on  eviction  the amount, if any, remaining due to the defendant after such set- off:  Provided that the court shall not set off  any sum of money due  for  rent  as  aforesaid,  if  such  sum  is  not  legally recoverable.  (3)  The  amount  of  compensation  for  improvements  made sub-sequent  to  the  date  up  to  which  compensation  for improvements  has  been  adjudged  in  the  decree  and  the revaluation of an improvement, for which compensation has been so adjudged, when and in so far as such re-valuation may be necessary  with  reference to  the  condition  of  such

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improvement at the time of eviction as well  as any sum of money accruing due to the plaintiff  subsequent to the said date for rent, or otherwise in respect of the tenancy, shall be determined by order of the court executing the decree and the decree shall be varied in accordance with such order.  (4) Every matter arising under subsection (3) shall be deemed to be a question relating to the execution of a decree within the meaning of sub-section (1) of section 47 of the Code of Civil Procedure, 1908.”

26 Sub-section 1 of Section 4 stipulates that every tenant shall, on eviction, be

entitled  to  compensation  for  improvements  which  were  made  by  him,  or  his

predecessor-in-interest or by any person who though not in occupation at the time of

eviction, has derived title from either of them. Under sub-section 1, such a person is

entitled, notwithstanding the determination of the tenancy, to remain in possession

until eviction in execution of a decree or order of a court. Sub-section 1 of Section 5

indicates that in a suit for eviction instituted against a tenant in which the plaintiff

succeeds  and  the  defendant  establishes  a  claim for  compensation,  the  court  is

required to ascertain the amount of compensation (under Sections 7 to 16). The

court will then pass a decree declaring the amount found due and that on payment

by the plaintiff into the court of the amount found due, the defendant shall place the

plaintiff  in possession of the land with the improvements thereon. The provisions

contained in sub-section 1 of Section 5 indicate that a determination of the amount

of compensation which is payable to the tenant precedes the passing of the ultimate

decree and the plaintiff would be entitled to be placed into possession conditional on

the deposit in court of compensation found due. Sub-section 2 of Section 5 enables

the plaintiff to seek a set off on account of money due by the defendant for rent

16

against the amount which is found due to the defendant by way of compensation.

Sub-section 3 of Section 5 provides for an eventuality where improvements have

been made subsequent to the date upto which compensation for improvements has

been adjudged in the decree. On account of such improvements after the passing of

the decree, the amount due will be determined by the court executing the decree

upon which the decree shall be varied in accordance with such order.  

27 The provisions contained in the Act of 1958 came up for consideration before

a two judge Bench of this Court in Shamma Bhatt v T Ramakrishna Bhatt7. Justice

V Khalid, speaking for this Court held:  

“8…Section 5 comes into operation only when a defendant against  whom a suit  for  eviction is  instituted  establishes  a claim for compensation under the Act. The judgment of the High Court rendered in 1969 has clearly held that the value of improvement awarded was not under Section 4 of the Act but was an amount agreed by the plaintiff. The appellants cannot succeed and have not succeeded in satisfying us that they ever made a claim for compensation under Section 4 of the Act and succeeded in such a claim. Therefore their  further claim  for  getting  the  improvements  revalued  cannot  be accepted.”8      

28 In  the  present  case,  what  the  appellants  now  seek  to  assert  is  that  in

pursuance  of  the  provisions  of  Section  4(1),  they  are  entitled  to  remain  in

possession until  their  claim for compensation for the improvements made on the

land is adjudicated upon. As we have found earlier, the claim which the appellants

asserted in Execution Application 38 of 2009 was specifically for declaring that they

7 (1987) 2 SCC 416 8 Id at page 422

17

were entitled to remain in possession as lessees and that the respondents were not

entitled  to  dispossess  them from the  property  in  their  possession.  Though  they

sought to assert that claim in their character as lessees, the issue which requires

consideration is whether the claim to compensation under Section 4(1) of the Act of

1958 could have been asserted in the earlier proceedings and should have been

asserted then.  

29 The substantive part of Section 11 of the CPC together with Explanation IV

provide thus:

“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. Explanation IV-  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.”

Under Section 11, a matter which has been directly and substantially in issue in a

former suit between the same parties or between parties litigating under the same

title cannot be raised before a court subsequently, where the issue has been heard

and finally decided by a competent court. Explanation IV enacts a deeming fiction.

As a result of the fiction, a matter which “might and ought” to have been made a

ground of defence or attack in a former suit shall be deemed to have been a matter

directly and substantially in issue in such a suit. In other words, Explanation IV is

attracted when twin conditions are satisfied: the matter should be of a nature which

18

might and ought to have been made a ground of defence or attack in a former suit.

Justice S Rangarajan (as the learned Judge then was) sitting as a Single Judge of

the  Delhi  High  Court  in  Delhi  Cloth  &  General  Mills  Co.  Ltd  v  Municipal

Corporation of Delhi9 noticed this feature :  

“35…The words employed — might and ought — are cumulative; they are not in the alternative. It is a well-established rule that any plea which if taken would have been inconsistent with or destructive of the title in the earlier suit is not a matter which ought to be raised therein because even  though  it  might also  have  been  raised  in  the  alternative.  This aspect was explained by the Judicial  Committee of the Privy Council in Kameswar Pershad v. Rajkumari Ruttan Koer (I.L.R. 20 Calcutta 79 at p. 85). The possibility of merely raising it as a ground of attack or defence, at least in the alternative, is alone not sufficient; the test is one which is more compulsive, namely, that the said plea “ought” to have been taken as a ground of attack or defence. These features would of course depend upon the particular facts of each case.”10

The words “might and ought” are used in a conjunctive sense. They denote that a

matter must be of such a nature as could have been raised as a ground of defence

or attack and should have been raised in the earlier suit.

 30 The “might and ought” requirement was construed by the Privy Council in a

judgment of 1892 in Kameswar Pershad v Rajkumari Ruttun Koer11.  Lord Morris,

speaking for the Privy Council, held thus:  

“That it “might” have been, made a ground of attack is clear. That it  “ought” to have been, appears to their  Lordships to depend upon the particular fact of each case. Where matters are so dissimilar that their union might lead to confusion, the construction of the word “ought” would become important; in this  case  the  matters  were  the  same.  It  was  only  an alternative  way  of  seeking  to  impose  a  liability  upon Pun Bahadoor, and it appears to their Lordships that the matter “ought” to have been made a ground of attack in the former

9 ILR (1975) II Delhi 174 10 Id at page 194 11 1892 SCC OnLine PC 16  

19

suit, and therefore that it should be “deemed to have been a matter directly and substantially in issue” in the former suit, and is res judicata.”12

The classical dictum on the subject finds formulation in the judgment of Wigram, V C

in Henderson v Henderson13 :

“…I believe, I state the rule of the court correctly, when I say, that where a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the court  requires  the  parties  to  that  litigation  to  bring forward their  whole  case,  and  will  not  (except  under  special circumstances)  permit  the  same parties  to  open the  same subject of litigation in respect of a matter which might have been brought forward as part of the subject in contest,  but which was not brought forward only because they have, from negligence,  inadvertence,  or  even accident,  omitted part  of their case. The plea of res judicata applies, except in special cases, not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject  of  litigation  and  which  the  parties,  exercising reasonable  diligence,  might  have  brought  forward  at  the time…”    

In  Greenhalgh  v Mallard14,  Lord  Justice  Somervell,  speaking  for  the  Court  of

Appeal, held :

“…I think that on the authorities to which I will refer it would be accurate to say that  res judicata  for this purpose is not confined to the issues which the court  is actually asked to decide, but that it covers issues or facts which are so clearly part of the subject-matter of the litigation and so clearly could have been raised that it would be an abuse of the process of the court to allow a new proceeding to be started in respect of them”.

12 Id at page 238

13 67 E.R. 313 14 (1947) 2 All ER 255

20

In  Johnson  v  Gore Wood & Co (a firm)15, Lord Bingham while adverting to the

dictum in  Henderson, noted that the underlying public interest in  res judicata  (as

indeed in cause of action estoppel and issue estoppel) has a common element:

“…The  underlying  public  interest  is  the  same:  that  there should be finality in litigation and that a party should not be twice  vexed  in  the  same  matter.  This  public  interest  is reinforced  by  the  current  emphasis  on  efficiency  and economy in the conduct of litigation, in the interests of the parties and the public as a whole. The bringing of a claim or the  raising  of  a  defence in  later  proceedings  may,  without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if  it  was to be raised at all.  I would not accept that it  is necessary, before abuse may be found, to identify any additional element such as  a  collateral  attack  on  a  previous  decision  or  some dishonesty, but where those elements are present the later proceedings will be much more obviously abusive, and there will rarely be a finding of abuse unless the later proceeding involves what the court  regards as unjust  harassment of  a party.  It  is,  however,  wrong to  hold that  because a  matter could have been raised in early proceedings it should have been, so as to render the raising of  it  in later proceedings necessarily  abusive.  That  is  to  adopt  too  dogmatic  an approach to what should in my opinion be a broad, merits- based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which  could  have  been  raised  before.  As  one  cannot comprehensively  list  all  possible  forms  of  abuse,  so  one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not. Thus while I would accept that lack of funds would not ordinarily excuse a failure to  raise  in  earlier  proceedings  an  issue  which  could  and should  have  been  raised  then,  I  would  not  regard  it  as necessarily irrelevant, particularly if it appears that the lack of funds has been caused by the party against whom it is sought to claim. While the result may often be the same, it is in my view  preferable  to  ask  whether  in  all  the  circumstances  a

15 [2001] 2 WLR 72

21

party's conduct is an abuse than to ask whether the conduct is an abuse and then,  if  it  is,  to ask whether the abuse is excused  or  justified  by  special  circumstances.  Properly applied, and whatever the legitimacy of its descent, the rule has  in  my  view  a  valuable  part  to  play  in  protecting  the interests of justice.”

Lord Millett held thus:

“…It  is  one thing  to  refuse  to  allow a  party  to  relitigate  a question which has already been decided; it is quite another to  deny him the opportunity  of  litigating for  the first  time a question  which  has  not  previously  been  adjudicated  upon. This latter (though not the former) is prima facie a denial of the  citizen's  right  of  access  to  the  court  conferred  by  the common law and guaranteed by Article 6 of the Convention for  the  Protection  of  Human  Rights  and  Fundamental Freedoms (Rome, 4th. November 1950). While, therefore, the doctrine of  res judicata in all  its  branches may properly be regarded as a rule of substantive law, applicable in all save exceptional  circumstances,  the  doctrine  now  under consideration can be no more than a procedural rule based on the need to protect the process of the Court from abuse and the defendant from oppression...”

31 Mr Giri urged, relying upon the above decision of the House of Lords that in

construing the expression “might and ought”, it is necessary for the court to bear in

mind the fundamental distinction between res judicata and constructive res judicata.

He urged that whereas the former encompasses a matter which was directly and

substantially in issue in a previous suit  between the same parties and has been

adjudicated upon, the latter brings in a deeming fiction according to which a matter

which might and ought to have been advanced in a previous suit would be deemed

22

to  be  directly  and  substantially  in  issue.  He  therefore  urges  that  a  degree  of

circumspection must be exercised in the application of the principle of constructive

res judicata.

 32 We are not inclined to decide this question on a priori consideration, for the

simple  reason that  under  the CPC,  both  res  judicata  (in  the substantive  part  of

Section  11)  and  constructive  res  judicata  (in  Explanation  IV)  are  embodied  as

statutory principles of the law governing civil procedure. The fundamental policy of

the law is that there must be finality to litigation. Multiplicity of litigation enures to the

benefit, unfortunately for the decree holder, of those who seek to delay the fruits of a

decree reaching those to whom the decree is meant.  Constructive res judicata, in

the same manner as the principles underlying res judicata, is intended to ensure that

grounds  of  attack  or  defence  in  litigation  must  be  taken  in  one  of  the  same

proceeding. A party which avoids doing so does it at its own peril. In deciding as to

whether a matter might have been urged in the earlier proceedings, the court must

ask itself as to whether it could have been urged. In deciding whether the matter

ought to have been urged in the earlier proceedings, the court will have due regard

to the ambit of the earlier proceedings and the nexus which the matter bears to the

nature of the controversy. In holding that a matter ought to have been taken as a

ground of attack or defence in the earlier proceedings, the court is indicating that the

matter  is  of  such a nature and character  and bears such a connection with the

controversy in the earlier case that the failure to raise it in that proceeding would

debar the party from agitating it in the future.  

23

33 In State of U P v Nawab Hussain16, a three judge Bench of this Court noted

that the two principles of res judicata and constructive res judicata seek to achieve

the  common  objective  of  assuring  finality  to  litigation.  Justice  P  N  Shinghal

observed:

“3. The principle  of  estoppel per  rem judicatam is  a  rule  of evidence.  As  has  been  stated  in Marginson v. Blackburn Borough Council [(1939) 2 KB 426 at p. 437], it may be said to  be  “the  broader  rule  of  evidence  which  prohibits  the reassertion of a cause of action”. This doctrine is based on two  theories:  (i)  the  finality  and  conclusiveness  of  judicial decisions for the final termination of disputes in the general interest of the community as a matter of public policy, and (ii) the interest of the individual that he should be protected from multiplication of litigation. It therefore serves not only a public but  also a private purpose by obstructing the reopening of matters which have once been adjudicated upon. It is thus not permissible to obtain a second judgment for  the same civil relief on the same cause of action, for otherwise the spirit of contentiousness  may  give  rise  to  conflicting  judgments  of equal  authority,  lead to multiplicity of  actions and bring the administration  of  justice  into  disrepute.  It  is  the  cause  of action  which  gives  rise  to  an  action,  and  that  is  why  it  is necessary for the courts to recognise that a cause of action which results in a judgment must lose its identity and vitality and  merge  in  the  judgment  when  pronounced.  It  cannot therefore survive the judgment, or give rise to another cause of action on the same facts.  This  is what is known as the general principle of res judicata.

4. But it may be that the same set of facts may give rise to two or more causes of action. If in such a case a person is allowed to choose and sue upon one cause of action at one time and to reserve the other for subsequent litigation, that would  aggravate  the  burden  of  litigation.  Courts  have therefore treated such a course of action as an abuse of its process  and  Somervell,  L.J.,  has  answered  it  as  follows in Greenhalgh v. Mallard [(1947) All ER 255 at p. 257] : “I think that on the authorities to which I will refer it would be accurate  to  say  that  res  judicata  for  this  purpose  is  not

16 (1977) 2 SCC 806

24

confined to the issues which the court  is actually asked to decide, but that it covers issues or facts which are so clearly part of the subject-matter of the litigation and so clearly could have been raised that it would be an abuse of the process of the court to allow a new proceeding to be started in respect of them.” This  is  therefore  another  and  an  equally  necessary  and efficacious aspect of the same principle, for it helps in raising the  bar  of  res  judicata  by  suitably  construing  the  general principle of subduing a cantankerous litigant. That is why this other rule has some times been referred to as constructive res judicata which, in reality, is an aspect or amplification of the general principle.”17

A Constitution Bench of this Court in Direct Recruit Class II Engg. Officers' Assn.

v State of Maharashtra18 referred to the decision of a three judge bench of this

Court  in Forward  Construction  Co. v Prabhat  Mandal  (Regd.),  Andheri19 and

noted the following position in law:  

“20…an adjudication is conclusive and final not only as to the actual  matter  determined  but  as  to  every  other  matter which the parties might and ought to have litigated and have  had  decided  as  incidental  to  or  essentially connected with subject matter of the litigation and every matter coming into the legitimate purview of the original action  both  in  respect  of  the  matters  of  claim  and defence…”20

                                                                 (emphasis supplied)

34 In  determining  as  to  whether  the  bar  of  constructive  res  judicata  stands

attracted, it is necessary to advert to the earlier application which was filed by the

appellants in the execution proceedings. The appellants styled the application as

17 Id at pages 809-810 18 (1990) 2 SCC 715 19 (1986) 1 SCC 100 20 Id at page 112

25

one under Order XXI Rule 99 of the CPC but that, in our view, is not determinative of

the true nature of the application. Order XXI Rule 97 provides as follows:  

“97.  Resistance or  obstruction to possession of  immovable property.—(1)  Where  the  holder  of  a  decree  for  the possession of  immovable property  or  the purchaser of  any such property  sold  in  execution  of  a  decree is  resisted  or obstructed  by  any  person  in  obtaining  possession  of  the property,  he  may  make  an  application  to  the  Court complaining of such resistance or obstruction. [(2) Where any application  is  made  under  sub-rule  (1),  the  Court  shall proceed to adjudicate upon the application in accordance with the provisions herein contained.]”

Order XXI Rule 99 provides thus:

“[99.  Dispossession  by  decree-holder  or  purchaser.—(1) Where  any  person  other  than  the  judgment  debtor  is dispossessed  of  immovable  property  by  the  holder  of  a decree for the possession of  such property or,  where such property  has  been  sold  in  execution  of  a  decree,  by  the purchaser thereof, he may make an application to the Court complaining of such dispossession.  (2)  Where  any  such  application  is  made,  the  Court  shall proceed to adjudicate upon the application in accordance with the provisions herein contained.]”

35 In Brahmdeo Chaudhary v Rishikesh Prasad Jaiswal21, this Court held that

the view taken by the High Court that the only remedy available to a stranger to a

decree who claims an independent right, title or interest in the property is to pursue

the remedy under Order XXI Rule 99, was unsustainable.  The court  held that  a

stranger to a decree is entitled to agitate his/her grievance and claim for adjudication

for an independent right, title and interest in the decretal property, even after being

dispossessed in accordance with Order XXI Rule 99. Order XXI Rule 97 deals with

21 (1997) 3 SCC 694  

26

the stage which is prior to the actual delivery of possession and the grievance of the

obstructionist can be adjudicated upon before the actual delivery of possession to

the decree holder. In other words, both sets of remedies are available to a stranger

to the decree. Justice S B Majmudar, speaking for the Court held:

“9…the High Court has totally ignored the scheme of Order 21, Rule 97 in this connection by taking the view that only remedy of such stranger to the decree lies under Order 21, Rule 99 and he has no locus standi to get adjudication of his claim prior to the actual delivery of possession to the decree- holder in the execution proceedings. The view taken by the High Court in this connection also results in patent breach of principles of natural justice as the obstructionist, who alleges to have any independent right, title and interest in the decretal property and who is admittedly not a party to the decree even though making a grievance right in time before the warrant for execution is  actually  executed,  would be told  off  the gates and his grievance would not be considered or heard on merits and he would be thrown off lock, stock and barrel by use of police force by the decree-holder. That would obviously result in irreparable injury  to such obstructionist  whose grievance would go overboard without being considered on merits and such  obstructionist  would  be  condemned  totally  unheard. Such an order  of  the executing court,  therefore,  would fail also on the ground of non-compliance with basic principles of natural  justice.  On  the  contrary  the  statutory  scheme envisaged by Order 21,  Rule 97 CPC as discussed earlier clearly guards against such a pitfall and provides a statutory remedy  both  to  the  decree-holder  as  well  as  to  the obstructionist to have their respective say in the matter and to get proper adjudication before the executing court and it  is that  adjudication which subject  to  the hierarchy of  appeals would  remain  binding  between  the  parties  to  such proceedings and separate suit would be barred with a view to seeing  that  multiplicity  of  proceedings  and  parallel proceedings are avoided and the gamut laid down by Order 21, Rules 97 to 103 would remain a complete code and the sole  remedy  for  the  parties  concerned  to  have  their grievances  once  and  for  all  finally  resolved  in  execution proceedings themselves.”22

22 Id at page 702

27

36 Under Order XXI Rule 10123, all questions including questions relating to right,

title  and  interest  in  the  property  arising  between parties  to  a  proceeding  on  an

application under Rule 97 or Rule 99 or their representatives shall be determined by

the court and not by a separate suit. In  Shreenath v Rajesh24,  Justice A P Misra,

speaking for a two judge Bench of this Court, while interpreting the expression “any

person” in Rule 97, held thus :

“10…We find the expression “any person” under sub-clause (1) is used deliberately for widening the scope of power so that the executing court could adjudicate the claim made in any such application under Order 21 Rule 97. Thus by the use of the words “any person” it includes all persons resisting the delivery of possession, claiming right in the property, even those not  bound by  the  decree,  including tenants  or  other persons claiming right on their own, including a stranger.”25

37 These principles have been reiterated in  Har Vilas  v Mahendra Nath26,  in

which it has been held that the provisions of Order XXI Rule 99 will not defeat the

right  of  a  third  person claiming to  be in  possession of  the property  forming the

subject matter of a decree in his own right to get his objection decided under Rule

97, at a stage prior to dispossession.

38 In  a  succinct  elucidation  of  the  law  in  Nusserwanji  E  Poonegar  v  Mrs

23  Order XXI Rule 101 provides thus :  Question to be determined.- All  questions (including questions relating to  right,  title or interest  in  the property)

arising between the parties to a proceeding on an application under rule 97 or rule 99 or their representatives,  and relevant to the adjudication of the application, shall be determined by the court dealing with the application, and not by a separate suit and for this purpose, the court shall, notwithstanding anything to the contrary contained in any other law for the time being in force, be deemed to have jurisdiction to decide such questions. Order XXI Rule 103 provides thus :  

Orders to be treated as decrees.- Where any application has been adjudicated upon under rule 98 or rule 100, the order made thereon shall have the same force and be subject to the same conditions as to an appeal or otherwise as if it were a decree.

24 (1998) 4 SCC 543 25 Id at page 549 26 (2011) 15 SCC 377

28

Shirinbai F Bbesania27,  Justice R A Jahagirdar as a Single Judge of the Bombay

High Court interpreted Rule 101 of Order XXI:     

“10. From the rule extracted above, it is easily seen that the language of the rule is peremptory and the powers given to the  executing  Court  under  the  said  rule  are  plenary.  The powers given to the executing Court under Rule 101 are not qualified or hedged by any restrictions. On the other hand it shows that the executing Court is required to adjudicate upon all questions mentioned in the said rule as if it had jurisdiction to  deal  with  every  question  that  may  so  arise.  By  a  legal fiction,  an  executing  Court  which  may  otherwise  have  no jurisdiction is invested with the jurisdiction to try all questions under the aforesaid rule.”28

39 In view of the settled position in law, as it emerges from the above decisions,

it  is evident that the appellants were entitled, though they were strangers to the

decree, to get their claim to remain in possession of the property independent of the

decree, adjudicated in the course of the execution proceedings. The appellants in

fact set up such a claim. They sought a declaration of their entitlement to remain in

possession in the character of lessees. Under Order XXI Rule 97, they were entitled

to set up an independent claim even prior to their dispossession. Under Order XXI

Rule 101, all questions have to be adjudicated upon by the court dealing with the

27 AIR 1984 Bom 357 28 Id at page 359

29

application and not  by a separate suit.  Upon the determination of  the questions

referred to in Rule 101, Order XXI Rule 98 empowers the court to issue necessary

orders. The consequence of the adjudication is a decree under Rule 103.  

40 The claim which the appellants have now sought to assert for compensation

under Section 4(1) of the Act of 1958 is intrinsically related to the claim which they

asserted in the earlier round of proceedings to remain in possession. Indeed as we

have seen, the appellants seek to resist the execution of the decree on the ground

that they are entitled to continue in possession until their claim for compensation is

determined upon adjudication and paid.  Such a claim falls  within the purview of

Explanation IV to Section 11 of the CPC. Such a claim could certainly have been

made in the earlier round of proceedings. Moreover, the claim ought to have been

made in the earlier round of proceedings. The provisions of Order XXI Rules 97 to

103 constitute a complete code and provide the sole remedy both to parties to a suit

and to a stranger to a decree. All questions pertaining to the right, title and interest

which the appellants claimed had to be urged in the earlier Execution Application

and adjudicated therein. To take any other view would only lead to a multiplicity of

proceedings and interminably delay the fruits of the decree being realized by the

decree holder.  

41 This view which we have adopted following the consistent line of precedent

on Rules 97 to 103 of Order XXI is buttressed by the provisions of the Act of 1958. A

claim under Section 4 (1) has to be addressed to the court which passes a decree

30

for eviction. In the present case, the appellants are strangers to the decree. They

were  required  to  get  that  claim  adjudicated  in  the  course  of  their  Execution

Application which was referable  to the provisions of  Order  XXI Rule  97.  Having

failed to assert the claim at that stage, the deeming fiction contained in Explanation

IV to Section 11 is clearly attracted. An issue which the appellants might and ought

to have asserted in the earlier round of proceedings is deemed to have been directly

and substantially in issue. The High Court was, in this view of the matter, entirely

justified in coming to the conclusion that the failure of the appellants to raise a claim

would  result  in  the  application  of  the  principle  of  constructive  res  judicata  both

having regard to the provisions of Sections 4 and 5 of the Act of 1958 and to the

provisions of Order XXI Rules 97 to 101 of the CPC.

42 For the above reasons, we find no merit in the appeal. The appeal shall stand

dismissed. Pending applications, if any, are disposed of. There shall be no order as

to costs.  

…………….…....................................................J                             [Dr DHANANJAYA Y CHANDRACHUD]

                                             ..……...........……...............................................J  [HEMANT GUPTA]

New Delhi; February 05, 2019.

31