Case: ASGAR  Vs. MOHAN VARMA

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 Limited4. A suit for partition 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 passed by the District Judge, Palakkad on 30 November 19655. 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 Thomas6. 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 suit 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 deeds7. 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 petitioners8. 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 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 obstruction9. 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 . 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 dispossessed10. 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 parties11. 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 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 appellants12. 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 law13. 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.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 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 Act15. A Writ Petition under Article 227 of the Constitution was instituted before the High Court of Kerala on 3 September 2015. 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.

Court's reasoning:
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 judicata28. 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 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 then32. 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 future34. 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 one under Order XXI Rule 99 of the CPC but that, in our view, is not determinative of the true nature of the application.36. Under Order XXI Rule 101, 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 suit37. These principles have been reiterated in Har Vilas v Mahendra Nath, 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 dispossession39. 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 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 10340. 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 holder41. 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 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.