1. One Kolakula Thomasreddi was adjudicated an insolvent in 1924. In November, 1927 his adjudication was annulled, and a few days later his property was vested in the Official Receiver under Section 37 of the Provincial Insolvency Act. The Appellant here, who was one of the Insolvent's creditors, then filed a suit against him (O.S. No. 19 of 1928) impleading also the Official Receiver and obtained a decree for Rs. 11,466 with interest and costs. In E.P. No. 25 of 1928 Appellant applied in execution for certain moneys of the insolvent in the hands of the Official Receiver making both the insolvent and the Official Receiver parties to his application. The Official Receiver resisted the application on the ground that he held the money for the benefit of all the insolvent's creditors. His objection was overruled and the application allowed in August, 1928. In August, 1929 the Appellant filed another application (E.P. No. 42 of 1929) in execution of the same decree against the same parties for the attachment of certain decrees as the property of the insolvent in the hands of the Official Receiver. His application was opposed by the Official Receiver on the same ground as before. Appellant pleaded that the decision of the Court in E.P. No. 25 of 1928 on this matter was res judicata but the learned Subordinate Judge held (i) that there was no question of res judicata in execution proceedings and (ii) that the subject-matter of the two proceedings was not the same. He then expressed his dissent from his predecessor's order and dismissed the application. Against that order of dismissal the present appeal has been filed.
2. The first question at issue between the parties was essentially one of law, and must depend upon the effect of a vesting order under Section 37 of the Provincial Insolvency Act. That matter has been recently considered by a Full Bench of which one of us was a member in A.A.A.O. No. 135 of 1931 and it was there held that when the property of an insolvent is vested in the Official Receiver (or any other appointee) under Section 37 it is the insolvency Court which retains control of it, and the insolvency Court must direct its disposal in the interest of the general body of creditors. On this matter therefore the first Subordinate Judge in 1928 must be held to be wrong, and the second Subordinate Judge in 1929 to be right. But this still leaves the question of res judicata untouched, and that is the sole issue before us.
3. Mr. Kotayya in a very able argument for the appellant has first established the position that the two reasons relied upon by the learned Sub-Judge are, even when taken together, insufficient for rejecting a plea of res judicata. This is clearly Laid down in the decisions reported in Subbachariar v. Muthuveeran Pillai I.L.R.(1912) 36 Mad. 553 ; 24 M.L.J. 545 and Govinda Menon v. Krishna Mannadiar : AIR1923Mad649 and has not been disputed before us by the learned Advocate for the Respondent.
4. Mr. Kotayya's next position is that the determination of an issue which depends upon an erroneous decision on a point, of law is none the less res judicata if the other conditions for the application of that doctrine are satisfied. For this position also Govinda Menon v. Krishna Mannadiar : AIR1923Mad649 can be cited as an authority, and it is further established by Doorwas Seshadri Aiyar v. Govindaswami Pillai : AIR1921Mad315 by Maharaja of Jeypore v. Ramamurthy I.L.R. (1933) 57 Mad. 73 and by the well-known decision reported in Sree Rajah Bommadevara Venkata Narasimha Naidu v. Andavolu Venkataratnam (1916) 32 M.L.J. 63 where the two learned Judges state the law as follows:
A decision on an abstract question of law in one suit is not res judicata so that the law of the land should itself be deemed to have been altered when that question arises in subsequent suits between the same parties, but a legal right found declared or awarded in favour of one of the parties in one suit though based on an erroneous view of the law is res judicata when the same legal right is controverted in subsequent suits between the same parties and again
'Where a decision on a point of law settles a question that arises directly out of conflicting views as to the rights of the parties it is res judicata'. This proposition of law is not controverted in the argument before us.
5. The learned Advocate for the Respondent however takes his stand upon a consideration of jurisdiction. He argues that the decision of the former Sub-Judge is in effect nothing more than a decision that he, as presiding over the executing Court had jurisdiction to deal with the insolvent's property - and that a decision as to jurisdiction can never be res judicata. In support of this argument he relies upon two cases. The first is a decision of the Privy Council reported in Maharaja of Jeypore v. Gunupuram Deenabandhu Patnaick The facts there were that the Zamindar of Jeypore brought a suit against certain defendants in the Court of the Agent to the Governor in Vizagapatam. By consent of the parties that suit was transferred by the High Court to the District Court of Vizagapatam which proceeded to try and dismiss it on the merits. No appeal was filed by the Zamindar. Subsequently in 1900 the High Court held, in another case to which the Zamindar was a party, that it had no jurisdiction to transfer a suit from the Court of the Agent to the District Court. The Zamindar thereupon filed a fresh suit on the same cause of action as that in the suit dismissed by the District Court. It was held that the decree of the District Court being given by a Court which had no jurisdiction, could not operate as res judicata so as to deprive the Zamindar of his right of suit in the Court of competent jurisdiction. We do not think in the light of the discussion which follows that this authority is of any assistance to the Respondent. The question of jurisdiction was never in issue between the parties, and it is obvious that neither side could ever have contended that, apart from the transfer the District Court had any inherent jurisdiction to try the suit.
6. The second case, however, affords a very close parallel indeed to the present case. It is a decision of a Bench of this Court reported in Subba Rao v. Perumal Reddi (1917) M.W.N. 318. The facts there were that the plaintiffs brought suits against their tenants the Defendants for the rent due on certain lands for fasli 1321 as Small Cause suits before the District Munsif of Sholinghur. The Defendants pleaded that the land was an 'estate' under the Madras Estates Land Act and therefore that it was only the Revenue Court which was competent to try the suits. This issue was tried by the District Munsif and found against the Defendants and decrees for rent were granted. Fresh Small Cause suits for the rent for faslis 1322 and 1323 were then instituted in the same court. The same defence was raised and was again tried, the decision this time being against the Plaintiffs. In revision petitions to the High Court, it was urged that the former decision was res judicata. The High Court held that it was not, even though the decision as to jurisdiction depended upon certain findings of fact, and came to 'their decision mainly on the ground that the doctrine of res judicata does not apply to questions of jurisdiction.
7. If this proposition thus broadly stated, is correct it is very difficult to distinguish the present case from Subba Rao v. Perumal Reddi (1917) M.W.N. 318. Here too, it may be argued with much force, the question was one of jurisdiction between two competing courts - the executing Court and the insolvency Court - and here too the executing Court held in the first application that it had jurisdiction and in the second that it had not. But there is no analysis in this decision of the meaning of the word jurisdiction' and no distinction drawn between inherent want of jurisdiction and a want of jurisdiction which can be discovered only after the decision of an issue by the very court whose jurisdiction is attacked by the Defendant. That distinction has been drawn in later cases which have been cited before us by Mr. Kotayya, and we think it is a fundamental distinction which ought to be recognised.
8. There are two such cases to be considered. The first is Girwar Narayan Mahton v. Kamla Prasad (1932) 12 Pat. 117. It is concerned with suits for rent by landlords against tenants. A suit was first instituted under Section 106 of the Bengal Tenancy Act, and was withdrawn with liberty to bring a fresh suit. The fresh suit was brought not under the Bengal Tenancy Act but in the ordinary Civil Court. It was compromised and a decree passed in terms of the compromise fixing the rate of rent at Rs. 7-8-0 per bigha. Then followed further suits for later rent in the Civil Court. The first court granted decrees at the rate of Rs. 7-8-0 but on appeal the compromise decree was ignored, and the decrees were modified by reducing the rate of rent to Rs. 5 per bigha. The reason for this was a finding that the civil court which granted the compromise decree had no jurisdiction to try the suit, being debarred from doing so by Section 109 of the Bengal Tenancy Act. It was held by the High Court that in spite of that statutory prohibition the compromise decree was res judicata. The bar created by Section 109 did not affect the inherent jurisdiction of the Civil Court. It was a matter for that court itself to decide. The head-note runs as follows:
There is a distinction between an inherent want of jurisdiction in a Court and want of jurisdiction on grounds which have to be determined by the court itself. The first makes the decree a nullity which can be ignored and need not be set aside. The second does not make the decree a nullity but only voidable; such a decree can be set aside by adopting the proper procedure, but cannot be collaterally impeached. A court which is empowered by law to try a suit, has power to try it either rightly or wrongly; the validity of a decree does not depend on whether it embodies a correct decision. A judgment of a court having jurisdiction over the subject-matter and the parties of the suit and having territorial and pecuniary jurisdiction, however erroneous, cannot be a mere nullity and cannot be collaterally challenged.
9. The other case is the judgment, but a long and elaborately reasoned judgment of a single Judge in Bombay Rajaram v. Central Bank of India, Ltd : (1926)28BOMLR879 . It is an even stronger case as it deals with a matter of territorial jurisdiction. There were two suits considered in that case one filed in 1924 and the other, in 1926 in the same court in Bombay. According to the law as understood in 1924 that court had jurisdiction, according to the law as Laid down in a Full Bench ruling in 1925 that court had no such jurisdiction. It was held, nevertheless, that the decree in 1924 was not a nullity, and that in 1926 the question of jurisdiction was already determined in favour of the plaintiff by the doctrine of res judicata. The head-note runs as follows:
The Court having jurisdiction to decide the question whether or not it had jurisdiction has the power to decide that question rightly or wrongly. No doubt a judgment pronounced by a court without jurisdiction is void, but the rule is subject to the well-known reservation that when the jurisdiction of court is challenged or is constructively subject of an issue the Court is competent to determine the question of jurisdiction whether the decision upon the particular question be correct and pass a decree and simply because a higher tribunal has in a subsequent suit held contrary on the point of jurisdiction that decree does not become a nullity.
10. Now it is undeniable that these rulings apply to the present case. It cannot for a moment be maintained that the learned Sub-Judge in the first application had no inherent jurisdiction to entertain it. He had the decree before him, the parties were parties to the decree and no question rises of any want of jurisdiction apart from the interpretation of Section 37 of the Provincial Insolvency Act. That issue was raised by the Official Receiver and was decided by the Court against him. The decision may now be seen to be wrong, but the Court was none the less competent to give it, and it is conceded before us that as the law was then understood the Sub-Judge must have deemed himself bound to give it.
11. And, as we have already said, we respectfully approve of the principles upon which these two decisions have been based. Other conditions being satisfied, the decision of a Court must, we think, be res judicata, unless that decision can be held to be a nullity, i.e., no decision at all. In the present case we cannot hold that the decision of the learned Sub-Judge in 1928 is a nullity, and we must accordingly accept the position that the succeeding Sub-Judge was debarred by the rule of res judicata from giving any contrary decision in 1930, allow this appeal with costs throughout, and direct the restoration of the Execution Petition to file to be disposed of according to law.