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Chiranjilal Ramachandra Loyalka and ors. Vs. Life Insurance Corporation of India Representing Neptune Assurance Co. Ltd. - Court Judgment

LegalCrystal Citation
SubjectCivil;Property
CourtMumbai High Court
Decided On
Case NumberAppeal No. 650 of 1955
Judge
Reported inAIR1959Bom396; (1958)60BOMLR1273; ILR1959Bom140
ActsCode of Civil Procedure (CPC), 1908 - Sections 11 and 92 - Order 1, Rule 8; Bombay Public Trusts Act - Sections 50
AppellantChiranjilal Ramachandra Loyalka and ors.
RespondentLife Insurance Corporation of India Representing Neptune Assurance Co. Ltd.
Appellant AdvocateM.P. Laud, ;K.M. Munshi, ;J.H. Dave, ;S.R. Jani, ;P.K. Thakor and ;Dhanuka, Advs. and ;Madhavji and Co., Attorneys
Respondent AdvocateN.P. Engineer, ;S.V. Gupte and ;A.N. Samant, Advs. and ;Samant and Co., Attorneys
DispositionAppeal dismissed
Excerpt:
civil procedure code (act v of 1908), sections 11, expln. vi, 92; order i, rule 8, - consent decree passed in suit filed under section 92--whether such decree can operate as res judicata--suit under section 92 seeking reliefs mentioned in section and also for declaration that properties in suit dedicated to religious or charitable purposes--such suit whether by reason that declaration sought, ceases to be representative suit under section 92.;a consent decree in a representative suit, whether under section 92 or order i, rule 8, of the civil procedure code, 1908, has the same force as a decree in intritum and can operate as res judicata under section 11 of the civil procedure code, 1908.;lakshmishankar v. vishnuram (1899) i.l.r. 24 bom. 77, s.c. 1 bom. l.r. 534 baishankar nanabhai v......chagla, c.j.1. this appeal raises a rather important question as to the applicability of the principle of res judicata. the trial court held that the suit which it was considering was bared by res judicata and dismissed the suit, and the plaintiffs have come on this appeal.2. the suit that was held to be bared was a suit filed under order 1 rule 8 of the civil procedure code, and the plaintiffs represented the hindu community of bombay. the suit was for a declaration that the members of the hindu community had acquired vested rights to use the mumbadevi tank for having p purificatory baths and to use the embankments thereof for performing religious, obsequial and other ceremonies. the suit was filed against the defendants who were the purchasers form the defendants in the earlier suit,.....
Judgment:

Chagla, C.J.

1. This appeal raises a rather important question as to the applicability of the principle of res judicata. The trial Court held that the suit which it was considering was bared by res judicata and dismissed the suit, and the plaintiffs have come on this appeal.

2. The suit that was held to be bared was a suit filed under Order 1 Rule 8 of the Civil Procedure Code, and the plaintiffs represented the Hindu community of Bombay. The suit was for a declaration that the members of the Hindu Community had acquired vested rights to use the Mumbadevi Tank for having p purificatory baths and to use the embankments thereof for performing religious, obsequial and other ceremonies. The suit was filed against the defendants who were the purchasers form the defendants in the earlier suit, being suit No. 438 of 1934. That suit was filed by the plaintiffs as relators under Section 92 of the Civil Procedure Code and in that suit the plaintiffs alleged that there was a dedication by one Putlibai in 1776 in respect of the very property which is the subject matter of the present suit, and by reason of that dedication the plaintiffs claimed that the Hindu community had the same rights which they asserted in the present suit. The contention of the defendants, on the other hand, was that they were the absolute owners of the property, claiming their title from Putlibai, and that there was no dedication, no trust and no rights in the Hindu community. That suit ended in a consent decree, and ,as the the minuets of the learned Judge of the 23rd March, 1939 when the consent decree was passed show, the Advocate General appeared before the leaned Judge Mr. Justice B. J. Wadia and stated to him hat he had consulted the members of the Hindu public from time to time in reference to the proposed consent terms and had satisfied himself that those met generally with the approval of the members of the Hindu Community. He further stated that he had considered the terms carefully and considered them for he benefit of the charity. He also stated that the defendants had acted very generously in the mater for the charity in suit. On this statement being made the learned judge passed a consent decree and in substance the consent decree, to the extent that we are concerned for the purpose of this appeal, set apart a part of the Mumbadevi Tank of the area of 3,000 square yards and in respect of this area Trustees were appointed and a scheme was sanctioned. There was a declaration that with regard to the rest of the property in suit the defendants were the absolute owners. There was also a provision that in the event of the Municipality insisting upon the Tank being filled up, the Tank could be sold by the Trustees and the sale proceeds were to be held upon Trust which were mentioned in the consent decree. This contingency in fact came about recently when in 1954 a suit had to be filed with the consent of the Charity Commissioner in the City Civil Court and the Trustees obtained the permission of the Court to sell the portion of the Tank which has to be filled up under requisition from the Municipality pursuant to the provisions of the consent decree. The question that has been agitated at the Bar is whether this consent decree dated the 23rd March 1939 constitutes a bar to the filing of the present suit under Section 11 of the Civil Procedure Code or principles cognate to the principle laid down in that section.

3. The first contention put forward by Mr. Laud on behalf on behalf of the plaintiffs is that the original suit No.438 of 1934, although it purported to be a suit under Section 92, was not really a suit under that section and therefore in arriving at the consent decree the only parties that were bound by that decree were the plaintiff in that suit on the record inasmuch as the present suit is filed under Order 1 Rule 8 on behalf of the Hindu community the Hindu community is not barred from proceeding with this suit because of the decision in the earlier suit. We must therefore consider what is the nature of a suit u under Section 92 and whether suit No. 438 of 1934 satisfies the conditions laid down in Section 92. Section 92 presuppose the existence of a trust created for public purpose of a charitable or religious nature. It is clear that it is not necessary in order hat a suit could be filed under Section 92, that the trust must be admitted. The plaintiff must come to the Court alleging that there is a public charitable trust and if that trust is disputed the Court will inquire into the matter and decide whether in fact there is such a public trust or not. Section 92 also requires that it should be filed for the purpose of obtaining the specific reliefs mentioned in Section 92, and the reliefs are set out in that section. The Court has no jurisdiction to grant any relief in a suit filed under Section 92 other than the reliefs mentioned in that section, and it is perfectly true that the bar of res judicata can only apply to a subsequent representative suit provided the earlier suit, if filed under Section 92, has been properly filed for obtaining the necessary reliefs. When we look at suit No. 438 of 1934 there is a clear averment that there is a public charitable trust created by Putlibai and it is in respect of this trust that certain reliefs are sought. The reliefs sought are the reliefs mentioned in Section 92 relief with regard to accounts, relief for appointment of trustees, and relief with regard to he framing of a scheme. But what is pointed out is that the very first relief is a relief which is outside the ambit of Section 92 and that relief is a declaration sought that the properties in suit are public charitable trust properties dedicated for the purpose of religious & charitable nature for the use and benefit of the Hindus and that the defendants have no interest in the said trust properties. It is said that a declaratory relief of this character cannot fall within the ambit of Section 92. It is perfectly true that a suit for a declaration that a property is impressed with a trust which is a public charitable trust does not fall with in the purview of Section 92. It was so held by the privy Council in Abdur Rahim v. Alin Mahomed Barkat Ali, 55 Ind App 96: AIR 1928 PC 16. But every suit which asks for a declaration is not necessarily a declaratory suit in the strict sense of the term. We in this Court are familiar with hundreds of plaints where declaratory reliefs are asked for as a matter of course when really no declaratory relief is required, no would the Court grant a declaratory relief. When we look a the plaint in suit No. 438 of 1934 it is clear that all the reliefs sought by the plaintiffs, which as already pointed out fall within the ambit of Section 92, could have been granted without the plaintiffs asking for a declaration. It the very basis of a suit under Section 92 is that there has to be public charitable trust before any relief could be granted by the Court, then a declaration to that effect seems to be unnecessary and only a surplusage. Therefore, in our opinion, the declaration sought by the plaintiffs in suit No. 438 of 1934 was either unnecessary or was merely incidental of their obtaining the necessary reliefs under Section 92. Therefore it could not be said of this suit that by reason of the fact that a declaration with regard to the properties being dedicated for purpose of religious and charitable nature was sought it changed the an nature of the suit and the suit ceased to be a representative suit under Section 92.

4. The Supreme Court in a recent decision in Pragdasji v. Ishwarlalbhai, : [1952]1SCR513 , has taken the view that although a suit for a declaration that a certain property appertains to a religious trust lies out side the scope of Section 92, still when the defendant denies the existence of a trust, a declaration that the trust does exist might be made as ancillary to the main relief claimed under the section if the plaintiff is held entitled to it. With respect this principle which correctly enunciates the law with regard to declarations in suits under Section 92, applies in full vigour to the facts of the present case. If the earlier suit had been contested and it the issue with regard to the nature of the property had been fought out, it would have been perfectly, competent to the Court to give a declaration that the property was subject to a public charitable trust and then proceeded to give the necessary reliefs under Section 92.

5. But it is urged by Mr. Laud that whatever might have been the position it the suit had been contested and the reliefs had been ultimately granted to the plaintiffs as prayed for by them in the plaint, that fact that the suit ended in a consent decree completely alters the complexion of the matter. It is said that once the parties compromised the suit, the declaration in the consent decree that the properties in suit were the absolute private properties of the defendants is a declaration which can only bind the plaintiffs to that suit and cannot bind the Hindu community whom they represented. It is said that under these circumstances the declaration given by the Court is merely an obiter dictum and was necessary or material for the granting of the reliefs required under Section 92 as those reliefs were never granted. Again, turning to the Supreme Court decision on which reliance is placed for the submission the facts there were that a suit under Section 92 was filed in the District Court and the District Judge raised the issue whether the properties were public charitable properties. He decided the issue against the plaintiffs and dismissed the suit. There was an appeal to the High Court and the High Court held that the properties were public charitable properties and remanded the suit to the District Court to be disposed of on its merits. The District Court held that the defendant was not guilty of misconduct and as his removal was sought on that basis and certain directions were sought on that basis, it dismissed the suit holding that the plaintiffs had not case of action. The matter again went to the High Court and the High Court dismissed the appeal. Now, in dismissing the suit after holding that the plaintiffs had no cause of action, both the District Judge and the High Curt in appeal gave the declaration to the plaintiffs that the properties were public religious and charitable properties. Therefore while the rest of the plaintiffs suit was dismissed they obtained this declaration and it was in this connection that the Supreme Court held that once the Court came to the conclusion that the plaintiffs were not entitled to any reliefs under Section 92, it was not open to the Court to give a declaration in a suit filed under Section 92 that the properties were public charitable trust properties, and the Supreme Court delated this declaration for the judgment of the High Court. Now, the position in suit No. 438 of 1934 is entirely different. If the consent decree only consisted of a declaration in favour of the defendants, Mr. Laud would be right that that declaration could not possibly bind the Hindu community and the Hindu community would not be debarred from reagitating that question in a subsequent suit. But what is overlooked is that in the consent decree, apart from the declaration given in favour of the defendants with regard to the part of the property in suit, the plaintiffs have obtained the relief they sought under Section 92 with regard to the other part of the property. As already pointed out, with regard to the 3,000 square yards which were set apart for trust, the plaintiffs got all the reliefs they wanted under Section 92. They got Trustee appointed they had a scheme framed, and they had the recognition by the defendants that to the extent of this property there was a public charitable trust. Therefore, it would be wrong to assume that the consent decree in suit No. 438 of 1934 merely gave a declaration in favour of the defendants' title.

6. It has been suggested by Mr. Laud that even if an issue is raised in a suit under Section 92 as to whether a certain property is public charitable property, the finding on that issue would not constitute res judicata in a subsequent suit, and Mr. Laud was pains to emphasise that the finding on that issue would be nothing more than merely,to use the language of the Privy Council in case, an argumentative step towards the ultimate reliefs that the Court would grant in a suit under Section 92. It is therefore seriously urged hat a finding one way or the other whether the property is private property or public charitable property, can never be finally decided in a suit under Section 92, and that question can be reagitated in subsequent suits. In our opinion, that contention is wholly untenable. If the very basis of a suit under Section 92 is the existence of a public charitable trust, then it cannot be said that an issue as to whether there is a public charitable trust or whether the property is private property is merely an incidental issue or a mere argument leading up to the final decision. Unless the Court decides that there is a public charitable trust the Court would have no jurisdiction under Section 92 and the plaintiff could not obtain any of in the reliefs which he seeks. Therefore an issue tried in a suit under Section 92 with regard to the nature of property would operate as res judicata in a subsequent suit filed between the same parties. It is true that in suit No. 438 of 1934 no such issue was tried and decided, by this argument has been advanced by Mr. Laud for the purpose of submitting that a declaration in a consent decree with regard to the nature of the property cannot stand on a higher footing than an issue actually decided in the suit and according to Mr. Laud if a finding on an issue with regard to the nature of the property cannot operate as res judicata much less can a declaration with regard to that property in a consent decree.

7. But the real and substantial point that has been urged by Mr. Laud is that the cause of action in suit No. 438 of 1934 and in the present suit are different and therefore Section 11 of the Civil Procedure Code has no application. Now what Section 11 requires is not that the cause of action in the two suits must be identical butt hat the matter directly and substantially in issue in the subsequent suit should also be directly and substantially in issue in the former suit. It will be noticed that under Section 11, not only the suit itself may be barred but also an issue, and therefore what we have to consider is whether a particular issue which he plaintiffs seek to be tried in this suit was directly and substantially the same in the earlier suit, and in this connection what is said is that in the present suit the plaintiffs are seeking a relief on the basis of a customary right enjoyed by the Hindu community and it is pointed out that in the earlier suit the claim was made on the basis of a dedication made by Putlibai and therefore it is said that the meters in issue in the two suits were difference and the decision in the earlier suit cannot operate as res judicata. When one analyses the matter a little more closely it becomes clear that the rights that the plaintiffs were claiming on behalf of the Hindu community in suit No. 438 of 1934 were the same as are now being claimed in the present suit. It is true that there was contention in the earlier suit that there was a public charitable trust. There had to be such a contention because the suit was under Section 92. It is also true that reliance was placed upon a dedication by Putlibai. But what is significant is that the plaintiffs in that suit did not rely upon any written trust. What they relied upon was a long and continuous user of certain rights by members of the Hindu community and what was in issue in that suit was whether the members of the Hindu community had used as a matter of right the property in suit for the purpose of religious ceremonies. Now that is the exact issue which arise in the present suit. What is in issue in the present suit is whether the Hindu community had performed these religious ceremonies for a long and continuous period so that they have become entitled to these rights as customary rights. In our opinion, what we have to look at is not the legal form which is given to the right claimed by the plaintiffs, but what is the real and substantial right claimed. Whether a dedication in law can be inferred from along and continuous user by the Hindu community or a customary right can be inferred; the real matter in issue was the user by the members of the Hindu community. That is what the plaintiffs contended and that is what the defendants disputed and the result was a compromise. In the present suit the plaintiffs are putting forward the same contention and the defendants are contesting the plaintiffs claim. Therefore in our opinion, there is no substance in the contention that the matters in issue in the two suits are not the same.

8. The second contention of substance advanced by the Mr. Laud is that inasmuch as suit No. 438 of 1934 was a suit filed under Section 92, a consent decree passed in that suit cannot operate as res judicata, and it is urged that whatever might be the position with regard to a consent decree in other suits, the position is different with regard to a suit under Section 92. Before we look at the authorities, let us look at the principle of the matter. A suit under Section 92 undoubtedly a representative suit. It is filed with the consent of the Advocate General, the Advocate General represents charity, he is he custodian of charity, and the relators to whom he gives his consent for filing the suit file the suit not on their behalf byu ton behalf of the community or a section of the community who is interested in the charity. It is said that a decision arrived at after a contest in such a suit stands on a very different footing from a compromise, be cause it is said that a whole community should not be bound by a decision which is not a decision arrived at after a judicial examination of the claims made by the parties. It is said that in the case of private parties, know their own interests and they are free to compromise in any way, but when the relators seek to bind a whole community or a section of the community they can only do so provided the Court itself has given a judicial determination. It would be most unsatisfactory, it is said, if by reason of a compromise arrived at in a suit under Section 92 a community should lose its important rights. We are told that in this very case by the compromise arrived at in the earlier suit a declaration was made in favour of the defendants and against the Hindu community, and it is difficult to believe that the whole community was conscious of what was happening and therefore to prevent the Hindu community from now reagitating this question and getting a proper decision from the Court would be to lay down a principle of a most dangerous character. Now as a matter of fact, as we have already pointed out, the compromise in suit No. 438 of 1934 was arrived at after every possible precaution had been taken and we refuse to believe that any Court would sanction a compromise in a representative suit unless it was fully satisfied that the proposed compromise was known to those who were going to be affected but it and the compromise was in the interest of those who were represented in the suit. But whether proper precaution should be taken or not in a suit under Section 92 when t he parties wish to compromise, has really nothing to do with the principle of the matter. If a consent decree under Section 92 does fall within the purview of Section 11 or the principle of res judicata then effect must be given to it irrespective of the question as to whether it is not advisable that consent decree in representative suits should only be passe dafter proper safeguards have been laid down. Turning to Section 11, it cannot be disputed that if suit No. 438 of 1934 had been heard and finally decided, then the present suit would have been barred although in the earlier suit the plaintiffs barred, although in the earlier suit the plaintiffs were formally different from the plaintiffs in the present suit, because Explanation VI to Section 11 provides:

'Where persons litigate bona fide in respect of a public right or of a private right claimed in common for themselves and others, all persons interested in such right shall, for the purposes of this section, be deemed to claim under the persons so litigating.'

Therefore in the earlier suit the persons interested were the Hindu community and in this suit the persons interested are also the Hindu community and therefore for the purpose of this Explanation the parties to the two suits are the same, and if he earlier suit had been heard and finally decided apart form other questions with which we have already dealt clearly the decision in the early suit would operate as res judicata for the purpose of the present suit.

9. The only question, therefore is whether a compromise or a consent decree can be considered to be a suit or an issue which has been heard and finally decided. If the view taken is that 'heard and finally decided' must be strictly and literally construed and there must be an actual hearing by the Court of the issue or the suit and an actual decision in invitum by the Court then no consent decree can operate as res judicata. Section 11, as just pointed out makes no distinction by reason of Explanation VI between a representative suit which is heard and finally decided and a suit which is not a representative suit and which is between private parties. Therefore whatever view one might take that view must apply equally to a consent decree between private parties and consent decree taken in a representative suit. On principle it is well settled that a consent decree operates as an estoppel. It is an estoppel by record and parties are estopped from contending contrary to what they have agreed to in the consent decree. But the whole of Section 11 is based upon the principle of estoppel by record and it is difficult to take the view that only decrees in invitum and not consent decree fall within the purview of Section 11. But it is not necessary to speculate on this matter because as we shall presently point out the matter now is concluded beyond all doubt that a consent decree operates as res judicata as much as a decree in invitum, if the conditions laid down in Section 11 are complied with.

10. As far as this High Court is concerned, as far back as Lakshmishanker v. Bishnuram, ILR Bom 77, Mr. Justice Candy and Mr. Justice Crowe pointed out a page 85 that it has always been the law that a judgment by consent raise an estoppel just in he same way as a judgment after the Court has exercised its judicial discretion; and a little later in Bhaishanker Nanabhai v. Morarji Keshavji and Co. ILR Bom 283, Mr. Justice Beaman held that a consent decree had to all intents and purpose the same effect as res judicata as a decree passed per invitum and this notwithstanding the words in Section 11 of the Civil Procedure Code 'has been heard and finally decided.'

11. The matter is really concluded by a recent decision of the Supreme Court in Shankar Sitaram v. Balkrishan Sitaram, : [1955]1SCR99 the learned Judges of the Supreme Court point out:

'It is well settled that a consent decree is as binding upon the parties thereto as a decree passed by invitum. The compromise having been found not to be vitiated by fraud, misrepresentation mis understanding or mistake the decree passed there on has the binding force or res judicata:'

If, therefore a consent decree has the same force as decree in invitum and can operate as res judicata under Section 11, then it is obvious that by reason of Explanation VI no distinction can be made between a consent decree in a representative suit, whether under Order 1, Rule 8 or under Section 92, and a consent decree in suit between private parties. In our opinion, the position would have been in arguable but for the fact that the Privy Council in the judgment already referred to 55 Ind App 96: AIR 1928 PC 16 expressed a doubt whether person instituting a suit on behalf of the public have the right to bind the public by a compromise decree, though a decree passed against them on contest bind the public, and this doubt arose in the minds of their Lordships of the Privy Council with respect be cause of a Scottish case in Jenkins v.Robertson, (1897) 1 LR HL 117, and when we turn to that decision does not seem to lay down that a decree obtained by arrangement between the contending parties, the Court bestowing no judicial examination on the merits of the question can never be res judicata. But the facts of the case were every striking. The plaintiff in that suit actually succeeded in the trial Court and obtained the verdict of the jury in favour of the rights of the public. An application was made to set aside the verdict of the jury and for a retrial and at that stage the plaintiff submitted to dismissal of the suit on his being paid the costs of the litigation. Therefore in a sense, this was what might be described as a purchased compromise. But that is not all. As was explained in the English decision in. In re, South American and Mexican Co.; Ex parte Bank of England, (1895) Ch 37, under the law of Scotland one person is allowed if he chooses, to represent the public and apparently according to the law of Scotland the result of the action binds the public at large. If, therefore an individual could file a suit in Scotland on behalf of the public without the safeguards of Section 92 or without the safeguards of Order 1, Rule 8 obviously one is not surprised that the Scottish Court should take the view that such an individual can not bind the public by a compromise decree. But in this English judgment the principle of a consent decree operating as res judicata is again emphatically reasserted and Mr. Justice Vaughan Williams at page 45 says:

'It has always been the law that a judgment by consent or by default raises an estopped just in the same way as a judgment after the Court has exercised a judicial discretion in the matter.'

And Lord Herschell L.C. in his judgment at page 50 says:

'The truth is, a judgment by consent is intended to put a stop to litigation between the parties just as much as it a judgment which results from the decision of the Court after the matter has been fought out to the end. And I think it would be very mischievous if one were not to give a fair and reasonable interpretation to such judgments and were to alow question that were really involved in the action to be fought over again in a subsequent action.'

12. One has only to consider for a moment what the effects of our accepting Mr. Laud's contention would be, in order to realise that the law could not be so absurd or anomalous. If we were to take the view that no consent decree in a suit under Section 92 can ever prevent subsequent litigation with regard to the same matter it will be impossible to expect parties to sit down and arrive at a settlement which would be clearly beneficial to charity and to the public. Although Section 92 is a dead letter in this State we have now the Bombay Public Trusts Act which by Section 50 almost in terms reproduces Section 92 with this distinction that instead of the Advocate General's sanction, the sanction of the Charity Commissioner is obtained. If the law were what is suggested by the appellants, then in several suits that are filed under Section 50 a compromise would almost become impossible because it would be futile for parties to arrive at a settlement if there was no certainty that they would be putting an end to the litigation. Therefore, in our opinion both on principle and on authority there is no substance in the contention that a consent decree in a suit under Section 92 should be put on an entirely different footing from a consent decree in other suits.

13. In our opinion therefore, the learned Judge below was right in the conclusion he came to. The result is that the appeal fails and is dismissed with costs.

14. Appeal dismissed.


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